Deontology Should Govern Decision Making in Business

Principle of Utility Maximisation

Teleology refers to consequences and is founded on the principle of utility maximisation. This concept judges behaviour by its effects on the overall welfare of all stakeholders. Deontology, on the other hand, views consequences as secondary. Under this philosophy, decisions and acts are evaluated in terms of their intrinsic worth. Deontology is more demanding than teleology, because it rates decisions and acts in absolute terms. For example, even if a decision or action satisfies the rule of the majority, deontology would reject that articular option if, as a result of it, a minority of stakeholders are likely to suffer. Decision making in business When business firms are charged with infractions, and when there is legal investigation on the managers of those firms, there is a concern raised about moral behavior in business. Hence, the level of trust, which is one of the foundations of the business environment, is threatened. In fact, managers often have to make decisions under economic, professional and social pressure. The decision-making process will always present ethical challenges. Is this the right thing to do?

This question is the essence of the ethical dilemma for any decision maker in today’s corporations. A collection of factors will be taken in consideration in answering to this question. Is it right for the company? Is it right for the shareholders? Is it right for the society? For the customers? For the decision maker himself? Indeed, business people have many sources of ethical theories to choose from when making decisions. Each moral system gives a unique perspective on different situations. Managers and business owners use these guidelines to act in fair and socially responsible ways.

The ground rules about which a decision maker will care are hence highly dependent on the moral approach.

Characteristics of deontology

Deontology bases itself on the intrinsic worth of the decision or act. No allowance is made for unethical conduct under this philosophy. A business manager, who accepts deontology, will hold that some moral principles are binding, regardless of the consequences. Deontological ethics is the opposite of consequential ethics. The moral person does his duty regardless of the consequences.

If a manager takes a deontological approach to ethics, he defines his duty by asking "What is the universal principle to be followed? " Deontological ethics refers to an established source of ethics guidance, such as industry standard or an official code of company conduct. In fact, Immanuel Kant refined deontological ethics and posited that the nature of morality is to do one’s duty even when we are not inclined to do it, and not because we are afraid of the consequences of not doing it. Kant referred to deontology as the categorical imperative.

Under this principle, a moral imperative must be categorical or absolute, providing a lasting motive to adopt a particular course of action, categorized as ‘right’ or ‘ethical’. The rationale behind the principle of deontology is that each action has intrinsic worth and unconditional value. Ferrell et al. (2008) refer to deontology as non-consequentialism, ethical formalism, or ethics of respect-for-persons. The principle of deontology states that decisions should be judged on the circumstances in which they are made, rather than by their consequences.

Deontology is the study of duty. In philosophy, it means specifically ethics based on duty regardless of consequences. Deontological ethics refers to rules stated in terms of other features of the courses of action, notably whether they represent fulfillment of an agreement or other duty or right, and/or involve the treatment of others with due respect. Since human beings have free will and thus are able to act from laws required by reason, Kant believed they have dignity or a value beyond price. Thus, one human being cannot use another simply to satisfy his or her own interests.

This is the core insight behind Kant’s second formulation of the categorical imperative: “Always treat the humanity in a person as an end and never as a means merely. ” What are the implications of this formulation of the categorical imperative for business?

Arguments in favour of applying deontology in business

The deontological theory states that people should adhere to their obligations and duties when analyzing an ethical dilemma. This means that the person will take into consideration his obligations to other people involved and the society at large when taking a decision thus fulfilling his duty which is considered ethically correct.

A deontologist will never break a promise made to other parties. He will never to do something that is against the law. Thus a deontologist will be very consistent in his decision making which will be based on duty of the individual. Deontology provides the basis for special duty towards other individuals like your family members. For example, older children have a special duty of protection and care for their younger siblings, in the absence of parents older children are expected to take due care of the younger ones preventing them in doing things that may cause harm to themselves

Deontology also praises those who do an act of supererogation; this is when someone exceeds his duties and obligations towards other persons or the society at large. For example, in case of a fire in a building, someone may go inside the building on fire risking his own life to save the lives of others. His duty would have been to call the fire services where fireman are equipped to handle this situation but instead of waiting for the firemen , he exceeds his duty by saving other people himself. It should be pointed out that the “respect for persons” principle does not prohibit commercial transactions.

