strategy+business, August 2, 2021
by Theodore Kinni
Photograph by phototechno
Say what you will about economist Milton Friedman’s position on the responsibility of business, the idea that increasing profit within the rules of the game was the sole and righteous goal of executives clearly simplified leadership values and ethics. I suspect that is one less-recognized reason that so many CEOs avidly embraced Friedman’s monolithic view for so long. But now as more and more leaders are expanding the scope of their responsibilities and companies are adopting—and compensating leaders on—ESG (environmental, social, and governance) metrics, an increasing number of thorny ethical dilemmas are sure to come along with it.
G. Richard Shell, chair of Wharton School’s Legal Studies and Business Ethics department, pointed out during a recent interview for this column two generic types of ethical problems that leaders face. One type involves a personal problem in which the leader is aware of an ethical lapse—perhaps a colleague’s conflict of interest or behavior that puts the company at risk. “Class one ethical dilemmas are ones in which executives feel the burden of their own conscience,” explains Shell. “These problems have an emotional quality to them. You feel the tug of conflicting loyalties, or you feel guilty if you don’t do something.”
The second type of dilemma is organizational in nature. “Class two involves values that relate to the firm and its relationship to society,” Shell says. “They more often have to do with your responsibilities to the firm, its brand and stakeholders, and its code of conduct in terms of the firm’s social role. They are more cognitive than emotional because you have to process costs and benefits.” Coca-Cola’s response to Georgia’s voting rights bill is an example of this kind of dilemma.
Although the two kinds of ethical dilemmas have different dimensions, they can be assessed using the same framework, according to Shell. He calls the framework CLIP—consequences, loyalties, identity, and principles—and describes it in his new book, The Conscience Code: Lead with Your Values, Advance Your Career. Read the rest here.
The second type of dilemma is organizational in nature. “Class two involves values that relate to the firm and its relationship to society,” Shell says. “They more often have to do with your responsibilities to the firm, its brand and stakeholders, and its code of conduct in terms of the firm’s social role. They are more cognitive than emotional because you have to process costs and benefits.” Coca-Cola’s response to Georgia’s voting rights bill is an example of this kind of dilemma.
Although the two kinds of ethical dilemmas have different dimensions, they can be assessed using the same framework, according to Shell. He calls the framework CLIP—consequences, loyalties, identity, and principles—and describes it in his new book, The Conscience Code: Lead with Your Values, Advance Your Career. Read the rest here.
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