Handbook on Responsible Leadership and Governance in Global Business
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Handbook on Responsible Leadership and Governance in Global Business

Edited by Jonathan P. Doh and Stephen A. Stumpf

Ethics, social responsibility, leadership, governance. These terms are heard in the classroom, in the boardroom, and viewed on the front page of newspapers and magazines. Yet serious attention to the relationships among these concepts is lacking. Although commitments to leadership, ethics, and social responsibility are evident, individuals and companies are falling short in combining these duties into policies and cultures that guide behavior and decisions. The missing element is a broad-based and integrated approach to responsible leadership and governance. This volume provides the leading thinking on these issues and includes a discussion of emerging areas that require future attention.
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Chapter 5: Leadership: Making Responsible Decisions

Michael Useem


Michael Useem Introduction The most unexplored aspect of leadership and governance is the art and science of responsible decision making. By responsible decisions we mean active choices by managers and directors among plausible options that affect the fate of others, not just themselves. It is an art because it depends upon hunches and intuition; it is a science because it should also be disciplined and analytical. And it is relatively underexplored because such decisions are almost always taken behind closed doors. To understand how responsible decisions are and should be taken, the closed doors must be opened, and to do so we peer into several such rooms at critical moments of decision. Drawing upon events and studies from a range of public and private sources, we identify a set of personal and organizational capacities that make for optimal outcomes. Our focus is on the drivers of good and timely decisions by those who carry responsibility for others. Distinct criteria emerge from the evidence, and we frame them here as five prescriptive guidelines for making effective decisions in a broad array of situations. It is also evident that responsible decisions divide into discrete bands, and we group them here in three clusters requiring special skills for decision making. Thinking like a president Most personal decisions are framed around private utility: what are the individual gains and losses associated with one outcome or another? Most managerial decisions are similarly framed around a division’s purpose: what are the benefits and costs for...

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