No one is used as merely a means in a voluntary economic exchange where both parties benefit. What this formulation of the categorical imperative does do is to put some constraints on the nature of economic transactions. Another concern about contemporary business practice is the extent to which employees have very limited knowledge about the affairs of the company. In an economic view, a Kantian approach to business ethics terminology, there is high information asymmetry between management and the employees.

Wherever one side has information that it keeps from other side, there is a severe temptation for abuse of power and deception. A Kantian would look for ways to reduce the information asymmetry between management and employees. In practical terms, a Kantian would endorse the practice known as open book management. The adoption of practices like open book management would go far toward correcting the asymmetrical information that managers possess, a situation that promotes abuse of power and deception. Open book management lso enhances employee self-respect. For a Kantian, meaningful work:

is freely chosen and provides opportunities for the worker to exercise autonomy on the job;

• supports the autonomy and rationality of human beings; work that lessens autonomy or that undermines rationality is immoral;
• provides a salary sufficient to exercise independence and provide for physical wellbeing and the satisfaction of some of the worker’s desires;
• enables a worker to develop rational capacities; and
• does not interfere with a worker’s moral development.

. Arguments against applying deontology in business Management, by definition, is the planning, leading, organizing and controlling available resources to achieve goals and objectives. Hence, one of the basic functions of management, controlling, is according to Harold Koontz, “the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished”. Consequently, it is largely based on outcomes and accountability of the business.

Managers are therefore required to be accountable towards achieving their objectives and one of the ways to achieve this is by analyzing whether their actions are in line with expected outcomes and henceforth modify their future decision making process accordingly. In fact, this function is considered as one of the fundamental aspect of management and deriving from this will give rise to a major shortcoming in management decisions. Relying on universalism and good will of managers will not be enough in management decision making to achieve the vision, goals and objectives set by the organisation.

Deontology requires that managers’ decisions be based on duty instead of consequences and must be followed for its own sake irrespective of the outcome. Such stance is considered as inflexible. It should be noted that norms vary from culture to culture, society to society and even people to people. Consequently having a rigid stance in respect of decisions may not be the best initiative for managers. The definition of right and wrong will depend on the culture, individual or historical period.

Decisions taken in particular societies might be considered as ethical while in others as non-ethical. In this context, it is easier to understand why, when faced with the requirement to select a model of how we ought to live our lives, many people choose the idea of ethical relativism, where that ethical principles are defined by the traditions of their society, their personal opinions, and the circumstances of the present moment. The idea of relativism implies some degree of flexibility as opposed to strict black-and-white rules.

From this perspective, it is better for managers to base their decision as a result of interactions with individuals and social institutions. Moreover, by definition an organization comprise a group of people with common objectives. No organization would be able to survive without its “people” such as owners who risk their money in the business, employees who provide the mental and physical efforts required for successful working of the business or managers who are involved in the daily operations of the organization.

Care Based-theorists Seek Solutions

Managers know that without its people there won’t be any organization. Hence, recognizing the stakes of such stakeholders is sometimes fundamental for the survival of the company. Sticking to a “rule based” approach as proposed by deontology might not help in certain cases where human resource for instance is involved. Care based-theorists seek solutions to ethical challenges on a case-by-case basis. To do otherwise means applying a blunt instrument across all situations (Hovland & Wolburg, 2012).

