We’ve talked about making effective decisions, but there are times when what could arguably be effective may not be consistent with ethical leadership.
There are ethical situations–often with legal implications–that leaders encounter where the actions they could choose to take obviously fall well outside of ethical leadership. Examples would include fraudulent actions, such as whether to steal from investors, misuse funds or fix costs. There are other times, however, that leaders will encounter grey areas where they’re having to weigh possible outcomes.
Ethical decisions involve determining right from wrong, not just what’s legal or fiscally responsible. Questions of morality are often more challenging because ethical leaders will consider the ways the decision will affect people; morality requires more thought than making a decision based solely on facts and figures.
What makes these decisions even more difficult is that leaders have to consider the organization’s responsibility to clients, team members, investors or shareholders and the general public–all of whom may have different expectations of what is right or wrong.
Most of our clients occasionally find themselves faced with these kinds of ethically ambiguous situations, which often involve people, either directly or indirectly. In these situations, managers or leaders have quite a bit of discretion. For example, choosing whether to:
- lay off employees to appease shareholders with higher profits.
- push a product to market quickly for faster profit when cash flow is threatening the viability of the company, or test it thoroughly for lower risk to the public.
- deny or excuse poor behaviour or take steps to educate employees, even if the latter is costly.
- take credit for another team member’s ideas.
- choose to pay employees, or not, when you let them leave early during bad weather because safety is a concern.
- bend procedures for certain team members and not for others.
These grey areas are times when ethical leadership is critical. If leaders make decisions that are perceived as unethical, there can be serious ramifications for the organization’s reputation, both internally with team members and externally with clients, business partners and even individuals or corporations looking to invest.
Moral perspectives may also vary from industry to industry, with emphasis on certain values over others. For example, many physicians look to the Hippocratic Oath, which pledges to treat patients to the best of their ability and do no intentional harm. Journalists prioritize reporting the truth, mindful of bias, and protecting the identity of sources. Legal ethics emphasize attorney-client privilege and truthful representation of facts.
Making an unethical decision could hurt employee morale and productivity, as well as damage corporate culture (which can happen even if efforts have been made to build a company culture that thrives).
It could also become a public relations nightmare if word gets out. As we discussed in a recent blog about authentic corporate social responsibility, the public is quick to expose and ridicule organizations that exaggerate, lie or appear to be hypocritical. People will scrutinize how well actions or decisions line up with purported organizational values.
For instance, saying the organization values the customer experience has to match with how adverse events are handled. Consider the difference between how two different airlines dealt with cancelled flights during bad weather:
- In 2007, JetBlue apologized for cancelling more than a thousand flights during bad weather because the airline didn’t have enough staff to deal with delays effectively. They apologized and communicated a customer bill of rights that detailed how passengers would be compensated in the event of cancelled flights.
- In 2022, Southwest Airlines blamed the weather for having to cancel more than 15,000 flights during stormy weather, even though it was clear that the airline’s archaic booking system made the situation much worse. Blaming the winter weather and promising the airline was doing everything it could did not go over well with the public.
As companies share their organizational values (for example, this is how we at Padraig define our values) and broader policies based on universal moral values, people watch and will point out inconsistencies.
In recent years, the allegedly volatile leadership of visionary, successful leaders like Elon Musk and Steve Jobs have proved problematic. Listing “doing the best, taking risks, respect, constant learning and environmental consciousness,” as core values for Tesla does not match with many reports of Musk’s behaviour, which some argue has damaged the Tesla brand financially. Similarly, allegedly raging at staff doesn’t match Apple values such as, “A healthy respect for well-being.”
How to Approach Ethical Decision-Making
When ethical leadership is important to you, there are different ethical lenses through which you can approach an ethical dilemma to make a decision.
Some common ethical lenses are:
- The Rights Lens–the most ethical decision protects fundamental human rights.
- The Justice Lens–the most ethical decision provides fair and equal treatment according to a defensible standard such as merit or need.
- The Utilitarian Lens–the most ethical decision produces the greatest balance of good over harm for the most stakeholders.
- The Common Good Lens–the most ethical decision contributes to the overall welfare of the community/society, valuing shared needs and interests.
- The Virtue Lens–the most ethical decision reflects common virtues such as acting with honesty or compassion.
- The Relational Lens–the most ethical decision enhances and preserves relationships.
Reflecting on the dilemma through different lenses can help leaders figure out what matters most in this situation. This preliminary work is valuable as leaders consider how to balance different societal values with the company’s needs and values.
A Process for Making Ethical Decisions
This five-step framework for making ethical decisions can be very helpful.
1. Identify the ethical dilemma and gather information.
Are there legal standards or compliance guidelines related to this issue?
Are there organizational policies that pertain to this situation?
What moral implications are there for this decision?
Who is going to be affected by this decision? Are they treated fairly?
Will this decision affect employee well-being, consumer safety, society or the environment?
2. Gather the facts.
How does this decision affect the business right now?
Is it a long-term or short-term issue?
Who needs to be involved in this decision?
3. Based on facts, brainstorm and list possible courses of action. Then, eliminate actions that aren’t feasible.
What ethical lens(es) are being used to view this dilemma?
Does this align with the organization’s values? My values?
Who could benefit from this? Who could be hurt?
Does this course of action follow company policies or guidelines?
Are there any legal concerns?
4. If time permits, seek input from stakeholders regarding proposed actions.
What other concerns have been raised?
How do folks react when they first hear the proposed action? When they have more information? Examine and experiment with different proposed solutions.
Are there short- or long-term consequences to consider?
Could there be an impact on the business and brand?
Are there possible precedents or other examples to consider?
5. Decide and implement the best ethical decision based on the previous steps.
How does this affect employee morale and productivity?
Is there an impact on profitability?
What should you be prepared for?
Using this framework to make decisions improves ethical leadership. There are ways to successfully implement change in your organization, including good communication and coaching for conflict.
Coach’s Questions:
Have you ever been part of making an ethical decision? Affected by an ethical decision made by someone else? What things worked well? Are there things that could have been done differently? What has happened recently or will happen soon that you should be looking at through the ethical lenses listed above?
