Up Your Business - April - 2018

Seek Wisdom to Take the Gray Out of Your Ethical Dilemmas

Up Your Business is an exclusive GEARS Magazine feature in which I share stories, insights, and reflections about real business and life challenges.

To get the most out of this article, you might want to reread my last two articles. In those articles, I presented the importance of using wisdom to revolutionize your decision-making process and how wisdom can help you make the wisest and best use of your time.

In this article, I’m going to tackle how to apply wisdom in making difficult ethical decisions. At first, I was excited to dig in and write this article because I’ve always considered myself to be an ethical person. But as I began to reflect and do a personal inventory of my life, my excitement turned into humility and ultimately terror. I asked myself, what qualifies me to take on this subject?

Sure, I’ve always tried to do what’s right, but who hasn’t? The fact that you’re reading this article means you’re a good person and want to do what’s right and ethical.

Thank you for taking the time to read what I’ve written. As you read on, please know that I’m not writing from a position of judgment, but rather one of empathy.

I’ll share some of my personal thoughts along with those of some people far wiser than me. I know that we all face ethical challenges and there’s no single right answer for each of us. Also, we don’t always make the right decision. In the end, we’re all just human beings being human.

Listening to Your Conscience

It’s been said that ethics is the foundation for personal fulfillment and success in the business of life. Ethics is the moral compass that guides our daily decisions. You’ve probably heard the old adage, “Let your conscience be your guide.” Let’s see how we can do a better job of listening to our consciences.

At one time or another, we’ve all heard somebody say that black-and-white decisions are easy… it’s the gray-area decisions that are difficult to make. Before you buy into that, consider this story:

One day, a young business owner proudly picked up the restaurant check for a family dinner saying, “Somebody ask me something about business, so I can write this off as a business expense.”

His dad challenged him, asking whether it would be honest to claim a tax deduction for what was clearly a family meal. The business owner just laughed and said, “Everybody does it. It’s no big deal.” Then, the business owner’s 9-year-old son chimed in, “Grampa, you don’t understand. Daddy doesn’t have to be honest because he’s a businessman.”

Of course, for many people this is just a joke taken from an old-time vaudeville routine:

“Ask me about my business.”

“Okay, how’s business?”

“Good, now I can write lunch off as a business expense.”

It’s funny if you think of it as a joke. But, if considered seriously, imagine how his son’s response made the young businessman feel. I know exactly how he felt because, I confess, it was my son saying it to me.

In retrospect, the thing that troubles me most about this story is that this wasn’t even in the gray area… it was blatantly illegal. How much more black and white could it have been? I was clearly wrong. Moreover, what kind of an example was I setting for my son?

Yet I was rationalizing and justifying it as “no big deal” because “everybody does it.” The problem is that we often use rationalization or justification to try to make black-and-white decisions gray when they really aren’t. There are nine words that summarize my point: “There’s no right way to do a wrong thing” (Anonymous).

But what about those situations that truly do fall into the gray area — those times when there’s no clear black or white? Or those situations where we try to turn a black-and-white situation and turn it gray to justify your decision?

Decisions that are clearly right or wrong don’t build character… they only test our honesty and integrity. Avoiding gray area decisions develops a non-caring, no-conscience character, but making good gray-area decisions builds character.

Here are a few examples of gray-area decisions that could easily turn into a losing situation for the shop:

  1. A shop does a transmission rebuild on a vehicle that they’d misdiagnosed to need a rebuild. After completing the job, the vehicle still exhibits the exact same symptoms. Ultimately, they discover that the problem was something else that was relatively simple and inexpensive to fix.
    They’re faced with the dilemma of telling the customer and charging only for the required repair and eating the rebuild, or just doing the minor repair at no charge without the customer’s knowledge and collecting for the transmission job. (After all, the customer did get a rebuilt transmission and warranty.)
    Of course, these are the two extremes. There are other possible solutions, like telling the customer it was an honest mistake and charging for both jobs, telling the customer both repairs were needed, or any number of “justifiable” alternatives.
    In any case, the only choice that doesn’t require justification is telling the truth and potentially eating the transmission job. In this scenario, you might appeal to the customer by saying that he still got a rebuilt transmission to see if he or she would be willing to pay for it. But this is the only way to take the gray out of it.
    The win-lose of not telling the customer could turn into a lose-lose if the customer finds out. Also, think about the message your decision, whatever it is, sends to your employees. Are you ethical beyond reproach or just ethical when it’s convenient or inexpensive?
  2. Over the years, I’ve seen a multitude of creative pay-plans that are structured to avoid paying overtime or to reduce payroll taxes. They all, in some fashion, bend the payroll regulations and many are outright illegal. Paying cash under the table is the most frequent.
    This becomes gray because both the business and the employee feel they benefit… the employee gets to pay less income tax and keep more of the money while the business saves payroll taxes and overtime.
    This so called win-win becomes a win-lose when a disgruntled employee reports the practice to the labor relations authority. The employee’s income continuance benefits will also be reduced because his or her reported income was artificially lowered; things such as Social Security and unemployment insurance.
  3. This third example is just two questions relative to how to artificially reduce income taxes for the owner by a little slight of hand on the books. (1) Do you ever fudge on your business expenses by paying for non-business expenses with company funds? (2) How many family cars get gas on the company credit card?
    These are just two examples of the justification in my opening story, “Everybody does it. It’s no big deal.” This becomes a losing situation if it gets caught in an audit. But it results in a lose-win because, by artificially deflating the shop’s profits, the value of the business is also deflated if you decide to sell. In this case, you lose and the buyer wins.

