A Publication of WTVP

Talking about business and corporate ethics seems to be just that-talk, at least much of the time. We can discuss principles by which any business or organization ought to operate, and we can construct values statements that sound really good.

Two problems usually arise, however, with ethics in business: the principles are disconnected from daily activities in various parts of the business operation, and the people working on the assembly line, serving customers, or setting policy may not really know what the business stands for and whether their decisions really are good ones (and whether they will be backed by management).

The fundamental test of ethics in a business is always in decisions. So, how are people trained in making decisions? What kinds of decisions are they making? How do they know they’re "good" decisions? Good for whom? Good for what?

Over the years, I’ve found people in management or who serve on boards are much better at pointing out "bad" decisions than they are "good" decisions, and the decision evaluations are based on outcomes rather than on an ethical stance or statement. The standards for decision-making are more often based on whether we made or lost money, or whether we kept or lost a customer, than on whether the action we took was the right thing to do, short or long term.

Or we major in the minors. Once I was involved in a protracted discussion about a decision on where and how to hold an office party, rather than to ask the more important question, "What do we want this party to do?" In other words, why have this party at all? How does it reflect our organization’s values and priorities?

I can’t recall a course in any level of schooling that dealt with how to make a good decision. In MBA programs, business schools sometimes offer courses in "Decision Analysis" or "Decision-Making" or cover this topic in some other management course, like team-building. I definitely can’t remember a single business, nonprofit, or church for which I’ve consulted that trained its constituents or workers in decision analysis, nor can I remember a seminar entitled something similar to "How to Make a Good Decision."

We simply assume people come equipped with good decision-making skills. Sometimes they have some of those skills, such as statistical analysis or factor analysis. Any organization, however, has to train and develop people in how to make good decisions here, in this organization. That’s when we can deal with values statements and ethical standards.

So what goes into a good decision? In policy-making or major, long-term choices, there are five critical elements:

In more practical, short-term situations, these factors are considered more quickly and perhaps more simply: Is the outcome consistent with who we are and, more importantly, who we want to be as an organization?

Some companies and organizations work closely with new hires or volunteers to help them determine whether their key decisions, as well as their daily choices in work, are consistent with core values or ethical positions. Some provide mentors or buddies, seasoned employees or volunteers who can help their assigned people evaluate their decisions and help them become more fully part of (we hope) a healthy corporate culture.

Here are two examples-an unhealthy and a healthy approach. Company X needs to start saving on labor and production costs to be more competitive, and line managers have been given numerical targets to try to reach so the cost savings can be realized. Senior management has produced a corporate creed: "People are our most important asset." Managers come up with a plan, without worker input, to cut more than 10,000 positions, so people are laid off. Remaining workers say, "What corporate creed? It’s corporate greed!" Morale sinks, customer service suffers, and many important projects don’t get done because everyone has way too much to do.

Company Y faces the same situation with the same direction. Line managers, trained in decision-making, start by presenting all information to workers, and seek input from them first on eliminating waste and duplication, then on ways the company can better utilize workers, and finally on how the company can innovate, creating new products people will buy. No one is laid off, everybody sacrifices something, waste is reduced by people who know where it happens, and two new products come to market, one of which opens a new customer base with little change in the assembly process.

There are tangible benefits to making good decisions based on ethics and values. What steps does your organization need to take to make better decisions sooner? IBI