Six Steps to Ethical and Effective Decision-Making

#Aristotle #Confucius #Machiavelli # Rousseau # Kant #Bentham #Maslow/Rogers

#Virtue #Effectiveness #Mutuality #Predictability #Utility #Self-image

When trying to make both effective and ethical decisions, leaders may find the following six step cycle useful.[1] By reconciling effectiveness with ethical outcomes, these steps help protect personal “moral capital” (based on their individual values and beliefs). This process can be applied to organizations so they are both effective and ethical. Failure to follow these steps can cause serious “moral injury”[2].

SIX STEPS

Step 1: Virtue test (Aristotle/Confucius): Leaders must establish their own opening balance of personal “Moral Capital” account – their individual ethical foundations or Virtue, reflecting their beliefs, values, and purpose.

Standing up for individual values can affect the ability to survive economically. The “moral injury” – the psychological costs of job loss can be considerable; self-image and the respect from others depends to great extent on jobs.

The ancient Greeks had an instruction, “Know thyself,” inscribed over the entrance to the Temple of Apollo at Delphi. Not knowing what drives individuals, what their life purpose is, what they believe, and what their values are, can be a source of stress, unhappiness, depression, even suicide. Once they have established ethical baselines, including decisions they will not make or follow under any circumstances; they are ready to move to step 2?

Step 2: Effectiveness test (Machiavelli): Leaders must check whether the proposed decisions they make or comply with achieve what they are designed to do and whether the ends justify the means allowing the organization to make a satisfactory return; creating and maintaining satisfied customers (the ends) and justifying the resources needed to do so (the means). Once leaders have verified that their actions will achieve the desired ends (regardless of their morality), they are ready to move to step 3.

Step 3: Mutuality test (Rousseau): Having determined that the ends do justify the means, leaders then must check whether the actions involved are acceptably mutual, that they represent a fair burden on everybody affected. Once they are sure that their actions are generally acceptable, they should move on to step 4, recognising unanimous consent is unlikely, and that if there is significant dissent, they should think again before proceeding.

Step 4: Predictability test (Kant): Leaders need to ensure that their proposed actions pass the predictability test so that people know what is expected of them in various circumstances that can be foreseen. This is necessary to avoid implementing often contradictory and one-off ad hoc decisions, creating confusion as a result. Once leaders are sure that what they propose does not conflict with existing policies and procedures and does not contradict the agreed purpose and values of the organization, they can proceed to step 5.

Step 5: Utility test (Bentham): A critical part of evaluation whether the ends justify the means is to determine its utility - whether it delivers the maximum benefit for the maximum number of people affected by it. Once leaders have a reasonable belief that what they are proposing will deliver the greatest good for the greatest number, they should move to step 6.

Step 6: Self-image test (Maslow/Rogers): Leaders must finally decide whether they are personally comfortable with what they are proposing or being asked to comply with. A good way to test this is to reflect on how they would feel if their decisions were reported in the newspapers or social media and how they would look in the court of public opinion. This test completes the cycle. It brings each individual back to the Virtue test because it reflects the status of each individual’s personal “Moral Capital” and how this is affected by every decision they have taken and the cumulative impact it has on their “Moral Capital” account.

If any step in the cycle throws up an obstacle to moving to the next step, it is a warning that the decision may be unethical, ineffective or both. If so, leaders must re-examine their assumption, reasoning and whether the risks are worthwhile.

APPLYING SIX STEPS

Choosing the mission and vision for any organization is a commercial and an ethical decision. Ethics are involved in deciding what kind of business the organization should do, what products or services it will offer, and it will treat its stakeholders. The ethical answers to these questions require considering the six ethical steps, shown below, when evaluating an organization’s Purpose and Values: ?

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1.?????? Purpose

In deciding the organization’s Purpose, leaders must articulate clearly the benefits they are proposing, by answering three questions, “What difference will we make in the lives of our stakeholders?” and “in whose interest is this enterprise being conducted” and “how will we reconcile any conflicts of interest” considering:

a.?????? Virtue test: This explains why some people do not wish to work for companies whose products are harmful, yet legal. They do not want to be associated with the products they offer, or the way they do business. Others have no qualms, as long as the business is legal. How people see themselves depends on their virtue ethics and whether there is internal conflict between the organization’s purpose and values and their own. People who ignore such conflicts risk losing their self-respect and the respect other people have for them, thereby inflicting “moral injury” and diminishing their “Moral Capital.”

b.????? Effectiveness test: Will the products do what they are supposed to do and allow the organization to make a satisfactory return.

c.?????? Predictability test: When marketing products, organizations should provide clarity, predictability, and consistency of performance as part of branding. People in organizations need to know what they can and cannot do in their dealings with internal and external customers. This is the point of codes of conduct to complement externally imposed rules and regulations, with guidance on how to comply and communicate clearly penalties for non-compliance.

