Legal Education Digest
J M Mitchell & E D Yordy
Journal of Legal Studies Education, Vol 27, 2010, No 1, pp 35 60
In October 2008, just days after the federal government gave millions of dollars to insurance giant AIG to bail the company out of financial crisis, a commentator for the Washington Post noted that several executives from an AIG subsidiary spent nearly $450,000 on a week-long retreat at a resort in California. If the comments to the online Post blog reflect the thoughts of the average American, people were not shocked by the behaviour, but rather expect this sort of behaviour from business leaders. One post in particular states, ‘HOW DARE THEY! We bail out these companies and they don’t learn’.
Yet business educators believe that they learn if they are given tools to help them recognise or prevent an ethical lapse in their organisation. As Marianne Jennings of Arizona State University recently wrote, ‘We [instructors] want our students to leave our classes with something that they cannot shake ... We strive to introduce some cognitive dissonance that stays with them and haunts them a bit when they are asked to do something in their business careers that probably crosses a line or two.’ Supporting this statement, David Gebler, an ethics consultant, adds ‘Most unethical behavior is not done for personal gain, it’s done to meet performance goals’. One of the goals of the model described in this article is to create a greater ability to recognise the negative aspects of making unethical decisions.
To this end, we developed an ethical decision-making model to aid students through the process of analysing these situations – a model that is easy to remember and apply. Through this model, the COVER model, students apply several ethical theories to analyse ethical dilemmas and come to decisions that are well informed and defensible. It is a tool to help students recognise and analyse ethical dilemmas. Ultimately, it is designed to help them make better decisions for themselves and their organisations.
Above all, they learn what questions should be asked – of themselves and others – and what factors need to be considered in their decision-making.
In 1993, Professors Piper, Gentile, and Daloz Parks of the Harvard Business School asked, ‘Can Ethics Be Taught?’ In their book, they reject the idea that it is not possible to teach ethics because students have already developed their personal ethical standards. Instead, they argue, students are at a stage of great exploration and are fully able, if not at their most able, to reflect on issues of right and wrong, moral absolutism and relativism, and moral courage.
Because the COVER model is not intended to teach students right from wrong or convince them to change their personal sense of ethics, faculty members on either side of the ‘can ethics be taught’ debate will find the COVER model useful. The model is a decision-making tool based in law and philosophy that invites users to analyse the ethical dilemma from a number of perspectives and use the results of the analyses to make a decision that they are comfortable defending to themselves, the media, the shareholders, and their supervisors.
Given that the model is intended to facilitate the decision-making process, rather than shape the personal ethics of the user, the real question for evaluation is whether a fairly comprehensive, step-like decision-making model is appropriate.
Over the past five years, a number of authors have proposed different ethical theories and frameworks as superior to others in ethical decision making.
One author has proposed a step-like model focusing on Sartrean Existentialism as the only philosophy needed to make well-reasoned decisions. While an interesting idea, the model gives no practical guidance to help students think through problems; its six steps are summarised in the sixth step: ‘Proceed with the choice that best reflects [one’s] awareness of freedom, [one’s] acceptance of responsibility and is most consistent with the [predetermined] goals and projects that [one] freely choose[s]’. The proponent of the model accurately acknowledges that ‘the model’s emphasis is on creating awareness and encouraging reflection’. Though both of those may be necessary for good decision making, it is not clear how the model guides one in actually making an ethical business decision that can be supported and defended to constituents.
Another model suffering from a similar defect proposes that the Triple Font Theory (TFT) be used to guide decisions. The TFT invites the decision maker to evaluate the moral end of the action, the subjective intention of the agent, and the circumstances and consequences of the action as the three determinants for making a decision. While seemingly simple in its statement, this theory, like the Sartrean Existentialist Theory, is not helpful to the student (or business person) who has little background in philosophical theories.
Recently, McDevitt et al argued that abundant theories exist and should be used to describe the influential factors in decision making without addressing the actual decision-making process. Instead, they articulated a highly complex integrative model. The first step of this model entails collection of content variables, including the decision maker’s demographic data, the influences of peers and managers in the job context, the executive leadership and organisational culture, and the external environment (such as societal norms). The model continues with a process of analysing the risk of making an unethical decision. The graphical version of the model contains 16 boxes linked by over 20 labeled arrows that walk the decision maker through an analysis of the risks associated with demanding an ethical action versus accepting an unethical action. Perhaps the fatal flaw in using the model to teach ethics comes when the authors acknowledge that there is a precondition that the decision maker recognises the ethical or unethical nature of alternatives prior to beginning the process. The model may accurately describe how a decision maker makes an ethical or unethical decision, but does not help a decision maker in determining whether an outcome is ethical or not.
One of the more interesting models for teaching ethics uses a baseball diamond analogy. In this model, students identify facts at home plate, identify alternatives at first base, apply a number of ethical theories at second base, assess the decision maker’s views of the world at third base, and then make the decision. While easy to remember the bases and what they stand for, this model becomes more difficult when one reaches second base and must think about which theories to apply and how.
