It is designed to enhance ethical reasoning by profiding : Insight into the identification and analysis of key issues to be considered and

d questioned to challenges to be raised Approaches to combining and applying decisionrelevant factors into practical action A decision or action is considered ethical or right if it conforms to certain standard

The EDM frameworks assess the ethicality of decision or action by examining the :
Consequences or well-offness created in terms of net benefit or cost Rights and duties affected Fairness involved Motivation or virtues expected

The first three of these considerations consequentialism, deontology, and justice- are examined by focusing on the impacts of decision on shareholders and other affected stakeholders, an approach known as Stakeholder Impact Analysis. The fourth consideration the motivation of decision maker - is an approach known as virtue ethics.

EDM Considerations a. Well offness or well being b. Respect for the rights of stakeholders c. Fairness among stakeholders d. Expectations for character traits, virtues Specific EDM Issues a. Different behavior in different cultures (bribery) b. Conflicts of interest , and limits to self-interested behavior

Philosophical Theories a. Consequentialsm, Utilitarianism, Theology b. Deontology(rights and duties) c. Kants categorical imperatives, justice as impartiality d. Virtue Specific EDM Issues a. Relativism, subjectivism b. Deontology, subjectivism, egoism

The basic question that interest philosophers is : What makes a decision or action or person more or less good or ethical? Each of the 3 philosophical approaches to ethical decision making (Consequentialsm, Deontology and Virtue ethic s) focuses on different conception of a right action

Consequentialism are intent on maximizing the utility produced by decision. The rightness of an act depends upon its consequences. An act and a decision is ethical if its favorable consequences outweigh its negative consequences Because utilitarianism and consequentialism focus on the results or ends of an action, they are sometimes referred to as Teleological.

Focus on the obligations or duties motivating a decision or actions rather than on the consequences of the action. Deontological reasoning is based upon the thinking of Immanuel Kant, a rational person making a decision about what would be good to do, would consider what action would be good for all members of society to do. The se duties must supersede self-interest, bias and favoritism

Virtue ethicist concerned with the motivating aspects of moral character demonstrated by decision makers. Responsibility especially culpability or blameworthiness - in both morality and law, has two dimensions : guilty act and guilty mind Virtue ethics focuses on the character or integrity of the moral actor and looks to moral communities, such as professional communities, to help identify ethical issues and guide ethical action. Virtues are those character traits that dispose a person to act ethically and thereby make that person a morally good human being. Other dispositions that are often cited as virtue include : honesty, integrity, enlightened self-interest, compassion, fairness, impartiality, generosity, humility and modesty. For virtue ethicist, possessing a virtue is a matter of degree.

Consequences, Utility Duty, Rights, Justice Virtue Expectation

Profitable? Benefit > Cost Risk adjusted Fiduciary duty Individual Rights Fairness, Legality Character Integrity Courage

Shareholders

Activists

Employees

Governments

Customers

Corporation

Creditors

Suppliers

Lenders

Others, incl.media

WellOffness Fairness

Benefit > cost

The distribution of benefits and burdens should be fair

Rights

The proposed decision should not offend the rights of the stakeholders and decision maker

Profit Items not included in Profit : Measurable Directly Items not included in Profit : Not Measurable Directly Bringing the Future to the Present Dealing with Uncertain Outcomes Identifying Stakeholders and Ranking Their Interest

Pollution Control Equipment Impact on Profit Short term Long term Benefit (PV at 10%) - Reduction in worker health cost 500,000 500,000 Total

University Admission Scholarships Impact on Profit Short term Long term Total

- Increase in worker productivity - Improvement in level of productivity, scholarship recipient

Total Benefit Cost (PV at 10%) - Pollution Equipment - Scholarship paid Total Cost Net Benefit-Cost

200,000

200,000
600,000 600,000 600,000

200,000

500,000

700,000

600,000

350,000 350,000 (150,000) 500,000

350,000 400,000 350,000 350,000 400,000 (400,000) 600,000 400,000 400,000 200,000

1.
2.

