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Part of Leadership ethics: how decisions reveal values
Leadership ethics when obligations conflict: a method in seven steps and three cases
A practical seven step method for leadership ethics when obligations conflict, with three hypothetical cases and a table of where leaders skip steps.
A leader owes things to six parties at once: the organization, the team, the individual in front of them, the customer, the law, and themselves. Most of the time these agree. The decisions worth a method are the ones where they do not, and where the leader is tempted to shortchange one party quietly rather than choose openly.
This is a method for choosing openly. Seven steps, then three worked cases, each hypothetical.
What to take away
- Name the obligations in play before weighing them. Most bad leadership decisions come from not noticing that one of the six parties was at the table.
- Identify which party you are tempted to shortchange. That is the one whose interest needs to be written down most carefully, because your own reasoning will underweight it.
- Two tests do most of the workcould you say the reasoning to the party who loses, and would you accept the same reasoning applied to you?
- Tell the losing party. A decision that goes against someone and is never explained to them was not a decision; it was an avoidance.
The seven steps
1. Name the parties. Go through all six. Organization, team, the individual most affected, customers or counterparties, the law, yourself. For each, write one line: what does this party need from this decision? Where the law is in play, the line reads "find out", and the finding out is done by counsel, not by you. For directors the obligation has a name and a body of law behind it, summarized at the Legal Information Institute's entry on fiduciary duty.
Seven Steps of Ethics Framework
- Name the parties
- Find the one you want to shortchange
- State the options, including unproposed
- For each option, who loses what
- The disclosure test
- The reciprocity test
- Tell the loser
2. Find the one you want to shortchange. There is always one. It is the party whose interest is least represented in the room, whose loss would be quietest, or whose claim is most inconvenient. Write their interest out in full. Your instinct will have already discounted it.
3. State the options, including the one nobody proposed. Usually there are three: the thing being asked for, refusing it, and a middle path that costs more effort. The middle path is often the answer and is often unstated because it is work.
4. For each option, who loses what. A short table. Names or roles down the side, options across, the cost in each cell. Blank cells are suspicious.
5. The disclosure test. For the option you favor, write the paragraph you would say to the party who loses. Not a memo. What you would say to their face. If you cannot write it, the option is not available to you.
6. The reciprocity test. Would you accept this reasoning if it were applied to you, by someone above you, in the same situation? If not, you are asking someone to accept a rule you would not.
7. Decide, record, and tell the loser. The record is one page: the parties, the options, the table, the decision, the reason. The telling is in person where possible. The party who lost hears it from you, with the reason, before they hear it from anyone else.
Case one: the timing of a restructure
You know that a restructure will remove roles in your team in three months. You have been told to keep it confidential. Meanwhile a member of the team asks your advice on whether to accept a promotion into one of the roles that will be removed.
Parties: the organization (confidentiality, an orderly process), the team (fair treatment), the individual (their career), customers (continuity). The law: employment law governs consultation and disclosure in restructures in many jurisdictions, and what you may say is a legal question. Yourself: your word to the organization.
The party you want to shortchange: the individual, because their loss is quiet and your discomfort is loud.
Options: tell them, say nothing, or the middle path: tell them nothing about the restructure but decline to advise, saying plainly that there are things you cannot discuss and that they should weigh that. The middle path is honest without being a breach, and most people understand exactly what it means.
The disclosure test on saying nothing and advising them to take the role: you cannot write that paragraph. The reciprocity test on the middle path: you would accept it. Decide, record, and note that the legal boundary on what you may say is counsel's to set, and you asked.
Case two: the report about a friend
A member of your team reports that a colleague, who is also a personal friend of yours, has been claiming expenses for meals that did not happen. The evidence is specific.
Parties: the organization (its money, its rules), the team (seeing whether the rules apply to your friends), the individual reporter (protection), the individual accused (fair process). The law: expense fraud may be a criminal matter, and the investigation process is governed by employment procedure. Yourself: your friendship, your credibility.
The party you want to shortchange: the reporter, by handling it quietly to protect the friend. Or the friend, by overcorrecting to prove you are not protecting them. Both are you managing your own discomfort.
The option nobody proposed: remove yourself and hand the matter to someone with no relationship to either party, say why, and step back. This middle path costs you control of the outcome, and it is the only option that passes both tests.
The reporter can be told the matter went to someone independent, and the friend gets a fair process from someone unconflicted. What happens next is procedural, possibly legal, and not yours to run.
Case three: the number that needs to move
Your manager tells you that a figure your team reports, a measure of delivery, needs to look better by the end of the quarter, and suggests a change to how it is calculated that would achieve this. The change is arguable. It is not obviously wrong. It is also obviously motivated.
Parties: the organization (accurate reporting and what it is used for), the team (what they learn about numbers under you), yourself (your relationship with your manager), customers (if the figure affects what they are told).
The law: if the figure feeds anything reported externally, financial or regulatory, its accuracy may be legally governed. Counsel needs to know before it changes.
The party you want to shortchange: the organization, because it is abstract, and its loss is a slightly less accurate number that nobody will notice this quarter.
Options: make the change, refuse, or take the middle path. The middle path requires the change be documented as a methodology change, applied to prior periods too so the trend is honest, and approved by whoever owns the figure.
That turns a motivated adjustment into a defensible one, or reveals it cannot be made defensible, which is also an answer.
Disclosure test: Could you explain the change to whoever relies on the figure, answering yes if it is documented and restated and no if it is quiet?
Reciprocity: You would not accept a team below you doing this, undocumented, to a figure you rely on. Decide, record, and put your questions to your manager in writing. This is not hostile and best protects both of you.
Where leaders skip steps
| Step skipped | What happens |
|---|---|
| Naming the parties | The law, or the individual, is discovered to have been at the table after the decision |
| Finding the shortchanged party | The decision is made on the interests that were loudest |
| The unproposed option | A binary choice is made where a third path existed |
| The cost table | The loser is not named, so is not told |
| Disclosure test | The decision surfaces later in words you would not have chosen |
| Reciprocity test | The team applies your reasoning to you, and you object |
| Telling the loser | They hear it from someone else, and what they learn is about you |
What this does not replace
The method organizes a decision; it does not make one. The four ways of reasoning that feed step four are set out in ethical frameworks and introduced compactly in the Markkula Center's decision-making resource, and the shapes of genuine conflict between obligations are in ethical dilemmas.
The team treats a leader's decisions as the real rules, whatever the code says. The reasons are in leadership ethics, and what the team member on the other side of case two weighs is in employee ethics.
None of that runs the seven steps for you, and the steps take about an hour on a decision that deserves them.
Common questions
Seven steps is a lot for a decision I need to make today.
Steps 2, 5 and 6 take ten minutes together and catch most of what the full method catches. Name the party you are tempted to shortchange, write the paragraph you would say to them, and ask whether you would accept the reasoning yourself.
What if the party I would shortchange is me?
That happens, and it is usually a sign you are about to absorb a cost that belongs to the organization. Write your own interest out with the same care as anyone else's. Martyrdom is not a method.
When does the law override the rest?
Whenever it applies. The method organizes the decisions that are yours to make; it does not create discretion where the law has removed it, and step one's "find out" is not optional.
