What is ethical decision-making in firms?
While ethical decisions are hard to define – everyone’s moral determination of what is right or wrong varies – there is some general consensus of what is appropriate or not for firms to engage in. While some of these are codified into laws, others are less precisely defined. In general, they involve consideration for treating employees and stakeholders fairly as well as consideration of the firm’s broader impact on society and the environment.
The importance of ethics in employee decision making
While it is important for top management to take into account ethical consideration when determining how the firm will compete, individuals at all stages of the firm may face choices, which may involve ethical considerations – is it right for the firm to engage in a particular behavior or not. Employees are the individuals that enact the strategy of the company, and thus while certain behaviors can be determined by the top level of the organization, the day-to-day implementations of the broad strategy are often up to lower-level employees in the firm. It is thus important that such employees have a sense of what is right behavior when enacting their decisions.
Instilling ethics in employee decision-making
While it is hard to anticipate all of the ethical decisions that employees may face, there are some broad approaches that can help ensure that the behaviors of individual employees are in line with company expected ethics.
One of the most powerful ways of instilling the importance of ethical considerations into employees is to ensure that ethical considerations are incorporated into company values. These are simple statements that employees can connect with, that help guide behaviors by illustrating what is important. Ensuring that the various dimensions of ethical considerations – such as how the firm treats its employees and customers – are codified into company values can help ensure that all members of the company are made aware of the importance of these principles.
Reinforcing and emphasizing the values
As well as having company values it is also important that these values are reinforced and emphasized to employees. To really drive behaviors they should be central principles that employees rely upon – messages that are continually emphasized as the key principles that they should rely on to help with decision making.
Displaying similar values in the strategy
Finally, it is important that the most central decisions in the company are also aligned with similar ethical standards. It is hard to get employees to buy into particular principles and values if major decisions appear inconsistent with these values. Ensuring that management is upholding the same ethical principles is thus an important component of getting lower employees to also follow similar standards.