However, a simpler three-pronged test may be more effective.

If the action passes the natural,

prescriptive, and consequentialist tests, it is quite likely to be ethically sound. The simplest test
for ethical decision making is the Golden Rule.

Individual ethics are complicated by group norms. Norms are sometimes problematic as
individuals attempt to harmonize individual and shared standards that clash.

Organizations are even more complex. As the size of the organization increases, incompatible
views proliferate. To be effective, individuals in organizations need to move the same direction
toward a common vision. If they share a strong social consensus, they share strong
organizational norms. When management formalizes this social consensus, they have created a
code of ethics.

To be successful, organizational values must help the organization make a product people want
to buy, at a price they are willing to pay, while obeying the law, and doing no harm to society.
Some scholars and businessmen now argue that they also have a duty to enhance the welfare of
society and solve social problems. This extended duty is erroneously called corporate social
responsibility (CSR).

Managers are legally and ethically required to work on behalf of the organizations' stockholders.
CSR speaks the language of stakeholders-a broader term that shifts allegiance from
stockholders to third parties that mayor may not have a claim to the organization's resources.
Prudent managers listen to all stakeholders, but prioritizing stakeholders over stockholders is
ethically tenuous.

Many businesses are now expected to give to a range of charitable activities. If such giving
provides a return for the stockholders, this is the equivalent of a marketing campaign. However,
managers should not give owners' money to any cause without a business rationale. As stewards,
managers oversee the organization to return profit to owners. Owners then may individually
decide to whom they wish to give. xxiv

Bottom Line: Individuals, not groups, are the proper ethical decision makers. A subversion of
this principle leads to unethical actions.

Key Terms:

Attitudes (From Italian: attitudine "disposition, posture,") are simply personal perspectives or
judgments about something or someone.

Values (From Old French: value "worth, value") are deeper, abstract ideas about what one
believes to be good, right, or desirable.

Terminal values are lifelong goals or objectives closely related to the individual's core ideology.

xxiv Managers who are sole-proprietors (owners) may give the organization'S money to whomever they like because
it is ultimately their own money.

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Instrumental values are values that determine how one should behave.

Priority (From Latin: prioritatem (nom. prioritas) "fact or condition of being prior," or prior) is
that which is placed or ranked in importance.

Little "c" correct values are those related to organizational strategy.

Big "C" correct values are those related to right and wrong, truth and error.

Right (From Latin: rectus "straight, right;") is that which is correct, true, and in accordance with
the facts.

Wrong (From Old English: "twisted, crooked, wry,") is that which is erroneous or unjust action,
a violation of that which is right.

Ethics (From the Latin ethica, and from Greek. ethike philosophia "moral philosophy,") are
standards of right and wrong behavior. Ethics literally means: the science of Morals.

Morality (From L.L. moralitatem (nom. moralitas) "manner, character,") is ethical wisdom that
determines behavior.

Utilitarian test in ethical decision making states that what is ethical is the greatest good for the
greatest number.

Moral rights test in ethical decision making states that what is ethical best protects fundamental
human rights.

Justice test in ethical decision making states that what is ethical is that which is fair and
impartial.

Practical test in ethical decision making insists that what is ethical would be approved by a jury
of one's peers.

Natural approach to ethical decision making is similar to Covey's universal principles. Through
the ages, philosophers and theologians have disputed just how much truth can be known through
natural means.

Prescriptive approach to ethical decision making flows from a scripture or an ethical rule book.

Consequentialist approach to ethical decision making is a method that simply observes what
works and reverse-engineers the process to determine what should be done. Academic research,
to the degree that it is unbiased, is useful in this regard.

Golden rule states "So in everything, do to others what you would have them do to you, for this
sums up the Law and the Prophets"

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Norms (From Latin: norma "carpenter's square, rule, pattern,") are standards of behavior shared
by a group.

Ethical behavior is behaving according to a standard of right and wrong.

Social consensus is the degree to which the group agrees that an act is "good" or "bad."

Code of ethics is a formal written statement of ethical guidelines.

Workplace deviance is behavior by an employee that threatens the organization because it

violates the norms, rules, or policies.

Whistleblowers are those who reports illegal or unethical conduct in the organization.

Economic responsibility as a matter of organizational responsibility, is the duty to make a

product or service people are willing to buy to generate profit.

Legal responsibility as a matter of organizational responsibility, is the obligation to comply with

all laws and regulations-local, state, and federal.

Ethical responsibility as a matter of organizational responsibility, is the duty to do what is right

and abstain from what is wrong, even when that which is ethically wrong may be legally
permissible.

Corporate social responsibility (CSR) may be defined as the organization's obligations to

society. The term itself is deceptive as it implies additional obligations beyond existing
economic, legal, and ethical responsibility.

Shareholder model of social responsibility argues that management is responsible to the

shareholders (owners) of the firm to maximize profit on their behalf.

Stakeholder model considers any group who has an interest in an organizations decisions or
actions.

Stakeholders are individuals or groups who have an interest in, or is affected by, the
organization.

Primary stakeholders are those who are responsible for the organization's survival. These
include shareholders, employees, suppliers, and customers.

Secondary stakeholders are all others who may be affected by the organization in some way.
These include the community at large, local government, the media, unions, special interest
groups, etc.

Mission-driven organization a model of social responsibility where the mission of the

organization drives the question of which interests to prioritize.

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Occupational ethics are ethical standards a particular profession has imposed upon itself as in
law, medicine, and education.

l10res (From Latin: pI. of mos manner, custom.), are group norms that are so common or
uccessful that society has embraced them.

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