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Evidence-Based Decision-Making for Competitive Performance

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EBDM & Ethics

I’ve been looking at the topic of Business Ethics for about 40 years. I don’t think I’ve seen anyone who really has it right. I simply cannot abide the almost universal utilitarian approach. I simply reject as virtually useless any ethical system that is based on the notion that “ethics is good business.” Even if that were true, it wouldn’t matter. Ethics is not about results, it is about right behavior regardless of results or outcomes. Any other starting point will end up in the ethical cesspool of self-serving deception for gain.

Ethics is about doing what we “ought” for the sake of “right.” What it is “right” that we “ought” to do is a big subject that we cannot deal with comprehensively here. Nevertheless, any effort in this area has to begin with the truth about what is before we can proceed to what we ought.

Hence, Evidence-Based Decision-Making is the beginning and foundation of any ethical system. To put it simply, if we begin with lies, prejudice, self-deception, moral hazard, ignorance or confusion, we cannot possibly make decisions that will lead to determined ethical good. We will, at best, blunder from one dumb idea to another and, at worst, find every hope turned into determined, hedonistic self-indulgence.

If we begin with the truth about things – including a realistic assessment of certainty in our “truth” – we can then proceed to pass judgment on the ethical merits of actions and potential outcomes. It is only then that we can reasonably claim to have exercised moral agency.

Let me illustrate with an example drawn (more or less) from personal experience.

The Turnaround Task:

I was once tasked with turning around an organization that had been barred from all US government work. That organization had engaged in a complex and deliberate fraud where they had manufactured test results on US EPA contracts. Government inspectors had discovered the fraud and one person had been sent to prison. The company had been barred from all government work. For that particular business, this was the kiss of death. The company I was working for had purchased this operation and asked me to assess the situation and let them know if it made sense to try to keep them open.

After I had spent about a month reviewing the operation, I concluded that it would take many months to turn it around. They had the many of the wrong people, poor equipment, poor training and poor systems. I estimated that it would cost about $2 million to turnaround the organization. It seemed unlikely to me that my company would want to invest that much in a failed operation. Furthermore, I would be telling a management team that they would have to put a lot more money into a business that they claimed publicly was a shrewd purchase. That could cost me my job.

Fortunately, I was working for a man of great integrity who encouraged me to tell the unvarnished truth and just deal with the consequences. When I told the President of my company what I thought he paused, and a sly grin began to come across his face. He said, “Well I told the Chairman that this was going to cost us, but we figured if it didn’t cost more than two or three million it would still be a great buy!”

Instead of being the goat, I ended up the hero, but that hasn’t always been the case. At other times, doing the right thing has cost me. The key is being able to risk loss for the sake of “ought.” When we do what we “ought” in the face of significant risk of loss, then we can talk about having acted ethically. Until we get to that point, we might be able to claim we have acted prudently, but not ethically.

The Moral Imperative:

The story above illustrates a key feature of ethics:

Unless we are prepared to pay the cost, we cannot choose to do what we “ought.” Instead, we are become slaves to lesser issues such as safety, security and personal gain.

That cost can be monetary, but it can even be physical. We don’t see it much in modern Western Civilization, but in other parts of the world and at other times not too removed from us, we have seem moral choices cost lives. The utilitarian moralist can hardly argue convincingly in the face of very serious costs to the moral agent. Their feeble and convoluted arguments give little comfort to those facing embarrassment, ridicule, financial ruin, imprisonment or execution.

When the cost of finding and facing the truth becomes high, utilitarian arguments fail to motivate or guide. It is simply too easy to calculate that some greater good (especially our own) tips the scales against the truth.

If we are to be consistently seen acting ethically, we must make ethical behavior a part of our person – an integral part of us. Then and only then might we calculate that acting unethically is a loss on the order of losing self. Only then might we conclude that choosing the ethical path is right even though it costs us everything.

A Necessary Condition:

When ethical scruples become second nature, it then becomes possible to risk loss and question pre-conceived and self-serving ideas. Perhaps the most fundamental of all ethical scruples is a commitment to get to the truth, without regard for the cognitive dissonance that can arise from questioning what we think we “know.”

This scruple, if properly understood, never allows us smug comfort in our current body of knowledge. It drives us toward questioning, searching, resolving and improving without ceasing. It is more than curiosity. It is a quest for a holy grail without any real hope for final rest. It questions every proposition as somehow flawed and in need to improvement. It cannot abide the concept of absolute knowledge, but clings to the belief that improvement is not only possible, but is a matter of duty.

In such an environment, unsubstantiated rumor, unsupported claims, untested hypotheses and uncritical thinking of all kind simply cannot long endure. Every program and every plan will be scrutinized for achieving its stated goals and modified accordingly. This does not ensure ethical behavior. Many other scruples are needed to ensure that intended results meet ethical standards. Nevertheless, an environment of Evidence-Based Decision Making allows for an open analysis of assumptions, programs and activities. No progress toward ethical behavior is possible without this first step.