The utilitarian ethical approach addresses any given action in terms of consequences or potential outcomes. This ethical approach strives to achieve the best outcome for the majority while presenting the least amount of harm or negative consequences. Every entity that will be impacted by the decision is considered equally, which requires weighing net benefits and costs individually for each stakeholder. In utilitarianism, the best ethical decision is one that produces the best balance of benefits for most stakeholders over harm. In a business context, approaches such as statistical analysis, consideration of marginal utility, and a traditional costs/benefits analysis may be viable with consequences including monetary gain or loss, value preferences, both short- and long-term effects of an action which are considered (Gustafson, 2013).
One notable framework is Jeremy Bentham’s utilitarianism. Bentham’s approach focused on reducing utility to a single index, with units assigned numerical, and potentially monetary value, which can then be regulated by law or policy. The utility function is measured in “utils” the value of goods, services, or given action relative to the utilitarian ethical approach of the greater good. Bentham essentially created a hedonic calculus to measure utility that provided an objective method of making value judgments rather than subjectivity or opinion. The utility of proposed actions is measured for conditions of probability, duration, certainty, and intensity. Bentham’s utilitarianism does not consider the personality of either the decision-maker or those who are affected, as every human seeks pleasure and avoids pair, relying on the morality of character can potentially obscure decision-making (Lu, 2019).
Bentham’s utilitarianism can be used in challenging business decision-making such as expansion or closings and layoffs. A cost-benefit analysis with an empirical standpoint is often used to make utilitarian determinations, but it needs to consider all stakeholders and externalities ranging from the firm and its employees to community, customers, and the environment in order to follow utilitarian calculus. Risk management in businesses also utilizes Bentham’s utilitarianism by using the utility function to guide decision-making, risk assessment, and strategic planning. In combination with modern tools of analytics, market consideration, and financial projections, managers are provided with a utility function that can objectively evaluate prospective projects and guide ethical decision-making, even in elements that difficult to assume in a utilitarian approach, such as customer perspective (Byars & Stanberry, 2018).
References
Byars, S. M., & Stanberry, K. (2018). Business ethics. Huston, TX: OpenStax. Web.
Gustafson, A. (2013). In defense of a utilitarian business ethic. Business and Society Review, 118(3), 325-360. doi: 10.1111/basr.12013
Lu, X. Y. (2019). Utilitarnism of Mill and Bentham: a comparative analysis. Frontiers in Educational Research, 2(9), 30-35. doi: 10.25236/FER.2019.020906.