Question

Given all the corporate scandals (e.g., Enron, Tyco) that have been in the news, how important a role should ethics play in decision-making? Should leaders and managers-and organizations-be evaluated on the extent to which they make ethical decisions? Explain and provide an example. 10. What role does personality play in decision making? Can you think of an example from your experience where the personality of a decision maker clearly influenced his or her decision?

Answer 1

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“A company’s ethical behaviour is the mirror image of its culture, a shared set of values and guiding principles deeply ingrained throughout the organization and the ethical behavior and culture become part of the definition of corporate identity.” (D’Amato, Henderson & Florence 2009) Business ethics is essential in building a company’s image which heavily affects the business itself and the society surround it. While many businesses have synonymies it with just abiding the laws, others are striving to operate ethically and establish codes of conducts for employees to follow. Acting ethically doesn’t ensure a profitable outcome whereas unethical business act doesn’t mean the business will be punished. However, in the 21st century, companies are being governed more carefully and ethical business acts are expected from the public. In the long run, acting ethically also earns the company more advantages than businesses that operate unethically. Business ethics studies what is right and wrong (Velasquez 2006); it is the combined understanding of the moral standard, philosophy, politics and law (Velentzas & Broni 2010). It provides a guideline for corporation to operate ethically and a moral standard to govern corporate behavior

Employee Performance

A lack of ethics has a negative effect on employee performance. In some cases, employees are so concerned with getting ahead and making money that they ignore procedures and protocol. This can lead to additional paperwork and careless errors that result in the task having to be completed again. Additionally, employees who feel acting ethically and following the rules will not get them ahead in the business sometimes feel a lack of motivation, which often leads to a decrease in performance

Ethical leadership is a construct that appears to be ambiguous and includes various diverse elements (G. Yukl, 2006). Instead of perceiving ethical leadership as preventing people from doing the wrong thing, authors propose that we need to view it as enabling people to do the right thing (Freeman & Stewart, 2006). An ethical leader is a person living up to principles of conduct that are crucial for him. To be an ethical leader one needs to adhere to a more universal standard of moral behaviour (Thomas, 2001). Leading ethically is believed to be a process of inquiry – asking questions about what is right and what is wrong – and a mode of conduct – setting the example for followers and others about the rightness or wrongness of particular actions (Guy, 1990)

Ethical leadership can be viewed in terms of healing and energizing powers of love, recognizing that leadership is a reciprocal relation with followers. Leader’s mission is to serve and support and his passion for leading comes from compassion (Kouzes & Posner, 1992). That ethical leadership is starting to receive attention is even shown in an effort to boil ethical leadership down to love (Kouzes & Posner, 1992

It is not just altruism that motivates corporations to operate in a socially responsible manner, but also consideration of the “bottom line.” There are good business reasons for a strong commitment to ethical values:

1. Ethical companies have been shown to be more profitable.

2. Making ethical choices results in lower stress for corporate managers and other employees.

3. Our reputation, good or bad, endures.

4. Ethical behavior enhances leadership. 5. The alternative to voluntary ethical behavior is demanding and costly regulation

10) Personality traits play a much bigger role in decision making than you may think. Some people are, by their very nature, indecisive. They find it quite difficult to make most decisions. I often find these people very loyal to the decision when they do make it. I am sure you know people like this. Other people make decisions way too quickly without considering all the consequences. These people are more impulsive.

How you primarily react to the world will affect your decision making process; this also makes your decision making process unique. There are many ways to describe how we react to the world, but one simple way is to say that we react from the head, heart or gut. Your personality will determine whether you approach decisions in a rational or emotional manner

Decision-making is a crucial part of running a successful corporation. Within companies, there are frequently different people who are directly in charge of plotting the course of operations. Chief financial officers, chief executive officers, chief operational officers – they all have different responsibilities and roles, but they must also work together in order to ensure the company is progressing forward and meeting the expectations of shareholders. Different personalities are crucial to making the right assessments The act of decision making can defined as choosing one alternative over all the others. This process implies there are multiple ways to accomplish a goal, and that one of these options was chosen because it is the most viable method of achieving success. However, a person’s own values, desires and lifestyle all color their decision-making capabilities, which can radically affect how a company chooses the right alternative

They found that extraversion predicts neural activity in a region of the brain called the medial orbitofrontal cortex, which is involved in evaluating rewards. In the task, this region responded more strongly to the possibility of immediate rewards than to the possibility of delayed rewards. "This is a brain region where we have previously shown that extraversion predicts the size of the region, so our new study provides some converging evidence for the importance of sensitivity to reward as the basis of extraversion," DeYoung says.

