According to US Government estimates Raj Rajaratnam founder of the Galleon Group, insider dealing generated profit or avoided losses of US$72m. Former hedge fund billionaire, Raj Rajaratnam was found guilty for illegally using insider information to trade in stocks such as Goldman Sachs, Hilton and Google. Bernard Madoff US$50bn Ponzi scheme, which led to him pleading guilty involved paying early investors consistent returns from the deposits of later clients. Both men are now reviled and have adversely affected the image of the wealth management industry.

Nevertheless, despite Raj Rajaratnam being sentenced to 11 years in prison together with a fine of US$157m, and Bernard Madoff being sentenced to 150 years in prison with a fine of US$171bn, organisations still tend to push ethics to the periphery of business decision-making.

A decade after the 2001 bankruptcy of the energy giant Enron, its former CEO Jeff Skilling is asking the US Supreme Court to grant him a new trial. The corporate collapse of Enron led to changes in corporate governance. A major response was the Sarbanes-Oxley Act, which was enacted in 2002. Its major provisions include: restrictions on auditors; enhanced powers for audit committees; CEOs and CFOs of public companies personally certifying accuracy of financial statements; enhanced disclosure requirements; much tougher criminal penalties.

Enron was seen as a company operating in the “new economy” with its CEO Skilling claiming that it was the most innovative company in the USA. Corporate scandals violate the trust of internal and external stakeholders, and they now demand answers to questions asked of “old economy” companies1. This compels organisations of all sizes to identify ways to embed ethical considerations into decision-making.

This article provides an overview of ethics in decision-making (EiDM) and seeks to stimulate a narrative with interested organisations. Recent Institute of Business Ethics (IBE) research2 illustrates how frameworks can facilitate EiDM. The article considers some challenges for international business organisations, and concludes by outlining some implications for organisational leaders.


Twenty-five years after its formation in 1986, IBE seeks to encourage high standards of business behaviour based on ethical values. IBE use their business experience to produce good practice guides. The recently published EiDM good practice guide provides a wealth of material. The content will be particularly relevant for the three corporate decision-making groups – employees, managers and senior leaders.

The EiDM booklet asserts that in the majority of cases, people do not consciously think about the ethical elements. However, if the organisation understands the ethical factors relevant to significant business decisions, ethics would permeate organisational decision-making. Many decisions may have little individual impact, but collectively they can help shape culture and enhance organisational effectiveness. Ethical policies should not contain processes that are mere checklists. Neither should they be based on an outcome of what an ethical decision should look like. IBE assert that EiDM is about optimising the conditions that support any decision.

Embedding EiDM frameworks in use by organisations such as Astra Zeneca, Raytheon, Cisco Systems, and Flowserve emphasis the role of the individual employee. Documentation is branded and illustrates various scenarios. EiDM need to consider the distinction between morals and ethics. The former tends to focus on personal issues and the latter on organisational decision-making. Ideally morals need to align with ethics, but there can be continual tensions within organisation.

The IBE guide presents a framework for considering ethics in decision-making. The framework contains four key elements:

  • Context and culture Emphasis is on macro and personal items. Macro items include nationality, cultural type, economic, and physical environments. Personal items include individual beliefs, workplace relations, gender and common cognitive biases.
  • Rigorous reasoning Any thought that a complicated process is a sign of rigor is misplaced. Rather than creating a myriad of checklists EiDM guides need to be concise and accessible to all. A programme of regular training sessions that share new material and enhance ethical skills increases implementation success.
  • Ability to make decisions Leaders must ensure that the tone at the top gets filtered down the organisations. Surveys to identify and track any possible barriers and pressures, that prevent employees from being able to act ethically will enhance morale.
  • Reflection and feedback Regular debriefs providing employees with opportunities to give feedback on ethical decision-making will enhance participation. Emphasis should be place on those decisions that have led to intended consequences.
  • Challenges for International Business Organisations

    Globalisation continues to be a major force for change. International businesses have to make decisions that have ethical complications across cultures and countries. Senior managers need to create an environment that enables diverse cultures to work harmoniously together. Due to the threat that unethical practices pose to stakeholders, senior management teams and consultants have sought to improve ethical conduct by developing and implementing interventions to improve ethical behaviour. Nearly three decades of academic research has provided outputs that can assist senior management teams.

    The impact of the Internet on the commercial landscape is on par with the Industrial Revolution that took place during the mid-18th Century. The Internet has led to a rapid evolution of businesses with global reach with profound impact on business relationships at the corporate, business and operational levels. The increasing importance of internal and external relationships is a paradigm shift in the modern business. Ethical codes of practice need to be flexible to cope with these changing business relationships. Workplace values can be shaped by the relationships between the individual and organisation.

    Determining the most crucial and impactful values will ease the implementation process. Critical values for international business organisations include: respect; good citizenship; fairness; trust; honesty; responsibility; equal opportunity; integrity. Each selected critical value must align with individual human values of employees. Employees must fully involve themselves by reflecting on personal values and link them with any ethical dilemma before them. This personal reflection enables employees to better understand complex issues.

    International business executives can experience a great deal of performance pressure in their roles. Higher levels of performance pressure can be a critical component of corruption and has a negative impact on ethical decision making. Traditional ethical decision making assumes that the outcome of a decision is known and that this will lead to the greater good for all. International businesses face ethical dilemmas in all markets its serves and in all facets of operations. However, the output of any ethical decision-making system may bring forth secondary outcomes that were unforeseen. Failure to properly manage this activity can bring the downfall of an organisation, or lead to an egregious reputation in the marketplace.

    Finally, the behaviour of leaders and supervisors play a critical role in enhancing ethical conduct. Leaders and direct supervisors ought to act as role models. Employees often imitate their bosses’ behaviour. Enron had a lengthy code of ethics, but this still failed to prevent a series of unethical decisions being made. Ultimately, values within an international business should act as a mechanism to standardise behavioural norms independently of what market it operates.

    The ability to integrate leadership behaviours with organisational values, vision and mission statements to create the appropriate climate is a necessity. Compliance to any ethical code of practice is a consequence of aligning organisational and individual values. Ethical dilemmas need to be treated similarly to strategic planning systems. Both are context-dependent. Some commentators have argued that some of the well-documented ethical failures should have been expected. An ethical strategic control system can monitor and anticipate problems. Finally, if the answer to the question posed in the title is no, can you really afford the repercussions?