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Ethical Reasoning in Business

On September 30, 1982, three people in the Chicago area died from cyanide introduced into Extra-Strength Tylenol capsules. The link between the deaths and the tainted capsules was made with remarkable speed, and authorities notified Johnson and Johnson. As the number of deaths grew—the final total was seven—the firm faced a crisis and, indeed, potential disaster. Tylenol, a leading pain-reliever, was Johnson and Johnson's single largest brand, accounting for almost 18 percent of the corporation's income.

The executives involved in deciding how to respond did not know the answers to these questions:

• Had the cyanide been put in the Tylenol capsules during the manufacturing process or later?

• Were the deaths that had already been reported just the first of a very large number?

• Would the deaths be limited to the Chicago area?

The United States Food and Drug Administration had issued a warning not to take Tylenol, but the government had not ordered the company to take any specific action. Perhaps the deaths would be local, and there would not be more than seven. Perhaps the authorities would not demand a recall. Perhaps a temporary cessation of sales until the source of the contamination was determined could prevent more harm to the public.

Against all these unknowns, the Johnson and Johnson executives had to weigh several certainties:

• A recall would involve a loss of up to $100 million.

• The loss was not covered by insurance.

• News of a recall could so damage the product that Tylenol might never be able to regain public confidence and its 37 percent of market share.

• The news and loss would surely result in a dramatic drop in the company's stock. (It did in fact go down 15 percent in the first week of October.)

• The competition in the analgesic market was fierce; competitors would try to make Tylenol's loss their gain.

These were certainties; the rest was guesswork and speculation. But, unwilling to expose consumers to further risk—and making a decision that puts them in the Ethics Hall of Fame—Johnson and Johnson ordered a recall of all Tylenol bottles. In the long run, public welfare and the company's reputation were protected by ethical decision making.

The Tylenol case obviously presents a major case of ethical reasoning. But ethical issues, large and small, present themselves every day. Business leaders need methods for dealing with them and arriving at reasonable decisions. There are three major approaches in ethics that have been defined by philosophers and theologians, and that are applied every day by many leaders who may never have read the works of the philosophers and theologians.

Three Approaches to Ethical Decision Making

The first approach is, moral rules derive from our rights and duties toward one another. The thinker most closely connected with this approach is the great philosopher Immanuel Kant (1724–1804), who expressed it in his Groundwork of the Metaphysic of Morals. For Kant, an action's goodness or badness is not based on the purposes for which we act; rather, it is based on whether or not the action could become a “universal law” for all moral actors in similar circumstances. So if it is wrong for any company to sell a potentially defective product, it is wrong for Johnson and Johnson to do so—despite the considerable cost of a recall. The focus is on the motivation, not the consequences, of an action. Furthermore, since all human beings share this ability to reason about moral actions, Kant believed that people must never be treated purely as means, but only as ends, in themselves. We cannot use other persons purely for some benefit to ourselves.

This rule would prohibit seeing the consumer purely as a means to corporate profit—as could have been done in the Tylenol case (but was not). Johnson and Johnson correctly recognized its duty to consumer welfare. However, the Kantian approach fails to consider the ends of an action. Morality should consider consequences (not just motives) of an action on the actual human beings who are affected.

John Rawls, likely the foremost philosopher of the twentieth century, takes a position very similar to Kant. Now Professor Emeritus at Harvard, Rawls laid out this principle in his Theory of Justice, first published in 1971. He argued that people will choose proper rules when they are forced to reason impartially. To attain such impartiality, Rawls asks people to reason from what he calls an “original position.” They should, in fact, imagine themselves behind a “veil of ignorance”—that is, as free, equal, rational, and self-interested individuals who do not know their place in society, how well they will fare in the natural lottery of talents, or their likes, dislikes, religious beliefs, and the like. In the original position, they know only the general facts about human society. It is assumed that they have different aims, but they cannot advance them at the cost of others, since all knowledge is held behind the veil of ignorance. Ignorance of these things guarantees impartiality in ethical choice.

According to this method of reasoning (from behind the veil of ignorance), the management and stockholders of Johnson and Johnson would have reasoned impartially—that is, they would never have put the consumer at risk any more than they would have been willing to put themselves at risk. However, the method is flawed; few can reason so abstractly about concrete daily moral problems. This difficulty becomes only more clear when Rawls spells out what we must “forget” to reason ethically (our place in society, talents, preferences, and religious beliefs). Rawls is also subject to some of the same criticisms as Kant; the actual impact on concrete human beings of any given moral decision never comes clearly into focus. This failure to consider consequences is remedied in the second approach.

This second approach holds that morality is not about rules and duty but about consequences. Known as utilitarianism, this position was defended most strongly by John Stuart Mill (1806–1873), who argued that actions that produce the most good for the most people are considered morally right. In this way, utilitarianism seeks the greatest good for the greatest number. Following this course, the decision makers at Johnson and Johnson would be forced to consider not only the interests of Johnson and Johnson but also the interests of the public at large. Determining the greatest good for the greatest number would require a cost and benefit analysis for all parties concerned.

This method of reasoning would have probably required the product recall. The protection of the millions of Tylenol users represents the greatest good for the greatest number and outweighs the financial costs to Johnson and Johnson. But if Johnson and Johnson believed that only a few would be poisoned, what then? Unfortunately, utilitarianism would allow large and unfair burdens to be placed on the few to benefit the many. This runs against many of our ethical sensibilities. What is more, such utilitarianism has little to say about the character of the greatest good for human beings. These defects are remedied in the third approach, personalism.

