Written and Narrated by
Robert Prentice, J.D.
Business, Government & Society Department
McCombs School of Business
The University of Texas at Austin
“In any kind of decision-making, context counts. The simple reframing of a situation or a question can produce a totally different answer from the same person. For example, people would rather buy a hamburger made of meat labeled seventy-five percent fat free than meat labeled twenty-five percent fat. In fact, when questioned, these people will tell you that the seventy-five percent fat-free burger tastes better than the twenty-five percent fat burger, even though the burgers are identical.
When NASA was deciding whether to launch the ill-fated space shuttle Challenger, Morton Thiokol’s engineers at first opposed the launch on safety grounds. But when their general manager instructed the engineers to, “put on their management hats,” he reframed the decision from one focusing on safety to one focusing on dollars and cents. The engineers then, unfortunately, changed their decision.
We need to look beyond the obvious frame of reference in business – “will this be a profitable decision?” – and consider our actions from a broader ethical perspective like, “how will this look when it is reported on the front page of the newspaper?”
Decisions made by business people often occur in a context where subjective factors predominate, and the framing of an issue is particularly influential. In Enron’s declining days, the company attempted to save money by encouraging employees to minimize travel expenses. An Enron employee later wrote that he intentionally flouted the new policy. While this seems like a clear ethical lapse, in the employee’s mind, he deserved to stay in the most expensive hotels and to eat at the best restaurants because of how very hard he was working. He framed the issue in terms of his narrow self-interest, and not in the broader ethical context of adhering to company policy.
CFOs and accounting personnel at Enron, HealthSouth, and other scandal-ridden companies did not need a philosophy course to help them figure out that their manipulation of financial statements was unethical. Their problem was that at the time of their actions, their frame of reference was loyalty to the company and to the company’s goal of maximizing stock price. Had those employees been able to think in terms of the bigger ethical picture – for example, the impact of their action on other people’s pension funds – they may have acted differently.”