Applying Utilitarian Theory in Business

Introduction

Our lives involve making different decisions continuously. We are at many times interested to know whether we are doing the right or the wrong thing. This especially applies when we are faced with ethical dilemmas that require us to make a difficult choice on our part. This kind of a problem is common in the business world where decisions are constantly made by company managers, workers or any other employees. One approach that can be used to guide one’s actions in such situations apart from helping one on everyday moral principles is the Utilitarian theory. According to this theory, an action is either good or bad depending on the pain or pleasure and happiness it brings to the majority. An action that brings happiness and pleasure to the majority is considered morally right while the one that brings pain to the majority is considered morally wrong. (Zhou, Z. et. al 2007)

To give an illustration of this theory in application lets consider a road accident that has happened and several people have been injured. A paramedic may consider the rule that ‘pregnant women first’ causing him to go ahead and attend to all pregnant women before he attends to anyone else. This is because by doing so, he would bring happiness and pleasure to the majority-the pregnant women and the unborn child. (Fisher & Lovell 2009)

The Utilitarian theory recognizes that human beings are selfish by nature and that they will therefore make decisions that tend to benefit them in the end. When we act for the benefit of others, it is because we will have some personal satisfaction in doing so. This is not a bad thing since we tend to identify the importance of pleasure and we will identify our pleasure with that of others causing us to consider the general good of others in our actions. (Modway, Porter, & Steers1979, p.225)

In order to understand better Utilitarian thinking, let us briefly consider other theories that can be applied in ethical dilemmas. Two other theories that can be used to guide moral behavior include the Deontological theory and Virtue ethics. According to the deontological theory, an action is considered to be right or wrong based on whether our intentions are good or not. A good way of gauging our intentions would be to place ourselves in the shoes of other people that our actions would affect. For example, a marketer may be faced with the dilemma of deciding whether it is right or wrong to market a harmful product. One question the marketer could ask himself is whether he would like to live in a world where harmful products have been marketed as good products. The answer would be obviously ‘no’. This should then deter the marketer from promoting this harmful product. (Harrison 2005)

On the other hand, Virtual theory considers an action to be right or wrong based on whether it is a virtual behavior or a behavior that displays vices. Virtues include characters like honesty, bravery, impartiality among others. In business, virtues may be considered as those behaviors that serve someone’s professional purpose. A wide gap is therefore likely to exist between someone’s personal virtues and professional virtues. (Gundlach, & Murphy 1993, p.36)

To illustrate all the theories at play, consider a person who has stopped a fight between two people. When judged from Virtue ethics theory, this person may be considered to have done a good deed because he displayed a virtue of bravery. He may also be considered to have done a right thing from the deontological perspective since he displayed a good will with a good intention of stopping a fight. Moreover, the person may be considered to have done the right thing according to the Utilitarian theory because the end result was good for the majority- It stopped injury that could have resulted from the fight. (Fisher & Lovell 2009)

The issue of moral ethics in business is a complicated issue. Some ask whether it is relevant to ask the moral question in business in the first place. However we have seen business ethics applied in every day to day business activities. This is because most people agree that they want a just and a good society. Two important elements in such a society are justice and charity. To be concerned with ethics in business is to be practical when the economic system is considered. In our country, the economic system is governed by the systems of free market laws, government laws, and competition among other laws. These systems work because people believe that there is at least some justice in them, the moment people lose faith in these systems, the systems would fail and businesses would not prevail. (Crane, & Matten 2007)

The good thing with the utilitarian principle is that it can easily guide someone to make clear decisions when applied in business. The framework of asking whether the decision made would bring happiness to the majority can be supported by quantitative and qualitative evidence that can be obtained from logical thinking and research. Consider an issue of lay-offs for example. This is a decision that may need to be made by a company that is facing financial problems something that we can easily identify with in the current economic crisis that the United States and indeed the world is facing. Company executives in such a company would ask themselves whether it would be better to lay-off five hundred people and save the company in addition to two thousand jobs for example. In this case, it is obvious that laying-off five hundred people would bring happiness and pleasure to the majority-the majority of the employees for example. (Gundlach, & Murphy 1993, p.37)

