PRINCIPLES FOR DECISION MAKING
Business decisions requires the facts, options, outcomes and consequences to be carefully considered.
What standards do business people use to grapple with questions that have potentially complex implications?
Several shorthand decision rules are often used by businesspeople.
We offer a number of “rules of thumb” and would welcome more.
One is the ABCs of business ethics and another is a list of maxims.
We also include a variety of ‘decision making frameworks’.
The ‘Theory’ section of this website also includes some other tests which help apply the relevant philosophical theory in practice.
Please forward your comments and suggestions. Anything that makes eases the burden of coping with ethical dilemmas would be warmly welcomed.
First of all, though, we discuss the concept of decision-making models and utilise one as an example of the technique. Ultimately we suggest that, in the end, weighing the concerns of multiple stakeholder groups becomes the essence of appropriate decision making.
DECISIONS AND DILEMMAS
How do we decide the right thing to do?
Dilemmas have rightly been described as situations SEEMINGLY BEYOND SATISFACTORY RESOLUTION.
Philosophers who study moral theory and reasoning regularly argue among themselves about what constitutes the best way to analyse and solve ethical issues, so don’t be worried if you can’t seem to figure out the ‘best’ course of action for all concerned!
Like any other decision, dilemma resolution involves weighing up all the various angles from a number of perspectives. It takes a bit of work … and thought!
Fortunately philosophers and others have been deliberating for centuries over such complex issues and there is a wealth of advice available, some of which we have touched on in the ‘philosophy’ section of EBEN Ireland’s website.
Indeed in recent times there has been a return to some of the earliest philosophical thought with ‘virtue ethics’ building on the work of Aristotle in terms of a person’s “character” and how a more “virtuous” life can be lived, based on what the business people now also refer to as “core values”!
However, the call to apply a specific ethical theory to a particular business situation is easier given than implemented.
Ethics is not an easy area to understand or control. While ethical theory for its own sake is important, theory in action is what makes for ethical business practice.
Thus, managers can vitalise ‘ethical reasoning’ in their own organisations by considering the following technique:
l. Identify the issues most likely to lead to moral or ethical conflict in your firm.
2. Develop a list of questions that reflect various ethical theories that can aid managers in determining whether a particular contemplated action or decision is unethical.
3. Recognise that there are sometimes conflicts among the various ethical principles that imply different (sometimes contradictory) decisions. Moreover, ‘realise that these conflicts increase as the number of relevant stakeholders in a decision increases.
These points can be elaborated on:
First, a sequence of questions to improve ethical reasoning should be asked. One approach to deal more normatively with ethical issues is to require managers to proceed through a sequence of questions that tests whether an action they are contemplating is ethical or has possible ethical consequences.
A battery of such questions might include the following:
Question 1 (the legal test): Does the contemplated action violate the law?
Question 2 (the duties test): Is this action contrary to widely accepted moral obligations? Such moral obligations might include duties of fidelity, such as the responsibilityto remain faithful to contracts, to keep promises, and to tell the truth; duties of gratitude, which means that special obligations exist between relatives, friends, partners, cohorts and employees; duties of justice, which basically have to do with obligations to distribute rewards based on merit; duties of non-maleficence, which consist of duties not to harm others; and duties of beneficence, which rest on the notion that actions should be taken that improve the situation of others – if this can be readily accomplished.
Question 3 (the special obligations test): Does the proposed action violate any other special obligations that stem from this type of marketing organization? (For example, the special duty of pharmaceutical firms to provide safe products, the special obligation of toy manufacturers to care for the safety of children, and the inherent duty of distillers to promote responsible drinking are all special obligations of this sort).
Question 4 (the motives test): Is the intent of the contemplated action harmful?
Question 5 (the consequences test): Is it likely that any major damages to people or organisations will result from the contemplated action?
Question 6 (the virtues test): Does this action enhance the ideal of a moral community, and is it consonant with what the marketing organization wants to be?
Question 7 (the rights test): Does the contemplated action infringe on property rights, privacy rights or the rights of the consumer (the right to information, the right to be heard, the right to choice and the right to remedy)?
Question 8 (the justice test): Does the proposed action leave another person or group less well off? Is this person or group already a member of a relatively underprivileged class?
These questions need not be pursued in lockstep fashion. If none of the questions uncover any potential conflicts, clearly the action being contemplated is quite likely to be ethical.
However, if the sequence of queries does produce a conflict, this does not necessarily mean that the action being proposed is unethical per se.
Unusual intervening factors may be present that would still allow the action to ethically go forward.
For example, suppose it is determined that the contemplated action is a violation of the law. More than likely then, you should not proceed, but what if the law is deemed unjust and thus that there could be a moral impetus for an organisation to transgress the law? Or inform legislators about the apparent inequities which may not have been envisaged when the law was originally formulated?
Some companies follow a decision-making model somewhat similar to this one.
Second, the stakeholder concept should he linked to business ethics. Several comprehensive theories can be utilised to guide the reasoning of managers as they try to reach moral conclusions. The difficulty, of course, is applying these theories to specific situations and then resolving conflicts among principles.
Sometimes, these conflicts will take the form of two competing duties owed to different stakeholder groups. For example, there is a fiduciary responsibility on the part of managers to render to shareholders a fair return. At times, this might involve taking steps that are clearly counterproductive to another stakeholder group, such as employees.
This may occur in the case of a plant closing. The judgmental difficulty, then, is deciding which of the two duties takes precedence.
Utilitarianism (and the cost-benefit analysis it often implies) is an extremely useful tool if one looks at a problem only from the standpoint of one or two stakeholder groups.
However, when multiple stakeholders are introduced into the situation, the use of consequence based theories is complicated considerably. In different instances, we would expect managers to draw from various and multiple ethical theories.
Similarly, duty-based or virtue ethics approaches are also complex. There are often contradictory duties, where management has the right to point out their truthful strategic competitive advantage (ie benefits of weight-loss drug) while at the same time perhaps violating the duty not to unfairly manipulate the receivers of their promotional messages by using incomplete information (that there may be side effects).
Frequently, however, most conflicts between stakeholders can be resolved through compromise or by broadening how the problem is framed. The existence of competing claims suggests that management must face up to the challenge of creating new alternatives that result in a better balance of obligations.
In the end, weighing the concerns of multiple stakeholder groups becomes the essence of appropriate ethical decision making.
Multiple claims on the organisation are at the root of the complexity of such decision making.
The stakeholder concept (and the multiple responsibilities it implies) provides the necessity for sensitising managers to ethical implications and teaching them to reason from the standpoint of moral theory.
In the final analysis, ethics still requires considerable prudential judgment that comes from the intuition of the manager (grounded, it is hoped, in ‘virtue ethics’ or ‘character’), but it is tempered or perhaps aided by a knowledge of ethical theory and standards, not something in which many business managers have received any training!!
Hence our attempt in this website to introduce the various concepts. They may appear to make more sense than may initially meet the eye and hopefully can aid you run your business at the level of integrity that you aspire to, with knock on effects on improved levels of trust and consequently reputation.
Trust and reputation are the foundations, with integrity as the cornerstone, on which all successful businesses (indeed all relationships) are founded!
So perhaps it is they that should also be borne in mind when weighing up decisions and dilemmas!
EBEN Ireland 