Priorities are fundamentally different than values. At the deepest level reality roots and defines core priorities, makes them be what they are. We discover core priorities; we do not make them what they are by liking or disliking them. Values, on the other hand, are self-defined; they have no necessary connection with reality or right order.

We use the term “values” today ambiguously. At times, “values” appear simultaneously to be able to refer to what we value (what we like), our act of valuing (our act of liking), or what we think is important (what we like more than something else). And, in its most pragmatic and practical use: creating value (making money, which is always more fun than losing money). The essentially ambiguous nature of contemporary “values” makes it difficult for them to tell us anything about what our real priorities should be when making decisions in real situations. Real values are what human beings really like. And, the only way we can know what we really like is to observe what we tend to choose, at the margin or during times of significant risk and especially in the midst of crisis situations. Real prioritizing, not values, tells what we really tend to value as more important than something else.

Nonetheless, some managers have created a quasi-religion of values within their companies. They hold annual retreats to review and set values for the business, and refer to the company statement of values as if it is a sacred text. Much of the time, these retreats and value statements produce useful opinions about what the business leaders believe to be important for the long-term prosperity of the organization, but a prioritizing of these “values” rarely, if ever, occurs. Yet prioritizing what we like and why we like it is essential for making any decisions at all.

Teamwork, for example, shows up in many company value statements, but is rarely ordered against the other values that a company might have. Consequently, in competing circumstances we may find front-line supervisors or middle-managers are reduced to situational leadership that emphasizes teamwork one day and another value the next.

The bottom line about values in business is that they should help create value. Priorities are different. Priorities provide a clear order of importance that people can use to make decisions. When we choose to do one priority, it affects other priorities simply by the fact that we have placed more of our time or money or resources into that priority. If employees understand where time and money creates the most value for the organization in relationship to its proper end, then these decisions become easier to make.

Despite all the “values” discussion in management theory over the past several decades, such talk has had little, if any, impact on the ethical climate of business in the twenty-first century. Meanwhile, lengthy codes of ethical conduct and company values statements continue to be developed, but scandals and wrong-doing have not subsided. The reason is that these values provide only a vague reference-point for making decisions in actual situations. By helping you discern what is most important in a given situation, Priority Thinking provides an alternative framework for performance and ethical action because natural decision-making is facilitated at every level. When leaders and employees know and act on the core priorities, everyone can focus better on strategic and tactical priorities.

In any given day, we all have to make judgments about two or more things: we must choose one thing over another, we must prioritize. Some people would have us believe that ethical prioritizing requires that we explore a complex balance of values, obligations, stakeholders, and so on. The reality boils down to our capacity to recognize that ethics, properly understood, is the study of whether we as individuals freely choose to practice priorities that are beneficial or harmful to our “end.”

Priorities and ethics are intimately related. The choices we make, the priorities we practice reflect our exercise of freedom. Sound priorities are a conscious result of the proper exercise of our freedom. Unhealthy priorities usually flow from disorder or chaotic thinking, choice and action. All are the product of our freedom. This has profound implications for how we study business ethics. In Priority Thinking, we see "business ethics" different from what is commonly thought of as right, wrong or legal behavior. To the Priority Thinker, these notions are important but secondary. The Priority Thinker sees business ethics as the study of the way individuals (all of the players in the drama of business) use their freedom to practice priorities that are beneficial or harmful to the business enterprise of which they are a part.⁶

We can not really know whether an action or condition is harmful or beneficial to a business or organization unless we know whether it contributes to the business’s chief, or main, end, its real mission, the chief reason it exists. The main end for which the institution or organization exists significantly influences the exercise of freedom by its members and, therefore, its ethics.

Ethics finds its proper orientation through the priority of ends over purposes. The modern world makes little distinction between “ends” and “purposes.” Strictly speaking, “ends” mean the fulfillment, maturity, or complete development (a kind of finality) of an act, institution, or person. Purposes refer to what “motors” or propels our actions forward; they are the consciously chosen means to reach an end. Purposes are, thus, limited to our ordinary waking-existence, awareness or consciousness of the world.

Ends are not purposes. Aristotle made this point over 2500 years ago when he said, “It is absurd to suppose that nothing comes into being for an end if we do not see the moving cause deliberating.”⁷ His key point was that things exist in nature and do things for the sake of the end without any conscious awareness of a purpose. Aristotle scholar Francis Slade⁸ offers the example that bees build a honeycomb without deliberating over how to build it (much less hiring consultants to figure out where to build it). They just do it. Ends do not exist because individuals want them to or choose them. Purposes, on the other hand, require deliberating agents. We choose our purposes.

Slade provides some good examples that modern leaders can apply to their ordinary organizational life. I have added a third related to my earlier example on the mortgage banking business as an industry and institution.

