The ethical leader: Practical tips on decision-making

Trustee talking points

As hospitals move into value-based business models and assume risk, ethical issues are likely to become more prevalent.
Ethical leaders share four common traits.
Some issues are black and white; the more nuanced ones require a powerful, analytical approach.
To practice ethical leadership, pay attention to duty, intention, and dignity and respect.

Greg, the chief operating officer of a Midwest health system, knew the decision he was about to make was the right one for the organization, even though it would cost him politically. He went ahead anyway. It was not the first or the last time he would do so.

Sharon, a physician in her first hospital CEO job, was faced with the option of having to cut costs from a service, which would result in inferior quality of care for patients, or approve continued spending. She chose the latter.

At a time when health care organizations are moving toward value-based business models, providers are assuming greater levels of risk, and ethical dilemmas are perhaps more prevalent than in previous years. And more is weighing on the outcome as well.

There are many real examples that point to successes and failures in ethical decision-making. Leaders who successfully address ethical considerations tend to have certain traits in common:

Their behavior is predictable. Peers always know how they will respond in situations, and that invariably means they will err on the side of being open and honest.
They allow others to grow and take the lead. They are secure in their identity and their position and know that their organization is best served by developing leaders.
They communicate clearly. They don’t dwell on the symptoms of an issue; instead, they get to the root of the problem. They are candid in expressing their feelings on a topic.
They are genuine and take a sincere interest in the people around them. They demonstrate true respect for the people in their organization.

These qualities are evident in Jeff, a board chair who faced an unexpected curveball from one of his trustees. The board was vetting three internal candidates to replace the longtime CEO, who had announced his retirement. But Sandra, a director with much experience, had decided she might be interested in the position. She even floated the idea with several other directors. Jeff was livid.

“A board has two significant priorities at all times,” he told us. “The first is overall financial stewardship. The second is succession and the success of the CEO. I would have jumped in front of a train if necessary to stop that, because it threatened the integrity of the entire process.”

Jeff did just that. He addressed Sandra directly. He told her in no uncertain terms to stand down and convey that action to the board members she had shared her musings with. Six months later, the board chose Carly, one of the three original candidates, as a successor, and she has been a great success as the new CEO.

A nuanced approach

Numerous red flags — the Daraprim price-hike controversy and the Volkswagen emissions scandal among them — have given us warnings recently of the sorts of decisions to avoid. In fact, there are several ways to train oneself and others in the ethical skills and behaviors that can become ingrained in our character.

One of the foremost experts in this field is Shannon Bowen, a University of South Carolina ethics professor who presents training sessions for various industries around the country, including the health care and pharmaceutical sectors, teaching executives how to make decisions in areas that are more nuanced than they are black and white.

“When you have an ethical decision that has a number of options — none of which are clear-cut and seem right — that’s where you need a more powerful and analytical model to help determine which course of action to take,” says Bowen, who also teaches public relations.

For example, the U.S. Food and Drug Administration requires testing of any drug that will be prescribed to children, yet children technically cannot give informed consent. “So how do you test a drug on children and make it ethical?” Bowen says. “Those are the types of situations that health care providers and pharmaceutical companies have to deal with all the time.”

To help executives analyze a situation and make a decision that they are morally comfortable with, Bowen encourages leaders to reach back more than 200 years and apply the theories of German philosopher Immanuel Kant to the issues with which they are wrestling. Kant argued that our actions should always respect the humanity of others and demonstrate respect for what he called a “universal moral law.”

The result is surprisingly tough-minded and contemporary. “You can absolutely take Kant’s theory and apply it in the real world because he believed in what some scholars call ‘brutal honesty,’ ” Bowen says. “Essentially, you’re telling the truth even if it’s going to harm your position, even if it’s going to make you an unpopular person in the organization for a while. You’re doing the right thing overall because doing so demonstrates respect for humanity, and that, ultimately, has to be your guide.”

Such candor is tempered, though, by responsibility. If being brutally honest will harm the dignity and respect of others, then you don’t have the right to proceed, Bowen says. So Kant’s approach is leavened with compassion; in fact, Bowen says she finds much Kantian influence among the nongovernmental organizations she has studied.

A simplified summary of Bowen’s Kantian model is this: Am I acting reasonably, or am I influenced by politics, money or self-interest? If those influencers are affecting me, I need to recuse myself from the decision. If it’s fair for me to make this decision, would people in a similar situation make the same decision? If I were on the receiving end of this decision, would I accept it?

Decision-makers also should consider the following points and questions:

Duty: Am I doing the right thing?
Intention: Am I proceeding with a morally good will?
Dignity and respect: Am I maintaining dignity and respect?

These questions take time to consider, Bowen admits, and require a great deal of communication among stakeholders. But the end result is a better-functioning organization with strong leadership from top to bottom.

Bob Clarke is CEO and Sherrie Barch is president of Furst Group and NuBrick Partners.

Are you a ‘what if’ person?

Having executives who apply ethical decision-making skills helps to avoid leaders being surrounded by “yes men” and “yes women,” says Shannon Bowen, a University of South Carolina ethics professor. “In general, I’m always encouraging people to be the ‘what if?’ person — to be the one who says, ‘This decision could go the way we hope, but what if it doesn’t?’ If you consider up front what the worst outcome could be, then you’re rigorously testing the decision.”

That approach, she contends, doesn’t lead to contentiousness in the organization. In fact, it guards against it.

“Any time people are empowered to take a step back and question a decision, leaders can insulate their organization from those potentially negative outcomes,” Bowen says. “Whether it’s fine-tuning the decision or investing in greater problem-solving or crisis planning, a more enduring decision can result from taking these steps than from taking a course of action simply because leaders think it’s a good idea.”

Greg, a health system chief operating officer who ended up founding several health care companies on his own, makes it a habit to encourage diversity in perspective. It is not uncommon for him to allow his team to move forward with a decision even when he believes his own idea would produce the best outcome. If the team’s idea succeeds, he has helped them grow. If it fails, he can help them understand the flaws in the approach so their next decision will be more successful.

Fortunately, Bowen says, she finds an eagerness among most health care and pharmaceutical leaders to apply ethical decision-making.

“A lot of these leaders’ questions center around financial reporting, negotiating with labor unions or drug labeling. Issues like those are fraught with all types of ethical concerns, and the answers are rarely simple. I think the Kantian model helps sort out the gray areas,” she says.

Not everyone, of course, is a fan.

“I don’t get a lot of phone calls from hedge fund managers,” Bowen said jokingly. “Believe it or not, I’m not really popular in those circles.” — Bob Clarke