Besides, utilitarian principles are not based on any religious approach, metaphysical or any unverifiable approach in making decisions. This makes it accessible to anyone. In the business world where standards need to be established and where some decisions need to be made collectively either internally or externally, it is utilitarian theory that can be used top guide these decisions. It is also important to separate religious and professional ideals in business. Going back to the issue of lay-off in the face of financial constraints, a manager who believes in virtues would find it hard to lay-off his workers. These may include virtues of sympathy and impartial treatment of others for example. It would however be difficult for him to convince other members in the boardroom to think like him when approaching this issue. People have very different beliefs and ideals. They can however agree on principles that would bring good to the majority. It is only by convincing other board members that an alternative idea is good for the majority employees and the company for example in the case of the manager that he can convince them. (Crane, & Matten 2007)

Utilitarian theory allows a person to consider the consequences of their actions which is important for building a civilized society. This has many advantages for decisions made in business. First of all, it introduces the idea of responsibility where people can be judged from their actions depending on whether they made good decisions for a company for example. These are decisions that should have brought good to the majority. A business executive who makes decisions that increase profits besides expanding the business may be considered to have made goods decisions that have brought pleasure to the majority. The company could also have attained the following in the process: It would have sustained and even employed more people and would also have contributed more to the economy by paying more taxes and enabling its workers to spend more. (Andersson, Hankinson, & Johansson1994, p.16)

Furthermore, the issue of a business considering the consequence of its actions makes it to be responsible to the society. In order to emphasize the importance of this, we need to remember what we had stated earlier that majority of people believe in a just society and that economic systems would fail if they (people in the society) lost faith in related systems that support the economy. These are the people who spend on goods and services offered by several businesses. Moreover, being responsible to the society enables a business to make decisions that would not harm people in the society. This should enable a business to offer quality goods and services that would not cause harm to the society. A marketer would be prohibited by the utilitarian theory from promoting cell phones that have not been tested to conform to health standards for example. This may include cell phones that use harmful frequencies and radiation. Harming the society by promoting such goods does not bring pleasure to the majority. (Crane, & Matten 2007)

The use of utilitarian approach in business enables a democratic environment to exist in companies. This is very important in promoting a creative workforce which is central for survival in the current competitive business world. When everyone in a company feels that he/she is part of important decisions that are made, they are compelled to reciprocate by working tirelessly for the company. Moreover, they are not discouraged to come up with creative ideas and innovations but are rather encouraged to do so. These ideas and innovations help in keeping a business afloat in any environment whether it is hostile or not. Decisions reached collectively consequently lead to collective responsibility when they are later judged on whether they have brought good to the majority. (Andersson, Hankinson, & Johansson1994, p.17)

Like any other theory on moral behavior, Utilitarian approach in solving ethical dilemmas has inherent weaknesses. The obvious weakness that shows up immediately when considering the application of this theory is the difficulty that comes with an attempt to measure happiness. For example, should long-term pleasure and happiness be considered above immediate pleasure and happiness? No standard method of measuring pleasure and happiness has been developed limiting the application of Utilitarian theory. A company facing financial constraints may have a difficulty in deciding which decision in either laying off some workers or decreasing the salary of all workers would bring pleasure to the majority of those involved. Since Utilitarian decisions are solely based on happiness and pleasure for the majority, it may prove difficult to make the right decisions since it is difficult to measure happiness and pleasure that would result from one’s actions. (Fisher & Lovell 2009)

When acting on Utilitarian principles, we are forced to act against our intrinsic beliefs and intuition. This especially applies when for example we sacrifice human beings for the sake of others. The end justifies the means approach does not just feel right at times. We may still feel the moral guilt for our actions although they have been based on what we consider to be the right thing to do when considering the pleasure and happiness for the majority. Take for example the case of a manager who has to sack some employees in order to preserve the jobs of the majority of the other employees. The idea of internal values that should guide our moral character and behavior may be true after all. (Zhou, Z. et. al 2007)

