The following letter is in regard to the ethical dilemma of doing right vs. being right:

Dr. Harned,

I recently attended a conference on the Foreign Corrupt Practices Act, and heard the following ethical dilemma. A fellow compliance officer recounted how one of his company’s business-unit presidents, in a former Soviet Bloc nation, wanted to bid on a government contract. His choice came down to this: pay a $30,000 bribe, or lose the contract and lay off 2,000 employees.

This situation disturbs me deeply. At both this person’s company and my own, frankly, nobody at corporate headquarters would even notice $30,000 or 2,000 layoffs—we are both global powerhouses. And while I have no problem resigning on principle or firing a corrupt manager, neither of us would really be affected either; the people paying the price for our obedience to the FCPA are 2,000 poor families, desperate for the good employment our companies would provide. To follow the FCPA and refuse to offer a bribe, I’d be ordering thousands of innocent people into financial hardship.

To me, this scenario underscores a dimension to ethical conflicts that nobody talks about: the difference between being right (that is, obeying the letter of the law) and doing right (keeping 2,000 families in prosperity, which helps my profits anyway). I honestly don’t know what I’d do in this situation. I’d welcome your views.

—A reader

Dear Reader:

This is an excellent question. As you mention, the business-unit president faced a classic ethical dilemma: a values-laden choice that carries a significant effect on the lives of others. Rather than being clearly a matter of right and wrong, he as being asked to determine the “best possible right action” in the situation.

This dilemma is reminiscent of the famous Heinz Dilemma used in psychological testing to determine one’s level of moral development. Heinz’s wife is dying and the druggist has a medication that may save her. The druggist is charging far beyond what the drug costs to make and much more than Heinz could ever afford. So Heinz must decide whether to steal the drug to save his wife, or obey the law and let his wife die.

In the Heinz scenario, there are many factors to consider: rule of law, the value of human life, the injustice of the druggist’s pricing, the rights of the druggist to profit, and the potential problems for the wife if Heinz is caught and sent to jail, to name a few. Although the reasoning varies, individuals at the two highest stages of moral development agree that Heinz should steal the drug, because the wife’s health is the greater good; the responsibility of preserving a human life trumps the obligation to follow the law and the druggist’s right to make a profit.

So, can the Heinz thinking be applied to your FCPA dilemma? How can and should the business-unit president decide? The answer lies in the two critical elements that must be considered whenever you make an ethical decision: values and stakeholders.

Values are the ideals we strive to attain: respect, integrity, responsibility, honesty, fairness, compassion, and so forth. Although different cultures manifest these values in different ways, their appeal is universal. Everything from philosophy and theology to business management theory reminds us of their profound importance.

The stakeholder view asks us to think about all those who will be affected by the decision. While values and principles are often the bedrock of ethical business practices here in the United States, this stakeholder approach—which has more of a corporate or social responsibility bent—is more common in other parts of the globe.

The best approach is to combine these two elements—so that we consider not just the issue of being responsible, but to whom we should be responsible. If we are thinking about issues of fairness and justice, we must know whose needs are to be taken into account. Ultimately, then, the business-unit president should keep several factors in mind as he decides what to do:

He has a responsibility to his company to protect its interests. He was put in a position of power to take care of company assets. While paying the bribe would provide financial benefit to the company, it also puts the company and its reputation at risk by violating the law. The amount of the bribe might not seem like much now, but add in the fines associated with violating FCPA and suddenly the cost can be massive and imperil all those who depend on the company for their livelihood.

He has a responsibility to follow the law. The law is the agreed-upon set of standards of a democratic society. While laws can be wrong, that wrong must be so egregious as to make violating the law a necessity. For example, was it right for Rosa Parks to go against segregation. It is not right for me to speed while driving, even if the limit is absurdly low.

He has a responsibility to his employees to treat them fairly and to take reasonable care of their needs. This point seems to support both giving and refusing the bribe. Here we must consider that while there is an ethical obligation for employers to deal honestly and fairly with their workforce, they are not obliged to retain employees forever. Layoffs are an unfortunate and challenging reality in business; companies unwilling to make difficult decisions about their workforce put all employees at risk by threatening the company’s viability.

He should care for his employees as fellow human beings and be concerned about their wellbeing. Providing them with gainful employment does this, so giving the bribe would seem to be the ethically right thing to do. Furthermore, care and compassion require that if he chooses not to offer the bribe, he make concerted efforts to be fair and transparent about layoffs and to help employees survive financially.

He has an obligation to society and his community. Going beyond just following the law, this means acting in a way that brings about lasting justice. Caving to the demands of a corrupt system only fuels that corruption. The people who suffer most at the hands of corruption are usually those with the least power to change the system. When those with more power, such as large, multinational companies, play into that system, they perpetuate it. Wealthy, stable, powerful companies that take a stand against corruption have the potential to use their power for good—and bring about a more just system, which is the best, most lasting way to help those in need.

When taking all of these factors together, it starts to become evident that greater risk is placed on a larger group of company stakeholders by paying the bribe, rather than by laying off employees to obey the law. Include the company’s refusal to “enable” a corrupt society, and the best possible option emerges. The ethical obligation to refuse to bribe outweighs the ethical obligation to protect employees’ jobs.

Which raises the question: Why is it right for Heinz to steal to save his wife, but not for a business-unit president to bribe to protect his employees’ livelihood? Simply put, sometimes the urgency and seriousness of a situation trumps the most expansive pro-con list. In such dire circumstances, lengthy deliberation is impossible and irresponsible.

The best example of this is a well-known defense contractor that chose to pay a bribe so employees and their families could escape a country about to go to war. Their employees were in imminent danger, and it was because of the company that they were in harm’s way. The country had no viable government system the company could rely on to help the employees before war arrived. Action had to be decisive and immediate. Lives were at stake, and the company’s leadership decided to do what had to be done for its employees—and willingly accepted whatever punishment might befall them as a result.

That brings me to my final point. Whatever your chosen course of action, you must be prepared for the consequences of your decision, to bear the burden of all those who might be harmed by your choice. That isn’t easy. But if you feel at peace with your choice and its potential consequences, that itself is often a sign that you have made the right choice.

Again, thank you for your question. Keep ’em coming!

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