It’s more complicated to think about performance through a different lens. That’s one of the difficulties we have to overcome. And as things stand now, moral analysis is rarely a defined part of management decision making; ethical issues are generally managed by exception. I want to capture what I see in the real world and show there are healthier ways to think about performance for the organization and for society as a whole.
S+B: The “Manager’s Compass” you introduce in Value Shift is a framework executives can use to sort through ethical questions. You say, though, it is “not a moral algorithm or a theory of right action so much as a prompt to focus managers’ attention on the moral aspects of decision making.” What do you mean?
PAINE: This framework tries to exploit the power of questions to engage people’s moral faculties. For example, when managers evaluate a potential investment or propose a new product from an economic point of view, they ask: “How big is the market? How attractive are the profit margins? How much will we have to invest, and what will the return be?” So I’m asking what questions might help them inject a moral point of view, too.
The Compass directs you to four primary dimensions of moral analysis. The first one is purpose. Will this action serve a worthwhile purpose? What are we trying to accomplish? What are our short- and long-term goals? Are they worthwhile? This analysis tries to clarify both means and ends. This includes the quality of our goals and the efficacy of the methods we choose to achieve them.
The second dimension is people. Who is affected by what you do? What are the claims of those affected parties? What interests are at stake that we need to pay attention to? This is very similar to what is sometimes called stakeholder analysis or social impact analysis. The only real difference here is that this category sometimes includes people who aren’t regular stakeholders. They might be people affected by what you do even though they’re not people with whom you deal directly on an ongoing basis.
The third dimension is principles — the norms and preset standards that could be applicable to what you’re doing. These might come from the law; they might be company standards; or they might be customary practice in the industry. This dimension encompasses not only basic obligations, but also your aspirations and ideals.
The fourth dimension of the Compass is power. It asks you to consider whether the action you want to take is really within the scope of your authority, your ability, your clout, and your resources.
S+B: How might you apply the Compass to address a typical decision?
PAINE: Let’s say you’re assessing a new product development proposal. Going around the Compass, and asking these questions, can unearth relevant ethical issues so they can be addressed as part of the design process. But the Compass raises questions that can and should be asked whenever a significant decision of any sort is being made. It’s also a useful tool for mapping differences. If we have conflicting opinions, we can examine the four dimensions to begin to understand why our views differ, and to find a starting point to resolve them. If our differences are irreconcilable, at least we know why we don’t see eye to eye.
S+B: You interviewed executives from the world’s top corporations and emerging multinationals from North America, Europe, China, India, and Latin America. Those conversations were another strong affirmation that corporate attitudes and corporate standards are changing all over the world. What sorts of rationales for their interest in values and ethics did they tell you about?