Simple questions to ask when making tough decisions

Sometimes there can be more than one right answer to a problem. The option you choose can say a lot about the values of your company- and your leadership.

Making these “right vs. right” choices can be one of the hardest tasks any manager can perform.

But Joseph Badaracco, the John Shad Professor of Business Ethics at Harvard Business School, says there are some simple methods you can apply to help you answer these tough questions.

Following his advice may not make the decisions any easier, but it should at least help you understand-and explain-why you make the choices you do.

CIO Managing Editor David Rosenbaum sat down with Professor Badaracco following his presentation at the CIO Leadership Conference 2006 in Cambridge, Mass. What follows is the transcript of that conversation.

David Rosenbaum: Professor Badaracco, could you briefly state the four questions that you should ask yourself when you’re addressing a problem?

Joseph Badaracco: Yes. The problems I talked about, David, were situations that I call “right vs. right” problems. So you’ve got two responsibilities, and you’ve got to make good on both of them. And the four questions I think that will really help people cut to the fundamentals are these:

  1. What are the consequences of different ways of dealing with the problem for everybody who’s going to be affected by it?
  1. Which individuals and which groups involved in the situation have rights that you’ve really got to respect? People may have a right to be told the truth. Shareholders have a right to good returns, and so forth. Everybody’s got an obligation to obey the law, and people have a right to expect corporate officers to do so.
  1. The third question is about the messages you want to send about your values as a leader, and about the values of your organization. Often in these tough “right vs. right” conflicts, people are really watching closely, and you’re sending messages about your character and the character of the kind of organization you’re trying to create.
  1. And the final question is what’s going to work. It’s Machiavelli’s question. You’ve got to be practical. You can’t simply tote up consequences, and dwell on rights, and think about your character. You need something that’s going to actually make a difference, and so you’ve got to think about that question in conjunction with the other four.

Rosenbaum: Now, what happens if you think only of consequences, and not rights? Where does that lead you?

Badaracco: It leads you into trouble. As I mentioned a moment ago, there are a lot of different groups who believe that they have the right to have corporate officers and companies obey the law.

There are the vast majority of most people in most organizations who believe they have the right to be treated fairly and honestly by the people they’re working for. And there are the owners of a business, who have a right to stable, growing, risk-adjusted, legal returns.

If you drop any of these balls, you’re going to pay for it, either inside the organization, outside with shareholders or outside with regulators.

This is especially true for companies doing business in America, where we have, and where we should be grateful we have, a large group of lawyers who are ready and available to help individuals who feel their rights have been violated find some way of getting what they feel they are owed.

Rosenbaum: Now, conversely, if you think only of these rights-these many competing rights-and not the consequences, what road does that lead you down?

Badaracco: I think that leads ultimately to paralysis, and that’s why you’ve got to balance your thinking about rights with thinking about consequences, thinking about values and character and thinking about what’s actually going to work.

It’s very hard, ultimately, to wrestle some of these rights issues to the ground. By the time legal counsel has finished exploring and vetting all the rights-based issues, it may be two or three weeks after a decision needs to be made.

You need leaders in organizations-you need, actually, managers at all levels-who have sensitivity to the really important rights that they’ve got to pay attention to. They’ve got to take those into account in the plans that they make, but they’ve got to move on and think about the other considerations as well.

Rosenbaum: And, just for balance, if you think only of your character?

Badaracco: Well, with all due respect to people listening to this or reading this: Who put the Good Housekeeping seal of approval on your character, your judgment, your instincts?

So that what you think is right-even if you deeply feel it’s right-ought to trump consequences for other people, and the rights that other people have.

The best leaders, when they have time, think hard about what they care about, what they value, but they’ve got a good team around them, and they’ve got some counselors who may not be part of their management team.

They try to get the sense of others about what’s the right thing to do, rather than just assume that their ethics [and] instincts show them the right path.

Rosenbaum: And I guess it goes without saying that if you only think about what works in the real world, you get Enron, you get Mr. Fastow, Mr. Skilling and Mr. Lay.

Badaracco: That’s right. You become a plumber, a technician, somebody who’s got a toolkit and can go around and work on problems.

But the real risk is that if you’re under a lot of pressure, and a situation is ambiguous, and you look for something that’s going to work, you’re going to end up finding something that’ll work short term, maximizing some single metric, keeping you off the hot seat, and in many cases, not addressing the full complexity of the problem.

You may look like you handled the problem for a day, but there’s a good chance it’s going to come back and bite you and others later on!

Rosenbaum: One of the examples-actually, your opening example-was: Somebody comes to you and says, “I’ve got a chance to buy my dream house.”

And you’re his boss, but you’re also his good friend. And he asks you, after telling you about the house, “Do you know any reason why I shouldn’t go ahead with buying this new, expensive house, that I’m going to have to stretch to buy?”

You know that in your desk there’s a list of people who are going to be laid off in two weeks, and of course it’s supposed to be confidential, because the announcements should be made all at once.

You suggested in your talk that there were ways, without violating your fiduciary responsibility or your responsibility to your organization, to hint around, to say, “Well, you know, times are tough, and competition is hard, and maybe I’d hold off a little bit.”

But what if the guy says, “Joe, you’ve known me a long time; I’ve known you a long time. Be straight with me. Do you know something?”

Badaracco: That’s a great question. And suppose he looks you right in the eye, so he’s asking for the truth, and he may also be checking to see if you’re going to blink or not and give away the answer. I think at that point, you have to say something to the effect that, “That is a question that I cannot answer.”

The awkward thing about giving that answer is that it is an answer. He is very likely to infer that the news is bad news, and he’s very likely to pass these suspicions on to a couple of other people.

The alternative, of course, is lying, but first of all, people typically aren’t very good liars, and secondly, if you pull that off, he may tell others, they’ll tell people they know, and a reputation for being less than candid is not something managers want to cultivate. So you’ve posed the toughest version of this, and at some point you’ve got to say, “That’s a question I can’t answer.”

And perhaps it’s possible to say it in a way that suggests to him that if he goes and does a lot of talking about this, life could be a little tougher for him.

Rosenbaum: Now, toward the end of [your] talk, a question was asked, “What if you don’t have the time to go through this kind of rigorous, four-question analysis?” And you said that there was a three-question, kind of quick version that you could do. Could you tell us about that?

Badaracco: Yes. It’s great to have a lot of time to really drill down on these problems, and sometimes you do. Usually, you have less time than you need, and even after all the drilling down, you don’t have all the facts you’d like to have. There are three quick tests that capture a lot of what’s important:

  1. One is the newspaper test: Ask yourself what plan of action for dealing with the problem in front of you is going to work best if it’s going to appear of the front page of your local paper-let’s say, tomorrow. That’s a way of picking up on all the consequences of your act, and it’s a way of looking at things in this kind of pragmatic, Machiavellian, what’s-really-going-to-work sense.
  1. Second test is the Golden Rule, or the Native American advice to walk a mile in the other person’s shoes. That’s a way of picking up on other people’s rights that you may be overlooking, because you’re the decision-maker, you’re in a position of authority and you’re under pressure to get a decision done. And the final question has different versions.
  1. A good version of it is the best-friend test. Ask yourself how you would like somebody who knows you well, whose respect matters to you, to look at you a few years down the road, and think about how you made the decision. That’s a way of really putting a spotlight on the character issues-your character, the character of the organization you’re trying to shape.

Those are three tests. They don’t take long, and often they can elicit some telling instincts that help people get these decisions right.

Rosenbaum: Thank you very much, Joe. It was a terrific talk, and I think I learned a lot. Thanks.

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