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Ethics in Business Decisions

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Some stumbling blocks to responsible action are cognitive or intellectual. As the model of ethical decision making outlined above suggests, a certain type of ignorance can account for bad ethical choices. Sometimes that ignorance can be almost wilful and intentional. After you discover a lost iPod, you might rationalize
to yourself that no one will ever know, that no one is really going to be hurt, that an owner who is so careless deserves to lose the iPod. You might try to justify the decision by telling yourself that you are only doing what anyone else would do in this circumstance. You might even choose not to think about it and try to put
any guilty feelings out of your mind.

Another cognitive barrier is that we sometimes only consider limited alternatives. When faced with a situation that suggests two clear alternative resolutions, we often consider only those two clear paths, missing the fact that other alternatives might be possible. Upon discovering a lost iPod, you might conclude that if you don't take it, someone else will. Because the original owner will lose out in both cases, it is better that you benefit from the loss than someone else. Responsible decision making would require that we discipline ourselves to explore additional
methods of resolution.

We also generally feel most comfortable with simplified decision rules. Having a simple rule to follow can be reassuring to many decision makers. For example, assume you are a business manager who needs to terminate a worker in order to cut costs. Of course, your first thought may be to uncover alternative means by which to cut costs instead of firing someone, but assume for the moment that cutting the workforce is the only viable possibility. It may be easiest and most comfortable to terminate the last person you hired, explaining, "I can't help it; it must be done, last in/first out, I have no choice...." Or, in the iPod case, "finders keepers, losers weepers" might be an attractive rule to follow. Using a simple decision rule might appear to relieve us of accountability for the decision, even if it may not be the best possible decision.

We also often select the alternative that satisfies minimum decision criteria, otherwise known as "satisficing." We select the option that suffices, the one that people can live with, even if it might not be the best. Imagine a committee at work that needs to make a decision. They spend hours arriving at a result and finally reach agreement. At that point it is unlikely that someone will stand up and say, "Whoa, wait a minute, let's spend another couple of hours and figure out a better answer!" The very fact that a decision was reached by consensus can convince everyone involved that is must be the most reasonable decision. Other stumbling blocks are less intellectual or cognitive than they are a question of motivation and willpower. As author John Grisham explained in his book Rainmaker, "Every (lawyer), at least once in every case, feels himself crossing a line he doesn't really mean to cross. It just happens." Sometimes it is simply easier to do the wrong thing. After all, who wants to go through all the trouble of finding the lost and found office and walking across campus to return the iPod? Consider how you would answer the questions asked in the following Reality Check.

1. Give a brief synopsis of a time you made a business decision that did not have a favorable outcome. 2. Select one of the stumbling blocks discussed and relate it to your scenario 3. What would you have done differently given the insight you have now on the decision.

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Solution Preview

I recall being a new manager for a department of six employees which included two temporary employees. As I was new to the assignment and role and new to managing others outside of being a team leader in which I had no authority to hire and terminate employees, I made a few bad calls. The one business decision that I most regret that did not have a favorable outcome was firing one of the temps without throughly investigating. In most departments there are cliques and apparently, the staff had been after the employee for quite some time and ...

Solution Summary

This solution briefly discusses the use of ethics and rationale in making business decisions.

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Business Ethics and Hotel Injury

Here are links to TWO cases. The first case, the Margreiter v. New Hotel Monteleone, Inc. case, is the decision to the case in your homework problem. Within that case, you will find mentioned the second case: Nordmann v. National Hotel Company, 425 F.2d. 1103 (5th Cir. 1970). That case establishes the basis by which the court in Margreiter determined the level of duty the New Hotel Monteleone owed to Mr. Margreiter. It may help you with the remainder of this homework.
Read both cases. Then, answer the questions below.

Here are the cases:
Margreiter case
Nordmann case (I have attached the links below).

1. During an appeal, the appeals court is required to rely on the evidence submitted during the trial. The "record," which is made by both parties during the trial, including all objections and other submissions of evidence, is binding on the appeals court, unless it was erroneous or not reasonable to believe or accept that evidence. Further, decisions of fact and credibility are typically left to the jury to make, and appeals courts prefer not revisiting those decisions (unless they are beyond the weight of the evidence or defy credulity.) Because the jury can weigh the body language of the witnesses during trial, and the record on appeal can't show that, appeal courts prefer allowing juries to make "fact-finding" decisions. Judges on appeal try to look for legal theories to overturn cases (or uphold them.) They make the "law" based decisions, based on the record before them.
With that understanding, explain the decision of the appeals court in the Margreiter case. In doing so, discuss which facts the court relied on in its decision and which facts the losing party requested the appeals court decide the case on, although it refused to do so.

2. Now review the Nordmann case. The Margreiter court used this case to assist it with making its decision (see line two of paragraph #4 of the Margreiter opinion.) What did the Nordmann court say was the "duty of care" a hotel owes to a guest to protect him from injury by third persons? Provide that here. Then, review the facts that the Nordmann court relied on to determine there had been a breach of the duty by the Nordmann court. Briefly recite those here as well.

3. Notice that the Margreiter court doesn't state which duty it imposed on the hotel "it simply recites as "precedent" the Nordmann case for its legal basis. Now that you know the duty of care that the Margreiter court used in its decision, briefly compare the two sets of facts from the two cases. Then answer these questions:
a) Do you feel that the Margreiter case had as strong facts as did the Nordmann case for holding the hotel liable? Why or why not?
b) Which facts do you feel most strongly weigh in favor of the court's decision in the Margreiter case?
c) Which facts do you feel were a stretch by the court in Margreiter?
d) Which case do you feel was more of a "slam-dunk" case to decide and why?

4. Do you agree with the decisions by the Nordmann and Margreiter courts? Do you feel that the decisions were ethical in nature? Why or why not? Use one of your ethical dilemma resolution models to analyze the court's decision of one of the two cases to help support your answer and include that analysis in your answer (i.e., Laura Nash, front page of the newspaper, Blanchard & Peale, Wall Street Journal). Make sure to set out the steps of the model and apply your reasoning and facts to the model in your answer.

Links:
Margreiter case
http://ms.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19810119_0042645.C05.htm/qx
Nordmann case
http://bulk.resource.org/courts.gov/c/F2/425/425.F2d.1103.26894_1.html

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