Maxims

Maxims for Business with Integrity

Several maxims that might aid a business person facing an ethical dilemma include the following:

The golden rule: Act in a way that you would hope others would act toward you.

The professional ethic: Take only actions that would be viewed as proper by an objective panel of your professional colleagues.

The TV/newspaper test: A manager should always ask  “Would I feel comfortable explaining this action on TV or in the front page of the local newspaper to the general public?” (This test is sometimes referred to as the ‘Newspaper’ or ‘Wall Street Journal’ or ‘Financial Times’ test).

When in doubt, don’t: If a manager feels uneasy about a decision, there is probably reason to question it. If the decision does not seem right in the head, heart or gut, then the decision should be postponed. The individual should probably seek guidance from a trusted person before proceeding with the decision.

Slippery slope: This maxim suggests that companies must be careful not to engage in debatable practices that may serve as a precedent for undertaking other, even more questionable strategies later. For example, there could be good reason for a sales manager to push sales “up the channel” toward the end of a financial period so that a hardworking group of sales reps achieve their bonuses. However, such tactics may lead to an increasing acceptance by management that it is okay to be “fast and loose” with inventory figures (i.e., the slippery slope).

Kid/mother/founder on your shoulder: Would a naive child, your mother or the company founder be comfortable with the ethical decision being made? Could you explain it to them in common sense terms they would understand?

Never knowingly do harm: This implies that a manager would not consciously make or sell a product not deemed to be safe. Certain observers call this the “silver rule” because it does not hold business people to as high a standard as the golden rule does. (What marketers might be guilty of not following this guideline?)

Some thumbnail rules are difficult to apply in specific situations. The application of different rules of thumb to the same situation may sometimes lead to quite different solutions.

For example, if business people pad their meal expense accounts 15 percent because customary gratuities (ie tips) are not technically reimbursable in the absence of a receipt, the “professional ethic” rule might indicate the practice is okay despite its variance from the letter of company policy. Why? Because this is the only mechanism to recover a legitimate cost.

In contrast, the “when in doubt, don’t” rule questions whether padding expense accounts is ever acceptable. Of course, the company that has such a rule might be viewed as guilty of placing their employees in a “no-win” situation, one that could be avoided if a specific provision for tips were included in its expense reimbursement policy.

Despite such ambiguity, these short maxims can have considerable value.

The “professional ethic” rule can be extremely useful for those subspecialties in business that have a code of professional conduct that covers certain recurring situations.

Whenever such rules are used, the consensus regarding what constitutes proper ethical behaviour in a decision-making situation tends to diminish as the level of analysis proceeds from the abstract to the specific.

Stated another way, it is easy to get a group of managers to agree in general that a practice is improper. However, casting that practice in a very specific set of circumstances usually reduces consensus.

For example, most managers would agree with the proposition that business has the obligation to provide consumers with facts relevant to the informed purchase of a product or a service.

However, let’s test this proposition in a specific situation: A manufacturer sells a cleaning concentrate with instructions calling for mixing one part of the concentrate with four parts of water; this product has been sold in this manner for 25 years. Now assume that an issue of a Consumer magazine indicates, based on several test applications, that the product is just as effective when mixed with one part concentrate to eight parts water. Thus, consumers need use only half as much concentrate.

Does the company have an ethical responsibility to inform customers of this fact? Most managers will agree that business has the obligation to provide consumers with facts relevant to an informed purchase. But does such an informed purchase include full disclosure of this new information, especially if further product testing in different cleaning situations might produce different results?

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