Ethical decision-making is a cornerstone of effective leadership. It influences not only your organization’s reputation but also its long-term success and societal impact.
Navigating the complexities of ethical dilemmas is no simple task. Leaders often face pressures, competing interests, and ambiguous situations that challenge their judgment.
Unfortunately, many leaders fall short in this critical area. Too often, they crack under pressure, compromise, and sell out. Or prioritize short-term gains. The result? An erosion of trust, which undermines their leadership and harms their organization’s brand.
Ways Ethical Leaders Approach Decision-Making
Ethical leaders are intentional and strategic about decision-making. Here are the things you can do that others don’t when it comes to ethics and decision-making:
Clarify the type of ethical issue. Start by determining what kind of ethical issue you’re dealing with. In their book, Ethics (for the Real World), Ronald A. Howard and Clinton Korver note that there are three common types of ethical issues:
- deception (e.g., lying, withholding information, false advertising, misleading marketing, greenwashing, “bait and switch” tactics, spreading fake news, fraud, false billing, money laundering, counterfeiting, Ponzi schemes, etc.)
- stealing (identity theft, embezzlement, tax evasion, theft, price gouging, wage theft, corporate espionage, theft of data or intellectual property, insider trading, etc.)
- harm (discrimination, harassment, privacy violations, unfair wages, worker exploitation, toxic work environments, pollution, bribery, unsafe workplaces, etc.).
Clarity in diagnosis can help demystify the path forward.
Create alternative actions. Ask the following: What acceptable, appealing, or even transformative options do you have? Too many people accept the obvious options in front of them without digging deeper and seeking creative alternatives.
Evaluate your alternatives. Which of the options offer defensible, ethical responses? When Stanford Professor Joseph Grundfest led a discussion at the Markkula Center for Applied Ethics, he recommended asking three simple but powerful questions:
- Is it legal?
- Is it ethical?
- Is it smart?
Vet the ethical dimensions of business decisions with many people you trust. Don’t go it alone. There’s often hidden wisdom in your team. With more eyes on the problem, you’re more likely to avoid hidden biases and misjudgments.
“We are all flawed. Since we all make mistakes, we are wise to solicit help and input from others as sounding boards and accountability agents. Heated debates occur among reasonable people who can disagree on what is ethical.
Such debates can be healthy and help maintain the ethical imperative.”
-Bob and Gregg Vanourek, Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations
Encourage and empower all workers to raise concerns. Consciously create a culture of vigorous debate in which people aren’t afraid to challenge each other and pressure-test ideas in the common search for excellent outcomes.
Develop and employ a transparent decision-making process. Share important information and decision-making processes openly. Let people know how information is collected and when decisions are made. Without such decisional sunlight, people won’t trust the integrity of the process. You’ll be setting yourself up for cynicism and failure.
Leadership Derailers Assessment
Take this assessment to identify what’s inhibiting your leadership effectiveness. It will help you develop self-awareness and identify ways to improve your leadership.
Establish clear ethical standards and commitments. Too many leaders take this step for granted. Big mistake. Your organization likely has clear financial goals and operational standards. Why should ethical considerations not also have the same kind of attention and high standards? Don’t give people an opening to start fudging on this important front when the heat is on (as it inevitably will be). Recognize that a results imperative should always be accompanied by an ethics imperative.
“Do not compromise on the ethical imperative…. Leaders have to draw the line.”
-Bob and Gregg Vanourek, Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations
Define the organization’s shared values. Employ a robust, collaborative process for determining the organization’s actual, distinct values (not generic ones that just sound good). Give this time. (See our article, “How to Create a Shared Purpose, Values, and Vision.”)
Use the organization’s shared values in making all important decisions and refer to the values frequently. Otherwise, the effort you put into determining the organization’s shared values was a waste of time. People will become cynical if they see you waste their time or if they spot a gap between stated and actual values.