The texts that provide the most instruction for business ethics are typically business ethics texts and legal studies textbooks with dedicated chapter(s) to ethics. Several of these offer full decision-making models for ethics. Marianne Jennings, a prominent legal studies and business ethics professor and author of popular business ethics and legal studies texts, sets forth a six- step process for resolving ethical questions. Those steps include determining the relevant facts, listing information one needs, analysing stakeholder affects, listing alternatives, evaluating the alternatives, and making a recommendation. While the steps are highly appropriate, the model lacks guidance on theories to use in the analysis of alternatives and reminds one of the baseball diamond model discussed above; students have no way to remember how to analyse the alternatives and no tools to do so.
A new business law textbook introduces the WPH Process of Ethical Decision Making. The WPH model comprises a stakeholder analysis (Who), a values analysis where the decision maker is asked to define the ultimate purpose of the decision (Purpose), and some ethics guidelines (How). For the ethical analysis, the authors advocate the Golden Rule, Kant’s categorical imperative, and a public relations test. As with Jennings’ model, the WPH model does not leave the students with an easy way to remember the analytic process.
Turning to texts dedicated solely to business ethics, one textbook author incorporates a variety of ethical theories with some decision-making rules for specific theories and supplements text with case analyses and role-play situations. The text specifically reviews five ethical perspectives (utilitarianism, universalism, rights theory, justice theory, and virtue ethics). After reviewing the theories, it presents several ‘quick tests’ to help decision makers think outside their default mode of thinking. These quick tests are simple questions related to individual theories that could be helpful when taken as a whole and yet are not presented in a manner to enable the decision maker to remember them. While offering a broad perspective, the discussion in the text does not give any cohesive process for making ethical decisions.
In their book, Business & Professional Ethics for Directors, Executives & Accountants, Brooks and Dunn introduce a number of different models and then state that the best approach ‘will depend on the nature of the proposed action or ethical dilemma and the stakeholders involved’. The authors then refer the reader to the seven steps outlined by the American Accounting Association: determine the facts, define the issue, identify the major principles or rules, identify alternatives, compare values and alternatives, assess consequences, and make a decision. Finally, the authors diagram the decision-making process in a diagram that does include some philosophical theories by referencing ‘consequentialism, deontology & virtue ethics and/or stakeholder impact assessment plus gap analysis of motivation, virtues and character traits [as described in approximately one page earlier in the chapter]’. Again, the framework espoused will not lend itself to be remembered easily or helpful in a decision-making situation.
In Business Ethics: Ethical Decision Making and Cases, Professors Ferrell, Fraedrich, and Ferrell set forth another framework for decision making combining moral intensity, individual factors, organisational factors, and opportunity with business ethics evaluations and intentions. The authors expressly state that the model is not going to help in determining if a decision is ethical or unethical but rather will ‘prepare [decision makers] to make informed ethical decisions’.
The COVER model, as set forth in the next section, also attempts to help decision makers to make informed decisions and gives guidance to those decision makers to determine if an alternative is ethical. It overcomes the problems described above with the models in the literature – those being narrow or insufficient philosophical coverage and inaccessibility or improbability of remembrance. The COVER model is easy to remember and accessible and is a comprehensive ethical decision- making tool.
The COVER model will help students learn to identify potential ethical dilemmas; ask relevant factual questions and gather appropriate information to come to a reasoned conclusion; think creatively about alternatives when faced with an ethical dilemma; identify and prioritise the stakeholders who will be affected by the decision in an ethical dilemma; locate and evaluate the appropriate laws, codes of conduct, and codes of ethics to inform their decision making; perform a cost/benefit analysis on the viable alternatives in a situation; and reflect on the impact of the business mission and culture, as well as their own personal values and beliefs, on decision making.
The model helps students to conduct a full analysis of the ethical issue before them with a memorable acronym. Studies have shown such mnemonics to be effective learning tools for students. Acronyms are ‘simple to integrate into classes and straightforward for students to grasp.’
The COVER acronym alone serves at least two purposes. First, some students will hear this title and think immediately of the recent scandals and the ‘cover-ups’ that have occurred over time. This leads to discussions of right versus wrong, analyses of why certain behavior is right or wrong, and some initial reflection on assumptions that individuals make when facing an ethical situation. Second, the title reflects the idea that the model is not to be used to help cover up any unethical behaviour, but rather is a tool to assist in thinking broadly and divergently – ‘covering the bases’ – as individuals evaluate a situation. The COVER model comes from the following mnemonic: ‘First I Ask Some questions to COVER my bases’: F = Facts; I = Issues; A = Alternatives; S = Stakeholders; C = Codes; O = Outcomes; V = Values; E = Editorial; and R = Rules.