They recognize that their approach requires stepping out of a comfort zone of “infallible” rules, but because it is grounded in human relationships, their approach is more likely to find solutions based on fairness (Hovland & Wolburg, 2012). Care-based theorists assume that humans are interdependent and need others for survival (Tronto 1993), that moral reason involves the interplay between emotions and reason (Noddings 2003; Held 1993), and that moral solutions must work for people within the context in which they live (Slattery et al. n press). In 1970, Nobel Prize winning economist, Milton Friedman published an article under the provocative title ‘The social responsibility of business is to increase profits’ where he posited that the managers’ fiduciary responsibility is to make profits since it is the main reason behind the setting up of firms. He added that distancing from such objectives would simply mean a theft towards shareholders(Crane and Matten 2004).

Hence, he vigorously favoured the philosophy that firms should only aim towards profit maximizing and any other responsibility can only be considered if firms achieve their main objective. If we look at the ethical egoism principle which stipulates that it is necessary and sufficient for an action to be morally right that it maximize one's self-interest, we can see that there is link between these two philosophies. Egoism differs in content from deontological theories such as Kantianism which give weight to the interests of others (Stanford Encyclopedia, 2012).

Abiding to deontology in decision making and favouring any other considerations than that of the shareholders own interests would simply mean drawing away from ethical egoism and hence would considered as a theft out of their pocket. On the other hand, Edward Freeman, who was one of the founding fathers of the stakeholder theory, challenged the idea of Friedman that the main responsibility of business was to maximize profits without any considerations for the interests of all those affected by the business, including customers, suppliers, employees, and, of course, stockholders.

There are two principles underlying the stakeholder theory (Crane and Matten 2004):

• Principle of corporate rights which requires that a corporation should not violate the rights of others to achieve theirs; and
• Principle of corporate effect which requires that business should be accountable of the effect or impact on other parties.

However, if we analyze the second principle, it is clear that it is drawn from the utilitarianism philosophy which considers morality on the basis of consequences of actions and the maximization of good to all sections of the society (Greenwood and De Cieri, 2005).

Based on this principle of corporate effect, making decisions only on a sense of “duty” or universal principles may not necessarily give rise to the greatest good to the greatest number of parties and will be in contradiction to the Stakeholder Theory. 6. Conclusion The perceived weaknesses of deontological theories have lead some scholars to consider how to eliminate or at least reduce those weaknesses while preserving deontology's advantages. One way to do this is to embrace both consequentialism and deontology, combining them into some kind of a mixed theory.

Given the differing notions of rationality underlying each kind of theory, this is however a difficult task.

Consequentialist Versus Deontological Ethical Systems

What is “good”? How does a person decide what is good? Over the course of history, various thinkers have tried to develop systems which guide human thought on this question. Some of the most important ethical theories are the “normative” theories -- that is ethical theories which try to establish authoritative standards by which conduct can be judged. Under the general heading of “normative,” two of the most important schools of ethical thought are the “consequentialist” and the “deontological schools of ethical thought. (“Normative Ethics” n. d. )

Consequentialism is the school of thought which asserts that the morality of a given action is to be judged by the consequence of that action. If the consequences are good, the action is good. Consequentialism is generally divided into a number of theories, including: utilitarianism and ethical egoism. Utilitarianism holds that the right action is one that produces the greatest good/pleasure (and least pain) for the greatest number of people. Utilitarianism has its root in the seminal figures of Jeremy Bentham, John Stuart Mill, and Henry Sidgwick.

Classic Utilitarians

Classic utilitarians developed a system which is could best be described as “hedonistic act consequentialism. ” Their system was “consequentialist” in that its proponents claimed that an act is morally right if the act causes the greatest good. To calculate this, one had to compare the total amount of good that the act caused, minus the total amount of bad that the act caused. If the net total net amount of good was greater than this net amount of good for any other act that the agent might have performed, then the act was good.

Their system was “hedonistic,” in that they claimed that pleasure was the only true “good” and pain is the only true “bad. ” This system was summed up in the common statement, “the greatest happiness for the greatest number. ” (Kemerling, 2002; Hollinger, 2002, p. 31-34: “Normative Ethics,” n. d. ; Lee, 2000, “Utilitarianism”; Sinnott-Armstrong, 2006) As Mill articulated this system, utilitarianism was consequentialist rather than deontological because included certain key points of denial. Utilitarianism denied that the moral rightness of any act depended on anything other than the consequences of the act.

