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Wednesday, November 16, 1994
Richard C. SchusterWhen it comes to managing human assets, "I feel like I'm trying to tell you to fly without knowing how to do it myself," said Schuster. We live in a world of "alphabet soup laws" with the business climate changing everyday. Those impacted make and deliver goods and services and receive goods and services--employees and customers.
According to the "stakeholder" theory, the business manager serves multiple masters. Who are these masters, and what are their demands? Shareholders demand protection of, and a fair return on, their investment. Customers demand delivery of promised goods and services for value received. Employees demand a safe working environment, fair compensation, and honest communication. Senior management demands adherence to direction and policies. One's personal belief system demands truth to one's self, and our communities demand that we abide by established laws and mores. Herein lies the potential for conflicting interests and personal pain.
If ethics are defined as an accepted standard of good behavior, the questions arise: What is "good behavior?" By whom are the standards accepted and enforced? When a situation arises in which one is faced with a choice between equally unsatisfactory alternatives (a dilemma), how does one prioritize the demands of the masters?
To demonstrate the dilemma of competing claims, Schuster divided the audience into small groups representing for-profit and not-for-profit organizations, and each group was given a different set of circumstances requiring a personnel decision. The groups were asked to identify the stakeholders (masters), identify the demands of each, and prioritize them. Some groups prioritized, reviewed the scenario, and then made a decision; others let their priorities be situationally driven . Some found that the short term v. long term impact needed to be considered. Often there were no right answers, only more questions.
In his brief response, Smith observed that the exercise brought home an important point about business ethics: "Scholars may deal with issues, but managers face dilemmas." Commenting on the exercise, he suggested that the context variable of profit versus non-profit organization matters only if we perceive that managers in for-profit companies have a special kind of responsibility, fiduciary responsibility, to one of the stakeholder groups, namely the shareholders. Managers of human assets sometimes need to fly without the benefit of wings.
 
 Council for Ethics in Economics
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