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Business Ethics - Four Spheres of Executive Responsibility - Badaracco

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Business Ethics: Four Spheres of Executive Responsibility Joseph L. Badaracco, Jr. I n The Functions of the Executive, his landmark book on managers and organizations, Chester Barnard wrote: *^*It seems to me inevitable that the struggle to maintain coopera^ tion among men should as surely destroy some men morally as battle destroys some physically. ' This is a grim observation. It flies in the face of our widespread celebration of business leadership, entre- preneurial achievement,
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  Business Ethics: Four Spheresof Executive Responsibility Joseph L. Badaracco, Jr.   n  The  Functions  of the Executive, his landmark book on managers  and  organizations,  Chester Barnard wrote:  ^ It seems to me  inevitable  that the struggle to maintain  coopera^ tion among men should  as  surely destroy some men morally asbattle destroys some  physically. '  This is  a  grim observation. It flies in the face of our widespread celebration of business leadership, entre-preneurial achievement, and tbe triumphal march of capitalism into Asiaand now Eastern Europe. Barnard's view also seem unrealistic. Manage-ment life is surely not, after all, a series of anguishing moral dilemmas.And when ethical issues do arise, the right answer, morally and legally, isoften clear. Tbe typical challenge is finding practical ways to do tbe rightthing, not discerning what is rigbt. Tbe investment bankers who met in darkgarages to exchange inside information for suitcases of cash were notstruggling on tbe horn of moral dilemmas but were breaking the law andviolating their clients' trust.Yet in other cases, the central challenge is deciding what is right. In 1988,  for example, the executives of Roussel UCLAF, a French pharmaceu-tical company, had to decide whether to market a new drug called RU 486.Early tests had shown tbat the drug was 90 to 95 effective in causing amiscarriage during the first five weeks of a pregnancy. A scientific andmedical breakthrough, RU 486 was an alternative to surgical abortions,and its creators believed it could ultimately help hundreds of tbousands ofwomen avoid injury and death from botcbed abortions. As researchers andbusiness managers, many Roussel UCLAF executives bad been personallycommitted to developing RU 486. Tbey faced tbe question, however, ofwhether to introduce the drug and how to do so. Protests against Rousseland debates within the company were already diverting a great deal of man-agement time and sapping employee morale. Some of the countries that   ur  Spheres of xecutive Responsibility faced severe population problems and wanted access to RU 486—such asChina—did not have tbe medical infrastructure to use the drug safely. Anti-abortion groups were threatening an international boycott of the productsmade by Roussel UCLAF and Hoechst, the German chemical giant thatwas Roussel UCLAF's largest shareholder. Indeed, the costs of the boycottseemed likely to outstrip the profits from selling RU 486. Moreover,Hoechst's corporate credo emphasized support for life, a reaction to itscollaboration with the Nazi deatb camps during the 1940s.What were tbe moral responsibilities of Roussel's executives? Howshould they have balanced tbeir ethical obligations to tbe company's sbare-holders, to their employees, to the women who might use RU 486, and tothe medical, and scientific, governmental, and political groups their deci-sions would effect? What did they owe to tbeir own consciences? In suchsituations, executives face morally treacherous problems. These are notissues of right versus wrong; they involve confiicts of right versus right, ofresponsibility versus responsibility. In sucb cases, managers cannot avoidgetting tbeir bands dirty: in meeting some responsibilities, they will fail tomeet others, and so they face the anguishing struggle that Barnarddescribed.Tbe problem of dirty hands is the lot of men and women witb power andcomplex responsibilities. In a play by Jean-Paul Sartre, a young idealistaccuses a veteran Communist leader of having sold out to the Nazi occupa-tion. The older man replies: How you cling to your purity, young man How afraid you are to soil your hands Allright, stay pure What good will it do? Why did you join us? Purity is an idea for ayogi or a monk. . . . To do nothing, to remain motionless, amis at your sides,wearing kid gloves. Well I have dirty hands. Right up to the elbows. I've plungedthem in filth and blood. But what do you hope? Do you think you can governinnocently?- Yet hard moral choices are at times the inescapable lot of men andwomen in positions of power. How do you fire a friend, someone you haveworked with for years? When is it right to violate an employee's privacy—someone witb a drinking problem, for example—to get him help he badlyneeds? Can you have a clear conscience when your company's product willbe misused by some customers and hurt innocent people? When can anexecutive wreak havoc on a workforce and a local community by movingan operation to a low-cost, overseas site? Is it sometimes right to pay abribe to win a contract and protect jobs?Some people believe there are fundamentally simple approaches to sucbsituations: let the market decide, search one's heart and be true to one'svalues, do what is best for the shareholders, take care of the people in thecompany family, do what is rigbt for all of a company's stakeholders.These ways of resolving tbe moral dilemmas of management are beguil-ingly clear, simple, praiseworthy—and misleading. Tbe search for a grand.  