Introduction to Management Lecture 6 Ethical Socially Responsible

Introduction to Management Lecture 6: Ethical & Socially Responsible Decision Making

KEY QUESTIONS FOR THIS WEEK Introduction to Management Teams and Teamwork Ethical Management The context of managers work Leading in a Global Context Managing Information 1. What kinds of decisions foster ethical behaviour? 2. What is ethical behaviour? 3. How do ethical dilemmas complicate the workplace? 4. What about ethics and morality? 2 2

Two kinds of decision making: Rational and non-rational Decision –Choice made from among available alternatives Decision making –Process of identifying and choosing alternative courses of action –Can be rational, but is often non-rational • System 1: intuitive and largely unconscious • System 2: analytical and conscious 3

Rational Choice Paradigm Effective decision makers identify, select and apply the best possible alternative Two key elements of rational choice 1. Subjective expected utility: determines choice with highest value (maximisation) 2. Decision-making process: systematic application of stages of decision making 4 4

Rational Choice Decision Process #Identify problem or opportunity • Symptom vs problem #Choose decision process • E. g. (non) programmed #Develop/identify alternatives • Search, then develop #Choose best alternative • Subjective expected utility #Implement choice #Evaluate choice 5

Problems with the Rational Choice Paradigm • The model assumes that people are efficient and logical information-processing machines • In reality, people have difficulty recognising problems and failures and cannot simultaneously process huge volumes of information • The model focuses on logical thinking and completely ignores emotions 6

Non-rational Decision Making Non-rational models of decision making –Assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions –Two types are discussed: satisficing and intuition Satisficing model –Managers seek alternatives until they find one that is satisfactory, not optimal Incremental model –Managers take small, shortterm steps to alleviate a problem 7 7

Bounded Rationality Bounded rationality –Developed in the 1950 s by economist Herbert Simon –Suggests that the ability of decision makers to be rational is limited by numerous constraints such as complexity, time and money, and cognitive capacity Satisficing model –Because of constraints, managers don’t make an exhaustive search for the best alternative –Instead managers seek alternatives until they find one that is satisfactory, not optimal 8 8

Intuition Model Intuition is making a choice without the use of conscious thought or logical inference. Stems from both: –Expertise—a person’s explicit and tacit knowledge about a person, a situation, an object or a decision opportunity is known as a holistic hunch –Automated experience—the involuntary emotional response to those same matters 9 9

Tips for improving your intuition 1. Trust your intuitive judgements 2. Seek feedback 3. Test your intuitive success rate 4. Try visualising solutions 5. Challenge your intuition 10 10

Question Bill has been a manager for 14 years. He has seen many different situations with his employees. He often makes decisions without really thinking about them. This is called ____. 11 A. Intuition B. Satisficing C. Bounded rationality D. Unbounded rationality 11

Evidence-based decision-making –The translation of principles based on best evidence into organisational practice –Brings rationality to the decision-making process 12 12

7 Principles for Evidence-Based Decision Making 1. Treat your organisation as an unfinished prototype 2. No brag, just facts 3. See yourself and your organisation as outsiders do 4. Evidence-based management is not just for senior executives 5. Like everything else, you still need to sell it 6. If all else fails, slow the spread of bad practice 7. The best diagnostic question: What happens when people fail? 13 13

What makes it hard to be evidencebased? 1. There’s too much evidence 2. There’s not enough good evidence 3. The evidence doesn’t quite apply 4. People are trying to mislead you 5. You are trying to mislead you 6. The side effects outweigh the cure 7. Stories are more persuasive anyway 14 14

Emotions and Making Choices 1. Emotions form preferences before we consciously evaluate those choices 2. Moods and emotions influence how well we follow the decision process 3. We ‘listen in’ on our emotions and use What emotions are involved in decision-making processes such as buying a house or dismissing an unproductive employee? that information to make choices 15 15

Implementing Decisions Execution—translating decisions into action—is one of the most important and challenging tasks of leaders 16 16

Evaluating Decision Outcomes • Post-decisional justification is the tendency to inflate the quality of the selected option, and forget or downplay rejected alternatives • Caused by need to maintain a positive self -concept • Initially produces excessively optimistic evaluation of decision 17 17

Participative Management The degree to which employees influence how their work is organised and carried out ●The process of involving employees in: ●Setting goals ●Making decisions ●Solving problems ●Making changes in the organisation 18 18

Making Ethical Decisions • Ethics (from Chapter 3) –Standards of right and wrong that influence behaviour • Ethics officer –Someone trained to deal with matters of ethics in the workplace, and particularly in how to resolve ethical dilemmas 19 19

Road Map to Ethical Decision Making Decision tree –A graph of decisions and their possible consequences which is used to create a plan to reach a goal –When confronted with any proposed action, a manager should ask the following questions: 1. Is the proposed action legal? 2. If 'yes', does the proposed action maximise shareholder value? 3. If 'yes', is the proposed action ethical? 4. If 'no', would it be ethical not to take the proposed action? 20 20

The Ethical Decision Tree 21

Ethics in the Workplace • An ethical dilemma arises when action must be taken but there is no clear ‘ethically right’ option. • Cause stress until they are resolved. • The burden is on the individual to make good choices. Source: http: //www. chooseust. org/2014/blog/the-abcs-of-ethics-in-theworkplace/ 22

Ethical Dilemmas Sources of ethical dilemmas include: • Discrimination • Sexual harassment • Conflicts of interest • Customer confidence • Organisational resources Source: http: //blogs. chatham. edu/professionalwritingprogram/2015/02/16 /is -your-writing-ethical-in-the-workplace/ 23

Factors Influencing Ethical Behaviour 24

Common Decision-Making Biases 1. Availability bias 2. Representativeness bias 3. Confirmation bias 4. Sunk cost bias 5. Anchoring and adjustment bias 6. Overconfidence bias 7. Hindsight bias 8. Framing bias 9. Escalation of commitment bias 25 25

Tools To Correct Bias: Ethical Frames 26

Ethics vs. Morality Ethics 1. The use of a system of logic (framework) that leads the logical solution of a dilemma 2. There can be more than one right ethical outcome to any ethical problem 3. Ethics is influenced by moral systems 4. It is possible for a decision or outcome to be ethical but immoral Morality 1. Descriptively refers to certain codes of conduct put forward by a society or a group (such as a religion), or accepted by an individual for her own behavior, or 2. Normatively refers to a code of conduct that, given specified conditions, would be put forward by all rational persons. 27 27

Ethics and Morality (Supplemental Reading) 28

Teams and Teamwork Week 5 Ethical Management Week 6 Leading in a Global Context Managing Information Introduction to Management Next Lecture? Week 7 Week 8 Assessment 2 due 29 Teams and Teamwork Ethical Management The Context of Managers Work Leading in a Global Context Managing Information Next week

References Apple Accused of Failing to Protect Workers. 2014. BBC News, Date Accessed: 16 March 2018, Retrieved from: https: //www. youtube. com/watch? v=k. Sv. T 02 q 4 h 40 Coles Edmonton: A 2012 Case Study in Lifting Indigenous Employment. 2014. Wesfarmers Ltd, Date Accessed: 29 December 2017, Retrieved from: https: //vimeo. com/101275004 Volkswagen Emissions Scandal: A Timeline. 2012. CNN Money, Date Accessed: 16 March 2018, Retrieved from: https: //www. youtube. com/watch? v=Y 5 Tv. FY 7 x. RDM 30 30