In practical terms, it is impossible to accomplish anything without incurring some cost. Every individual decides for himself when gaining something is worth the price he must pay. But in a societal context, the benefit and cost are visited on different parties – so it is impossible to accomplish anything in society without inflicting some cost on someone.
Inflicting costs for others means doing harm to or inflicting hardship upon them. The typical situation of a commercial organization is in managing the exchange of benefits and hardships among multiple parties.
- The customer receives the benefit of the hardship (price and effort) of obtaining it.
- The employee suffers the hardship of producing it for the benefit of their wage.
- The vendor suffers the hardship of providing service for the benefit of their payment.
- The investor receives the benefit of profit for the hardship of the risk he has taken with the capital he contributes.
The management of a firm ideally seeks to arrange that it is a fair trade for all parties – because it must be in order to ensure their continued participation and the sustainability of the firm. While it is apparent that present-day leaders are beginning to recognize this, they are still limited in the scope of their vision to the firm and those it immediately impacts. An executive that makes a decision that will increase the market share of his own firm to benefit his employees and investors is by the same decision scheming to decrease the market share of other companies, harming their employees and investors. He is unconcerned for the welfare of his competitors and their stakeholders.
Every decision a leader makes helps someone and harms someone. The lower the level of management, the smaller and more practical the dilemmas they must solve. A senior executive determines whether establishing a productive facility in a third-world nation is good for the world economy, but a front-line manager determines whether employees with families should be given preferential status for selecting vacation dates. Therefore, the higher a person's office, the greater damage they inflict upon others.
A leader must decide which people deserve to benefit at the expense of others, and what level of benefit is worth what level of harm. Personal decisions, in which benefit and harm are both visited upon the person who makes the decision, have no such dilemmas and can be decided casually based on preferences. Leadership decisions affect the lives of others, and must be undertaken with greater deliberation based on principles.
Leaders who are unwilling to make any decision that does harm to some person or group of people are not able to lead. Those who are unwilling to acknowledge and consider the harm they do are not able to lead ethically.