By Joseph Badaracco and David RosenbaumSometimes there can be more than one right answer to a problem. The option you choose can say a lot about the values of your company\u2014and your leadership. Making these \u201cright vs. right\u201d choices can be one of the hardest tasks any manager can perform. But Joseph Badaracco, the John Shad Professor of Business Ethics at Harvard Business School, says there are some simple methods you can apply to help you answer these tough questions. Following his advice may not make the decisions any easier, but it should at least help you understand\u2014and explain\u2014why you make the choices you do.CIO Managing Editor David Rosenbaum sat down with Professor Badaracco following his presentation at the CIO Leadership Conference 2006 in Cambridge, Mass. What follows is the transcript of that conversation. (You can also listen to or download a podcast of this interview.)David Rosenbaum: Professor Badaracco, could you briefly state the four questions that you should ask yourself when you\u2019re addressing a problem? \n\n\n\nJoseph Badaracco: Yes. The problems I talked about, David, were situations that I call \u201cright vs. right\u201d problems. So you\u2019ve got two responsibilities, and you\u2019ve got to make good on both of them. And the four questions I think that will really help people cut to the fundamentals are these:\n\nWhat are the consequences of different ways of dealing with the problem for everybody who\u2019s going to be affected by it?\n\nWhich individuals and which groups involved in the situation have rights that you\u2019ve really got to respect? People may have a right to be told the truth. Shareholders have a right to good returns, and so forth. Everybody\u2019s got an obligation to obey the law, and people have a right to expect corporate officers to do so.\n\nThe third question is about the messages you want to send about your values as a leader, and about the values of your organization. Often in these tough \u201cright vs. right\u201d conflicts, people are really watching closely, and you\u2019re sending messages about your character and the character of the kind of organization you\u2019re trying to create.\n\nAnd the final question is what\u2019s going to work. It\u2019s Machiavelli\u2019s question. You\u2019ve got to be practical. You can\u2019t simply tote up consequences, and dwell on rights, and think about your character. You need something that\u2019s going to actually make a difference, and so you\u2019ve got to think about that question in conjunction with the other four.Rosenbaum: Now, what happens if you think only of consequences, and not rights? Where does that lead you? \n\n\n\nBadaracco: It leads you into trouble. As I mentioned a moment ago, there are a lot of different groups who believe that they have the right to have corporate officers and companies obey the law. There are the vast majority of most people in most organizations who believe they have the right to be treated fairly and honestly by the people they\u2019re working for. And there are the owners of a business, who have a right to stable, growing, risk-adjusted, legal returns.If you drop any of these balls, you\u2019re going to pay for it, either inside the organization, outside with shareholders or outside with regulators. This is especially true for companies doing business in America, where we have, and where we should be grateful we have, a large group of lawyers who are ready and available to help individuals who feel their rights have been violated find some way of getting what they feel they are owed.Rosenbaum: Now, conversely, if you think only of these rights\u2014these many competing rights\u2014and not the consequences, what road does that lead you down?Badaracco: I think that leads ultimately to paralysis, and that\u2019s why you\u2019ve got to balance your thinking about rights with thinking about consequences, thinking about values and character and thinking about what\u2019s actually going to work. It\u2019s very hard, ultimately, to wrestle some of these rights issues to the ground. By the time legal counsel has finished exploring and vetting all the rights-based issues, it may be two or three weeks after a decision needs to be made.You need leaders in organizations\u2014you need, actually, managers at all levels\u2014who have sensitivity to the really important rights that they\u2019ve got to pay attention to. They\u2019ve got to take those into account in the plans that they make, but they\u2019ve got to move on and think about the other considerations as well.Rosenbaum: And, just for balance, if you think only of your character?Badaracco: Well, with all due respect to people listening to this or reading this: Who put the Good Housekeeping seal of approval on your character, your judgment, your instincts? So that what you think is right\u2014even if you deeply feel it\u2019s right\u2014ought to trump consequences for other people, and the rights that other people have. The best leaders, when they have time, think hard about what they care about, what they value, but they\u2019ve got a good team around them, and they\u2019ve got some counselors who may not be part of their management