Appendix 1:

Ethical Decision-making Models

An ‘ethical decision-making model’ is a device for use in working through ethical problems and
reaching a decision about a course of action in a structured and systematic way. In recent years,
a great number of ethical decision-making models have been proposed, and various models
have been officially adopted or endorsed by several professional and business organisations. A
number of decision-making models are reproduced here for your consideration. These models
are not provided as the only ways to go about dealing with ethical issues. Indeed, some people
have expressed concern about the wisdom of using decision-making models at all. The concern has
largely been that decision-making models can give the impression that ethical decision-making is
an algorithmic and mechanical process when, in fact, it is usually much more complex and subtle
than that. In addition, the fact of there being so many different decision-making models can give
the impression that just any old decision procedure, involving any considerations, will do, as long as
it can be represented as steps that can be followed in reaching a decision. Ethical decision-making
models do, however, have the important characteristic of representing ethical deliberation as a
systematic process, rather than simply as a ‘touchy-feely’ experience or as a matter of one’s gut
reaction to a situation. Ethical decision-making models emphasise that there is, in fact, deliberation
associated with making ethical decisions—there is something to deliberate about, and the various
contributing factors can be articulated and dealt with.
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In considering the following proposed ethical decision-making models, you should give some
thought to the appearance of common elements in some or most of them (for instance, they almost
all include a ‘light of day’ test, a suggestion that you imagine how you would feel if the proposed
action came to be widely known). You should also give some thought to whether any of the steps or
elements in these models seem to be particularly insightful, potentially fruitful or helpful in dealing
with ethical matters systematically. You will notice that all the models allow for what was earlier
referred to as ‘ethical pluralism’; none of them is couched in terms of a purported correct moral
theory.

1 The American Accounting Association model: seven steps

In 1990, the American Accounting Association (AAA) published a casebook, Ethics in the
Accounting Curriculum: Cases and Readings. These cases illustrate ethical issues that accountants

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 296 Business Ethics

may encounter in the context of their professional activities. Each case is analysed using a seven-
step decision-making model.1

1 Determine the facts—What, who, where, when, how.

• What do we know or need to know, if possible, that will help define the problem?
2 Define the ethical issue.
• List the significant stakeholders.
• Define the ethical issues.
• Make sure you know precisely what the ethical issue is—for example, conflict involving
rights, question over limits of an obligation, etc.
3 Identify major principles, rules, values—for example, integrity, quality, respect for persons,
profit.
4 Specify the alternatives.
• List the major alternative courses of action, including those that represent some form of
compromise or point between simply doing or not doing something.
5 Compare values and alternatives. See if a clear decision is evident.
• Determine if there is one principle or value, or combination, which is so compelling that
the proper alternative is clear—for example, correcting a defect that is almost certain to
cause loss of life.
6 Assess the consequences.
• Identify short and long, positive and negative consequences for the major alternatives.
The common short run focus on gain or loss needs to be measured against long-run
considerations. This step will often reveal an unanticipated result of major importance.
7 Make your decision.
• Balance the consequences against your primary principles or values and select the
alternative that best fits.
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2 The Laura Nash model: twelve questions2

Nash wants to make decision-making more practical, rather than relying on abstract philosophical
concepts.

1 Have you defined the problem accurately?

• Gain precise facts and many of them.
2 How would you define the problem if you stood on the other side of the fence?
• Consider how others perceive it; alternatives?
3 How did this situation occur in the first place?
• Consider the history, problem or symptoms.
4 To whom and what do you give your loyalties as a person and as a member of the corporation?
• Private duty vs. corporate policy or norms.

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 Appendix 1: Ethical Decision-making Models 297

5 What is your intention in making this decision?

• Can you take pride in your action?
6 How does this intention compare with the likely results?
• Are results harmful even with good intentions?
7 Whom could your decision or action injure?
• A good thing resulting in a bad end? Wanted A; got B.
8 Can you engage the affected parties in a discussion of the problem before you make your
decision?
• Example: talk to workers before closing the plant.
9 Are you confident that your position will be as valid over a long period of time as it seems now?
• Look at long-term consequences.
10 Could you disclose without qualm your decision or action to your boss, your CEO, the board
of directors, your family or society as a whole?
• Would you feel comfortable with this on TV?
11 What is the symbolic potential of your action if understood? If misunderstood?
• Sincerity and the perceptions of others.
12 Under what conditions would you allow exceptions to your stand?
• Speeding to a hospital with a heart attack victim.