Slade defines medicine as a body of knowledge and skills that has as its end the restoration and maintenance of human health. A person’s purpose in practicing medicine can vary from wanting to “make a lot of money” to “relieving suffering out of love for mankind.” The art of medicine exists neither to provide those who practice it with money nor to demonstrate our sympathy or benevolence toward our fellow suffering human beings. The ends for which medicine exists are oriented toward the greater good of restoring and maintaining human health.

So, when the doctors (who only recently narrowly escaped murder charges and now face civil charges) trapped in hurricane Katrina allegedly conducted “mercy killing” of their patients, they may have been motivated by their purpose (alleviate suffering). But, if they killed their patients instead of medically caring for them, their actions violated the end for which the art of medicine exists. As Slade indicates, this is why the Hippocratic Oath forbids the use of the art of medicine to kill people. While killing is certainly morally wrong at times, the reason for the Oath is primarily not to safeguard this or that person’s health. It is to preserve the existence of the art of medicine and the proper end for which the medical profession exists. As deliberating persons, we might get involved in medicine to achieve some things we want, that favor our purposes, but not the end of medicine considered in itself. Medicine exists for a stated end no matter what the doctor intends.

Another example to which Slade refers is something with which each of us is familiar: education. Education has its chief end, Slade argues, in acquiring higher knowledge about the arts and sciences. The proper, or chief, end of education ultimately rests in the acquisition of knowledge about the discipline we are studying. In doing so, we become independent learners and get started on the path of professionalism. We also know from experience that those who attend university tend to enjoy greater economic benefits (make more money) than those who do not. The end of attending university will generally be achieved if the teachers teach and students study. Thus, if the purpose of education becomes about the economic advantage gained, more money made, than about the learning itself, a more subtle frustration of our purpose collides with the end.

This occurs on two sides: (1) the student who uses learning as a means to his or her personal purpose: for example to make more money; and (2) the educational institutions who see the students as means to making money for the college instead of the very focus and end by which wisdom is imparted and gained. If a university sees itself as solely existing to promote economic and social advantage to its students, it probably sees the same for itself. The consequence is that both frustrate the true end for which learning at a university should exist.

Ends reveal themselves independently of the purposes of individual agents. Such is the power and natural priority that they have over our self-defined purpose.

Our capacity to exercise our freedom and act ethically depends on our recognition of this core or fundamental priority of ends over purposes.

The final example relates to the problems that are escalating in the mortgage banking industry. Mortgage banking is a modern phenomenon in the history of commerce. The banker sells an agreement in the form of a product (a loan) that facilitates the ownership of property. The chief end of mortgage banking, properly understood, is to provide people with the capital required for ownership of land and home. A noble end, a greater good, congruent with some of the deepest desires of all human beings: theownership of private property.

Yet mortgage bankers have many purposes for being in the business. The best bankers will tell you that if you enjoy helping people find happiness through ownership, the money in the form of compensation comes naturally. The top twelve percent (12%) of mortgage bankers make over sixty percent (60%) of the money in the industry. What drives them? The money or a greater purpose? The distinction reveals itself when the purposes of the agents become misaligned to the end for which mortgage banking exists. The pursuit of money turns to greed. And, when fraud reveals itself in the industry as it has from the year 2005 onward, well-established companies take strong and swift action to identify and eliminate the fraud because they are most concerned with preserving the very art of mortgage banking as an institution. In so doing, they preserve their business too.

The principles I have described through the above examples are crucial to understand if we want to bring sound ethical principles to our everyday world of work. Priority Thinkers do more than acknowledge the difference between “ends” and “purposes.” We recognize the ethics that flow from these “ends” and keep our core priorities straight because of this recognition. We find purpose in our deliberate willing to choose and act for a proper or improper end. We have no sense of rightly, or wrongly, ordered purpose without this. Ends exist regardless of our intentions. When leaders reduce ends to purposes, they jeopardize their capacity to align the individual purposes of their people to the greater good (a proper and noble end) that the organization should exist to advance, because they lose the ability to distinguish real ends from subjective purposes.

In constant pursuit of aligning the interests of agents to that of shareholders, value maximization has dominated the language and thinking of top scholars in the world of corporate finance. In a way they are right. A business cannot survive, much less prosper, if it is not making money. But “making money” is a relative term that we measure against our understanding of risk and reward. Does a company make money when it provides shareholders with a return of 5%? No, not really. Why put the shareholder through that kind of anxiety, when the near certainty of treasury bills would have guaranteed the same rate or return. CEOs have many obligations; one is to provide shareholders with a return greater than 5%.

Excerpted from: “Getting it Right and Getting Along”- by Peter Charles DeMarco