Ethics are moral principles that guide a person's behavior. These morals are shaped by socialnorms, cultural practices, and religious influences. Ethical decision making is the process of assessing the moral implications of a course of action. All decisions have an ethical or moral dimension for a simple reason—they have an effect on others. Managers and leaders need to be aware of their own ethical and moral beliefs so they can draw on them when they face difficult decisions.
Ethical decisions can involve several determinations. The field of ethics, also known as moral philosophy, shows that there are various ways of systematizing, defending, and recommending concepts of right and wrong conduct. For example, from a consequentialist standpoint, a morally right action is one that produces a good outcome, or consequence. A utilitarian perspective takes the position that the proper course of action is one that maximizes overall happiness.
Most ethical decisions exist in a gray area where there is no clear-cut or obvious decision that can be determined solely through quantitative analysis or consideration of objective data or information. Ethical decision making requires judgment and interpretation, the application of a set of values to a set of perceptions and estimates of the consequences of an action. Sometimes ethical decisions involve choosing not between good and bad, but between good and better or between bad and worse.
Making ethical decisions also involves choice about who should be involved in the process and how the decision should be made. For example, if a decision will have a significant impact on the local community, leaders may feel obligated to invite a representative of the community to participate in discussions. Similarly, decisions with a significant ethical dimension may benefit from being made by consensus rather than by fiat—to demonstrate that the choice is consistent with an organization's espoused values.