Values-based decision making,” a popular term these days in both industry and academia, is commonly exemplified by Johnson & Johnson’s 1982 decision to pull Tylenol off retailers’ shelves, at a cost of $100 million to the company, after tainted capsules had been found. The company’s courageous action illustrated how decision making is a trade-off between values — in this case, choosing customer safety over short-term financial performance.1
Values-based decision making has in fact come to take on the exclusive meaning of socially responsible decision making. But while a greater emphasis on ethics is certainly praiseworthy, an important reality is being missed. All decisions — whether judged highly ethical, grossly unethical or anywhere in between — are values-based. That is, a decision necessarily involves an implicit or explicit trade-off of values.
Because the values that underlie our decision making are often buried in the shortcuts we take, we need a means for revealing those values and expressly thinking through the trade-offs between them. The framework we present in this article helps a decision maker to understand that everyday decisions all have some basis in values, to sort out the specific values involved in a given decision-making event, and to make the decision with full awareness of its ethical implications.
Uncovering the Values Within
Values are enduring beliefs, both hard-wired (i.e., acquired genetically) and shaped by cultural context, about preferred “end states.”2 Whether we think about it or not, values guide our everyday behavior, even the most mundane choices. Consider the decision of whether to get up from one’s desk at work to get a cup of coffee. The decision maker may seek the coffee for physical stimulation in the interest of achievement, or perhaps to fulfill a need for affiliation in kibitzing at the coffee maker. When the person gets up to make a coffee run, one or both of those values have won out over the value of staying at the desk to keep one’s nose to the grindstone.
Values, whether neutral, virtuous or not so virtuous, drive our decision making. Even unethical, illegal or dishonest decisions are “values-based” — they’re just not reflective of higher-order “positive” values.3 For example, a decision to engage in insider trading is ultimately a choice favoring the values that hail financial gain as more important than keeping one’s integrity.
1. “James Burke Acted Before Crisis Hit,” Fortune, August 11, 2003, 69; and L. Torlée, “A Swift Kick in the Credo,” Marketing Management (March 21, 2005): 25.
2. M. Rokeach, “The Nature of Human Values” (New York: The Free Press, 1973); and M. Rokeach, “Understanding Human Values: Individual and Societal” (New York: The Free Press, 1979). See also J. Gutman, “A Means-End Chain Model Based on Consumer Categorization Processes,” Journal of Marketing 46, no. 2 (spring 1982): 60–72.
3. Instrumental goals include social acceptance, friendship, social status, responsibility, accomplishment, confidence, self-identity, integrity, caring, honesty and trust. Personal values include belonging, power, improving/maintaining relationships, self-esteem, personal security (safety), personal enjoyment, quality of life, peace of mind and independence.
4. D. Kahneman and A. Tversky, “Prospect Theory: An Analysis of Decision Under Risk,” Econometrica 47, no. 2 (1979): 263–291. See M. Bazerman, “Judgment in Managerial Decision Making,” 3rd ed. (New York: Wiley, 1994); and J.E. Russo and P.J.H. Schoemaker, “Decision Traps” (New York: Fireside, 1989).
5. J.L. Bower and C.G. Gilbert, “How Managers’ Everyday Decisions Create — or Destroy — Your Company’s Strategy,” Harvard Business Review (February 2007): 72–79.
6. J.M. Stevens, H.K. Steensma, D.A. Harrison and P.L.Cochran, “Symbolic or Substantive Document? The Influence of Ethics Codes on Financial Executives’ Decisions,” Strategic Management Journal 26, no. 2 (2005): 181–195; and J.E. Urbany, “Inspiration and Cynicism in Values Statements,” Journal of Business Ethics 62, no. 2 (December 2005): 169–182. See also D.R. Cressey and C.A. Moore, “Managerial Values and Corporate Codes of Ethics,” California Management Review 25, no. 4 (1983): 53–77.
7. J.M. Phillips, J.E. Urbany and T.J. Reynolds, “Confirmation and the Effects of Valenced Political Advertising: A Field Experiment,” Journal of Consumer Research 34 (2008): 794–806; T.J. Reynolds, “LifeGoals: The Development of a Decision-Making Curriculum for Education,” Journal of Public Policy and Marketing 24, no. 1 (spring 2005): 75–81; and T.J. Reynolds, “Interactive Method and System for Teaching Decision Making,” U.S. Patent 6971881 (December 6, 2005).
8. This case study is taken from A. Galvin, “The Price of Fixing Prices,” Journal of Pricing Management 1 (summer 1990): 46–51.
9. T. Aeppel, “Changing the Formula: Seeking Perfect Prices, CEO Tears Up the Rules,” Wall Street Journal, March 27, 2007, sec. A, p. 10.
10. A. Hyde, “Comprehending Math” (Portsmouth, New Hampshire: Heinemann, 2006).
11. M.E. Porter, “What Is Strategy?” Harvard Business Review (November 1996); L. Bossidy and R. Charan, “Execution: The Discipline of Getting Things Done” (New York: Crown Business, 2002); and C. Salter, “Attention Class! 16 Ways to Be a Smarter Teacher,” Fast Company, November 2001, 114.