A Decision Making Model to Enhance Corporate Ethics / Business Ethics / Social Responsibility
Cheney, Tim D., Business Renaissance Quarterly
This short paper sets forth a decision making model for organizations to use in their pursuit of "business ethics," and "social responsibility." It then provides some suggestions for how to more easily adapt such a model.
We hear a lot these days about "corporate ethics," "business ethics," and "social responsibility." Most of us have some idea what these terms mean, but it often seems a bit fuzzy. This can make it a daunting task for managers to adopt strategies to address these concepts. Ethics deals with concepts of right and wrong, and entails actions somewhat beyond the legal minimums. Social responsibility tends to mean utilizing the stakeholder model and taking into account to a greater degree the interests of those impacted by corporate decisions and actions. One way to consider the manner in which ethics and social responsibility apply in the corporate or business setting is to approach it as part of decision making process. That's what managers do; they make decisions. The following approach might be helpful as a way to enhance "business ethics" and "social responsibility" through a broader decision making process.
This approach to decision making can be set forth by the acronym FPILEPAR: Facts, Parties, Interests, Laws, Ethics, Practicalities, Alternatives, Rationalizations. There is nothing profound in this approach; it is merely a slight expansion on basic decision-making process.
What are the facts? All the facts. This seems to be a basic concept, but it is often shortchanged in the rush of everyday decision-making. Aldous Huxley once said that bad facts don't disappear because they're ignored. Sherlock Holmes said he could discover facts, but could not invent them. Examples of organizations ignoring bad facts or trying to invent better facts abound; Enron, Merck and others. Most large judgments against organizations arise due to the fact that managers ignore those "bad" facts. They get hit hard not for the first "bad fact," rather for the last in a series. The product injured someone? Somebody has complained of harassment? Maybe it'll go away. No it won't. Knowledge of the facts is expected; organizations can't use the "I didn't know" excuse. In this day, society expects more from organizations; they are expected to know.
Facts and knowledge expectations involve not only appropriately responding to a factual occurrence, but anticipating facts which may occur and acting in a proactive manner to avoid such "bad facts." The corporate culture, or the personality of the corporation, can be an effective tool. In an atmosphere where open and honest communication exists, an organization is less likely to be caught by unspoken "bad facts." This can be particularly important as a manner of avoiding the "we've never had a complaint so everything is just fine" syndrome. The absence of a complaint does not necessarily mean the absence of a problem.
Who is impacted by the decision and subsequent action? This utilizes the "stakeholder" model of decisionmaking. Generally, stakeholders are those parties who might be affected by a business decision and subsequent action. These can include employees, customers, owners and investors, suppliers, lenders, competitors, the surrounding community and society at large. It basically entails making a broader consideration of the potential impacts of business activity before a decision is finalized and implemented.
What are the potential interests, which might be affected? Are there monetary interests? Possible physical interests? Health and safety interests, etc.? We, as a society, tend to rank physical safety on a higher plane. If our activity will possibly impact safety, we need to be increasingly careful.
As it applies to stakeholders, it can be helpful if we can keep in mind the traditional basic consumer rights of safety, being informed, being heard and having a right to choose. …