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Moving from Ethical Fading/Failures

The problem of ethical fading/failures is easy to understand and illustrate. Here ya go:

Photo Credit: Paul Knowlton

The headline-grabbing ethical failures of 2020 include:

  • Wirecard of Germany filing for insolvency after acknowledging a “prevailing likelihood” that it fraudulently booked $2B in assets;

  • Luckin Coffee and iQIYI, both of China, for alleged fraudulent reporting, compliance breaches, and key metric manipulation all in an effort to appear as growth stocks;

  • More than 100 Wells Fargo employees for creating fake profiles and filing fraudulent PPP applications (to the company’s credit the employees were fired but is this a continuation of the 2018 fake account scandal?); and,

  • Renewed allegations that PG&E’s failures to inspect and maintain its equipment in favor of cost savings has resulted in fires scorching over 100,000 acres of Northern California and hundreds of structures.

2020 was no anomaly. Opening this morning’s news feed we can choose among the headline-grabbing ethical concerns regarding Mark Zuckerberg and Facebook … Elizabeth Holmes and Theranos … fast fashion and forced labor ... and the examples go on. But instead of dwelling on the problems, or worse, another B-school case study of ethical failures that doesn’t help move the needle in the direction of a trustworthy market, let’s focus on the real and sustainable solution of ethical reasoning.

While the problem of ethical fading/failures is simple to illustrate, the solution of ethical reasoning is more sophisticated. Nevertheless, with just a moment of focus the solution is just as easy to understand as the problem. Here ya go:

(c) 2016-2021 Aaron Hedges

In Better Capitalism (often cataloged by sellers as a business/ethics book) we introduce, illustrate, and teach the ease and benefit of ethical reasoning. Done well, ethical reasoning comprises and integrates three aspects to form a model for ethically solid and profitable decision-making that we call Unified Ethical Decision-making (UED). Here is a summary introduction to the diagram and model from the book:

Done well, ethical reasoning comprises three modes, formally called teleological, deontological, and characterological. …

The word teleological comes from the Greek word telos for “end,” “goal,” or “purpose.” In this goal-based mode, actions are right or wrong depending simply upon whether or not they advance the desired goal. From this perspective actions are evaluated not in and of themselves but on the basis of their results; the goal justifies the means. …

Deontological emerges from the Greek word deon, which means “obligatory” or “binding.” A deontological approach is obligated to refrain from using wrong means to achieve results and is bound to justice and fairness in acting. From this perspective actions have a moral component, actions are inherently right or wrong. Accordingly, this rules-based mode cares about achieving good ends if just rules or principles are obeyed. …

Characterological is a term used to point to our character—that part of our inner selves that holds our virtues, who we are as people. Our virtues do not operate in a vacuum but work with the rules and principles that guide us in how we act. This character-based mode can develop virtues from virtually any source, from the dangerously evil to the rightly holy. In the ultimate sense, the character-based mode springs from one’s understanding of God’s character. We all derive virtues from how we perceive ultimately reality. [Clearly, ethical fading draws from the ‘dangerously evil’ virtues while the UED model draws from the ‘rightly holy’ virtues.] ….

To summarize, The deontological [rules-based] mode is about what we should do; the teleological [goal-based] is about what we could do; and the characterological [character-based] is about what we would do. … [pgs. 35-37]

Fully and properly processing your decision making through the UED model, the decision-maker arrives at the ideal set: Actions which are morally sound, in character, and advance the cause. This becomes a sure solution to keeping you and your company out of the headlines, at least for all the wrong reasons. This will please everyone, from your malpractice insurer to your mom.

We invite you to read further about the UED model and invite you to contact us to learn how we can help you integrate the UED model in your organization.

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