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BUSINESS, ETHICS & SOCIETY 31 July 2015

ETHIC A L B U S I N E S S DECISIONS: TH E
FRAME W O R K

INSIGHTS FROM

Jared D. Harris

Bidhan L. Parmar

Andrew C. Wicks

MORAL THEORY AND FRAMEWORKS

S
ince ethics is an integral part of management, it is vital for
managers to become comfortable with the language of ethics, and
to understand how it is inextricable from the language of business.
Each business decision can break or respect rules and norms, has
consequences and e ects on stakeholders, and shapes and is shaped by the
character of managers and their corporations.

GU IDE S TO HE LP A V O I D R A TIO NA LIZA TIO NS

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Rationalizations are a common pitfall in decision-making. e term refers

to the process of convincing oneself that a decision is fair and defensible,
when in fact it merely serves one’s own interests or o ers an easy way out.
In these situations, when one is pressed by others about the decision, the
reasons may not seem so compelling, even to the one o ering the
rationalization. ere are no foolproof techniques for revealing
rationalizations, but the following tests and methods have been used by
philosophers and ethicists for some time.

P U B LIC I T Y T E S T

Could you defend your choice if it were made public (i.e., if it appeared on
the cover of e Wall Street Journal, or if you had to explain it to your
mother or your children)? is test helps to make you scrutinize your
reasoning by raising tough questions that might otherwise be avoided. e
prospect of having to face public disclosure helps to make people more
critical of their assumptions and reasoning. Using this as a hypothetical
check can help sort out whether your reasoning is sound and can be justi ed
or is biased and self-serving.

R E V ERS I B I L I T Y

Could you defend your reasoning if you were on the losing end of your
decision? is test helps managers make decisions that are fair and can be
defended in public. It also puts you in the position of the party who will
su er the negative consequences of a decision (i.e., being red) and asks:
Could you agree with and respect the reasons for the decision? e issue is
not whether the person who is being red approves of the decision.
Reversibility instead asks whether the person on the losing end could
respect the reasons for the decision.

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G E N ERA L I Z A B I L I T Y

Could you defend using this same reasoning in similar cases? is test also
raises the issue of consistency and asks whether parties are willing to make a
precedent out of their decision. Is the action you are contemplating, and the
rationale behind it, something you would think others should do in similar
circumstances?

B U I LDI NG YO U R E TH I CA L F R A ME WO R K
Frameworks help managers to understand and analyze the moral dimensions
of a given situation — they help identify key themes, raise important
questions, and provide a basis for making informed and defensible
decisions. An ethical framework is a set of questions that managers can use
to get beyond their initial moral intuitions and clarify the relevant features
of the case. e questions in a framework may force one to think about the
issues from other perspectives or to look at rules that may apply. A good
framework helps managers avoid rationalization of their initial moral
intuition by looking at discon rming data or di ering opinions. It serves as
a test to guide and re ne moral intuition through a variety of cases. A good
framework takes the best from your moral intuition and adds the pieces that
may be missing. An ethical framework works best when it is complementary
to, not separate from, other modes of business analysis and decision-making
(i.e., from nance, accounting or marketing).

What follows is a list of the critical questions from ethical theory that can
help managers make better decisions. It is important for each manager to
select four to six key questions that form the heart of his or her framework
and apply them across a variety of cases. When choosing your framework
questions, think carefully about what values you personally stand for as well
as where your potential moral blind spots are. At a minimum, a framework
should examine the relevant moral issues by including questions from the
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three main ethical traditions (Actions, Agents and Consequences) instead of

focusing narrowly on only one.

C L A RIF Y I N G W H A T Y O U K N O W

What are the key facts in the situation?

Do I have this information confirmed by independent sources or by people from the other side?

Are there any vital pieces of information that I lack?

How does the situation change if I alter my biases and assumptions?

Which way of looking at the problem is most useful?

If there are conflicts between your sense of integrity and the best decision for the firm, are
there ways to alter how the decision is made or implemented to lessen or avoid the conflict?

What are some relevant parallel cases?

Who are the stakeholders? Who is affected by this issue and how? What does each party have
at stake?

C L A RIF Y I N G T H E D E C I S I O N -MAKING PROCESS

Is this my problem or should the decision be made by someone else?

Do I have the organizational backing (i.e., formal authority) and support (i.e., informal backing)
to decide?

Whom can I reasonably include or get input from, given the circumstances?

