2 of 7-part thought leadership series: Protecting and Sustaining Your Organisation Through Ethical Decision-Making

In the complex tapestry of organisational ethics, scandals stand out as stark reminders of what happens when ethical decision-making breaks down. In this article, we apply Robert S. Hartman’s 3 Dimensions of Value to dissect some infamous scandals and their ramifications.

The Case of Lucy Letby: An Intrinsic Failure

The case of nurse Lucy Letby, accused of the unthinkable—harming infants under her care, sheds light on a dire failure in Intrinsic Value. This dimension, which emphasises the inherent worth of individuals, was compromised, shattering the fundamental trust between caregiver and patient. While the legal proceedings continue, the alleged actions have had a profound impact on public trust in healthcare, calling for a stringent reevaluation of how intrinsic values are upheld in such critical professions.

Post Office Scandal: Systemic and Extrinsic Collapse

The British Post Office scandal involved a flawed computer system that led to the wrongful conviction of many sub-postmasters. Here, both Systemic and Extrinsic Values were compromised. The systemic failure was in the reliance on flawed technology without proper oversight, and the extrinsic failure manifested in the organisation’s initial defense of the system over the welfare of its employees. The scandal resulted in a £153 million (and counting) settlement and immense reputational damage.

PPI Scandal: A Disregard for Systemic and Intrinsic Values

The Payment Protection Insurance (PPI) scandal is another prime example where financial institutions mis-sold insurance to customers who did not need it. The systemic failure was in the lack of proper regulatory compliance, while the intrinsic failure lay in the disregard for customer welfare. The scandal cost the banking industry over £50 billion in compensation, highlighting the financial devastation of ethical lapses.

Volkswagen’s Emission Scandal: Systemic Deception

Volkswagen’s emission scandal, or ‘Dieselgate’, involved the company installing software to cheat on emission tests. This was a systemic failure at the highest level, where the pursuit of extrinsic value (market success) led to a catastrophic lapse in systemic integrity. The scandal has cost Volkswagen an estimated $30 billion in fines, vehicle refits, and legal costs, not to mention the indelible stain on its brand image.

Analysing the Dimensions of Failure

In each case, a failure in one or more of Hartman’s dimensions led to the scandal. Intrinsic value was often the first casualty, as individuals’ rights and well-being were overshadowed by extrinsic goals or systemic inadequacies. Systemic failures typically followed, where policies and regulations were either inadequate or blatantly disregarded. Finally, the extrinsic failures became evident in the financial and reputational damage suffered.

The Numbers Speak: The Impacts

• Lucy Letby Case: Though the human cost is immeasurable, the trust erosion in healthcare has prompted nationwide reviews and policy reforms.
• Post Office: Beyond the £153 million settlement (as of 11th January 2024), over 700 wrongful convictions have devastated lives and careers.
• PPI Scandal: The financial sector’s £50 billion pay out is one of the most significant in consumer redress.
• Volkswagen: With $30 billion in damages, ‘Diesel-gate’ became a landmark case of corporate deception.

Conclusion

Through the lens of Hartman’s dimensions, it’s clear that ethical decision-making in organisations is multifaceted, requiring a balance of intrinsic respect for individuals, systemic adherence to standards, and extrinsic pursuit of success. As these scandals demonstrate, when one or more dimensions are neglected, the consequences can be catastrophic, financially, reputationally, and most importantly, in the human toll they exact.

In our next articles, we’ll further explore how to prevent such ethical breaches and sustain organisational integrity through proactive measures.

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