Seek diverse viewpoints. Think broadly about diversity, including not only social, cultural, and identity factors (e.g., race, ethnicity, gender, etc.) but also education, tenure, experience, and information. Diversity brings a host of benefits when it comes to decision-making and performance. (1)
Encourage open dialogue. Create a safe environment in which people can speak their mind freely and that values rigorous debate about important issues in order to make sound decisions.
Involve all major stakeholders in important decisions. Consider all perspectives. Be inclusive in your decision-making processes. Consider the impact of decisions on all stakeholders, including workers, customers, shareholders, suppliers, partners, and communities.
Personal Values Exercise
Complete this exercise to identify your personal values. It will help you develop self-awareness, including clarity about what’s most important to you in life and work, and serve as a safe harbor for you to return to when things are tough.
Employ several simple tests to make sure your ethical decision-making meets basic standards. For example, here are ten simple tests to choose from (best to use a few, but no need to use them all):
- Common Sense Test: What does your common sense tell you? What would your grandma or grandpa say about the issue before you?
- Mirror Test: Look in the mirror: What does your conscience tell you about the choice in front of you?
- Sanctuary Test: Go out into nature. Get some peace, quiet, and perspective. Otherwise, the immediate stress and pressure may cause you to choose poorly.
- Front Page Test: How would you feel if your decision made it to the front page of the newspaper? Act accordingly.
- Role Model Test: What would your role model(s) advise?
- Advisory Group Test: What would your best advisors urge you to do? (Follow “Robert’s rule”: Never make an important ethical decision alone.)
- Loved One Test: If your loved one (e.g., spouse, child) were in the situation, what would you want for him or her?
- Reciprocity Test: What would you want to happen if you were on the other side of this dilemma? (See the “golden rule”: treat others as you want them to treat you.)
- Consequences Test: What are the likely consequences of the different decisions you could make? The idea in utilitarianism is seeking pleasure and avoiding pain for as many people as possible: “the greatest good for the greatest number.” Here you evaluate things from the perspective of an objective, benevolent spectator, not your own interests.
- Universalizability Test: What would happen if your decision became a universal law that everyone had to follow—and for all time? It’s a powerful thought experiment (from German philosopher Immanuel Kant) that can provide real insight.
(See our article, “Ethical Decision-Making: Simple Tests.”)
Use several ethical frameworks to help you understand different aspects of the decision at hand. Common frameworks include utilitarianism (focused on maximizing overall good), deontology (focused on following rules and duties), and virtue ethics (focused on moral character). You can put these theories to work quickly and effectively by asking simple questions, such as:
- How will this affect everyone involved? (consequence)
- What’s required of me in this situation? (duty)
- What would I do at my best? (virtue)
You can also ask a question that integrates these approaches: Can we create a new course of action that minimizes the harm and maximizes the benefits or that allows us to do what’s required or be at our best?
Consider the long-term impacts of decisions, including sustainability considerations. Think beyond short-term considerations. Consider how your decisions will impact the long-term health of the organization, the wellbeing of workers, and the broader community. Be sure to avoid “greenwashing” (when companies convey a false impression or misleading claims about how environmentally sound their products are) as well as “greenhushing” (when companies downplay their sustainability efforts to avoid criticism for being “woke” or not sufficiently focused on profitability).
Be wary of potential biases and actively work to debias your decisions. Keep in mind that human decision-making is limited by cognitive constraints, such as time pressure and limited information. (Scholars call it “bounded rationality.”) People often choose “good enough” options instead of excellent ones, effectively “satisficing” and not “optimizing.”
Be clear-headed about the internal and external pressures you’re facing that threaten to take you down questionable roads. The concept of “bounded ethicality” notes that most people are usually ethical, but not completely so. Their propensity to be ethical can be downgraded under certain conditions (e.g., performance pressures and conformity influences).