Whom should I formally include? Who has a right or deserves to be involved?

Is there any documented organizational guidance?

What action best meets my primary obligations?

How much of a stake do I have in the decision and its aftermath?

U N D ERS T A N D I N G S T A N D A R DS OF CONDUCT

Would this particular act or practice violate relevant standards of conduct?

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Are there ways to pursue our strategic interests without violating the standards of conduct?

If the public finds out about this activity, will it lead to action against the firm (e.g., lawsuits)?

Are the standards of conduct observed within the firm defensible and consistent with the
standards of conduct of the society in which it operates?

Does the action violate any human rights?

What action best meets established moral guidelines and common sense (promise-keeping,
respect for others, refraining from lying and cheating, fairness and non-maleficence)?

What action meets legal obligations?

U N D ERS T A N D I N G C H A R A C T ER AND VIRTUE

What character traits do the firm or managers need to be successful over time?

To what extent do these actions reflect the character traits that the firm espouses? Are they
the basis for excellent organizational performance over time?

To what extent is this problem a result of a poor relationship (e.g., bad communication)?

Could improvements in how the firm communicates with and treats employees or other
stakeholders improve the long-term prospects for the firm?

What decision can I live with?

What decision will allow me to live better with others?

Which options are more likely to help me sleep at night six months and two years down the
road?

C L A RIF Y I N G C O N S E Q U E N C ES

Which purposes are most important? Are there any clear priorities among stakeholder claims?

Which actions best realize the key purposes of the firm?

Will certain stakeholders be especially harmed? Will they feel negatively toward the firm or
seek to hurt the firm?

Are there any natural alliances among key stakeholders that can be developed?

Which action is likely to be effective?

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A V O IDI N G R A T I O N A L I Z A T I O N

Could you defend your choice if it were made public (i.e., if it appeared on the cover of The
Wall Street Journal, or if you had to explain it to your mother or your children)?

Could you defend your reasoning if you were on the losing end of your decision?

Is the action you are contemplating, and the rationale behind it, something you would think
others should do in similar circumstances?

is post is excerpted from Darden Professors Jared D. Harris, Bidhan L. Parmar

and Andrew C. Wicks’ technical note Moral eory and Frameworks (Darden
Business Publishing). Please see its companion piece, “Ethical Business Decisions:
e Lens,” for a summary of three major strands of ethical theory.

Professor Wicks teaches in the Darden Executive Education program Servant

Leadership: A Path to High-Performance, which helps leaders embody values in
their behavior, deepen working relationships, and strengthen satisfaction
internally and externally.

Jared D. Harris
ASSOCIATE PROFESSOR OF BUSINESS ADMINISTRATION

Harris is an expert on both ethics and strategic management. His research centers on the
interplay between ethics and strategy, with a particular focus on the topics of corporate
governance, business ethics and interorganizational trust. Harris has written extensively on
the topics of executive compensation and other governance-related topics.

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Harris worked as a certi ed public accountant and consultant for several leading public
accounting rms in Boston and Portland, Oregon, and served as the CFO of a small
technology rm in Washington, D.C. He consults with several top nancial services
companies on the topics of strategic management, ethics and compliance

READ M O RE

Bidhan L. Parmar
ASSOCIATE PROFESSOR OF BUSINESS ADMINISTRATION

Parmar is an authority on how to make good decisions — one of the toughest challenges in
leading a business. He focuses on how managers make decisions and collaborate in
uncertain and changing environments to create value for stakeholders. Parmar’s work helps

executives better handle ambiguity in their decision-making. His recent research examines
the impact of authority on moral decision-making in organizations.

In 2012 Parmar wrote the article “Moving Design from Metaphor to Management Practice”

READ M O RE

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Andrew C. Wicks
RUFFIN PROFESSOR OF BUSINESS ADMINISTRATION; DIRECTOR, OLSSON CENTER FOR APPLIED ETHICS;
DIRECTOR, DOCTORAL PROGRAM

Wicks specializes in ethics. He is an expert in international business ethics, corporate social

responsibility and ethics in public life.

Wicks’ research interests include stakeholder responsibility, stakeholder theory, trust, health
care ethics, total quality management and ethics, and entrepreneurship. Wicks also
specializes in religion and public life, particularly as it pertains to businesses.

Wicks is co-author of three books — Managing for Stakeholders: Survival Reputation and

READ M O RE

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