In our financial life as well as in our everyday business life and personal life we are constantly confronted with decisions both small and large that give us pause, even if only for a moment, but sometimes the decisions are so difficult that they even fall into the category of wrestling with it for days.
Now in this post Sarbanes-Oxley era along with the impact it has had on governance and even on the Federal Form 990, we as representatives of our nonprofit organizations have to be prepared to transparently defend our decisions in an ethical context. I am not implying that ethics did not exist in the past. But, I am finally admitting that this sometimes cursed legislation has some real virtues and one is that Ethical Financial Behavior must become not only more transparent but actually become ingrained into best business practices and into our personal business decision making life.
Ethics is such a big topic. Just pick-up a Code of Ethics Statement from almost any organization and you will see broad statements of context with very little individual specific action steps or guidance. In other words, the code of ethics statement sounds good but does not give you a specific road map for action.
After talking about code of ethic statements for years and how important these statements are to organizations, I have toyed with a decision model that at least for me appears to help un-muddy the waters somewhat and move me more quickly to a decision. The result is a decision that I am better prepared to explain in a financial memo or defend when challenged or confronted.
Ethics can be viewed through three aspects; Compliance, Public Perception and Your Own Core Values. Each of these three aspects has real concrete substance and they also each have vast areas of grayness. For a business decision each of these three areas can be explored individually with great depth and the solace of a single focus. The melding of the three areas in coming to a final decision is what is challenging. The simple act of giving order to the three aspects helps to add an element of clarity to the process.
I call the process a “Working Ethical Decision Making Model”. The model works well for decisions that impact your organization and strengthens decisions that have a financial component. The model breaks down as follows with the order being critical:
First – Compliance which covers areas of law, regulations, codifications, permits, licenses or any other statue of conduct. The compliance area at first appears to be an area of rights and wrongs strictly black and white but as we all know there are areas of grayness where you would assume they should not exist. This is why regulations and laws and the IRS tax code are constantly being rewritten and changed.
Second – Public Perception which by definition is all about levels of grayness. The only black and white issues that come out of public perception are that you are a fool if you ignore public perception and a bigger fool if you let it totally dominate your decision making process.
Third – Your Own Core Values is so gray because most of us cannot often succinctly explain them to people let alone to ourselves. However, we each know when a decision feels right and we are at peace with that decision.
Now take a decision and tackle it by exploring each of the above aspects in this order. First compliance and what areas of laws, regulations, etc. do I have to address and are there any conflicts and interpretations to settle. Next explore separately public perception to simple understand and best recognize what the general public is thinking to gain insight, knowledge and perspective. Finally, for your own core values, balance the first two aspects by seeing how well what you have learned from compliance and public perception sits in your own belly.
Take comfort from this decision model by following the three-aspect thought steps in the specific order of first know the compliance issues and then understand the depth and breath of public perception and finally align this knowledge with your own core values arriving at a decision that both feels right and can be explained and supported in a comprehensive and succinct manner.