ETHICAL DECISION-MAKING IN ORGANIZATIONS

Decisions that managers make are either programmed (established decision rules) or non-programmed (creative solutions).  The decision making process is a step-by-step approach that can be used for all types of problems.

One of the difficulties with innovative decisions is that they also tend to be risky.  Unfortunately, many managers tend to be risk averse.  Risk aversion is "the tendency to choose options that has fewer risks and less uncertainty"Nelson, D.L. & Quick, J.C. (2010). This tendency can cause managers to avoid risky decisions that may produce new ideas and high benefits.


Decision-making can be strengthened individually and in-group situations.  Groups can use techniques such as brainstorming, nominal group technique, Delphi technique, devil's advocacy, and dialectical inquiry.  Models of decision-making vary from very rational (the rational model) to non-rational (the garbage can model).  Intuition and creativity can be developed and improved to aid decision makers.

"Types of Decision Making - Life123." Articles and Answers about Life - Life123. Web. 08 Mar. 2011. http://www.life123.com/health/self-improvement/decision-making/types-of-decision-making.shtml.

  

Once individuals make decisions, they tend to become committed to those decisions.  Escalation of commitment is the tendency to continue to commit resources to a failing course of action, and it may occur because of personal pride, optimism, humans dislike inconsistency, sunk costs, and some cultural differences may arise.

Managers should consider in the organization questions like: is it legal? Is it balanced? How will it make me feel about myself? 

Ethical decision-making is very important towards the organization, considering social responsibility and morals. In which ethical behavior is “Acting consistent with one’s personal values and the commonly held values of the organization and society” Nelson, D.L. & Quick, J.C. (2010) and it is influenced by organizational and individual influences.

For example, EMP is a Colombian company which has corporate social responsibility. They have lots of projects in order to embrace responsibility for the company's actions, and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. 

"YouTube - EPM RSE Responsabilidad Social Empresarial." YouTube - Broadcast Yourself. Web. 06 Mar. 2011. <http://www.youtube.com/watch?v=k5b3SDcKHW0>.

HOW CAN ORGANIZATIONS EFFECTIVELY MANAGE BOTH RISK TAKING AND ESCALATION OF COMMITMENT IN THE DECISION- MAKING BEHAVIOR OF EMPLOYEES?

One of the difficulties with decisions that are innovative is that they also tend to be risky.  Unfortunately, many managers tend to be risk averse. This tendency can cause managers to avoid risky decisions that may produce new ideas and potentially high benefits. However, companies need risk management to analyze possible risks in order to balance potential gains against potential losses and avoid expensive mistakes.

"Risk, Challenge, & Safety in Outdoor & Adventure Education & Recreation." Wilderdom - a Project in Natural Living & Transformation. Web. 08 Mar. 2011. http://wilderdom.com/Risk.html.

Managing risk-taking behavior can be successful trough creating an effective decision-making under uncertainty. In this case, it will allow employees to fail without fear of punishment, which may reduce creativity and innovation.

Once individuals make decisions, they tend to become committed to those decisions.  Escalation of commitment is the tendency to continue to commit resources to a failing course of action. It may occur because of personal pride, optimism, humans dislike inconsistency and sunk costs. In that case, managers could split responsibility for decisions, provide individuals with a graceful exit or have groups make the initial decision.

Bibliography

•  "YouTube - EPM RSE Responsabilidad Social Empresarial." YouTube - Broadcast Yourself. Web. 06 Mar. 2011. <http://www.youtube.com/watch?v=k5b3SDcKHW0>.
• Mintzberg, H. & Westley, F. (2001, Spring). Decision making: It’s not what you think. MIT Sloan Management Review, 42(3), 89 –93.
• Nelson, D.L. & Quick, J.C. (2010) Organizational Behavior: Science,TheReal World and You. South-Western CollegePublication, 7th. Ed.
•  "Risk, Challenge, & Safety in Outdoor & Adventure Education & Recreation." Wilderdom - a Project in Natural Living & Transformation. Web. 08 Mar. 2011. http://wilderdom.com/Risk.html
• Wong, K. F. E., & Kwong, J. Y. Y. (2007). The role of anticipated regret in escalation of commitment. Journal of Applied Psychology, 92,545–554.
• "Types of Decision Making - Life123." Articles and Answers about Life - Life123. Web. 08 Mar. 2011. http://www.life123.com/health/self-improvement/decision-making/types-of-decision-making.shtml.