3 The Michael Rion model: six questions3

1 Why is this bothering me?
• Is it really an issue? Am I genuinely perplexed, or am I afraid to do what I know is right?
2 Who else matters?
• Who are the stakeholders who may be affected by my decisions?
3 Is it my problem?
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• Have I caused the problem or has someone else? How far should I go in resolving the
issue?
4 What is the ethical concern?
• Legal obligation, fairness, promise-keeping, honesty, doing good, avoiding harm?
5 What do others think?
• Can I learn from those who disagree with my judgment?
6 Am I being true to myself?
• What kind of person or company would do what I am contemplating? Could I share my
decision ‘in good conscience’ with my family? With colleagues? With public officials?

4 Mary Guy: values, rules and a decision-making model4

Before offering a decision-making model, Guy suggests that one might keep ‘ten core values’ in
mind: ‘By evaluating how these values relate to an issue under consideration, and by analysing who
the stakeholders are in the decision, the ethical implications of an action become clearer.’
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 298 Business Ethics

• Caring—treating people as ends in themselves, not as means to ends. This means having
compassion, treating people courteously and with dignity, helping those in need, and avoiding
harm to others.
• Honesty—being truthful and not deceiving or distorting. One by one, deceptions undermine
the capacity for open exchange and erode credibility.
• Accountability—accepting the consequences of one’s actions and accepting the responsibility
for one’s decisions and their consequences. This means setting an example for others and
avoiding even the appearance of impropriety. Asking such questions as ‘How would this be
interpreted if it appeared in the newspaper?’ or ‘What sort of person would do such a thing?’
brings accountability dilemmas into focus.
• Promise keeping—keeping one’s commitments. The obligation to keep promises is among the
most important of generally accepted obligations. To be worthy of trust, one must keep one’s
promises and fulfil one’s commitments.
• Pursuit of excellence—striving to be as good as one can be. It means being diligent, industrious,
and committed; and becoming well informed and well prepared. Results are important, but so
is the manner and the method of achievement.
• Loyalty—being faithful and loyal to those with whom one has dealings. This involves
safeguarding the ability to make independent professional judgments by scrupulously avoiding
undue influence and conflicts of interest.
• Fairness—being open-minded, willing to admit error, and not overreaching or taking undue
advantage of another’s adversities. Avoiding arbitrary or capricious favouritism; treating
people equally and making decisions based on notions of justice.
• Integrity—using independent judgment and avoiding conflicts of interest, restraining from
self-aggrandisement, and resisting economic pressure; being faithful to one’s deepest beliefs,
acting on one’s conviction, and not adopting an end-justifies-the-means philosophy that
ignores principle.
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• Respect for others—recognising each person’s right to privacy and self-determination and
having respect for human dignity. This involves being courteous, prompt, and decent, and
providing others with information that they need to make informed decisions.
• Responsible citizenship—having one’s actions in accord with societal values. Appropriate
standards for the exercise of discretion must be practised.
Guy also suggests five rules, which integrate these values, and which might be of assistance in
codifying one’s ethical decision-making:

• Rule 1—Consider the well-being of others, including non-participants. This rule emphasises
caring and respect for others.
• Rule 2—Think as a member of the community, not as an isolated individual. This emphasises
loyalty, integrity, respect for others, and responsible citizenship.
• Rule 3—Obey, but do not depend solely on the law. This emphasises integrity and responsible
citizenship.
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 Appendix 1: Ethical Decision-making Models 299

• Rule 4—Ask, ‘What sort of person would do such a thing?’ This emphasises all the values by
calling each into question.
• Rule 5—Respect the customs of others, but not at the expense of your own ethics. This
emphasises accountability, fairness, integrity, and respect for others.
Guy’s decision-making model:

1 Define the problem.

• Isolate the key factors in question and diagnose the situation to define the basic problem
and to identify the limits of the situation. This step is critical, because it prevents solving
the wrong problem.
2 Identify the goal to be achieved.
• If you do not know where you are going, you will never know when you get there. For
this reason, it is essential that a goal is clearly declared.
3 List all possible solutions to the problem.
• All alternatives that will address the problem and achieve the goal are placed under
consideration.
4 Evaluate each alternative to determine which one best meets the requirements of the situation.
• This requires a thorough analysis of each alternative. The analysis involves measuring the
benefits, costs, and risks of each, as well as identifying the likely intended and unintended
consequences of each. This step provides information about the utility of each alternative
in terms of the efficiency with which it maximises desired values and still achieves the
goal.
5 Identify the one course of action that is most likely to produce the desired consequences
within the constraints of the situation.
• This requires selecting the alternative that maximises the most important values and
holds the most promise of achieving the goal, while solving the problem as effectively as
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possible.
6 Make a commitment to the choice and implement it.
• This requires converting the decision into action.
Guy further suggests that a slightly larger, ten-step, model is more appropriate for complex
problems:

