Leadership on Point

Ethics and the Business Decision-Making of Today’s Leaders

December 6, 2011 Dr. Johnny Magwood - Guest Author

Ethics in Business Decision Making

The people who work in both large and small corporations are typically a reflection of society. Workers and leaders that enter the workforce bring with them personal, family, and community ethics and values.  From an ethical perspective, there are two elements worth considering: ethical approach and ethical referent.  Ethical approaches include principles, rationale, and standards that individuals portray when facing an ethical decision.  Within the decision-making process, people include their egos, a sense of benevolence, and a principled philosophy.  Ethical referents are the building blocks of an individual’s ethical concerns, or the stage of scrutiny supporting a person’s ethical decision-making.  Unfortunately, many business decisions are made with irrational foundations.  Good ethical decisions are not always beneficial to an individual or profitable for a firm, however, good ethical decision-making is good for society and is a requirement for good leadership.

External partners, consumers, and other stakeholders also help to share and create the fundamental components of management’s ethical philosophies.  It is vital to understand and appreciate the fact that ethical recommendations from external entities are not always consistent with management’s view of corporate or business ethics.  Outsiders can (and sometimes do) become unique ethical icons and serve as a social moral guide for unsavory organizations and groups.  Many business-related ethical investigators have encountered moral deterioration centered on how individuals’ perspectives evolve over the human life cycle.


Hence, leaders and employees will inspect the advantages and disadvantages of a personal or business dilemma and frequently select the path of least resistance.  But rational choices and ethical business behaviors are often consistent and tend to lead to a favorable outcome.   Leaders who are rational moralists are more likely to see situations through the lens of their values.  Conversely, some business managers will abandon their moral position when conditions dictate. We now have the context that gives the impression that a business decision often depends on the situation, experience, projected outcome, and the human propensity to make ethical and/or unethical decisions.


That is, when there is a counterbalance between good versus bad… can a bad or unethical decision be overcome?



Written by: Dr. Johnny D. Magwood, vice president customer experience & chief customer officer, Northeast Utilities Service Company