Right and Wrong

Author: Ronald Alsop

Can business schools teach students to be virtuous? In the wake of all the corporate scandals, they have no choice but to try. p. Harvard Business School boasts that it offered its first course on business ethics — “Social Factors in Business Enterprise” — nearly a century ago, in 1915. But this is no time for Harvard — or any business school, for that matter — to rest on its laurels.p. Harvard plans to launch a more in-depth, required ethics course called “Leadership, Governance and Accountability” in January. “The new course will expose students to more of the kinds of pressures they are inevitably going to face in business,” says Lynn Paine, professor of business administration.p. Harvard had begun reviewing its ethics curriculum before the wave of corporate scandals, but the Enron Corp. debacle and all that followed made it easier for Harvard to enlist faculty support for the new course. The course almost certainly will include an Enron case study, which Prof. Paine says is constantly being revised with each new development, along with cases on positive corporate role models.p. Bad Reputation
p. In the post-Enron era, M.B.A. programs — Harvard in particular — have come in for some caustic criticism for producing graduates obsessed with making money regardless of the ethical consequences. To some people, M.B.A. graduates are at the root of all the corporate greed and dishonesty. In a public-opinion survey about how companies can mend their reputations, one respondent declared, “Get rid of the Harvard M.B.A.s.” After all, two infamous Enron executives — former Chief Executive Jeffrey Skilling and former Chief Financial Officer Andrew Fastow - hold M.B.A. degrees from Harvard and Northwestern University’s Kellogg School of Management, respectively.p. Even President George W. Bush, a Harvard M.B.A. himself, publicly urged business schools to “be principled teachers of right and wrong and not surrender to moral confusion and relativism.” Business schools have gotten the message. They are busy infusing more ethics training than ever before into their curricula, as well as trying to screen applicants for integrity before admitting them.p. In fact, some schools are doing background checks to verify the accuracy of applications, while Harvard added an essay question to its applications requiring people to explain how they handled an ethical dilemma. “We hope through our admissions process to attract students with a strong upbringing,” says Prof. Paine. “We are preparing young people for their role in life and building on what came before.”p. Recently, AACSB International, the major business-school accrediting organization, increased the emphasis on ethics in the standards that business schools must meet to receive accreditation. “Before Enron, ethics didn’t occupy a central role at many schools,” says Carolyn Woo, chairman of AACSB and dean of the Mendoza College of Business at the University of Notre Dame. “We must challenge students about how much their values are worth and develop an awareness in them of the ethical implications of business decisions. They must have their antennae up and not be naive.”p. Dean Woo speaks with authority. Notre Dame , a Roman Catholic university, has a long tradition of ethics research and education, including its Institute for Ethical Business Worldwide and Left for Ethics and Religious Values. Indeed, some recruiters say they are drawn more these days to religious schools like Notre Dame and Brigham Young University.p. After all of the recent corporate malfeasance, companies are scrutinizing job candidates closely to try to ensure that they’re hiring an upstanding individual. In The Wall Street Journal/Harris Interactive survey, 84% of recruiters said personal ethics and integrity are very important attributes in job candidates.p. There’s no foolproof method for measuring virtue in M.B.A. students, but many recruiters feel confident they can easily weed out the potential sinners by conducting rigorous interviews, observing students’ body language and conversation in social settings, consulting character references, and checking the accuracy of resumes.p. Gut Feeling
p. Sometimes, though, it just boils down to a gut reaction. More than half of the respondents to the survey said they rely on “a gut feeling or hunch” when interviewing students. But three-quarters said they also depend on responses to interview questions about ethical dilemmas, and about half find students’ previous work experience a revealing clue to their character.p. “Lately we’ve become even more sensitive to students’ ethical standards,” says J. Todd Johnson, a survey respondent and materials manager for Intel Corp. “For example, we look for red flags in how people handle teamwork. Have they done an end run rather than talked to the entire team?”p. The survey also found that M.B.A. students with ties to any of the scandal-tarred companies will encounter resistance from some recruiters. Several respondents to The Wall Street Journal survey said they are loath to interview a former employee of Enron or Arthur Andersen, especially with so many other talented graduates to choose from. “I reviewed the resume of a student who had been an energy trader at Enron,” a survey respondent said. “We did not pursue her, and I would have been hard-pressed to defend pursuing her.” In his survey comments, a recruiter from a consulting firm declared: “We won’t employ anybody from Andersen.”p. The Enron and Andersen cases bring up the issue of whether a student can be taught to behave ethically. Certainly, some people believe, by the time a budding executive reaches an M.B.A. program, his or her moral compass is set.p. But some academics disagree. When Harvard administrators wondered about the effectiveness of ethics courses, they retained a developmental psychologist for advice. "The psychologist concluded that M.B.A. students in their mid