1 Define the problem.

2 Identify the goal to be achieved.
3 Specify all dimensions of the problem.
4 List all possible solutions to each dimension.
5 Evaluate alternative solutions to each dimension regarding the likelihood of each to maximise
the important values at stake.
6 Eliminate alternatives that are too costly, not feasible, or maximise the wrong values when
combined with solutions to other dimensions.

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 300 Business Ethics

7 Rank the alternatives to each dimension according to which are most likely to maximise the
most important values.
8 Select the alternative to each dimension that is most likely to work in the context of the
problem while maximising the important values at stake.
9 Combine the top ranking alternatives for each dimension of the problem in order to develop
a solution to the problem as a whole.
10 Make a commitment to the choice and implement it.

5 The Kent Hodgson model: the three-step process5

1 Examine the situation.
• Get the critical facts. What does the situation look like? What has happened? What are
the circumstances involved?
• Identify the key stakeholders. Who are the significant players? Include all the key
stakeholders significantly affected by the situation and by any decisions you might make.
• Identify each stakeholder’s options (what each stakeholder wants done). State the options
for action that represent each stakeholder’s interest. Put yourself in the stakeholders’
shoes and think from their point of view. This is not the time to make final judgments or
slant stakeholder options from your own perspective.
2 Establish the dilemma.
• Identify the working principles and norms that drive each option (why each stakeholder
wants it done). Pinpoint, as best you can, the business reasons for each option. Why
is this stakeholder in favour of this option for action? The answers show you what the
stakeholders value and the working principles that flow from those values.
• Project the possible outcomes (consequences) of each stakeholder option. Do any violate
your principles, or those of your organisation? What will each stakeholder option cause
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to happen? You are trying to discover what the stakeholder wants to have happen in this
situation. Then ask, ‘Do any of the outcomes resulting from these options violate my
principles, or those of my organisation?’
• Determine the actions (means) necessary to produce each outcome. Do any violate your
principles, or those of your organisation? What will stakeholders have to do to get the
result they want? What steps will they take to make their desired options happen? Then
ask, ‘Do any of the actions they will take to make their options happen (means to the
end) violate my principles, or those of my organisation?
• State the dilemma. Through the activities completed, you know the stakeholders, the
options they represent, the validity of the working principles behind their options, and
the validity of the means to implement their options. You are now in a position to decide
if what you are facing is a true dilemma (balanced opposite interests). You are now able
to state, even write down, the dilemma exactly.

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 Appendix 1: Ethical Decision-making Models 301

3 Evaluate the options.

• Identify the General Principle(s) behind each stakeholder option. Is the option driven
primarily by dignity of human life, autonomy, honesty, loyalty, fairness, humaneness, or
the common good (the ‘magnificent seven’)? The answer is not automatic or expedient;
rather, it is a matter of honest judgment on your part.
• Compare the General Principle(s) behind each option. Which is the most responsible
General Principle(s) in this situation? In your mind, in this situation, which of the
‘magnificent seven’ holds top priority as an ethical reason for this or that option? The
object is to choose an option for action that represents the most responsible General
Principle (or Principles) for you, now, in this situation.
• The option with the most responsible General Principle(s) is your choice for action. Your
decision is not a guess, a choice from ignorance, or a choice from expediency. It is choice
for action derived from principles. And it is a decision that is defensible on the grounds
of principle and an attitude of cooperative responsibility.

6 The Cottell and Perlin model: five steps6

1 Describe all the relevant facts in the case. Be certain to note any assumptions not directly
presented in the case.
2 Describe the ethical and legal perspectives and responsibilities of the parties. Try to distinguish
between legal and ethical responsibilities. Take note of potential value conflicts among
participants in the case.
3 State the principal value conflicts in the case.
4 Determine possible courses of action. Note both short- and long-term consequences. Describe
the principles affirmed or abridged in projected courses of action. Distinguish utilitarian
(consequences) from deontological (principles) justifications in each case. Would ethical
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realism as it exists in the accounting profession assist in resolving the dilemma?