More broadly, DeYoung works on understanding "what makes people tick, by explaining the most important personality traits, what psychological processes those traits represent, and how those processes are generated by the brain," he says. "The brain is an incredibly complicated system, and I think it's impressive that neuroscience is making such great progress in understanding it. Linking brain function to personality is another step in understanding how the brain makes us who we are

Decision regret- dependent variable

Landman defined regret as “A more or less painful judgment and state of feeling sorry for misfortunes, limitations, losses, shortcomings, transgressions, or mistakes”. It is important to note that we focus on regret stemming from manager’s negative evaluations of their decision process and of their choice outcome. Of particular consequence for study is the potential effect of regret in decision making. Although previous research on regret assumed that people regretted only negative outcomes while recent theorists argued that one can regret one's choice process even when the choice does not turn out poorly

Feeling regret require the ability to imagine other possibilities than the current possible ways. One has to reflect on one’s choices and the outcomes generated by these choices, but one also has to reflect on what other out comes might have been obtained if choice differently. From other point of view, regret is double effect emotion that greatly relies on comparison and evaluation process .

The decision regret phenomenon has widespread literature in field of psychology. It is practically proved that regret influences decision-making under uncertainty beyond disappointment and traditional uncertainty measures. The psychology literature showed that when the unfavorable outcomes are the result of action rather than of inaction, the experience of regret becomes more severe and that the regret is anticipated in decision-making under uncertainty. Furthermore, the anticipation of regret is influenced by the visibility of the outcome of excluded options. In the light of neuroscience literature showed that regret is neurologically different from disappointment and that the inability to experience regret distorts decision making under uncertainty.

Regret is a rational and negative cognitive response resulting from comparing an actual result with a better one that was passed up by the decision-maker. Regret is a psychological state different from satisfaction. Satisfaction involves a comparison between expected and actual performance, whereas regret occurs when a foregone alternative would have yielded a better outcome than the actual one.

When managers replicate on and evaluate the decisions they have encountered, comparisons are made between the experienced outcomes and the outcomes resulting from a different choice. These types of comparisons are quite common in society where managers have a limited set of options before making a selection. However, decisions can become unpleasant when managers feel they have made an incorrect choice. Whenever a manager perceives that a foregone alternative would have yield a better outcome, a feeling of regret is experienced. Even if a manager determines that his decision was the best alternative at the point in time a choice was made, regret can still be experienced when the manager believes another option resulted better

Regret also stems from situations, where the choice of inaction leads to a less desired outcome, than the outcome resulted through an alternative decision. They discussed that the perception of incorrect actions may produce regret more frequently than inactions, but regret due to inaction does occur. Additionally, research has shown that regret due to actions and inactions differ by time span also, whether it occurs in the short-term or long-term. Short-term regrets are immediate or direct reactions to an exact outcome experienced while long-term regrets are more passively experienced as thoughts of what could have happen. Therefore, regret is the result of decisions related to actions and inactions by concerning life of decision either short-term or long-term in nature. Research explains that the anticipation of regret can systematically influence choice and there is strong relationship between regret and satisfaction levels resulting switching behaviors

Most psychological research on regret has focused on the amount of regret associated with different types of decisions. In the early 1980’s, two regret theories were proposed. Bell proposed that people hope to avoid consequences in which they appear, and then made the wrong decision, because they anticipate the possibility that their decision may not turn out as expected. In a second proposed regret theory, Loomes and Sugden assumed that the value of choosing an item is dependent on the items simultaneously rejected. Thus, the experience of regret associated with a decision outcome is dependent on an evaluation of the relative utility of the outcome in comparison to possible alternative outcomes. The recent literature on decision-making contends that a thorough post-choice evaluation must include not only positive outcomes such as performance and satisfaction but also regret and disappointment or unfavorable outcomes.

Behavioral research has originate that, besides maximizing positive decision outcomes, decision makers frequently consider potential regret. Tsiros and Mittal developed a model of regret and demonstrated through empirical tests that regret directly influences product repurchasing intention. Regret is experienced even in the absence of information regarding a better-for gone outcome, and after receiving post-purchase information that may lead to future regret. Studies found that individuals are willing to take risks or to obtain more information in an investment decision to gain a greater monetary return. More information they acquire implies that regret can be avoided.