team.They try to get the sense of others about what\u2019s the right thing to do, rather than just assume that their ethics [and] instincts show them the right path.Rosenbaum: And I guess it goes without saying that if you only think about what works in the real world, you get Enron, you get Mr. Fastow, Mr. Skilling and Mr. Lay.Badaracco: That\u2019s right. You become a plumber, a technician, somebody who\u2019s got a toolkit and can go around and work on problems. But the real risk is that if you\u2019re under a lot of pressure, and a situation is ambiguous, and you look for something that\u2019s going to work, you\u2019re going to end up finding something that\u2019ll work short term, maximizing some single metric, keeping you off the hot seat, and in many cases, not addressing the full complexity of the problem. \n\nYou may look like you handled the problem for a day, but there\u2019s a good chance it\u2019s going to come back and bite you and others later on!Rosenbaum: One of the examples\u2014actually, your opening example\u2014was: Somebody comes to you and says, \u201cI\u2019ve got a chance to buy my dream house.\u201d And you\u2019re his boss, but you\u2019re also his good friend. And he asks you, after telling you about the house, \u201cDo you know any reason why I shouldn\u2019t go ahead with buying this new, expensive house, that I\u2019m going to have to stretch to buy?\u201dYou know that in your desk there\u2019s a list of people who are going to be laid off in two weeks, and of course it\u2019s supposed to be confidential, because the announcements should be made all at once.You suggested in your talk that there were ways, without violating your fiduciary responsibility or your responsibility to your organization, to hint around, to say, \u201cWell, you know, times are tough, and competition is hard, and maybe I\u2019d hold off a little bit.\u201d But what if the guy says, \u201cJoe, you\u2019ve known me a long time; I\u2019ve known you a long time. Be straight with me. Do you know something?\u201dBadaracco: That\u2019s a great question. And suppose he looks you right in the eye, so he\u2019s asking for the truth, and he may also be checking to see if you\u2019re going to blink or not and give away the answer. I think at that point, you have to say something to the effect that, \u201cThat is a question that I cannot answer.\u201d The awkward thing about giving that answer is that it is an answer. He is very likely to infer that the news is bad news, and he\u2019s very likely to pass these suspicions on to a couple of other people.The alternative, of course, is lying, but first of all, people typically aren\u2019t very good liars, and secondly, if you pull that off, he may tell others, they\u2019ll tell people they know, and a reputation for being less than candid is not something managers want to cultivate. So you\u2019ve posed the toughest version of this, and at some point you\u2019ve got to say, \u201cThat\u2019s a question I can\u2019t answer.\u201d And perhaps it\u2019s possible to say it in a way that suggests to him that if he goes and does a lot of talking about this, life could be a little tougher for him.Rosenbaum: Now, toward the end of [your] talk, a question was asked, \u201cWhat if you don\u2019t have the time to go through this kind of rigorous, four-question analysis?\u201d And you said that there was a three-question, kind of quick version that you could do. Could you tell us about that?Badaracco: Yes. It\u2019s great to have a lot of time to really drill down on these problems, and sometimes you do. Usually, you have less time than you need, and even after all the drilling down, you don\u2019t have all the facts you\u2019d like to have. There are three quick tests that capture a lot of what\u2019s important:\n\nOne is the newspaper test: Ask yourself what plan of action for dealing with the problem in front of you is going to work best if it\u2019s going to appear of the front page of your local paper\u2014let\u2019s say, tomorrow. That\u2019s a way of picking up on all the consequences of your act, and it\u2019s a way of looking at things in this kind of pragmatic, Machiavellian, what\u2019s-really-going-to-work sense.\n\nSecond test is the Golden Rule, or the Native American advice to walk a mile in the other person\u2019s shoes. That\u2019s a way of picking up on other people\u2019s rights that you may be overlooking, because you\u2019re the decision-maker, you\u2019re in a position of authority and you\u2019re under pressure to get a decision done. And the final question has different versions.\n\nA good version of it is the best-friend test. Ask yourself how you would like somebody who knows you well, whose respect matters to you, to look at you a few years down the road, and think about how you made the decision. That\u2019s a way of really putting a spotlight on the character issues\u2014your character, the character of the organization you\u2019re trying to shape.Those are three tests. They don\u2019t take long, and often they can elicit some telling instincts that help people get these decisions right. \n\n\n\nRosenbaum: Thank you very much, Joe. It was a terrific talk, and I think I learned a lot. Thanks.