Another weakness that comes with utilitarian theory is that pleasure is neutral. The consideration of pleasure applies equally to everyone. This includes a criminal whose actions may be justified by the utilitarian theory. A scenario like this can be seen in a situation where a group of unemployed youths rob a bank. Their actions may be considered right because they brought pleasure to themselves by obtaining money though illegally. The bank on the other hand could continue with its operations as normal. Someone can even argue that these robbers were able to invest the money while providing a source of income to themselves and to others bringing pleasure to the majority in the process. (Crane, & Matten 2007)

Utilitarian beliefs present a problem of neglecting the minorities in the society. Take for example a situation where something like slavery could be allowed since it would bring pleasure to the majority in the society. It is therefore possible to ignore, neglect and abuse the rights of others in a utilitarian context. This is something that may be applied in the business world legalizing controversial actions. Although some companies have very poor working environments including paying their workers poorly, overworking them besides risking their worker’s health, they might argue that by employing people and contributing to the economy, they are bringing pleasure to the majority. Take the case of industrialized, industrializing and poor nations for example. Although these countries know that it is wrong to emit dangerous carbon emissions into the atmosphere, which affect the ozone layer affecting mostly poor nations that do not have resources to deal with environmental problems that are resulting in the process, they have and could argue that reducing these emissions would mean affecting their economies negatively bringing pain to millions of their citizens. Utilitarian principles may in fact be promoting human selfishness in disguise. (Fisher & Lovell 2009)

Besides, utilitarian beliefs do not consider human intentions and motives but instead focus on just the consequences and end results. This may affect our morality since it is like we have been taken out of the picture. It is only our actions that are instead judged on whether they brought pleasure and happiness to the majority. It may not be possible to judge our actions since it is only time that can tell whether our actions brought pleasure and happiness to the majority in the society, pleasure that may be difficult to determine and measure in the first place. A manager whose company is facing financial problems may dismiss workers that he is not in good terms with, although he could have done a right thing in that he would save the company from collapse in the end bringing pleasure to the majority, his intentions are obviously wrong. (Modway, Porter, & Steers1979, p.227)

Moreover, the Utilitarian theory places the highest value that can be attained by humans on pleasure and happiness. The only explanation that the theory gives for this preposition is that human beings naturally desire to be happy. We all know that we should not always go ahead and try to get what we naturally desire. What about if all people were fulfilled and happy at all times? Would this make the world a better place? How would our experience be affected in such a scenario? These are some questions that we need to ask ourselves in regard to the Utilitarian theory. For example, research has shown that a goof number of people living in poor nations in lack are much happier than people living in rich nations in excess. (Fisher & Lovell 2009)

Conclusion

The business world is complex when it comes to issues like making the right choices in ethical dilemmas. It is a world where it is very difficult to make decisions based on just whether they are right or wrong. Even in such circumstances, we need at least a framework to guide our actions in order to meet the moral needs of the society that holds a strong belief in justice and fairness. Although it has many weaknesses, the utilitarian theory comes in handy in making decisions concerning ethical dilemmas in the business world. This is mostly because it considers the good of the majority, something that almost everyone in the society agrees with and applies in his/her daily duties.

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References List

Andersson, J.C., Håkansson, H. & Johansson, J. 1994, “Dyadic business relationships within a business network context”, Journal of Marketing, Vol. 58, pp. 1-15.

Crane, A & Matten, D. 2007, Business Ethics, Oxford.

Fisher C & Lovell A.2009, Business Ethics & Values, FT/Prentice Hall.

Gundlach, G. & Murphy, P.1993, “Ethical foundations of relational marketing exchanges”, Journal of Marketing, Vol. 57, pp. 35-46.

Harrison, M. R.2005, An Introduction to business and management ethics, Pal grave/Macmillan.

Modway, R., Porter, L. & Steers, R. 1979, “The measurement of organizational commitment”, Journal of Vocational Behaviour, Vol. 14, pp. 224-47.

Zhou, Z. et. al. 2007, Teaching and Research of Business Ethics, Tianjin: Nankai University Press.