Posted by: nuleadership | January 6, 2014

Decision Making With Unintended Consequences

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As the clock strikes midnight, the world once again brings in another new year with anticipation.  For many people, the last several years have been filled with financial crisis and personal turmoil. 

With the realities of globalization, one country’s misfortune can have negative consequences for other countries across the world.  Therefore, a new year brings a lot of uncertainty for the future.

Furthermore, today’s businesses must be ever on guard for market turbulence and global threats.  Given this reality of personal consequences, individuals must be more mindful of effective decision making. In fact, bad decision making can hurt an organization as well as an individual. 

Denis Collins, author of Business Ethics, notes that the prevalence and costs of unethical decision making at work can be substantial for businesses. Therefore, good decision making can dilute a competitor’s advantage. In this discussion, we will examine how decision making can carry unintended consequences. 

Today’s leaders must consider the aftermath of their poor decision making. Sadly, many folks fail to understand the consequences of their decisions. For example, Vanessa Williams was one of these fallen Hollywood icons. In 1983, Williams became the first African-American woman to be crowned Miss America. 

However, her immediate success was short-lived due to a scandal. Consequently, Williams was forced to relinquish her title; she probably did not think her youthful deed would come back and wreck her dreams. Yet, the consequences not only damaged Williams but her family, friends, and millions of her fans. Nobel Prize author Albert Camus once noted, “Life is the sum of all your choices.” In spite of all wise counsel, some people seem to have a knack for making poor decisions. 

Sadly, many poor decisions have unforeseen impacts.  Nancy Cavender and Howard Kahane, authors of Logic and Contemporary Rhetoric, argue for better decision making under this financial crisis: “Now, more than ever, we need to think critically about the world we live in and the decisions we make.”  They point to the dire consequences of poor decision making.  In fact, these circumstances often can be traced back to a root cause. 

The Law of Unintended Consequences relates to any purposeful action that will generate unintended consequences. This law can be categorized into several areas: (a) a positive unexpected benefit called serendipity, (b) a negative effect which is contrary to the original intention, and (c) a potential source of problems which is commonly referred to as Murphy’s Law. 

Like Murphy’s Law, some decisions may appear to afflict some people as if their lives are cursed. Making the right decision is a difficult process. No one will applaud your many good decisions; however, you will probably catch heat over the bad ones. 

In fact, every person, regardless of their background or social standing, can benefit from good decision-making techniques. In this life, most people make decisions to the best of their abilities. When various things happen, especially bad ones, individuals must be ready to deal with them. Therefore, understanding unintended consequences can assist in helping us make better decisions for the future.   

 Discuss your understanding of the Law of Unintended Consequences as it relates to effective decision making.

 © 2014 by Daryl D. Green

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Responses

  1. Reblogged this on Unique Dress.

  2. Ethical Behaviors

    As a past Senior Noncommissioned Officer I have dealt with issues that were unethical and completely irresponsible. For instance, young impressionable new military members failing to complete without errors aircraft preflight checks and then signing off as if it was accomplished.

    First of all, I must mention a senior mechanic is always on duty and double checks everything to ensure compliance. Sometimes triple checks when new troops are involved. But what about the individual that fails to do the job he is in trusted with. What do you do? You can council him, write him up and even give him remedial training.

    However, the problem is within the individual. What makes him cut corners when the lives of others are dependent on him doing his job? Collins (2012) states, “Government agencies are not immune.” This is in its self a scary thought. The code of ethics and accountability are stringent and must be adhered to no matter what level of employment your working at.

    From my experience, it takes an aircraft accident or the termination of employment to force some individuals to comply with mandated codes. How do you hire the right people for the right job the first time?

    Collins, D. (2012). Business Ethics: How to design and manage ethical organizations. Hoboken, NJ: Wiley.

    • Paul,

      Excellent…right out of the gates! Your personal observations clearly speak to the issues of personal motivation. Some people will be motivate by personal threats (i.e. dude, you will be fired if this happens again) while this same approach does nothing to someone else (i.e. “You can fire me if you can’t catch me again”). Consequently, organizations must get the best (and ethical ones) on the front end of the hiring process.