This left the utilitarian system open to attack because of the hedonism it advanced. (Hollinger, 2002, p. 34-36; “Normative Ethics,” n. d. ; Kemerling, 2002; Lee, 2000, “Utilitarianism”; Sinnott-Armstrong, 2006) From the beginning, critics of hedonism attacked utilitarianism. They criticized John Stuart Mill as trying to degrade the value of human life to an animalistic level. One of the more commonly used arguments was that vulgar acts, such as orgiastic sex might produce greater transient pleasure than some disciplined higher act such as studying fine poetry. (Hollinger, 2002, pp.34-36: “Normative Ethics,” n. d. ; Kemerling, 2002; Sinnott-Armstrong, 2006)

Mill tried to respond to these charges by setting up a distinction between lower and higher qualities of pleasure. (Mill, 1861, 56) This did not satisfy Mill’s critics, who contended that in the end, utilitarianism supported hedonism. Critics find these systems overly technical and confusing, and utilitarianism fosters an “end justifies the means” line of reasoning. Further utilitarianism does not accept the notion that some acts are absolutely ethically wrong, so that potentially it can be warped into a system justifying any means.

Hollinger, 2002, pp. 34-36; “Normative Ethics,” n. d. ; Kemerling, 2002; Lee, 2000, “Utilitarianism”) Egoism is the view that a moral person is a self-interested person. The primary exponents of ethical egoism, include Epicurus, Adam Smith, and Ayn Rand. Critics charges that the ethical system of Epicurus leads to an austere hedonism. Adam Smith’s “invisible hand” would cause the most productive state of an economy to be reached by allowing all of the people in the economic unit each to pursue his own self-interest.

Deontological Ethical Theory

Ayn Rand professed a view of rational self-interest, saying that altruism was irrational. (Hollinger, 2002, pp. 28-31; “Normative Ethics,” 2002; Sinnott-Armstrong, 2006) Deontological ethical theory takes its name from the Greek root “deon,” meaning “that which is obligatory. ” It is ethical theory based on a concept of duty or obligation. Turning then to principled ethical systems, stem from Socrates, who felt himself duty bound to accept the ruling of the court in Athens, which had ordered him put to death.

From Socrates, one can move ahead to Immanuel Kant, whose philosophical system led to his system of the “categorical imperative”: “Act so that you treat humanity, whether in your own person or in that of another, always as an end, and never as a means only. ” To develop his “Categorical Imperative,” Kant looked to the roots of morality in humanity's rational capacity and meticulously developed a system based on moral absolutes. He argued that these are inviolable duties, rules which must be followed absolutely and in every possible situation. (“Normative Ethics,” n. d. ; Hollinger, 2002, pp.37-39)

Another school of deontological thought is the contractarianistic school exemplified by John Rawls or Thomas Hobbes. This theory asserts that moral acts are those act that all people would agree to if they were completely unbiased. (“Normative Ethics. ” n. d. ) Finally, there are philosophers such as John Locke, also considered deontological, who presented the idea that all men are endowed with certain inalienable rights. (“Normative Ethics. ” n. d. ) Immanuel Kant (1724-1804) set forth what is generally accepted as the most advanced theory of deontological or duty-based ethics.

Contrary to the consequentialism of Mill, Kant’s theory judges morality by examining the nature of actions and the will of agents rather than the goals sought or the ends achieved. To describe this in general terms, this deontological theory focuses on the inputs leading to actions rather than outcomes produced by those inputs. This does not mean that Kant did not care what the outcomes of his actions were. Like other men, he wished that things would go well. But Kant insisted that as far as the moral evaluation of our actions was concerned, consequences did not matter. (Hollinger, 2002, pp. 37-39; “Normative Ethics,” n. d. ; Kemerling, 2002)

In his philosophical studies, Kant tried to establish a rational principle that would stand as a categorical imperative for ethical judgments. He insisted that the imperative, or duty, had to be categorical, not merely hypothetical, or conditional, because true morality could not depend on such things as individual likes and dislikes, abilities, or opportunities. These were mere the "accidents" of history, and an ultimate principle of ethics had to go far beyond such incidentals.

