OVERRELIANCE ON QUANTITATIVE ANALYSIS

Decision-making processes can contribute to unethical behavior by relying exclusively on quantitative analysis and focusing only on financial outcomes. For example, in Chapter 3 we discussed the decision-making process that kept the Ford Pinto from being recalled. In that situation, exclusive reliance on a quantitative cost-benefit analysis to the exclusion of ethical considerations had disastrous consequences. In another example, Johns Manville, the former corporate giant and producer of asbestos, was brought down by decision-making processes that focused on the bottom line to the exclusion of worker health. More than 40 years ago, top management began to receive information implicating asbestos inhalation as a cause of severe lung disease in workers. Managers and medical staff suppressed the research and concealed the information from employees. During testimony, a lawyer reported on a confrontation with the corporate counsel about the failure to share X-ray results with employees. The lawyer reported asking, ‘‘You mean to tell me you would let them work until they dropped dead?’’ The Johns Manville lawyer replied, ‘‘Yes, we save a lot of money that way.’’ It was apparently cheaper to pay workers’ compensation claims than to develop safer working conditions. A New Jersey court found that the company had made a ‘‘conscious, cold-blooded business decision to take no protective or remedial action.’’ Obviously, organizational decision makers must rely on quantitative analysis in making business decisions. But their reliance on numbers, to the exclusion of ethical considerations, is problematic and contributes to an unethical culture. Discussions about whether the decision is the ‘‘right’’ thing to do must accompany discussions about the effect of a particular decision on the bottom line. Important decisions should be subjected to a discussion of ethical concerns, especially potential impacts on stakeholders.

BURDEN OF PROOF In 1986, Beech-Nut Nutrition Corporation, the second-largest U.S. baby food manufacturer, pleaded guilty to 215 felony counts and admitted to selling apple products that were a blend of synthetic ingredients. How did this happen? There were many causes, among them the company’s financial difficulties, the belief that other companies were selling fake juice  and the belief that the juice was perfectly safe.

A chief cause may also have been the decision-making processes that were used. When Jerome LiCari, director of research and development, recommended changing suppliers in 1981 Operations Head John Lavery turned the traditional burden of proof around. Generally, baby food manufacturers would switch suppliers if the supplier couldn’t demonstrate that the product was genuine. In this case, Lavery said that if LiCari wanted to go with a more expensive supplier, he would have to prove that the concentrate they were buying was adulterated  Given the technology available at the time, this was difficult, and the supplier was retained.

A similar decision-making criterion was used in the decision to launch the space shuttle Challenger despite engineers’ concerns about O-ring failure in cold weather. In previous launches, engineers had been required to show evidence that the launch was safe In the case of the Challenger, the burden of proof was changed. Engineers who balked at the impending launch decision were asked to prove that it was unsafe.

These examples suggest that it’s relatively easy to alter decision-making processes to support whatever decision managers have already made. That’s why it’s extremely important that organizations design formal decision-making processes in good financial times and before a crisis occurs. Then, when trouble strikes, they can rely on these effective decision-making processes to guide them. The space shuttle Challenger might never have been launched if engineers had been required to prove that the launch would be safe, rather than unsafe. Managers must be particularly alert  to changes in traditional decision-making criteria, especially in times of crisis.