d.????? Mutuality test: This includes two separate ideas. The first is based on the “Golden Rule” treating other people as they would expect to be treated. The second builds on this, dealing with implicit and explicit social contracts covering environment, safety, health, and equality, and the damage done by externalities to the environment (pollution, waste, congestion) caused by either legal but harmful behavior (such as the tobacco or junk food business) or illegal behavior, regarded as “the cost of doing business.”

e.?????? Utility test: At its simplest, this is stakeholder satisfaction. However, it becomes more complicated if satisfying stakeholders has unintended knock-on effects that harm other people. For example, there seems to be no issue with satisfying customers who want to eat junk food and confectionery or drink sugary drinks and alcohol or smoke. Surely, if they wish to harm themselves after having been advised of the risks that is their business? Yet, people who get diabetes or cancer put a burden on public health systems and increase the taxes for everybody.

f.??????? Self-image test: This reflects how people feel about themselves when what they have done is discussed in the media and at home – can they sleep at night or are they worried that they will be criticized for unethical/unacceptable behaviour.

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2.?????? Values

These define what business the organization is willing to do, with whom, and how. They need to consider:

a.?????? ?Virtue tests: If there is a serious divergence between the espoused values of the organization and those of individuals working within it, they will be disaffected and disengaged, reflecting the impact of the divergence on their personal values and purpose (the Virtue test), and thus how they feel about themselves.

b.????? Effectiveness test: Here the question raised by the application of principles is what the impact will be on the viability of the business of sticking to declared principles. If sticking to principles means that it is impossible to do business (for example, because of corruption in a particular jurisdiction), some organizations violate their principles and justify their actions based on the impact on the bottom line. Others make the tougher decision not to get involved in such markets. What is clear is that declaring one thing, but doing another, leads to a breakdown of trust between the organization and its customers and between the organization and its members. This applies with even greater force when people who violate the declared principles are excused either because of their seniority or because of their importance to the bottom line. In declaring principles of behavior by which the organization will be judged, it is essential that everybody is held to them.

c.?????? Predictability test: Principles pass the predictability test if they are spelled out clearly in codes of conduct and the consequences of failure to abide by them are understood by all. If there are many waivers or exceptions to the rules, they become discredited and a source of cynical disengagement. However, leaders should avoid “a foolish consistency” that “is the hobgoblin of little minds, adored by little statesmen and philosophers and divines”[3] and recognize that when circumstances change, appropriate solutions change as well.

d.????? Mutuality test: Society depends on businesses obeying the law and regulations designed to protect vested interests in the name of the common good as a minimum. Most organizations declare that they will obey the law and many go beyond that in their declarations of corporate responsibility. Some choose to break the law and pay the fines on the grounds that this is “the cost of doing business.” While this may make sense for the individual organization, the costs to society of “free riding” are great.

e.?????? Utility test: When deciding which principles to adopt and adhere to, leaders must recognize that sticking to principles may incur a personal cost as well as costs to vested interests and society as a whole. This may mean that sticking to the principles makes it impossible to do certain kinds of business or to do business with certain types of regimes or customer. If that is the case, the consequent loss of business must be recognized explicitly and people should not be penalized for losing the business because they adhered to their principles. Equally, if espoused principles are undermined by exceptions being made because certain individuals are senior or too important for the bottom line, the principles cease to have value. Clearly articulated principles allow suppliers, employees, customers, and regulators to know what behavior to expect.

f.??????? Self-image test: This is how people feel about what they have done and whether it presents them with serious problems of cognitive dissonance, and denial that will lead to undermining their Virtue ethics starting point, doing long-term “moral damage.

When people diminish their “Moral Capital”, they can take corrective action; or they can choose to live with cognitive dissonance, become morally disengaged, and dilute/reject their values to reflect what they have done. If they make this choice, they risk entering a downward moral spiral that will ultimately reduce their “Moral Capital” to zero.

[1] This article is based on an excerpt from Zinkin, J., and Bennett, C., (2023), The Challenge of Leading an Ethical and Successful Organization, (Walter de Gruyter GmbH: Berlin/ Boston), pp.88-96

[2] “Moral injury is understood to be the strong cognitive and emotional response that can occur following events that violate a person's moral or ethical code. Potentially morally injurious events include a person's own or other people's acts of omission or commission, or betrayal by a trusted person in a high-stakes situation...morally injurious events threaten one's deeply held beliefs and trust.”

Williamson, V. et al. (2021) “Moral injury: The effects on mental health and implications for treatment,” The Lancet, Volume 8, Issue 6, June 1, pp.453–455, https://www.thelancet.com/journals/lanpsy/article/PIIS2215-0366(21)00113-9/fulltext, accessed on July 11, 2021

[3] Rosenzweig, P. (2013), Emerson, R. W. quoted in “A foolish consistency is the hobgoblin of little minds – the metadata stay,” Lawfare, December 18, https://www.lawfareblog.com/foolish-consistency-hobgoblin-little-minds-metadata-stay, accessed July 23, 2021.