To better understand what’s involved with managerial ethics, we need to first look at three different perspectives on how managers make ethical decisions.32 The utilitarian view of ethics says that ethical decisions are made solely on the basis of their outcomes or consequences. The goal of utilitarianism is to provide the greatest good for the greatest number. In the rights view of ethics, individuals are concerned with respecting and protecting individual liberties and privileges such as the right of free consent, the right to privacy, the right of free speech, and so forth. Making ethical decisions under this view is fairly simple because the goal is to avoid interfering with the rights of others who might be affected by the decision. Finally, under the theory of justice view of ethics, an individual imposes and enforces rules fairly and impartially. For instance, a manager would be using the theory of justice perspective by deciding to pay individuals who are similar in their levels of skills, performance, or responsibility the same and not base that decision on arbitrary differences such as gender, personality, or personal favorites. The goal of this approach is to be equitable, fair, and impartial in making decisions.

These factors include an individual’s morality, values, personality, and experiences; the organization’s culture; and the ethical issue being faced.33 People who lack a strong moral sense are much less likely to do the wrong things if they are constrained by rules, policies, job descriptions, or strong cultural norms that discourage such behaviors. For example, suppose that someone in your class stole the final exam and is selling a copy for $50. You need to do well on the exam or risk failing the course. You suspect that some classmates have bought copies, which could affect any results because your professor grades on a curve. Do you buy a copy because you fear that without it you’ll be disadvantaged, do you refuse to buy a copy and try your best, or do you report your knowledge to your instructor? This example of the stolen final exam illustrates how ambiguity over what is ethical can be a problem for managers and employees.