Profit or Loss only

Plus externalities (i.e. Cost-Benefit Analysis/CBA) Plus probabilities of outcomes (i.e. Risk-Benefit Analysis/RBA) CBA or RBA plus ranking of stakeholders

3.

4.

1. 2. 3. 4. 5. 6.

Life Health and Safety Fair treatment Exercise of conscience Dignity and privacy Freedom of Speech

1. 2. 3. 4.

5- Question Approach Moral Standard Approach Pastins Approach Extending & Blending the Approach

Is the decision 1. profitable? 2. legal? 3. fair? 4. right?

Stakeholder Interest Examined Shareholders usually short term Society at large legally enforceable rights Fairness for all Other rights of all

5. Going to further sustainable Specific rights development?

Moral Standard 1. Utilitarian: Maximize the net benefit to society as a whole 2. Individual Rights: Respect and protect 3. Justice Fair distribution of benefit and burdens

Question of proposed decision Does the action maximize social benefits and minimize social injures? Is the action consistent with each persons rights? Will the action lead to a just distribution of benefits and burdens?

Key Aspects Ground rule ethics End-point ethics

Purpose for Examination To illuminate an organizations and/or an individuals rules and values To determine the greatest net good for all concerned

Rule ethics

To determine what boundaries a person or organization should take into account according to ethical principles
To determine how to move the boundaries to remove concerns or conflicts

Social contract ethics

Consequences, Utility

Consequences, Utility

5-Ques. Velasq Pastin Max Profit v Max Utility (Benefit > Cost) v Max utility (Risk Adjusted) v

Duty, Rights, Duty, Rights, Justice Justice

Fiduciary Duty Individual Rights Fairness

Character Integrity Courage

v v v
v v v

v v v
v v v

v v v
v v v

Virtue Expected Virtue Expectation

1.

2.

3.

Motivation Expected Self-control rather than greed Fairness or justice consideration Kindness, Caring, Compassion, and benevolence Virtues Expected Dutiful loyalty Integrity and transparency Sincerity rather than duplicity Character Traits Expected Courage to do the right thing according to personal and/or professional standard Trustworthiness Objectivity, impartiality Honesty, truthfulness Selfness rather than selfishness Balanced choice between extremes

Does the decision or action involve and exhibit the integrity, fairness, and courage expected? Does the decision or action involve and exhibit the motivation, virtues, and character expected?

Consideration Well-offness or Consequentialism Rights, duty or Deontology Fairness or Justice

Description The proposed decision should result in more benefits than costs The proposed decision should not offend the rights of the stakeholders, incl. the decision maker The distribution of benefits and burdens should be fair

Virtue Expectations or Virtue Ethics

The motovation for the decision should reflect stkaeholders expectations of virtue

Decision makers repeatedly make the following mistakes :

Focus on short term profit and shareholders only impact Focusing only on legalities subject to consumer boycotts, employee

slowdowns, increasing govt regulation Limits to fairness fair only to groups they like Limits to rights canvassed should canvass the impact on all rights for all stakeholder groups Conflicts of interest personal /group interest vs corps best interest Interconnectedness of stakeholders fail to anticipate that what they do to one group will redound to trigger action by another Failure to identify all stakeholder groups Failure to rank the specific interest of stakeholders Leaving out well-offness, fairness or rights Failure to consider the motivation for the decision Failure to consider the virtues that are expected to be demonstrated

Proposed Decision or Action

Yes

Better Alternative?

No

Final Decision

Identify the facts

Identify Stakeholders, their interest & the ethical issues

Ethical Analysis Rank interest in importance Apply Comprehensive EDM Framework : 1. A Philosophical Approach : Consequentialism, Deontology & Virtue Ethics and/or, a 2. Stakeholder Impact Assessment + Gap Analysis of Motivation, Virtues & Character Traits

Identify the facts and all stakeholder groups and interest likely to be affected 2. Rank the stakeholders and their interest 3. Assess the impact 4. Specify the alternatives 5. Compare values and alternatives 6. Assess the consequences 7. Make your decision
1.