Unethical behavior is a risky business strategy-it may lead to disaster. An engaged couple made a reservation, and put down a $1,500 deposit, to hold their wedding reception at a New Hampshire restaurant. Tragically, the bride died of asthma four months before the wedding. Invoking the terms of the contract, the restaurant owner refused to return the couple’s deposit. In a letter to the groom, he admitted, “Morally, I would of course agree that the deposit should be returned.” When news- papers reported this story, customers deserted the restaurant and it was forced into bankruptcy- over a $1,500 disagreement.5 Unethical behavior does not always damage a business, but it certainly has the potential of destroying a company overnight. So why take the risk?

Even if unethical behavior does not devastate a business, it can cause other, subtler damage. In one survey, a majority of those questioned said that they had witnessed unethical behavior in their workplace and that this behavior ha)i reduced productivity, job stability, and profits. Unethical behavior in an organization creates a cynical, resentful, and unproductive workforce.

So why bother with ethics? Because society benefits when managers behave ethically. Because money does not buy happiness. Because ethical managers have happier, more satisfYing lives. Because unethical behavior can destroy a business faster than a snake can bite. And because, in the end, ethical behavior is more likely to pay off.


It is one thing to decide, in theory, that being ethical is good; in practice, it can be much more difficult to make the right decisions. Supreme Court Justice Potter Stewart once said that he could not define pornography, but he knew it when he saw it. Many people feel the same way about ethics-that somehow, instinctively, they know what is right and wrong. In real life,

4 Hugh Aaron, “Doing the Right Thing in Business,” Wall Street journal, June 21,1993, p. A10. 5 John Milne, “N.H. Restaurant Goes Bankrupt in Wake ofWedding Refund Flap,” Boston Globe, Sept. 9, 1994, p. 25.

however, ethical dilemmas are often not black and white, but many shades of gray. The purpose of this section is to analyze the following ethics checklist as an aid to managers in making tough decisions:

• What are the facts?

• What are the critical issues?

• Who are the stakeholders?

• What are the alternatives?

• What are the ethical implications of each alternative?

• Is it legal?

• How would it look in the light of day?

• What are the consequences?

• Does it violate important values?

• What kind of world would this be if everyone behaved this way?


What Are the Facts? Although this question seems obvious, people often forget in the heat of battle to listen t0 (and, more importantly, to hear) all the different viewpoints. It is crucial to discover the facts, firsthand, from the people involved.

What Are the Critical Issues? In analyzing ethical dilemmas, expand your thinking to include all the important issues. Avoid a narrow focus that encompasses only one or two aspects. In the case of the New Hampshire restaurant that refused to refund a deposit, the owner focused on the narrow legal issue. His interpretation of the contract was correct. But if the owner had expanded his thinking to include consideration for his customers, he might have reached a different decision.

Who Are the Stakeholders? Stakeholders are all the people potentially affected by the decision. That list might include subor- dinates, bosses, shareholders, suppliers, customers, members of the community in which the busi- ness opemtes, society as a whole, or even more remote stakeholders, such as future generations.

What Are) the Alternatives? The next step is to list the reasonable alternatives. A creative manager may find a clever solution that is a winner for everyone. What alternatives might be available to Sheldon Baskin, the land- lord who faced a dilemma in the opening scenario?


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