Second Statement of the Rule Stresses

Eventually, Kant developed his categorical imperative, which he articulated in several different versions, including: Always act in such a way that you can also will that the maxim of your action should become a universal law. and Act so that you treat humanity, both in your own person and in that of another, always as an end and never merely as a means. The first version of the categorical imperative emphasizes an idea important to Kant’s thinking of the idea that any rule was valid only if it could be applied universally. The second statement of the rule stresses the importance of respecting persons as more important than things.(Kay, 1997)

Deontological ethical theories are strongest in the areas where utilitarian theories face the greatest difficulty. Ethical rules based on duty have the great advantage that the ends can never justify the means. For example, suppose a ruler wished to revive the Roman practice of public crucifixion of criminals. Even if it was determined that the general populace was so caught up in a blood lust that the pleasure of the masses who would watch the agonies of the condemned far, far out-weighed the suffering of the victim, the categorical imperative demands that individual human rights be acknowledged and held inviolable.

No matter how much the public wants this spectacle, it must be dismissed from our moral deliberations. (Hollinger, 2002, pp. 38-39: Kay, 1997) Putting Kant’s categorical imperative into practice, however, has presented a number of serious problems. First, the categorical imperative gives only absolute results. Actions are “good” or “bad. ” There is no room for "gray areas. " For example, lying is always wrong -- even the "polite lie" or the lie told for noble reasons. Second, duties often come into conflict, and the categorical imperative gives no means to resolve these conflicts.

Utilitarianism permits a ready comparison of all actions, and if a set of alternatives have the same expected utility, they are equally good. Conflicting duties, however, may require that I perform logically or physically incompatible actions, and my failure to do any one is itself a moral wrong. (Hollinger, 2002, p. 39: Kay, 2002) Because neither theory is satisfactory in its pure form, I am compelled to use a blend in real life. I follow a utilitarian approach in the sense of trying to maximize the good that I bring to people, but with an awareness that there are categorical situations beyond which I will not go.

Pros and Cons of Ethical Theories

 The similarities between the virtue theory, the utilitarianism theory and deontological theory are that they all support good and responsibility. Virtue theory not only concentrates on how an individual acts but also what a person should strive to be, for example a religious figure may personify perfection when in the public when they really should strive for that perfection at all times. The deontological theory states that people “have a moral obligation to follow certain principles. I liken this to the Ten Commandments, rules or principles that we all are expected to follow. “The utilitarian theories, as supported by John Stuart Mill, call for generating the greatest aggregate good for the greatest number of people. One major benefit of such theories is that they take consequences into account. They seek specifically to promote the human good as a whole. They also provide guidance for behavior, enabling people to know what qualifies as the moral choice. ” I will again use the religious area as an example because to me this is what the religious leaders do.

They preach to the multitudes to be good and do good and they also offer guidance. The differences between virtue theory, utilitarian and decontological are that “virtue ethics cannot generate specific rules to guide behavior. ” Under the utilitarian theory “only total human good or happiness matters. ” Deontological theories “do not always clarify how to rank duties. ” I lived in a very small community where everyone knew everyone and we all thought we were living the life of good moral standards and values, until one day I saw a very prominent member of the community, enter an establishment that everyone knew was a hangout for drug users.

This person was there for a long time and when they came out you could tell they were under the influence. Now according to the deontology theory it was my obligation to report this person to the proper authorities, but I fell short because it meant the demise of a family.

References

1. Ridley, Aaron. 1998. Beginning Bioethics. New York: St. Martin’s Press http://www. bio. davidson. edu/people/kabernd/Indep/carainbow/Theories.
2. htm http://www. ehow. com/info_8404891_pros-cons-ethical-theories. html

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