Ethical Business Decision-Making
An effective ethics and compliance program, by definition, translates into ethical business decisions. Believe it or not, to bring ethics into the equation you do not need to be a philosopher, historian, or professional ethicist.
Ethical decision-making is a discipline. It is an approach to identifying and resolving issues in the business context. Of course, it occurs in many other contexts. Nor can ethical business decision-making be boiled down to just “doing the right thing.” There is more to it than that.
Applying ethics in the business context requires an awareness or sensitivity to ethical issues that may arise and a method to resolve relevant issues as part of an overall decision. To ensure adequate examination of ethical issues, there are a number of basic questions that can be examined. This approach can be applied in a variety of contexts and can be modified as appropriate to fit a company’s profile.
Ethical business decisions often require a careful discussion among interested parties. The dialogue is important to conduct and evaluate. If regularly practiced, a company and its managers can apply this discipline in making important decisions based on ethical principles.
I am not suggesting that every business decision requires a pow-wow and meeting among managers. But certain important and novel decisions should be subjected to a discussion and dialogue among interested parties. The process itself is an important reflection of a desire to bring ethics to the table for everyone to discuss.
So assume that the company has an important strategic decision to make – e.g. entering a new market, or leaving a market, or discontinuing a product line.
Here are some suggested questions to unearth and examine the ethical considerations of a specific decision.
- What are the relevant facts of the issue? What do we know and what do we not know? Do we have enough facts to make a decision?
- What are the options? Have we identified all relevant options and examined all possible options?
- Will the company’s decision damage someone, some group or stakeholder(s)? How important are these concerns?
- Does the decision present positive and negative alternatives resulting in a trade off?
- Does the issue involve more than legal compliance or economic efficiency?
- Which option will result in the greatest benefits with the least harm? What option best serves the company’s interest?
- Which option is most consistent with our corporate values?
- Considering all of the above factors, which option best addresses the situation?
- If reported in the media tomorrow, what would public reaction be?
- Assuming we decide on a specific option, how do we implement the decision with due regard for our stakeholders’ interests?
These questions can be a good starting framework for ethical decision-making. They are not meant to be exhaustive but more illustrative. The questions can also provide a standard framework for important corporate decisions at the management, senior executive and corporate board level.
Legal compliance is a minimum requirement – you cannot make an ethical decision if you violate the law. However, a legal decision does not mean that it is an ethical decision. The consideration of business ethics factors is tied to corporate values, the culture of the company, and the company’s standing with its stakeholders and the public.