Ethics play a part in business decisions – they delve deeper into the heart of a business to tell leaders what to care about and what they should be doing. David Rodin, Founder and Chair of Principia, a leading global advisory on organisational ethics, shares three philosophical schools of thought that can help modern leaders make decisions.
When the question of ‘what we ought to do’ comes up in a business context, it’s common to turn to a management book or thought leader to gain insights. But as ultimately what we ought to do is a matter of ethics, it’s worth studying ethical theories and seeking inspiration from how philosophers grappled with some fundamental questions around morality.
While a business strategy gives you instrumental reasons for actions (such as if you want to grow market share, then invest in marketing), ethics delve much deeper into the very heart of your business to tell you what you ought to care about and what you should be doing. The job of ethical theory is to explain what intrinsic reasons there are, where they come from and how they can guide us in difficult decisions.
There is no grand unified theory of ethics, but there are at least three fundamental forms of ethical reason that provide invaluable and practical lessons for business leaders today.
Maximising the good
An interesting theory to start with is utilitarianism, developed by the philosopher, Jeremy Bentham. There’s a simple premise at its heart: to ensure ‘the greatest happiness of the greatest number’. We can also view this as the need to maximise net aggregate welfare.
Bentham understood happiness as pleasure and the avoidance of pain, but modern versions of utilitarianism encompass more varied notions of welfare and life goals. In this ethical model, all lives matter equally, and we should act to enable as many people as possible to lead a good life.
Utilitarianism provides many useful resources for a business leader. You can apply it to any decision and consider whether your action will create more benefits than costs overall. If not, then probably you shouldn’t be doing it. (Of course, a number of industries immediately fail this test, such as tobacco, processed food and some social media).
Utilitarianism also asks us to consider the unintended harms and risks of our business. So in modern terms, a utilitarian might consider what the carbon emissions are of a decision, or whether a product could be used to cause harm. The secondary consequences of a service or product always need to be considered.
Where utilitarianism falls down is prioritising overall net welfare at the expense of individuals. For example, you can justify killing one person so their organs can be donated to save five other people. While utilitarianism is great for creating net benefit for the whole as a whole, it fails to consider the specific duties we owe to people and groups that are also a part of our obligation to the world.
Doing what is right
Once we start looking at specific duties, we can see them everywhere. For example, businesses aren’t charities, so we owe a special duty to shareholders that sometimes means prioritising profit over maximising the general welfare. We owe duties of care to employees and to customers.
This is where Immanuel Kant comes in. Deontology, his theory of ethics, provides a powerful explanation for at least some of these special duties. For Kant, many duties are rooted in the fact that persons are ‘ends in themselves’. Simple objects such as stones can be used as we see fit, but people have free will and thus their own projects and ends. We therefore have a fundamental duty to recognise this special status in the way we treat them.
Kant summed this up in his famous dictum: we must treat other people ‘never merely as a means to an end, but always at the same time as an end’.
While this sounds abstract, it has very practical consequences for some of the most difficult ethical decisions we can face. An example of this is when I worked with military commanders. We’d face questions such as whether we should launch a drone strike on an insurgent known to be planning a terror attack while he was sleeping next to his spouse at night. The spouse is just as innocent as the healthy person in the transplant example, so why might it be permissible to kill one but not the other when the lives of others are at stake?
Kant helps us to understand. In the transplant case we intend to use the healthy person as a means of saving the five sick ones, but the drone strike makes use of the spouse’s death. One is a violation of duties, the other is not.
Thankfully business leaders don’t (usually) have to make such life or death decisions, but the general principles can be applied to everyday situations. Ask yourself whether a decision you’re pondering will use the person or group affected as a mere means to some end? If so, you should think carefully about whether that decision is right.
Fitting with virtue
Utilitarianism considers our relationship to the world as a whole, and deontology considers our relationship with people or groups. So the third ethical theory that’s helpful in guiding business decisions considers the relationship to our own self – Aristotle’s theory of virtue.
Aristotle believed that without virtue, it’s impossible to lead a good life and achieve happiness and true wellbeing. He noted that many virtues are a middle point between two competing vices – such as courage being the balance between the vice of cowardice (having too much fear) and recklessness (too little fear) when facing danger. He believed that like muscles, virtues had to be practised, trained and maintained by doing virtuous actions.
You can also apply this theory to organisations. Organisations define their virtues through a statement of values, which demonstrate how they want to operate. These can in turn provide a practical guide to action through a test of fittingness: does this action fit with who I want to be as a leader and with what we want to be as an organisation?
Just as Aristotle believed virtues had to be practised, as a leader you must actively work to develop and maintain both your personal virtues and those of your company. Who you bring into the organisation, what you reward and the opportunities you create for shared reflection all have an impact on virtue.
While these three theories don’t fit perfectly together, they do provide a useful moral framework when considering world, other and self. When faced with a difficult decision ask these three questions: is it good for the world? Is it right for others? Is it fitting with the self you aspire to be? Hopefully they will guide you to make the right choice.