Mill’s Rule Utilitarianism offers many advantages which address the issues of Bentham’s Act Utilitarianism. Mill eradicated the possibility of sadism or cruel pleasure by drawing clear boundaries between the qualities of pleasures (Johnson, 2007). Rule Utilitarianism also clearly states that certain actions are explicitly prohibited because they have the tendencies to create or promote pain.
However, Rule Utilitarianism lacks the flexibility of Act Utilitarianism, which means that reasonable rule breaking is no longer a possibility (Brady, 1985). For example, one could not tell white lies, even if the intention is to protect or save others. There is a further flaw in Mill’s concept of different qualities of pleasure – how do we judge what makes pleasure lower or higher? Since taste or preference varies among different people, this is obviously a subjective matter.
Overall, like any other theories, the ones put forward by Bentham and Mill have their share of pros and cons. On one hand, Bentham’s Act Utilitarianism is flexible and easy to apply, but ridiculously relativistic, allowing any pleasure, be it good or evil. On the other hand, Mill’s Rule Utilitarianism addresses the humanity and reasonability of different kinds of pleasure, but lacks the flexibility to make logical decisions in critical situations.
Advantages of Utilitarianism in Business
It now comes down to the main question. Is utilitarianism a good ethical theory to guide business in decision-making?
The greatest advantage of the utilitarian approach is its cost-benefit character. Business managers have to analyse the pros and cons of alternative managerial and economic actions on a regular basis (Audi, 2007). This method of overcoming business problems is emphasizes in many business courses; hence it is often ingrained in the mind of many managers.
People in the business world appreciate the fact that utilitarians understand that not everyone from the affected parties will reap the benefits from a particular action. Therefore, in utilitarianism, a strong emphasis is placed on the net utility of a list of consequences derived from a decision being considered.
In additional, business executives also understand that the business decisions they make are hardly singular; they go both directions and have consequences. Hence, these decisions will often end up in the context of a ‘win-lose’ situation. For example, the decision to increase long-term shareholder value may require sacrificing short-term profits in favour of reinvesting in the business.
The main reason why managers are so accepting of utilitarian thinking lies in its flexibility in response to different circumstances by accommodating complex situations more easily than other, more absolute, philosophical approaches (Van Staveren, 2007). The factors considered in a utilitarian framework vary from the short term to the long term or from financial to non-financial criteria. While conflicting stakeholder claims can be recognised, managers typically place more consideration on business owner or shareholder goals associated with corporate profitability than the goals of other groups such as employees or the community.
In determining the proper weighting of decisions being made, there are normally many factors to consider, some of which result in immediate profitability, while others result in customer loyalty and thus longer term profitability, although sometimes at the expense of more apparent short-term goals. For example, the distribution manager of a supermarket chain might send lower-quality cuts of meat and vegetables to lower-profitability stores in disadvantaged neighbourhoods can rationalize his decision in doing so by saying that as long as the meat and vegetables are above a legally set minimally acceptable quality level, it is in the best financial interest of the supermarket chain to take any action it can to enhance overall operations.
The less profitable stores located in the least affluent areas of the city may be systematically discriminated against in order to maximize economic advantage. Alternatively, management may also calculate (quite reasonably) that the marginal value of the inner-city store can be maintained only by offsetting the impact of higher insurance and security costs and lower sales volume per square foot with other cost-cutting measures. When combined with the need to provide higher quality to customers in the more affluent areas, competitor threat is presented. Therefore, when compared with the alternative of closing an otherwise unprofitable store (and also taking into account the ‘external’ costs of unemployment and less service to that neighbourhood), the current practice may be the most ethical in a utilitarian sense.
Limitations of Utilitarianism in Business
Utilitarianism, just like all other ethical theories, has its limitations. Consequentialist approaches to ethical reasoning are not without their problems. Perhaps the greatest concern, however, which applies to almost any formulation of utilitarianism, comes down to the question of who decides what “the greatest good” is (Renouard, 2011).
Under usual circumstances, there exist many differing opinions on what constitutes the nature of the actual benefits of a particular action. When this is the case, only one person can ultimately which perception of what “good” shall prevail. Is it the chief executive officer, the head of marketing, the product managers or a panel of customers?
Secondly, it appears that utilitarianism is a philosophy where ends sometimes may justify otherwise unacceptable means (Van Staveren, 2007). Should there be a penalty or expense for some parties just because the outcome of a particular action produces a “net good” for a corporation or perhaps even society as a whole? Should any product be allowed to enter the market although it causes a significant and lasting health problem for a minority of users?
Those who practice most forms of utilitarianism recognise that one cannot cause great harm to certain others in order to achieve a desirable or noble end. This seems to be the point that animal rights activists stress in advocating a ban on the use of animals in safe testing products such as cosmetics. In fact, one of the greatest ethical precepts is never knowingly inflict harm, although the concept of what constitutes “a harm” or a significant harm is debatable.
Lastly, managers who adopt a primarily economic interpretation of utilitarianism must compare it with the concept of justice (Cavanagh et al, 1981). The idea of an economic utilitarianism, where the theory is applied in the economics environment, is somewhat understandable because a business organisation is primarily an economic enterprise. However, does it mean that just because an action is economically beneficial, it is just and proper to undertake?
A particular action that might produce the greatest economic good for the greatest number still cannot be justified as just and proper when both the production and consumption processes are seen to victimise some participants and, arguably, consumers in situations other than those involving economic terms.
Conclusion
Utilitarianism’s ultimate goal of evaluating consequences leads to promoting human welfare by maximizing benefits to as many people as possible (Johnson, 2007). Utilitarian ethics offer a very reasonable method to solve ethical problems in business (Greblikaite & Navickaite, 2012). Counting the rate of benefit and harm of particular actions is based on fundamental human principles (Greblikaite & Navickaite, 2012). Utilitarianism can assist in many ways during decision-making in business. It helps to provide a systematic and objective way of resolving conflicts of self-interest which proves useful when it comes to making business decisions. Most businesses ultimate goal is profit maximisation, in other words, reaping the most benefits for the most number of people (shareholders) from a single business decision. The utilitarian approach is extremely flexible and easy to apply; hence it could easily be used as a template (cost-benefit analysis) during decision-making process.
However, utilitarianism has its limitations too. It is sometimes difficult or impossible to identify possible consequences. Even if the consequences could be measured accurately, determining their relative merits can be difficult too. Also, the issue of fairness is another flaw of utilitarianism. Although the majority enjoys the benefit of the decision made, there will always be a group of minority whose rights and happiness are sacrificed or ignored. Basically, ethics of utilitarianism denies the value of individual itself. This value cannot be measured and compared with other people and their interests (Greblikaite & Navickaite, 2012). Putting it in the business context, not all the business stakeholders will enjoy the benefits of the decision made. This could lead to future problems which the utilitarian approach might have overlooked.
In conclusion, utilitarianism is a useful and practical general method to apply to decision-making in business as it helps to have a systematic approach, which analyses a broad range of outcomes, when making business decision. However, due to several of its obvious flaws, realistically, utilitarianism cannot be the sole ethical theory used in guiding company decisions. Different ethical theories have to be used in conjunction to ensure a more complete and versatile ethical approach to decision-making in business.
Reference List
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