Business Franchising

Before you take a decision or implement change or introduce a new system I am sure you consider the five “E’s”:

Efficacy (will it work at all?)

Efficiency (will it work with minimum resources?)

Effectiveness (does it contribute to the enterprise?)

Ethics or Ethicality (is it sound morally?)

Elegance (is it beautiful?)

Let’s talk a bit about the fourth “E” – Ethics.

There is an ethical dimension to every decision.

Any time a human being, or entity, intervenes in the life of another human being, or entity, directly or indirectly, an ethical situation arises.

There is a story, probably apocryphal, which illustrates this.

There was a cyclonic storm and millions of fish were washed ashore and were struggling for life on the beach. A man came to the beach and patiently began to pick up the fish, one by one, and throw them back into the sea. An amused passerby asked him what difference it would make, to which the man pointed to the fish in his hand and said, “Ask this fish?”

Thus, we see that seemingly routine decisions, which at the organizational level do not appear to have major ethical magnitude, have large ethical significance at the individual level.

Some people believe that ethics is of little concern to business people. “Ethics is Ethics” and “Business is Business” they say. Thus many upwardly mobile managers of today tend to rationalize when faced with an ethical dilemma and take the position that they must wear multiple ethical hats and cloak themselves with three separate conflicting codes of ethics:

One code applicable to the professional or technical aspects of their work (Professional or Technical Ethics);
Another code for their business behaviour (Business Ethics);

And a third code of ethics for their personal lives (Personal Ethics).

This leads to the development of schizophrenic ethical personality wherein the individual may strive for professional excellence and high ethical standards for one’s own self and within one’s organization, but resort to unethical practices to succeed in business at all costs.

This Dr. Jekyll and Mr. Hyde approach is at the heart of many ethical dilemmas in managerial decision-making.

Each person, entity, group, institution or constituency that is likely to be affected by the decision is a “stakeholder” with a moral claim on the decision maker.

This stakeholder concept provides a systematic way of perceiving and resolving the various interests involved in our ethical decision making.

There is an ethical dimension to every decision. Thus any of your decisions, which affect other persons, have ethical implications, and virtually all of your important decisions reflect your sensitivity and commitment to ethics.

In summary, as you perform your job in your workplace, you must analyse and ascertain various ethical dimensions as you deal with your superiors, peers, subordinates, customers and all other stakeholders connected with your work.

Different stakeholders have different ethical perspectives.

For example, take the case of workplace romance.

Whereas, some organizations [and stakeholders] may feel that there is nothing ethically wrong with workplace romance and many even encourage organizational romance / marriage among colleagues by giving various perks / incentives, some others may discourage or even prohibit workplace-romance. Of course, sexual harassment would be universally considered unethical.

One useful technique to resolve such ethical dilemmas is the CATWOE model adapted from Systems Management.

Ethical dilemma occurs due to mismatch in ethical perspectives of various stakeholders involved in the ethical situation.

A CATWOE analysis helps the manager identify all stakeholders involved in a decision and their respective ethical perspectives.

CATWOE is an acronym to categorize various stakeholders:

CATWOE MODEL

C = CUSTOMERS, OR CLIENTS OF THE DECISION
A = ACTORS, OR AGENTS WHO CARRY OUT THE DECISION
T = TRANSFORMATION PROCESS, THE DECISION MAKER
W =WELTANSCHAUUNG, WORLD VIEW PREDOMINATLY HELD
O = OWNERS / OWNERSHIP
E = ENVIRONMENT / ENVIRONMENTAL IMPOSITIONS

To elaborate a bit:

C: The ‘customers of the system’. In this context, ‘customers’ means those who are on the receiving end of whatever it is that the system does. Is it clear from your definition of “C” as to who will gain or lose from your decision?

A: The ‘actors’, meaning those who would actually carry out the activities envisaged in the notional system being defined.

T: The ‘transformation process’. What does the system do to the inputs to convert them into the outputs?

W: Weltanschauung – The ‘world view’ that lies behind the root definition. Putting the system into its wider context can highlight the consequences of the overall system. For example the system may be in place to assist in making the world environmentally safer, and the consequences of system failure could be significant pollution.

O: The ‘owner(s)’ – i.e. those who have sufficient formal power over the system to stop it existing if they so wished (though they won’t usually want to do this).

E: The ‘environmental constraints’. These include things such as ethical limits, regulations, financial constraints, resource limitations, limits set by terms of reference, and so on.

CARDINAL ASPECTS OF ETHICAL DECISION MAKING

All decisions must take into account and reflect a concern for the interest and well being of all stakeholders.

