Pinto Fires, Profit and Perception: Ethics and Organizations – by Donna Ladkin

Pinto Fires, Profit and Perception: Ethics and Organizations - by Donna Ladkin

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How should we understand ethical choices? Which actions fall under the domain of ‘ethical’ and which are ‘just economics’?  Professor Donna Ladkin suggests that how organizations perceive difficult situations will shape the ethical choices they make.

This week I introduced my undergraduate leadership students to the well-worn case often referred to as ‘Pinto Fires’. It’s the situation which arose in the Ford Motor Company in the 1970s when the Company realised that their sub-compact car, the Pinto, had a design fault which resulted in the likelihood of its fuel tank exploding in the event of a rear-end collision. More often than not, the ensuing blaze resulted in the death or severe injury of those in the car. In a memo which was released as part of trial evidence when the Company was indicted for their actions in 1977 it was revealed that Ford had conducted a cost-benefit analysis in relation to their options for action. Their comparison showed that the cost of fixing the design fault with an $11 part would be more expensive than dealing with legal action taken by families of deceased Pinto drivers and their passengers. On the basis of this analysis, Ford executives decided to continue producing the car without the potentially life-saving alteration.

The students seemed genuinely stunned by this decision on Ford’s part. They seemed even more dumbfounded when watching a YouTube video of Milton Friedman, defending this decision in a debate with a young man, not much older than themselves (see: https://www.youtube.com/watch?v=jltnBOrCB7I). How could someone as esteemed as Milton Friedman be defending this crude way of weighing up the cost of a human life versus the economic profit of a faceless organization?

But it’s all down to how you think about such situations, and what you perceive as you attend to them. Dennis Gioia, who was part of Ford’s recall team and who subsequently went on to teach business ethics, notes that within the micro-world in which Ford executives operated undertaking such cost-benefit comparisons was ‘just the way business was done’. It wasn’t about being unethical or ethical, it was merely about making good, economically favourably business decisions, which, after all, is the point of business.

But is it?

Is it possible to consider that business may not be all about profit? Is it possible to imagine business being about collective endeavour, about providing meaningful livelihoods and worthwhile products, about contributing to social, as well as economic welfare?

What so often seems to be forgotten, is that the ‘way we think about things’ – the priority given to ‘making money’ over providing safe products – as exemplified by the Ford Pinto case – is just that, a way of thinking about things. The micro-world in which we operate plays a key role in determining what we pay attention to, what we deem to be important, and whether or not we even recognize the ethical aspects of most situations we engage in as we go about our day to day lives.

The link between perception and ethics has been apparent from as long ago as Aristotle’s assertion that in order to behave ethically one must ‘perceive correctly’. If we do not notice the ethical component of a situation – we have no chance of responding ethically. For instance, if while travelling across London on the Tube I am too engrossed with my mobile phone to notice the frail elderly man who has just got on the train, and could use my seat more than me, I won’t stand up and offer it to him. I need to notice he is there in the first place. Having noticed him however, I need to make a judgement – and the making of this judgement requires not just ethical nous, but the perceptual skill of imagination, as well. It is by imagining myself in the elderly man’s shoes, and letting myself feel what it might be like for him to be tottering as the train bumps along, that I may be moved to ethical action.

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It is poignant to be writing this blog during the week in which we have celebrated the 70 year anniversary of the liberation of Auschwitz. Hannah Arendt famously described Adolf Eichmann as acting from a ‘failure of imagination’ in relation to his role in the Holocaust. The notion still has currency today as the West’s muted response to the Ebola virus, the ongoing conflict in the Middle East and our collective myopia concerning climate change are similarly attributed to a lack of our imaginative faculties.

But how can we develop both our perceptual and imaginative capacities which are at the heart of ethical engagement? This is the question at the core of my new book, Mastering the Ethical Dimension of Organizations. In it, I suggest that ethical skill is a capacity to be practised, rather than primarily a way of coming to judgement. The practices involved are actually relatively simple, although they may not always be easy. Firstly, they involve consciously seeking out the way in which our actions affect others. Beyond that, they require us to stretch beyond the comfort of our own micro-worlds to come to know those different from ourselves. Finally they are about actively questioning the assumptions we bring to the way ‘things are’ and the priorities we set. They are practices of perception and imagination which can form the habit of consciously noticing what we notice, and what we do not notice, as we way weigh people against profits in the business of our lives.

 

0c689b8Donna Ladkin is Professor of Leadership and Ethics at the Graduate School of Management, Plymouth University.  Her new book Mastering the Ethical Dimension of Organizations is published by Edward Elgar.

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