      Professor Green

  3. Collins (2012) discusses Kohlbergs stages of moral development, pointing out that “people progress through a continuum” of stages and that some “might stop progress at any point.” I believe the stage of development feeds into the results identified in the Law of Unintended Consequences. If an individual has not matured to a higher level of cognitive reasoning such as that found in the postconventional level of Kohlbergs stages, then the results of their decision making processes will more than likely have lose ethical basis and a higher probability of resulting in negative consequences. On the other hand, an individual who has progressed to this stage is more than likely going to think through “mutually agreed upon human rights” as well as “abstract universal ethical principles” which will often lead to a clearer understanding of decision outcomes and consequences.

    • Georgette,

      Interesting comments!
      All,

      Are good ethical decisions directly related to the maturity of an individual or not?

      Professor Green

      • I don’t see ethical decisions directly related to maturity of an individual because of nature. Individuals by nature sense good and bad ethics. Collins (2012) stated, “Individuals often express a “gut” feeling or moral intuition that something is right or wrong, although they are unable to articulate the reasoning that led to their moral conclusion.” Age doesn’t seem to have a defining factor. I have seen young children make ethical decisions that would normally be seen in much older or matured individuals. On the other hand, I have seen many matured educated professional individuals make some of the worst decisions they could have made. Their decisions were made based on how those decisions would benefit themselves. Bottom line ethical and unethical decisions can be made at any age and the maturity of the individual has no bearing.

      • Paul,

        OK! Point well taken! Ever heard of ‘an educated fool?’

        Professor Green

  4. […] As the clock strikes midnight, the world once again brings in another new year with anticipation. For many people, the last several years have been filled with financial crisis and personal turmoil. With the realities of …  […]

  5. On a personal level this concept comes back to managing an individuals “personal brand”. Speek (2011) talks about the discipline that must be applied to constantly maintain a mindset that takes into account the perception of your personal brand. Do others perceive you as an ethical leader?

    Developing a discipline of perception management requires that a leader mental consider how others will view the decisions they make (Speek, 2011). Putting yourself in the shoes of those affected will influence not only decisions, but how the resulting actions are carried out (Speek, 2011).

    The consequences for poor decisions, or even decisions poorly acted upon, can have negative consequences and the consequences are not always as apparent as the examples in this post. For example: A leader that starts a company using unethical, opportunistic means will always live with the stigma that the company was founded on questionable means. Even if the company goes on to do great things, the perception of those in the know will always be that the leader and the company are unethical.

    Leaders must always manage their personal brand (Speek, 2011). The actions of today will have forever consequences (Speek, 2011).

    Reference:
    Speak, K. D. (2011). Positive Perceptions. Personal Excellence, 16(8), 8.

    • Kevin,

      WOW! So…a bad decision could hurt a person’s professional brand? Given this framework, why would individual knowingly act unethical in his or her decision making (i.e. damage the professional brand)?

      Professor Green

  6. When I first read about the Law of Unintended Consequences and thought about how it relates to effective decision making, I immediately thought of Archduke Franz Ferdinand. The decision was made to assassinate the Archduke and that did happen. However, an unintended consequence of that decision was that it also started World War I.

    Collins (2012) states, sometimes a person may have good motives, but insufficient knowledge or awareness. Companies implement a standard operating procedure because it works and is usually safety oriented, but they don’t work if not followed. For instance, with one of my last jobs we had a team that was tasked to complete a hard objective. The task was taking a little longer than expected so the supervisor had the team deviate from the normal procedures, and told them that he wanted it done his way because it made “more sense.” The supervisor was new and was not familiar with the company or its operating procedure. Ultimately, his short cut that was intended to help the team ultimately got a team member killed.

    Collins, D. (2012). Business Ethics: How to design and manage ethical organizations. Hoboken, NJ: Wiley.

    • Greg,

      Excellent piece of history! Wars are often started with little understanding of the consequences. We might look through out history books…or look at the current situation in the Mid East.

