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How to Deal with Moral Dilemmas when Running a Business: The Sleep-at-Night Method

6 Dec 2017

By Serhat Pala

CREDIT: Getty Images

Entrepreneurs have to be opportunistic, especially if they're pioneers operating on the fringes of the market they're in. However, this opportunistic nature can sometimes cause ethical conflicts for us when we find ourselves in situations where something might be potentially good for business and completely legal, but not exactly ethical. These are usually the toughest decisions to make.

On one hand, you do not want to miss an opportunity that will help you reach your goal faster and on the other hand, you are not sure if that decision means doing something unethical. In those situations, your inner voice is usually pretty good at coming up with justification for the choice you've made. If you are not one of those "the end justifies the means" type of people, than not being 100 percent sure about the ethics of your decision can really keep you up at night.

When I find myself facing these types of decisions, I have  an exercise I like to do to help me make the most ethical choice. I call it the "sleep-at-night decision making model."

Let's look at an example from my own personal experience.

I was working with a longtime supplier who invested a lot of their own money for a product to be manufactured to my specifications. Later, I met a another supplier who said they could also make that same product to my specifications, but for a much less cost.

My dilemma was that I had recently met with representatives of the first company and told them I would renew my contract with them in a few weeks and they had already started working on a new product design for me based on the pending contract renewal.

I had to decide whether I should go with the better deal or stick to my word and renew the contract as promised.

So, I asked myself these two questions:

1. What specifically makes me uncomfortable about this decision?

I was uncomfortable because I had told them I would renew the contract and if I didn't, that would mean breaking my word and scrapping a long-term partnership that had taken me a significant amount of time to develop. The fact that I would be trading loyalty for monetary benefit made the decision even more difficult.

2. If I make this choice, would I be able to feel comfortable telling someone I respect all the details of my actions in regard to this decision?

When faced with any kind of moral dilemma, I always picture myself talking with my wife and children and explaining the situation to them. For you it might be someone else, as long as it's a person or a group whose respect you hold in high esteem.

I know that my family would want me to keep my word and choose loyalty over the monetary benefit, but I also knew that my wife, being an entrepreneur herself, would want me to get the best possible deal I could.

With that in mind, I approached the supplier I had the existing contract with and told them about the second company's offer while reassuring them that I valued our relationship and would not jeopardize it for some savings. However, if there was anything they could do to amend our agreement and make it more lucrative so I wouldn't be tempted in the future, that would also be helpful. They did amend our agreement and we're still working together.

Another time, I was contacted by a sales broker company that had worked with a competitor for direct corporate sales, but who no longer worked with that competitor. This sales broker company complained about not getting paid fairly and indirectly told me that they could start selling my company's products to my competitor's customers since they knew the details of all my competitor's customer agreements and all they would have to do is undercut their prices a bit to steal these customers away.

I had the imaginary conversation with my family and although there was no legal ramifications from working with the sales broker company and it was incredibly tempting, we all (pretend) agreed that it wouldn't be right to work with them under those circumstances. That meant missing out on making some lucrative deals and sticking it to a competitor, but I've never regretted the decision.

It helped that my company was in no danger of going under. The health of your company when dilemmas arise also plays a part. If my company was on the brink of going under, I can't honestly say I wouldn't have chosen differently. Survival is a big motivator in decision making.

When faced with difficult ethical decisions, ask yourself these questions and they'll help you make the decision that will help you sleep at night.

Read the full article here.
This content was originally published by Inc Magazine. Original publishers retain all rights. It appears here for a limited time before automated archiving. By Inc Magazine

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