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Feb 01 2015
Ethical Decision Making
DeAnna Leahy, CCE, Sunroc Corporation

As I was doing some reading this week for a Business Ethics class that I am taking at UVU, I was thinking about some of the situations in my career when I have been faced with an ethical dilemma. I have been a Corporate Credit Manager for the last 28 years, and can think of several instances when I have had to make an ethical decision. I think at some point everyone in an organization will be faced with an issue that will require ethical decision making. That is certainly true of top management positions, but is also true of every worker in an organization. Some are dramatic decisions with lasting consequences, but most often they are small decisions that require individuals to make an ethical decision. In either case, individuals need to decide for themselves what type of person they want to be.


I work in the construction industry and therefore I work with contractors on a daily basis. Unfortunately, there are a few contractors who fall into the pattern of "robbing Peter to pay Paul." They have the mind-set that they can always catch-up the bills when they get paid on the next job. This can become a perpetual pattern for some small contractors. There have been several occasions when a contractor has a balance owing on one job and has run out of money on the job. They have started a new job and believe that they will have the funds in this new job to pay off the previous job. One of the things standing in their way of doing this is that the new job has a construction loan, and to draw money out of this construction loan they need invoices to support, or provide back-up, for the amount requested. Over the years I have had several contractors come to me and ask me to provide them an invoice for the past due invoices on the old job, with the delivery address of the new job, so that they can provide them to the bank to draw money from the loan on the new job to pay off their past due balances. Is this ethical?

Making a utilitarian decision based strictly on results would consider whether or not the overall consequences provide the greatest good for the greatest number. Would I like to have that past-due balance off of my accounts receivable aging? Yes! I have key performance goals that I am trying to accomplish, and DSO (Days Sales Outstanding) is one of the goals on which my job performance is evaluated which also affects my bonuses. Would the contractor benefit by having the invoices paid? Yes! He no longer has a past due balance that is accruing interest at 18% per annum, and his account will not be placed on credit hold. Does the home owner of the old job benefit? Yes! He no longer has to worry about my company placing a mechanic's lien against his property. So, on the surface, it would appear that the decision to do this would provide the greatest good for the greatest number.


Next, I would need to assess the decision based upon principles and rules. What rules are in place about such a decision? Well, that depends on the contract between the contractor and the new property owner. If the contractor gave the owner a price to complete the job that is a set price, one could argue that it ultimately does not matter what the contractor turns in for the draws, because he would only be paid up to the total contract amount for the job. However, if he has a cost plus contract, meaning that the owner pays for the cost of his materials plus a certain mark-up, this decision would definitely misrepresent the facts. By providing invoices to the home owner for materials that did not actually go into his job, I would put myself and my company at risk.

Finally, I look at making a decision based on integrity and character. Would it be ethical for me to provide invoices to a bank for a construction loan when the materials did not go into that project? Absolutely not! Each time a contractor has come to me with this proposed plan to take care of the past due invoice, I have explained to them the problems that could create, and have let them know that neither I nor my company will make a representation that materials went into a job that were not actually incorporated into that job. It would not be ethical, and the new owner should not have to pay for invoices out of their construction loan to pay off the contractor's previous obligations, regardless of what type of contract the owner has with the contractor. To misrepresent the facts would also place my company in a position to possibly be liable to third parties for fraud.


In the business world today, it seems like the only important factor when making a decision is to maximize profits. The words "Business" and "Ethical" are thought of as an oxymoron and cannot be used in the same sentence. So, we get examples such as Enron and Bernie Madoff. However, it is more important than ever that we make decisions by considering the impact that the decision will have on all of the stakeholders - anyone who is affected by the decision made. We must be willing to make the right choice - regardless of the consequences. Responsible decision making and deliberation will result in more responsible behavior. As the great philosopher Aristotle said "We are what we repeatedly do."