      Professor Green

    • Greg,

      I think it is interesting to see how a decision that was made in the past actually had an affect on thousands of people. To me its like ripples on the water how they continuously spread. same goes for decision making, many people do not realize that the decisions they make today can and most likely will have an affect on not only their life but the life’s of many in days and years to come.

    • Greg,

      Wow, what a learning experience for the supervisor. It is the actions of people, and especially the government, always have effects that are unanticipated or “unintended”. (Norton, 2013).

      I’m sure your supervisor had good intentions , however, because he didn’t get all the information he needed before he made his decision an unfortunate and “unintended” accident happened. Sometimes you cannot see or understand every consequence that may or may not happen with a decision but hopefully alot more research and thought goes into every decision made from now on.

      Norton, R. (2013, August). Unintended Consequences. In eCompany Now Magazine. Retrieved January 9, 2014, from http://econlib.org

  7. Unintended consequences have been thought about and discussed before by economists throughout history. One source that I read recently highlighted one good example of this. In Rob Norton’s article “Unintended Consequences,” he quoted the French economic journalist Frederic Bastiat saying:

    There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. (as cited in Norton, 2008)

    This quote seemed to be the best explanation of how unintended consequences determine whether or not a particular decision is the best one to make or not. If someone wants to make ethical decisions that have a positive effect, then they must at least consider what might happen in addition to the reason why they chose to make the decision. When people make decisions, they should consider how it effects everyone directly and indirectly, and they should consider whether or not the decision is worth the consequences. Hopefully, in the event of bad unforeseen consequences, if the intentions of the decisions are ethical, then the negative unintended consequences could be overlooked or forgiven.

    Reference

    Norton, R. (2008). Unintended consequences. Retrieved fromhttp://econlib.org/library/Enc/UnintendedConsequences.html

    • Samuel,

      Interesting thoughts! An individual might want to consider running a number of scenarios related to his or her decision making in order to effectively anticipate consequences then.

      Professor Green

  8. The Law of Unintended Consequences can effect the decisions individuals make on a daily basis. Every decision that we make is followed by a consequence. At times the consequence happens directly after the decision and other times the consequence occurs later in the future. Whether or not that consequence is positive or negative can depend on a number of things, but often depends on the motives behind the decision. Collins states, “It is motivation that led to the act, and the consequences of the act, that carry ethical weight” (Collins, 2012, p. 5). This is because individuals often make decisions based on the consequences they know will follow. However, unintended consequences are often the outcome of decisions. One may find a positive benefit comes from a deed simply done out of kindness, on the other hand one may find a negative consequence to a deed that was intended to be harmless.
    Collins, D. (2012). How to design and manage ethical organizations. Hoboken, NJ: Wiley.

    • Amanda,

      Excellent! Your thoughts are directly related to the ‘Cause and Effect’ Approach.

      Professor Green

  9. All of the posts related to this topic are extremely interesting and provacative. If someone wants to ruly understand the concept of “unintended consequences”, they need look no further than the Affordable Care Act passed by congress in 2010. As 2014 begins, these consequences are becoming more and more apparent. Nancy Pelosi, the then speaker of the House of Representatives, said we ” had to pass it to find out what’s in it”. Well, now we know and the majority of America is going to suffer those consequences.
    (Johnson, 2013) spelled out one hundred of these unintended consequences in his article. Without going to all of them, which is a research topic unto itself, here are a few examples. The owner of the three top franchises of CiCi’s Pizza in Texas has said it is more cost effective to sell the franchises due to the fact that the mandates would leave him in the negatives $80,000/yr.(Johnson, 2013). Closer to home, Southern Hearth and Patio has stated that insurance premiums have tripled under the current presidency and has resulted in lower wages and lower bonuses for employees (Johnson, 2013). Example after example of companies reducing their workforce significantly or changing most employees to 29 hours or less to offset the mandates are given throughout this article.
    With all of these “unintended consequences” coming to light, which are reality and irrevocable, is it ethical to continue down the path of its implementation when the damage from it far exceeds the rewards?