Ethical values and principles always take precedence over non-ethical and unethical values and principles

It is ethically proper to violate an ethical principle only when it is clearly necessary to advance another true ethical principle which, according to the decision maker’s conscience, will produce the greatest balance of good in the long run

THE FIVE STEP ETHICAL DECISION MAKING APPROACH

Step Action

1 Identify and classify the stakeholders in the situation using CATWOE and understand their ethical perspectives

2 Identify their dominant ethical perspectives

3 Construct an ethical conflict web, mapping different ethical perspectives [CATWOE - six nodes]

4 Identify those strands of the web where no significant conflict may be assumed to exist. These may be removed from the ethical decision making model.

5 Concentrate on those strands where conflict does exist. Use conflict resolution techniques to achieve the “overall good” for the system

Ethical decision-making involves the process by which a person evaluates and chooses among alternatives in a manner consistent with his or her core ethical values or principles.

Thus when you make an ethical decision you:

(a) Perceive and eliminate unethical options
(b) Select the best from several competing ethical alternatives.

Ethical decision-making requires more than a belief in the importance of ethics. It also requires sensitivity to perceive the ethical implications of your decisions; the ability to evaluate complex, ambiguous and incomplete facts and the skill to implement ethical decision making without jeopardizing your career.

Ethical decision-making requires three things: Ethical Commitment, Ethical Consciousness and Ethical Competence.

The CATWOE model will help you in Decision Management – in improving the Ethical aspect of your managerial, professional and personal decisions.

VIKRAM KARVE

Vikram Karve, 52, educated at IIT Delhi, ITBHU and The Lawrence School L

Business code ethics need to be part of your organization’s culture; and recent business ethics cases prove that need. Stories of large business fraud to small business embezzlement are being reported with ever-increasing frequency; unfortunately business ethics are under attack.

How often in your business day do you need to make decisions? What is the basis for those decisions? Do you have a business vision statement and a mission statement that helps you with your decision making? That is, can you align your decisions to your vision and mission? Many business owners and managers face challenges in making decisions; not because they can’t decide, but because they need to make a decision without an ethical framework.

Developing a business code of ethics is necessary for all business ownership. You need to identify how you want your business to be operated. If you have your ethics code written and available, making tough decisions will become easier.

What should a business code of ethics include?

A focus on the organization’s long-term direction (the vision) and the shorter-term goals (the mission).
Identification of values that are important to the business. A sense of your business culture.
What ethics means to your business: your definition of business ethics.
Acceptable workplace activities and behaviors.
Unacceptable workplace activities and behaviors and the sanctions or consequences that will result if unacceptable behaviors occur.
Orientation and training that will be provided to support the values and culture and ethics of the organization.
The role of communication and ethics: how will employees and other stakeholders understand what you value, or don’t value, without communications.
The relationship and responsibility of the organization within its community.
Industry standards and practices; and how your organization is focused on meeting or over-achieving against those standards.
For the most part we all like to believe that we are ethical in our decisions, and that is likely very true where there are clear-cut right versus wrong decisions. But the bigger challenge lies in making ethical decisions between right versus right options. These types of decisions are often the most difficult.
For example, is it right to continue paying your executives a high salary while you cut the work hours (and therefore the net pay) of your lower-paid employees? Is it right to provide a price discount to one customer but not the other? Is it right to reward one employee with a gift certificate for work well done on servicing a large account when other employees have worked hard to support smaller assigned accounts?

Your code of ethics should be written in clear enough language that these, and other, decisions are easy to make and easy to support. Additionally your ethics code needs to provide a basis or framework for assessment. The framework could be questions to be asked and answered.

For example, if you are faced with a significant issue:

Identify and determine the different points of view on the situation.
Define what the cost is (both tangible and intangible) of the proposed solution(s)?
Affirm that your vision, mission and values statements clearly support your proposed solution(s); in other words, are they aligned? (If the answer to that question is no, then either your solution is wrong or your vision, values and missions statements don’t accurately reflect your culture).
Does the proposed solution or decision ‘do no harm’ (this is the basis for most ethical reasoning)?
Reports of recent business ethics cases highlight the need for businesses to operate in an ethical manner. Your business brand and identity is tightly connected to the values and the ethics you demonstrate, and commit to, in your business. Build a business code of ethics; and make sure you ‘live’ to your code; you will build a stronger, more effective and more sustainable business.
Kris Bovay is the owner of Voice Marketing Inc, the business and marketing services company. Kris has 25 years of experience in leading large, medium and small businesses and has worked hard to build a strong reputation for ethical business practices. Kris also teaches a business ethics and practices course at the largest post secondary institution in British Columbia, Canada.

Business Franchising

CATWOE Model and Business Ethics

How to Build a Stronger Business? Align Your Business Ethics With Your Business Culture

Recent Posts

Partner Links

Archives

partner