CALIFORNW MANAGEMENT REVIEW  pring  1992 unifying principle of management morality leads to frustration and oftencynicism. The moral dilemmas of management are, at bottom, clashesamong different, conflicting moralities, among very different spheres ofresponsibility. Each sphere is, in many ways, a nearly complete moral uni-verse—its own world of commitments, human relationships, strong duties,norms of behavior, personal aspirations, and choices tbat bring happinessand suffering to others.^ Wben the claims of these different spheres of com-mitment pull in different directions, managers face the hazards of whicbChester Bamard warned. Four Spheres of Morality The ommitments of Private Life —The first of these moral worlds is thesphere of private life. In part, tbis realm consists of duties and obligationswbich are usually stated as abstract, universal principles: tell tbe truth, keeppromises, and avoid injuring others. Individuals disagree about the srcinsof tbese duties and tbe priorities among tbem, but most people believe tbatcertain fairly clear obligations are binding on everyone. Such principles,however, offer only an abstract, attenuated view—a philosopher's x-ray—of the complex morality of individuals' commitments, ideals, and aspirations.Consider, for example, tbe case of a young woman who worked as anassociate at a New York investment banking firm. She had contributed sig-nificantly to a successful assignment, and the client invited the project teamto a celebratory luncheon. Tbe young woman was eager to attend, but tbeluncheon would be held at a small men's club tbat required women to entertbrougb a side door. As she struggled with this issue, tbe young woman didnot find berself consulting a universal, prioritized list of abstract, etbicalduties. Sbe did spend a great deal of time thinking about ber family, herexperiences in college, her grandmother's decision not to pursue a careerwith an established law firm because sbe would bave to leam typing andshorthand to get tbe job, tbe experiences of other women at her investmentbank, and about her hopes for ber career.In sbort. her analysis was refracted through tbe personal realities ofher life and past experience. Moreover, her decision was not simply achoice but an act of self-definition or self-creation: it would partially definetbe person she would become, someone who had gone through the sidedoor or someone who had done something else. Tbe poet Adrienne Richobserved that the story of our life becomes our life, and this youngwoman was about to write—or live out—an important chapter of her per-sonal narrative.There was no single, universal, right decision in this case. Tbe mor-ality of private life differs from person to person, refiecting factors that areindividual and often highly particular. Some people are deeply committedto their families, others to tbeir work, or political reform, or strong   ur  Spheres of xecutive Responsibility friendships. For many, the sphere of private morality is suffused with reli-gious  belief while others find ideals and aspirations elsewhere—in theirparents' example, in philosophy, literature, the lives of people they admire,or convictions bom of their own lives and reflection. Personal morality isusually embedded in the unexamined norms and assumptions, the slowlyevolving commitments and responsibilities, and the enveloping ways of lifeof families, friends, and communities.Much of the morality of private life is implicit and intuitive, and itappears clearest in retrospect, in the patterns underlying one's past actions.Few people have the skills and the inclinations—so highly prized in aca-demia—to state their implicit morality in clear, precise, systematic terms.For some people, rational articulation is a betrayal, a denial of Pascal'sobservation that the heart has its reasons that reason does not know. Indi-viduals often do not fully understand how or why they made a particulardecision. After long reflection, something simply seems right.Integrity and character play important roles in the morality of private life.  From time to time, most people wonder about questions that ancientphilosophers first articulated: What distinguishes a good person from a badone? What ways of living, what guidelines, what virtues make for a goodperson and a good life? What do I want my life to add up to? What abidingaspirations and commitments will give my life purpose and a sense ofwholeness, coherence, and integrity? In the Western world, such questionshave defined the morality of private life ever since Socrates, Plato, andAristotle asked them 2500 years ago.This sphere of morality seems to be primary, to be morality in its truestand deepest sense. It seems clear, after all, that people are first and fore-most individual moral agents and only later take on social roles as execu- tives,  attorneys, or physicians. But this is not the whole story. The men andwomen who become business executives, like others who hold positions ofpower in society, shoulder the weight of other moral responsibilities. TheBritish historian R.H. Tawney wrote: 'To argue, in the manner ofMachiavelli, that there is one rule for business and another for private life,is to open the door to an orgy of unscrupulousness before which the mindrecoils. To argue that there is no difference at all is to lay down a principlewhich few men who have faced the difficulty in practice will be prepared toendorse. ** Like Chester Barnard, Tawney acknowledges a struggle: betweenthe rule for business and the moral claims of private life. But what is this rule for business? The answer, in short, is that certain moral responsibilities come withcertain social roles. The job of being a military officer, a nurse, or anattorney brings particular obligations, as does the job of running a business.The chairman of Roussel UCLAF, Edouard Sakiz, decided at one point tooverrule his strong, personal convictions and oppose the marketing of RU 486.  Sakiz feared that protests and boycotts by anti-abortion groups would

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Jul 28, 2017
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