    Johnson, Andrew.(2013). “100 unintended consequences of Obamacare”. retrieved from http://nationalreview.com/article/359861/100-unintended-consequences-obamacare-andrew-johnson/page/0/3

    • Clay,

      Interesting and a hot button issue…in North America! Yes, even a government can deal with unintended consequences too!

      Professor Green

      • Clay,
        You asked: “With all of these “unintended consequences” coming to light, which are reality and irrevocable, is it ethical to continue down the path of its implementation when the damage from it far exceeds the rewards?”

        My response: No, it is not ethical to continue on this path. It seems to be unfair to risk the negative consequences that may effect individuals by the implementation of this Act. Professor Green is correct, the government can deal with unintended consequences too, and lately healthcare seems to be the area that these consequences are noticed. Jonathan Tomes discusses the consequences of the HIPPA regulations implemented by the government and says “This expansion of government control of
        and liability for violation of government laws and regulations can only lead to increased costs for covered entities and their business associates” (Tomes, 2013,p. 6). This is another example of how government can make a decision that effects a multitude of individuals with unintentional consequences.

        Tomes, J. P. (2013). The law of unintended (Financial) consequences: The expansion of HIPAA business associate liability. Journal Of Health Care Finance, 39(4), 28-35

  10. Reading this post immediately recalled experiences I had at a former job as an underwriter for a national insurance brokerage. On several occasions, management seemed concerned with making fast decisions in regards to rolling out new products.

    There were instances where we would receive phone calls from customers about new products that many of us did not know anything about. In many instances, we would never receive a copy of the marketing email that went out announcing the program, or have any communication prior to. This was an issue because we did not know who to transfer calls to, and were not able to provide any details or assistance to customers.

    We also had several online tools designed so that our agents could work on their own to market and sell our products. These tended to be rolled out with very little testing, resulting in unintended errors and frustration with our clients.

    With some proper planning and testing these scenarios could have been anticipated, and many of these issues could have been avoided, resulting in better results for all (Wilburn & Wilburn, 2012).

    Wilburn, K., & Wilburn, R. (2012). Scenarios and unintended consequences. Global Conference On Business & Finance Proceedings, 7(1), 224-238.

  11. Ethical decisions, whether we realize it or not, are something that each and everyone of us deals with on a daily basis. Many times those decisions come while at work because that is where we spend a large part of our time (Collins, 2012). Everyone will have a different view of what is good or bad, wright or wrong but I believe that is part of what makes an ethical decision to each person. Because much of our time is spent at work many of the ethical issues we face will impact the company one works for, or owns. In my opinion by trying to make ethical decisions not only will help the company in the long run but will help the employees as well. The ethical decisions should lead the company down a path that is long, more certain and should help individuals inside the company prosper.

    Source

    Collins, D. (2012). How to design and manage ethical organizations. Hoboken, NJ: Wiley.

    • Josh,

      You stated: Everyone will have a different view of what is good or bad…Because much of our time is spent at work many of the ethical issues we face will impact the company one works for, or owns.

      My Response: I agree. Collins (2012) stated, “Individuals often express a “gut” feeling or moral intuition that something is right or wrong. Every person has different moral views that are affected by their life experiences, families, religions, etc. That’s why companies need to have sufficient ethics training so that all of these different employees have the same view on how the company is to operate.

      Collins, D. (2012). How to design and manage ethical organizations. Hoboken, NJ: Wiley.

  12. According to Norton, the Law of Unintended Consequences is always at work. It is the actions of people, and especially the government, always have effects that are unanticipated or “unintended”.
    The law of unintended consequences provides a basis for many criticisms of government programs (Norton, 2013). One example is Social Security. Social Security helped eliminate poverty among the elderly. Norton states that many economists feel it has carried a cost that goes beyond the payroll taxes levied on workers and employers. He goes on to say that today’s workers save less because they know when they retire they will receive Social Security checks. If this statement is true, than according to the economists workers will save less, invest less, and the economy and wages grow slowly than they would without Social Security.
    All decisions no matter how big or small, affects more than one person, not only in the moment but in the future as well. Careful thought needs to go into decisions but there will always be the “unintended “ consequences.

