Ethical influences on functional decisions

In large organisations, middle and senior middle managers are rarely involved in company-wide decisions. They operate within a division of the business (a function) and therefore make decisions only about marketing, people, finance or operations/resource management. These are functional decisions. Many of these will be day-to-day, tactical decisions such as ordering more supplies, deciding on next week’s production, temporary staffing levels and so on. These have no ethical or moral basis and these days are increasingly informed or made by computer. Functional decisions with an ethical dimension are likely to be longer term and more strategic. Accordingly it may be less clear later as to who actually made the decision because it is likely to have been made either by committee, or through a process of discussion known as emergent decision.

In the same period of time in which Toyota made operational decisions that ended up damaging its reputation for quality in the USA, Volkswagen engineers were illegally defeating emissions tests on their diesel cars, and General Motors (GM) was involved in even more obviously unethical actions. In September 2015 GM admitted total liability for allowing a safety fault in its ignition systems that had caused at least 124 deaths over the previous decade. GM not only knew about the fault, but had repeatedly lied to cover it up from regulators. In a deal struck with the authorities, GM accepted a fine of $900 million (less than a third of 1 year’s profit). The fine was widely criticised for being insignificant to a business the size of GM, but the authorities believed it would be impossible to prove in law that executives were guilty of a ‘wilful violation’, i.e. made decisions knowing that deaths would result.