Watch out for common biases in decision-making. Here are some common ones to watch out for:
- Stereotyping: expecting a member of a group to have certain characteristics even when you don’t have actual information about that person
- Unconscious bias (a.k.a., implicit bias): a notion or belief that affects your understanding, decisions, and actions but that operates below the level of your conscious awareness
- Ingroup bias: the tendency of people to give preferential treatment to others they perceive to be members of their own groups (e.g., this can lead to favoritism in hiring, work assignments, or performance evaluations)
- Silencing: processes by which the voice or participation of certain people or groups is downplayed or excluded, whether consciously or unconsciously (e.g., managers who frequently interrupt female engineers and dismiss their ideas)
“Individual cognitive effort is not enough. You have to cultivate an organization-wide culture in which people continually remind one another that the brain’s default setting is egocentric, that they will sometimes get stuck in a belief that their experience and perception of reality is the only objective truth, and that better decisions will come from stepping back to seek out a wider variety of perspectives and views.
You can’t manage for bias in the moment you’re making a decision. You need to design practices and processes in advance.”
–Dr. Heidi Grant and David Rock, “Beyond Bias,” Strategy + Business, July 13, 2015
Watch out for the tendency to be blinded by your own self-interest. Researchers call it “motivated blindness.” According to Max Bazerman in a Harvard Business Review article, “A New Model for Ethical Leadership”: “If we behave unethically out of self-interest, we’re often unaware that we’re doing so…. my colleagues and I have shown that executives will unconsciously overlook serious wrongdoing in their company if it benefits them or the organization.”
Alignment Scorecard
When organizations aren’t aligned, it can reduce performance dramatically and cause frustration and dysfunction. With this Alignment Scorecard, you can assess your organization’s level of alignment and make plans for improving it.
Intentionally shape an ethical environment for decision-making. We’ll address this in more detail in a future article, but here are some key practices:
- Foster a culture of integrity by establishing and upholding clear ethical standards and rewarding ethical behavior.
- Publicly recognize and celebrate ethical behavior.
- Investigate and address misconduct swiftly and impartially.
- Avoid having a culture of burnout that can contribute to ethical problems.
- Promote long-term thinking by prioritizing decisions that benefit the organization and community in the long run.
- Embrace corporate social responsibility and conscious leadership practices (e.g., a “triple bottom line” with an emphasis on people, planet, and profit).
“…it’s not just about engaging in good acts, it’s also avoiding playing an indirect or implicit role by allowing bad things to happen…. Leaders are responsible not just for their own ethics but also for creating an environment where they foster more ethical behavior by all the people within their organization.”
-Max Bazerman, Professor, Harvard Business School
Assess your decisions regularly (including their ethical dimensions). That way, you can evaluate how you did and learn from mistakes. View it as an opportunity for learning, growth, and course correction. Such assessments and the reflection that accompanies them tend to help reinforce your organization’s ethical standards.
Consider timing as an important factor too, not just the decision itself. For example, if a children’s toy company suspects that a product defect can jeopardize the health and safety of the children who use it, timely action is critical, even if the picture isn’t totally clear.
Conclusion
Ethical decision-making in leadership requires an intentional approach. Clarity, transparency, and inclusivity are key.
By clarifying the ethical issues at hand, creating and evaluating alternative actions, and seeking diverse perspectives, leaders can ensure their decisions are not only well-informed but also ethically sound. It’s essential to involve stakeholders, empower workers to raise concerns, and foster open dialogue.
Leaders must also be aware of pressures, potential biases, and the long-term impact of their decisions. They must design an environment that encourages ethical behavior in their organization. With a clear focus on shared values, regular self-assessment, and a commitment to sustainability, leaders can make decisions that are both morally responsible and likely to set up the organization for success.
Reflection Questions
- How are you and your organization doing when it comes to ethical decision-making?
- Which of the above processes will you add to your punch list?
- Which are the most important?
Tools for You
- Leadership Derailers Assessment to help you identify what’s inhibiting your leadership effectiveness
- Personal Values Exercise to help you determine and clarify what’s most important to you
- Alignment Scorecard to help you assess your organization’s level of alignment
Leadership Derailers Assessment
Take this assessment to identify what’s inhibiting your leadership effectiveness. It will help you develop self-awareness and identify ways to improve your leadership.