    Norton, R. (2013, August). Unintended Consequences. In eCompany Now Magazine. Retrieved January 9, 2014, from http://econlib.org

    • Beth,

      Thanks for your example!

      Professor Green

  13. When considering the law of unintended consequences, one has to look at the side effects of making a decision. An example of this is ones choice of taking medicine. According to BBC news (2001), in medicine, most drugs have unintended consequences ‘side effects’ associated with their use. However, some are beneficial. For instance, aspirin, a pain reliever, is also an anticoagulant that can help prevent heart attacks and reduce the severity and damage from thrombotic strokes. The existence of beneficial side effects also leads to off-label use—prescription or use of a drug for an unlicensed purpose.
    As such it is very important for management in any and every organization to carefully make decisions, as these decisions can have a negative or positive impact on the image of their organization. The cause and effect principle in decision making is important in trying to avoiding unintended consequences.

    BBC NEWS (2001) “BBC 15 February 2001, Aspirin heart warning”. Retrieved on January 20, 2014.

  14. According to an article I read, it was expressed that, “if the policy is right in principle, we must follow its consequences. This must be allowed to go ahead” (Timmins, 2013, p. 564). I’m no advocate of the Affordable Care Act, but I don’t believe that anyone expected the release of the healthcare.gov website to have been a flop when it debuted. However, it proved to be absolutely a bust. Again, it was embedded in the minds of those who wished for it to succeed. Therefore, countless hours were put into revitalizing the software and coding to ensure that healthcare would be made available to those who would be willing to apply. Our country’s administration done what they felt was necessary to employ those were able to eventually bring about a product that was acceptable and deployable to the public.

    Timmins, N. (2013). The law of unintended consequences. British Journal Of Healthcare Management, 19(11), 564.

  15. From my understanding, the Law of Unintended Consequences is our actions that have different and unexpected consequences. These different actions can be positive, negative, or sometimes even neutral. “There are five different ways that these actions might have unexpected consequences” (n.d.). The five are as followed: ignorance, error, immediate interest, basic values, and self-defeating prophecy. For example, the law of unintended consequences could happen in a family’s basic value setting. Let’s say you want to teach your child how to ride a bike. After many attempts of trying to ride the bicycle, the child keeps falling and getting injured. They develop a fear of riding a bicycle and it becomes traumatizing. Going back to the beginning, you never wanted that to happen to your child but a consequence came from teaching them to ride a bike.

    What is the law of unintended consequences?. (n.d.). Retrieved from http://www.wisegeek.com/what-is-the-law-of-unintended-consequences.htm

  16. The Law of Unintended Consequences can effect the decisions individuals make on a daily basis. Every decision that we make is followed by a consequence. At times the consequence happens directly after the decision and other times the consequence occurs later in the future. Whether or not that consequence is positive or negative can depend on a number of things, but often depends on the motives behind the decision. Collins states, “It is motivation that led to the act, and the consequences of the act, that carry ethical weight” (Collins, 2012, p. 5). When we make choices in life and impact others in are decisions we need to make sure that we are making ethical and moral decisions that we continue to support and back after that decision. That decision will impact the business from that day after we make that decision. I tend to think through all of my personal decisions as well before I make them as well in the same manner knowing they will also affect the individuals in my household and the indiduals I am involving in the decision.

    Collins, D. (2012). How to design and manage ethical organizations. Hoboken, NJ: Wiley

  17. The law of unintended consequences is an interesting topic because it is so important in today’s time. Every widely known actor, athlete, business owner is constantly under a microscope now. If they make a decision that might be perceived as controversial it is spread all over tv, twitter, facebook, and many other outlets. In my opinion it has bred a culture of “overly politically correct” individuals. Sure, these leaders have to say what is best for themselves and their brand. However, most answers to questions or in interviews have become so cookie cutter now that you can predict what will be said before it even starts. Athletes are widely known for this. The culture now demands honesty, but at the same time if that honesty steps outside the bounds of what they are used to hearing it is breaking news. This is the culture of consequences businesses and celebrities deal with on a daily basis.


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