The steps of the model are split in to two distinct components: Due Diligence (Facts, Issues, Alternatives, and Stakeholders) and Philosophical Analysis (COVER). As students work through the model, they may move from the Philosophical Analysis back to the Due Diligence as new facts are discovered and new stakeholders are considered or new alternatives surface.
Prior to any philosophical analysis of a situation, it is important to conduct what we call ‘Due Diligence.’ This entails defining the scope of the question and conducting a sort of ‘environmental scan’ to determine who is involved or impacted by the decision and what information is available or needed. The first four steps of the COVER model will walk students through this phase. They are as follows: (1) Determine the facts (including what one does not know but would like to know); (2) Identify the ethical issues; (3) Consider alternatives; and (4) Identify the stakeholders. These four steps are not sequential, and students may find themselves moving amongst them. For example, the student may make a list of known and unknown facts. As the student begins to look at alternatives, more questions of fact may arise.
The philosophical analysis of the ethical situation comprises numerous philosophical approaches to ethics.
In the Code analysis, students look to legalistic documents to inform their decision. Students should brainstorm areas of law to research further, as well as apply any areas of law with which they are familiar. Students also should review relevant codes of conduct or ethics for their industry or company.
The Outcomes analysis is based in a philosophy known as Utilitarianism. John Stuart Mill (1806 1873) stated that ‘actions are right in proportion to their tendency to promote happiness or absence or pain, and wrong insofar as they tend to produce pain or displeasure.’ Yet another description of utilitarianism is that it is ‘committed to the maximisation of the good and the minimisation of harm and evil’. Cost-benefit analyses are rooted in utilitarian philosophy. Students should include a financial analysis as part of the cost–benefit analysis, even when they are not given financial information. Anecdotal evidence from use of the model shows that students are likely to forget the financial analysis if they are not given financial figures in the problem.
The Values analysis is rooted in many different philosophical theories that are discussed more fully below. In doing this analysis, students are asked to look at a number of different sources of values. Corporations commit to their values (at least on paper) with their mission statement, strategic plans, goals, and similar documents. There may be a company motto related to the treatment of customers. In this section, students may be asked to analyse conflicting values, such as a mission statement that would direct one result, but corporate culture that may lead to a separate result.
The Divine Command Theory of ethics, for example, is rooted in teaching of religion. In essence, this theory states that individuals determine right and wrong based on the commands of a higher being. Students are asked to look at how their background and religious teachings inform their beliefs about the ethical dilemma at hand.
Rights-based theories address fundamental rights that individuals believe should be supported.
Finally, the concept of Corporate Social Responsibility (CSR) is part of the Values analysis. CSR is the idea that corporations have a duty to go beyond obedience to the law, profit, and minimal ethical standards to affirmatively reach out and promote philanthropy.
The Editorial analysis combines some aspects of the Outcome analysis with some aspects of the Values analysis. There may be a mention of the publicity effect in the Outcome analysis – there probably should be for any major decision. Students must combine some of the values of the company with the negative publicity to determine which of the alternatives the company is willing to defend.
The Rule analysis is based in the ‘categorical imperative’ philosophy of Immanuel Kant (1724 1804). In essence, the categorical imperative asks the decision maker to evaluate each alternative as if that alternative were to become the rule for all others to follow. This analysis encourages the students to give importance to all decisions. It is impossible under this analysis to rely on notions like, ‘it is just one small violation’, ‘we are a small company and our pollution does not really make a difference’, and other such rationales.
To complete the model and bring the decision-making process back to the initial question, it is important for students to make a preliminary conclusion. In the conclusion, it is important to point out which alternative is selected and which analyses support that conclusion.
The conclusion is typically listed as preliminary because quite often students finish the exercise wanting more information. In many courses, the students may be able to identify areas of law that should be reviewed and would want to wait to commit to an alternative until that research is complete.
The COVER model is flexible enough that it has been used in the classroom in a variety of ways. As an introduction to an ethics unit, faculty members have used the Due Diligence components to discuss identification of ethical issues, stakeholder theories, and moral imagination. Then, they have used the COVER analysis to introduce each ethical theory with mini-case studies for evaluation under each theory.
Our use of the model in class has shown that discussions related to ethical theories and the impacts of making ethical decisions have become richer and more focused on critical thinking than on mere information transfer.
The COVER model of ethical decision making gives decision makers ‘the tools they need to identify and think through ethical issues’ and the insight as to ‘what questions should be asked – of themselves and others – and what factors need to be considered in their decision-making’. The model walks students through a number of ethical theories and aids them in creating a thorough and complete analysis. The COVER acronym is easy to remember and helps decision makers recall the ethical theories when needed. It also prepares them to address any potential negative consequences of the decision.
Perhaps the use of the model would have allowed even the executives at AIG to make a better decision, or to anticipate better the negative publicity associated with their retreat. The use of the model would have allowed them to prepare for the backlash and preempt comments such as the one posted on the Washington Post Web page.