Ethical Decision-Making in Organizations

by DBH Consulting

The panel was moderated by Demmie Hicks, the President and CEO of DBH Consulting, Inc. Panel presenters were James R. Pender, CPCU, CLU, ChFC, of Oswald Companies; Marjorie Fine Knowles, J.D. of Georgia State University, Lori Taylor of Coca-Cola Enterprises, Inc., and Hamid Mirsalimi, Ph.D. and Maureen H. Hunter, Ph.D., both of DBH Consulting, Inc.

Mr. Pender, Chairman of the Board of the Oswald Companies, shared his insights from the perspective of an insurance executive and leader in the industry. He stated that in insurance organizations a set of priorities need to be routinely established; priorities that have to do with the following three questions:

Mr. Pender argued that until these questions are asked and priorities are established, there is not much point in moving forward. He asserted that ethical living is a matter of habit; it is a question of trying to do the right thing over and over again, in the workplace, the neighborhood, the place of worship, the school, etc. He pointed out further that ethical living must take place out in the community and is not done in solitude; that ethical living must be no different when at work or at play, in our homes or away, at our place of worship, or at the “corner bar.” Finally, he shared his wisdom that ethical standards are usually enhanced when we make a habit of forgiving ourselves and others. He concluded by a compelling story about an insurance executive who made the choice to personally help one of his employees who suffered during the hurricane Katrina disaster, and the example that it set for his employees, and the contribution that it made to the culture of his company.

Dr. Fine Knowles, Professor of Law and former Dean of the College of Law at Georgia State University, who has served as a member of board of directors in a number of corporations, including chair of the TIAA-CREF Committee on Corporate Governance and Social Responsibility, discussed ethical decision-making from the perspective of board of directors of corporations. She highlighted two important responsibilities of any board:

1. To have ethical decision-making at the forefront of their decision-making practices, and

2. To ensure that their views, regarding appropriate and ethical corporate behavior, are trickled down throughout the organization.

Without appropriate dissemination of information regarding the board’s position on ethical behavior, the employees might live with their own beliefs about how they should conduct themselves, or make assumptions about the wishes of the board, assumptions that may be incorrect and ethically inappropriate.

Ms. Lori Taylor, Vice President of Risk Management at Coca-Cola Enterprises, Inc., discussed her relationship with some of the insurance agencies with which she had been working. She explained, from the perspective of a corporate client, how observing unethical behavior of the insurance agency representatives creates a wedge of trust that is hard to overcome. She explained that when she perceived agency representatives trying to steer the insurance needs of Coca-Cola Enterprises to their favored insurance underwriters, she lost trust in them realizing that they no longer had Coca-Cola Enterprises’ interests in mind. The consequence: the agencies lost the business of Coca-Cola Enterprises! Ms. Taylor’s presentation was a great testament that ethical behavior and good business are profoundly intertwined.

Dr. Hamid Mirsalimi, a clinical psychologist, and Principal Consultant at DBH Consulting, commented on human behavior and different ways that individuals reach ethical decisions. Citing research by Harvard psychologist Lawrence Kohlberg, who conducted research on how boys and men approach ethical dilemmas, Dr. Mirsalimi explained that, at least for men, three approaches in ethical decision-making have been identified:

1. Ethical decision-making based on fear of punishment or wish for a gain/reward

2. Ethical decision-making based on fear of how colleagues might approve or disapprove of one’s behavior, and

3. Ethical decision-making based on agreed-upon societal rules and rights, and personal ethical principles.

While that research is limited in scope because it only explored ethical decision-making in boys and men, it does illustrate that individuals, at any moment in their decision-making process, may engage in one or another of the above three approaches. Given that the last approach to ethical decision-making (i.e., ethical decision-making based on agreed-upon societal rules and rights, and personal ethical principles) is more likely to lead to ethical behavior, an awareness of our choices in any ethically challenging situation, is likely to help us make better decisions about what we aught to do.

Dr. Maureen Hunter, an organizational psychologist, and Principal Consultant at DBH Consulting, provided insight on the profound impact of organizational culture on the individual member’s ethical behavior. Dr. Hunter discussed how the culture of an organization is shaped by stories that are often talked about regarding the conduct of various influential leaders of the organization. Such stories are at the heart of the organizational culture as they implicitly define what an organization’s ethical belief system is. A story about unethical behavior for financial gain on the part of an organization leader is likely to perpetuate the idea that financial bottom line always supersedes ethical behavior; on the other hand, stories about ethical conduct by leaders perpetuate the notion that ethics come first, and that the organization’s success is indeed tied to ethical behavior.

After presentations by individual panel members, the moderator, Ms. Demmie Hicks, the President and CEO of DBH Consulting, provided thematic links among the presentations, and asked important follow-up questions from each member of the panel. The session ended with a question-and-answer period between the audience and panel members.