Related Articles & Books
- “Ethical Leaders: What They Do that Others Don’t”
- “Ethical Decision-Making: Simple Tests”
- “Leadership and the Ethics Imperative”
- “Why Are We Talking about Ethics?”
- “The Ethical Challenges Faced by Leaders”
- “The Importance of Trust in Leadership”
- “The Importance of Credibility in Leadership”
- “Are You Strong Enough to Be a ‘Voice of One’?”
- Bob and Gregg Vanourek, Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations
- Max Bazerman and Don Moore, Decision Leadership: Empowering Others to Make Better Choices (Yale University Press)
Postscript: Quotations on Ethical Decision-Making
- “Bias is universal. There is a general human predisposition to make fast and efficient judgments, and you are just as susceptible to this as anyone else. If you believe you are less biased than other people, that’s probably a sign that you are more biased than you realize.” -Heidi Grant Halvorson and David Rock, “Beyond Bias,” Strategy + Business, July 13, 2015
- “To be sure that we are using ethical thinking, we need to continually check our biases and assumptions. Our brains use assumptions as ‘shortcuts’ when making decisions, and we are not always fully aware of them.” –Linda Fisher Thornton, 7 Lenses: Learning the Principles and Practices of Ethical Leadership (Leading in Context, 2013)
- “…much of what goes wrong isn’t caused by bad people doing bad things; it’s caused by good people doing bad things without knowing that they’re doing something bad. We have many optimistic illusions about ourselves, and we tend to behave unethically in ambiguous contexts. So when ethical lapses occur, they rarely happen in situations when what is right versus what is wrong is clear. They more typically occur when what is morally right is less clear, such as ‘doing what is right versus loyalty to the organization,’ or ‘doing what is right versus doing what I was told to do,’ or some other context that causes confusion.” –Max Bazerman
- “I also have asked every Salomon employee to be his or her own compliance officer. After they first obey all rules, I then want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper, to be read by their spouses, children, and friends, with the reporting done by an informed and critical reporter. If they follow this test, they need not fear my other message to them: Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.” -Warren Buffett, opening statement before the Subcommittee on Telecommunications and Finance of the U.S. House of Representatives
- “It is difficult to manage for bias in the moment you’re making a decision. You need to design practices and processes in advance. Consciously identify situations in which more deliberative thought and strategies would be helpful, and then set up the necessary conversations and other mechanisms for mitigating bias.” -Dr. Heidi Grant and David Rock, “Beyond Bias,” Strategy + Business, July 13, 2015
(1) Source: Kadri Karma and Rebekka Vedina, “Cultural Intelligence as a Prism between Workforce Diversity and Performance in a Modern Organization,” Review of International Comparative Management, Volume 10, Issue 3, July 2009. According to researchers, informational diversity usually leads to better quality solutions (although diversity in values may not lead to innovative solutions). Diversity can boost critical thinking, contribute to error detection, and produce cognitive friction that can enhance deliberation. According to the research, gender-diverse teams tend to have higher revenues, profits, and earnings per share than male-dominated teams, and gender-mixed teams outperform female-dominated teams. One dynamic at work here: gender-balanced teams monitor each other more closely. With friction and tension, there’s more conflict, and the work feels harder, but “The result is superior performance on complex tasks, and smarter, more balanced decisions.” Source: Khalil Smith, “How Diversity Defeats Groupthink,” Neuroleadership Institute, 2019.
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Gregg Vanourek is a writer, teacher, and TEDx speaker on leadership and personal development. He is co-author of three books, including Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (a winner of the International Book Awards written with his father, Bob Vanourek) and LIFE Entrepreneurs (a manifesto for living with purpose and passion). Check out his Leadership Derailers Assessment or join his rapidly growing community. If you found value in this, please forward it to a friend. Every little bit helps!