Human dignity is the center of personalism. Such a focus on human dignity is supported from such varied sources as the United Nations, Christian social thought, and the Dalai Lama. Ethical reasoning according to a personalist approach will ask the question, Which action most leads to the protection and promotion of human dignity? Of course, the key to answering this question for any issue will be one's understanding of the human person.

Aspects of the Person to Consider

Those within the Judeo-Christian tradition believe that all persons are created in the image and likeness of God. This belief gives a foundation for protecting and promoting human dignity. Roman Catholic social thought in particular has latched on to this approach to answer questions of business and economic ethics. (But not only Jews and Christians can affirm human dignity; Muslims, philosophers, and others also do so, for their own reasons and within their own traditions. I trust that the reader who is neither Jew nor Christian can find application for all or most of the ideas presented here.)

There are six basic aspects of the human person to consider when making ethical decisions in one's everyday work life. First, all things on earth are ordered to human beings as their center and summit. Indeed, human persons are spiritual beings distinguished as they are from other creatures by their capacity to know and to love. This capacity finds its perfection in the wisdom oriented toward what is genuinely true and what is genuinely good. God alone can offer the final fulfillment for human beings. In other words, God gives persons their true being, not simply in the sense of existence in time and space but also in the sense of life purpose, meaning, and ethical structure. To become truly what one is meant to become spiritually, a person must have “space” to practice spirituality. This means that your ethical decisions must have respect for and encourage various belief systems. For example, people need time off from work for religious holidays.

Second, God's being is not solitary but communal, a community of persons—Father, Son, and Spirit—who give and receive the gift of love. Human persons, created in the image and likeness of God, also find their true being in the process of giving and receiving love and in the experience of unity amid difference. Since a person only develops to his or her fullest with others, it is your ethical responsibility to encourage this. For example, you could give employees the opportunity to socialize, participate, work in cooperative settings, and join appropriate associations.

Third, persons are material. The basis for such a consideration is that God has created persons as body and spirit, and their everyday material processes should serve to reveal the hidden presence of God. Although, realistically speaking, the activities of caring for the body, providing for the needs of family and self, and participating in economic life do at times involve toil, the more salient truth is that, in the process of these activities, one can discover and recognize the activity and presence of the Creator. For example, consider a human meal. People eat and provide nourishment for the material needs of their bodies, but they also tend to do this communally. The material overlaps with the spiritual. Indeed, for Christians, the Eucharist, a meal, is the high point of worship. As an ethical decision maker, you should consider that a person requires food, shelter, and clothing to survive; therefore, you should pay just wages and benefits and provide safe and pleasant working conditions to protect a person materially.

Fourth, an understanding of the human person should emphasize freedom for the individual, because it is only in the exercise of our freedom that we can turn ourselves toward what is truly good. In our freedom and creativity, we may participate in and contribute to that process of giving and receiving love that involves God and other persons. The more people involved, the more giving and receiving of love there is. As an ethical decision maker at work, you will help others to move forward professionally and to exercise their creative abilities.

Fifth, persons are finite and thus subject to moral failings. In our finitude, we realize that we can never achieve the good that we often desire. We must learn patience, longsuffering, humility, and realism in setting objectives. Refusal to do this is a rejection of our bodily nature. Furthermore, in our freedom we have all refused to participate as we should in the process of giving and receiving love; the image of God in us all is thereby lessened and distorted. Since we are all prone to our weaknesses and moral inconsistencies, you can give your employees oversight, second chances, extra training, and even reassignment.

Finally, persons manifest equality in the sense that all are called to know and to love God, and all have certain rights and duties with respect to others. The basic equality among persons has been the basis for the call to provide all, especially the least advantaged, with the necessary support to achieve the ends of human life. Consequently, you must be careful not to discriminate on a non-performance basis.

In these ways, a personalist approach incorporates the wisdom contained in the prior methods. Universal obligation (Kant and Rawls) must be respected because of our equal human dignity, and we must consider carefully the ultimate impact (utilitarianism) on actual human beings when reaching a judgment. However, personalism surpasses these approaches by actually filling out our concept of human beings and their innate dignity.

Back to Johnson and Johnson

The Tylenol case helps us to see what these six principles for personalist ethical decision making might look like in practice. Johnson and Johnson's decision was compatible with their social responsibility to protect persons, whose unique value is inestimable. Human beings were put before things (money, in this case). This action was consistent with the protection of human dignity, and therefore the recall was a proper exercise of managerial freedom. Given our nature as morally inconsistent and shortsighted creatures, there was surely the temptation to do otherwise.

Johnson and Johnson protected our material nature. They recognized their social obligation. Because they, too, were fragile and morally inconsistent, they could have chosen otherwise. Spiritually, they maintained the public's trust. They recognized basic equality by not putting their own good above others. In sum, they chose the action that most led to the protection and promotion of human dignity.

It is a great relief to ethicists and moralists—and a source of deep satisfaction—that Johnson and Johnson fared so well in the long run in the wake of its highly ethical actions. Ethical behavior can be consistent with not only surviving but also thriving in the business world.