A Compass for Decision Making, Article Review Example

Introduction

Today, the views of the public about the role of corporations, and their management are rapidly changing. Many companies are now embracing corporate social responsibility, in order to serve their stakeholders better, and to engage with the public. The below essay will examine the recent trends in leadership of corporation that aim to improve integrity, engagement, vision and mission development, as well as leading change.

The Role of Today’s Organizations

Reflecting on the changing role of organizations, Paine (2006, p. 54) concludes that “societal changes have necessitated only incremental modifications”. The changes, however, were not only present in the society, but in the global economy, governance of countries, and the development of technology, as well. One of the results of the changes in the operating environment of corporations is what Paine (2006, p. 54) calls “moralization of the corporation”. The reputation of companies is more vulnerable than ever, due to the development of information technology, therefore, companies need leaders who can commit to high ethical standards, and implement them in the day-to-day operations of the organization.

Managers’ decisions today – according to Paine (2006) need to include moral concerns, and this changes the way companies are expected to operate. Conducting a competitive or financial analysis is no longer enough to make the right decisions: the actions need to be tested against the moral values of the company and the leadership. However, there is one important question that is not covered by Paine’s article regarding the morality of decisions within companies: the communication of ethical values with employees. It is extremely important that the vision and mission of the corporation are approved and embraced by the entire organization. Effective leaders, who manifest transformational leadership traits have the ability to clearly communicate the vision and gain engagement from followers. This way, the entire organization can become more ethical. Today, due to the speed of online media communication, one unethical action that is taken by one particular employee of the corporation can gain a huge publicity worldwide, and can severely damage the reputation of the company.

One of the main shortcomings of Paine’s article is that it focuses simply on the role of leadership to make ethical decisions based on moral principles, but ignores leaders’ impact on the behavior of employees, and the importance of shared values within the entire organization.

The Compass of Decision-Making

Paine (2006) reviews four different modes of ethical analysis that should be used by leaders for assessing the morality of their decisions. These modes are: purpose, principle, people, and power. These modes will be examined in detail below in order to determine their role in managerial decision-making.

Analyzing the purpose, and the decision’s alignment with it is a pragmatic assessment. However, again, Paine (2006) neglects the role of vision and organizational mission, which might be relevant to this analysis. Indeed, checking whether or not the decision is in line with the main purpose (mission) of the company is a more effective approach, based on my personal perception. Aligning decisions with the purpose of the organization is improving the overall effectiveness of the corporation, and helps it achieve its targets faster. As an example, when the company is looking to decide whether or not they should move their operation to another country, it needs to examine the mission of the corporation. If one of the main purposes detailed in the mission statement is to provide the best price for customers, and outsourcing operations would reduce operational expenses, the decision would serve the corporation’s purpose. On the other hand, if the mission of the company involves creating more jobs nationally, the decision to move operations overseas would not be aligned with the mission.

Principle analysis, on the other hand, is linked to organizational values, therefore, it is suitable for assessing the ethical and mission implications of the corporation. The norms of the company would create boundaries for the leadership, and it is important when power is concentrated within the top management. However, even today, many companies lack a clear value system, and confusion about basic principles of conducting business exists within the leadership.  Reflecting on the principal mode of decision-making it is important to note that aligning decisions with principles is only possible if standards and norms are clearly defined and communicated within the company.

The “people” analysis is somewhat similar to what several authors call “stakeholder analysis” (Reed et al., 2009). The impact of decisions on all stakeholders (people likely to be affected) need to be assessed. This, however, involves more than measuring the projected benefits and disadvantages. Recent changes in the global business environment have resulted in the expansion of companies’ stakeholder base. Corporations doing business abroad need to consider their environmental impact on the area, and align their decisions with their corporate social responsibility initiatives. Reed et al. (2009, p. 1935) also states that “stakeholder analysis can be abused to empower or marginalise certain groups”, therefore, organizations need to ensure that they involve stakeholders in the decision-making process, and hold consultations whenever they identify that one particular group would be more affected by the decisions than others.

Power analysis, on the other hand, is a problematic aspect of managerial decision-making. Power, according to Paine (2006) does not only involve authority, but resources and knowledge, as well. One question stands out from the list of the author, though, which needs to be analyzed in detail: “have we secured the necessary approvals or consent from the relevant authorities?” (Paine, 2006, p. 60).  Again, the author defines approval as simply legislative, and does not mention the engagement of employees, as well as other stakeholders. The approval of the community, as well as employees (followers) can positively impact the outcome of decisions, and increase the overall power of the organization.

Paine, after analyzing the four modes of decision-making state that corporations should make their decisions more centre-driven. This statement also indicates that leaders should perceive themselves not only as decision-makers, but moral actors, as well. Decisions made should be sound both ethically and economically.

Personal Reflection

In my personal decision-making, I always reflect on my values and principles, before assessing the proposed benefits and disadvantages of each decision. I also assess the investment (time and money) required, as well as the return on my investment to make the final decision. However, I always make sure that first I check the proposed decisions against my personal values and norms. Making no harm and creating a positive change – I believe – help me make decisions aligned with my moral norms and ethical principles.

In my company, the ethical norms are clearly communicated with all employees, and the shared values make decision-making easier. Ethical considerations are always taken into consideration, through aligning the goals and processes with the shared vision and mission. The legality and impact is in the main focus of the decision-making process: the company often creates impact and feasibility reports prior to making a decision.

In my company, there are no specific measures created to assess the ethical aspects of decisions, however, – through aligning the decisions with organizational values – this purpose is served. In my department, organizational goals are always considered, and the impact of departmental decisions on other business areas, as well as customers. The company has its own “code of conduct”, which is assessable for all employees. Further, training provided for all workers and managers covers the basic ethical principles of the company.

In my company, ethical analysis is carried out on the basis of the principle that the decision should create the most benefits and impose the least harm for all stakeholders. Stakeholder analysis (people, according to Paine (2006) is implemented in the decision-making process, and often discussions are held between representatives of departments, legislators, and the public. Using the Utility principle (Gampel, 2007), the company uses two main principles:  non-maleficence (not causing unnecessary harm) and positive beneficence (taking action to benefit people).

My company’s leadership development program focuses on not only moral assessment of decisions, but also on skills that enable future leaders to create their personal moral principles,  develop ethical norms and principles, as well as communicate their vision with followers. Focusing on transformational leadership, the training programs are designed to empower self-awareness, as well as help leaders engage with employees, and promote shared decision-making, so different views can be expressed during the process.

Works Cited

Gampel, Eric. “A Framework for Reasoning about Ethical Issues”. Academia.edu. 2007. Web.

Paine, Lynn. “A Compass for Decision Making” In: Responsible Leadership. Thomas Maak and Nicola M. Pless (eds). 2006. Print.

Reed, Mark S., et al. “Who’s in and why? A typology of stakeholder analysis methods for natural resource management.” Journal of environmental management 90.5 (2009): 1933-1949. Print.