So how do we do a better job when we find ourselves in the gray area? Wouldn’t it be nice if there were some way to shrink the gray area revealing more of the black or white?

The Ethics Check

Norman Vincent Peale and Ken Blanchard thought that it was important enough to write an entire chapter on it in their book, The Power of Ethical Management. They refer to it as an “Ethics Check.” They narrowed it down to three questions but, over the years, I’ve added one more question that helped me better apply the principles. I hope you find this helpful.

Rather than charging ahead without thinking and then rationalizing or justifying your behavior after the fact, the Ethics Check will help illuminate the facts and help you sort out the right actions from the wrong ones. Follow these four steps to help take the grayness out of questionable situations.

Ask yourself these questions:

  1. “Is it legal?” Consider both the letter of the law and the spirit of the law. In other words, is it in alignment with the driving force behind the law in the first place? Of course, if your answer to this one is “no,” there’s no reason to consider the other questions.
  2. “Is it balanced?” If I do what I’m considering, is it going to be a win-win? True win-wins are not easy to achieve and sometimes won’t be perfect, but lopsided win-lose or lose-win situations almost always end as lose-lose propositions.
  3. “How will this make me feel about myself?” If all the facts of the situation and your decision were published in the newspaper or broadcast on the nightly news, would you feel good about it? Would it make your family proud or embarrassed?
    For my use, I’ve added this one for good measure:
  4. “Do you feel the need to explain, defend, justify, or rationalize your decision?” If the answer is “yes,” you aren’t quite there yet. You have some more work to do. Be humble enough to seek the advice of someone you know to be ethical. A little humility now is better than the potential pain or embarrassment of making a bad decision.

Flip a Coin… No Kidding

If you can’t resolve your dilemma with the Ethics Check and your intellect, maybe your good conscience and gut instincts can help. Consider flipping a coin. No, I’m not joking, but here are the strict rules:

  • Before you toss the coin, assign a value to the head and the tail. For example, a head means you’ll do option A and tails means you’ll go with option B.
  • It’s essential that you be sensitive and honest with yourself.
  • Flip the coin and, while it’s still in the air, listen to your inner voice and be sensitive to the feeling in your gut. Think about which way you hope the coin will land.
  • Psychologists believe that, while the coin is in the air, your subconscious mind will weigh all the facts and, through your conscience, will instantly tell you the right thing.

Ethics Is Your Responsibility

As leaders of your businesses, your families, and your communities, you need to set an example. Don’t just speak of values and ethics… walk your talk and set the standard.

There are a lot of good companies, but the companies that thrive and attain sustained greatness have an ethics-first culture.

I know one company that adopted a short, simple mission statement. It serves as the alignment tool for the owners, their leadership team, and all their team members to use for every decision and action they contemplate. It also sends a clear message to everyone — customers, suppliers, community, and employees — about the kind of company they are.

“We do the right things for the right reasons… even when nobody’s looking.”

In case you’re wondering, the company is flourishing and has experienced sales growth every year, including through the years of the recession. It might not be entirely due to their commitment to ethics, but I’ll guarantee it’s a major factor.

In the words of the late, great, UCLA Basketball Coach John Wooden, “There’s no pillow as soft as a clear conscience.”

Share Your Stories

If you’ve personally experienced a weird or unusual customer dispute and wouldn’t mind sharing it to help your industry, please contact me. You just tell me the story and I’ll do all the heavy lifting to write it.

We can make it an article about you, or you may remain anonymous. The main thing is we want to share stories that will help others avoid similar problems. Call me at 480-773-3131 or email me at coachthom@gmail.com.

About the Author

Thom Tschetter has served our industry for nearly four decades as a management and sales educator. He owned a chain of award-winning transmission centers in Washington State for over 30 years.

He calls on over 30 years of experience as a speaker, writer, business consultant, and certified arbitrator for topics for this feature column.

Thom is always eager to help members of our industry and continues to be proactive in pursuing ways to improve your business and your life.