• [‘Ethical realism’ is an important notion for Cottell and Perlin. Basically, it means trying
to consider what the leaders in the profession would think is right or wrong. This relies
on the premise that ‘the leadership has an ethical insight’. By ‘leaders’, they mean the
‘intellectual authorities … the big guns. Each of us can name the national leaders in
the profession. They are the managing partners of large firms, the heads of professional
bodies, the members of standard-setting boards. In short, they are the men and women
who have risen up through the ranks to positions of respect.’]
5 Choose and defend a decision. State why one value (or set of values) was chosen over another
in the case. Discuss the result of such a choice for participants in the case, for the accounting
profession, and for society in general.

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 302 Business Ethics

7 David Mathison: the synthesis model7

First, understand three foundational concepts:
• Obligations—restrictions on behaviour, things one must do or must avoid; for example,
business relationships, fidelity in contracts, gratitude, justice.
• Ideals—notions of excellence, the goal of which is to bring greater harmony to self and others;
for example, concepts as profit, productivity, quality, stability, tolerance, and compassion all
fit here.
• Effects—the intended or unintended consequences of a decision; for example, oil rigs on the
high seas, a spillage.
This requires a three-step process:

1 Identify the important issues involved in the case using obligations, ideals, or effects as a
starting point. The goal here is to expand one’s view.
2 Decide where the main emphasis or focus should lie among the five or so issues generated
in step 1. Which is the major thrust of the case? Is it a certain obligation, ideal, or effect? For
example, it may be a choice of remaining silent about a wing design defect with the effect of
people dying in a plane accident versus going to the media with the effect of damaging a plane
manufacturer’s credibility on a personal ‘hunch’.
3 With the well-focused issue worked out in step 1, now you apply the ‘Basic Decision Rules’:
a When two or more obligations conflict, choose the more important one.
b When two or more ideals conflict, or when ideals conflict with obligations, choose the
action that honours the higher ideal.
c When the effects are mixed, choose the action that produces the greatest good or lesser
harm. For example, in the case of the questioning engineer, clearly saving human lives
is the greater good over saving a manufacturer’s image.
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8 Anthony M. Pagano: six tests8

Pagano proposes six tests, rather than outlining a particular approach or model. His idea is that
these tests can provide useful insights into the ethical perspective of a proposed action:

1 Is it legal?
• This is the core starting point.
2 The benefit–cost test.
• This is the utilitarian perspective.
3 The generalisation test.
• Do you want this action to be a universal standard? If it’s good for the goose, it’s good for
the gander.

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 Appendix 1: Ethical Decision-making Models 303

4 The light of day test.

• What if it appeared on TV? Would you be proud?
5 Do unto others—The Golden Rule test.
• Do you want the same thing to happen to you?
6 Ventilation test.
• Get a second opinion from a wise friend with no investment in the outcome.

9 The Corruption Prevention Network (CPN): Big Issue

Grappler
The Corruption Prevention Network is a New South Wales–based association of mainly public
sector employees. A few years ago, the CPN decided that it wanted to construct an ethical decision-
making model for use by any public sector employees. And so, the Big Issue Grappler (BIG) was
created. This decision-making model is based around public sector values. It invites the decision-
maker to evaluate any prospective decision in light of those values; and in particular, BIG allows
the user to factor in their own values, the community’s values, and their organisation’s values.
It recognises that situations are not always win-win. That is, some values will often have to be
sacrificed for the sake of others; and BIG makes the user come face to face with this fact.
This decision-making model requires that the user propose an action, and then use the model
to check whether or not, and how well, that proposed action fits with public sector values. It works
in six steps, and then allows for formally recording the results of the decision-making process.

• Step 1: Define issue—state what your BIG issue is.

• Step 2: Proposed action—state what you think will solve your BIG issue.
• Step 3: Ethics check—conduct a check for relevant stakeholders using generic ethical values.
• Step 4: Probity check—check other governance and probity aspects of this solution.
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• Step 5: Decision—state your amended decision that takes account of steps 3 and 4.
• Step 6: Reality check—ensure the decision is justified.
• Step 7: Results—see and/or record the results of the decision process.

This model is freely available at www.corruptionprevention.net/tools.

Click on ‘BIG’.

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