The Good, the Bad, and Your Business: Choosing Right When Ethical Dilemmas Pull You Apart

Employment law attorney Michael Maslanka reviews the book The Good, the Bad, and Your Business: Choosing Right When Ethical Dilemmas Pull You Apart by Jeffrey Saglin. Review highlights the books distinction between ethical and legal decisions.

If you think that you know exactly what’s right and what’s wrong and that your moral compass doesn’t need any fine-tuning, then we invite you to readThe Good, the Bad, and Your Business: Choosing Right When Ethical Dilemmas Pull You Apart by Jeffrey L. Saglin. The book points out that even the simplest-seeming decisions often have wide-ranging implications.

The ethical issue

Let’s say that your company is planning a reduction in force. You are privy to who is on the hit list. One of the employees on the list comes to you and says, “My husband and I are thinking about making an offer on a house in the area. What do you think?” The reduction in force is going to take place soon, probably within a few months.

Your decision?

Saglin says that there are several tests to use. Here they are.

Test no. 1: Can I sleep at night? Saglin thinks this is of little use. He points out that human resources managers sometimes lie awake at night precisely because they have done the right thing, because they understand that their decisions have real consequences, and because they will be held accountable for their decisions. As Saglin points out, “If people like Hitler sometimes sleep well and people like Mother Teresa sometimes sleep badly, we can place little faith in simple sleep-test ethics.”

Test no. 2: The mirror test. Peter Drucker is a management consultant. He recommends a simple mirror test. According to him, ethics requires us to ask ourselves: “What kind of person do I want to see when I shave in the morning, or put on my lipstick in the morning.” Our take on this test? As H.L. Mencken said, “Every complex problem has a simple solution, and it’s usually wrong.”

Test no. 3: The CEO test. Norman Augustine, a former CEO of Lockheed Martin, suggests that there are four questions to ask in responding to an ethical dilemma:

1. Is it legal?
2. If someone else did it to you, would you think it was fair?
3. Would you be content if it appeared on the front page of your hometown newspaper?
4. Would you like your mother to see you do it?

If you answered “yes” to all four questions, then Augustine says that whatever you are about to do is probably ethical. That’s a little more helpful because, according to Saglin, it also measures something other than yourself — namely, considering constituencies and effects outside of yourself. And perhaps for the CEO, this broad-brush approach makes sense. But what about managers who are lower on the corporate food chain?

Test no. 4: The 12-step test. Saglin says a more pragmatic framework for most managers is to test the applicable content of business decisions. This test consists of not one or two questions to ask yourself, but 12. Here they are:

1. Have you defined the problem accurately?
2. How would you define the problem if you stood on the other side of the fence?
3. How did the situation occur in the first place?
4. Who was involved in the situation in the first place?
5. What is your intention in making this decision?
6. How does this intention compare with likely results?
7. Who could your decision or action injure?
8. Can you engage the affected parties in a discussion of the problem before you make your decision?
9. Are you confident that your decision will be as valid over a long period as it seems now?
10. Could you disclose your decision or action without qualms to your boss, your CEO, the board of directors, your family, or society as a whole?
11. What is the symbolic potential of your action if understood?
12. Under what conditions would you allow exceptions to your decision?

Using this format forces you to figure out what the problem is and to look at it from an outsider’s perspective, not just yours. It also compels you to look at what you intend by the decision, how it will affect others, and the consequences of telling your bosses and those you respect of the decision.

So what’s the right decision here?

There isn’t one. But what you decide isn’t as important as how you come to a decision. Going through a process ensures that you conscientiously examined the effect the decision is going to have on all relevant constituencies. It forces you to look at money — why you’re doing what you’re doing in the reduction in force — and people — that is, who could be affected (either adversely or positively) by telling one person — and finally, the community at large — whether your decision has ramifications in the general community where your business is located.

Bottom line

• It’s part and parcel of ethical decisionmaking to make decisions when you simply don’t know enough. If you wait until all the facts are in, the decision will be resolved and you may be absolved of blame, but that’s not ethical decisionmaking — that’s passing the buck. Put bluntly, making ethical decisions based on less than complete information is part of your job.
• Ethical decisions don’t necessarily involve loss of money to your company or pain to yourself. For instance, when a jury sizes you up on the witness stand, they think to themselves: “If I worked at this company, is this the way that I would want to be treated? Even if I don’t agree with the decision that was made, was it made thoughtfully and conscientiously? Would I feel safe if I worked at this company?” Ethical decisionmaking can translate into having a jury swing your way.
• In a recent consulting firm’s survey, 80 percent of employees who felt that management would uphold company ethical standards also believed that current customers would recommend the company to others. Further, 81 percent of employees who see their management as ethical would recommend the company for potential recruits. But what happens when employees perceive management as taking an ostrich-like attitude of self-delusion toward ethical issues? It’s startling: Only 40 percent of employees believe that current customers would recommend the company to others, and only 21 percent of employees would recommend their companies for potential recruits.The bottom line: monkey see, monkey do. If ethical standards are not embraced at the top of the company, they won’t be embraced in the lower ranks.
• A written policy without a true commitment is probably more harmful than having no policy at all. It makes you out to be a hypocrite. Or, as Groucho Marx once commented, “These are my principles, and, if you don’t like them, I have others.” In fact, you know a policy is working when it’s just taken as second nature that certain decisions should make themselves without a lot of thought.

In his book, Seglin mentions the Johnson & Johnson crisis several years ago in which bottles of Tylenol were tampered with. Because Johnson & Johnson had, for years, a strong corporate credo that guided management and a clear understanding of acceptable behavior, the decision to recall all the bottles from store shelves did not have to be micromanaged by spin doctors or dictated by the results of a polling group. Finally, we want to leave you with this thought. While we certainly encourage you to talk to your lawyers, getting legal advice is not the same thing as managing your business. While you can make decisions — like who to promote or terminate — with the goal of never being sued, you won’t have much of a company to work in or one that makes a lot of money. As Seglin tells us:

If we give over [the decisionmaking] process to relying on a rigid set of rules designed to protect us from getting sued, we risk losing control of doing what we can do in the type of business that we want to work in. Abstaining from responsibility from making tough choices by using the fear of litigation as a crutch is no real solution since we end up making decisions that might indeed have good outcomes (or might have bad ones) without really knowing why we made this decision other than the fact that someone somewhere decided that’s the way it’s done to avoid exposure. . . . Certainly, it’s easier to rely blindly on a set of legal rules and checklists rather than thinking through the implications of each specific decision that needs to be made. But then we end up with companies full of managers who refuse to manage, or refuse to take personal responsibility for thinking through their decisions. That’s hardly a sound foundation on which to build a company.

Think about it.

Michael Maslanka is the managing partner of Ford & Harrison LLP’s Dallas, Texas, office. He has 20 years of experience in litigation and trial of employment law cases and has served as Adjunct Counsel to a Fortune 10 company where he provided multi-state counseling on employment matters. He has also served as a Field Attorney for the National Labor Relations Board.

Mike is listed in The Best Lawyers in America and was selected as a “Texas Super Lawyer” by Texas Monthly and Law & Politics Magazine in 2003. He was also selected as one of the best lawyers in Dallas by “D” Magazine in 2003. Mike has served as the Chief Author and Editor of the Texas Employment Law Letter since 1990. He also authors the “Work Matters” column for Texas Lawyer.