to late 20s are particularly ripe for discussions about such issues as conflicting responsibilities," says Prof. Paine of Harvard.p. Some corporate recruiters are more skeptical. In The Wall Street Journal/Harris Interactive survey, nearly a quarter of the respondents said that integrity is inherent in an individual’s character and that business schools can’t teach ethics. About 60%, however, said they believe schools can provide guidance on making ethical choices.p. “I’m not sure you can teach ethics, but you certainly can teach the severe ramifications that come from doing something unethical in business,” says Timothy Schuetze, a recruiter for a consumer-products company and graduate of the Yale School of Management. Yale ranked first in the list of schools recruiters named most often for producing students with high ethical standards.p. Listening to an Ex-Con
p. Business schools are trying a variety of programs and techniques to instill integrity. HEC Montreal has created a chair in ethical management. The professor holding it will explore a variety of issues, including “the existential dimension — individuals’ freedom of beliefs and the development of their deepest aspirations at work.” At the Tuck School of Business at Dartmouth College, students attended a series of ethics panels, including one that featured a cautionary tale from an ex-convict involved in a $100 million fraud.p. “Students are very receptive to ethics courses and have been the driving force behind our social-impact management initiative,” says William Laufer, director of the business ethics research left at the University of Pennsylvania’s Wharton School. “But when I first came here around 1990, many students considered ethics lessons infantile.”p. Academics disagree on the ideal approach to embedding ethics in the curriculum. Should schools require students to take courses focused primarily on ethical responsibilities? Or is it better to sprinkle ethics lessons throughout all of the major courses, including finance, accounting, international business and marketing?p. The best answer is probably some of both. That’s the strategy at the Columbia University Business School. Its Left for Leadership and Ethics, created with funding from Sanford C. Bernstein&Co., offers elective courses with an ethics theme, and has adopted an ambitious new ethics curriculum that all students must take. It’s a unique yearlong hybrid of stand-alone lectures plus lessons woven into all of the M.B.A. program’s required core courses.p. Some of the questions to be addressed in various courses: Is it ethical to market legal but dangerous products? Should elements of fairness enter a company’s pricing decisions? Can and should income be redistributed from rich to poor? What are the ethical considerations in the presentation of statistics? Should companies abate pollution above and beyond government regulations?p. “We must help students figure out how they can come out of ethically challenging situations with their integrity intact without destroying their careers,” says Meyer Feldberg, the business school’s dean.p. Some corporate recruiters believe schools should go well beyond simply presenting case studies about ethical dilemmas. They favor a community-service requirement, as well. “A one-semester practicum with a nonprofit organization could provide a student with a life-transforming experience,” says Marvin Pannell, a project manager at Wells Fargo&Co. “Many students today aren’t growing up with religion and aren’t replacing religion with their own brand of spirituality.”p. Besides creating ethics programs, some business schools are working harder to foster a culture of integrity and collegiality on their own campuses. At Ohio State University, the Fisher College of Business created a new honor code that the class of 2003 M.B.A.s were the first to sign. “Honesty and integrity are the foundation from which I will measure my actions,” the code states. “I will hold myself accountable to adhere to these standards.”p. This year, Indiana University’s Kelley School of Business has developed a 20-page code of conduct that is modeled closely after the corporate codes that graduates will ultimately have to abide by. Among the areas covered: cheating, fabrication, plagiarism, professional behavior with recruiters, and proper classroom manners (“do not surf on the Internet, avoid eating noisy or odiferous foods, and always close computers during any guest speaker’s presentation”). “We especially have to emphasize the code with our international students who may have different ethical standards in their countries,” says Idalene Kesner, M.B.A. program chairwoman. “Some cultures don’t view plagiarism, for example, in the same serious way that we do.”p. Taking an Oath
One business-school dean would even like to see students take an ethics oath at graduation, pledging to be morally upright and socially responsible business managers. Angel Cabrera, dean of the Instituto de Empresa business school in Madrid, is circulating a proposed oath to try to drum up support among his colleagues at other M.B.A. programs.p. “I will utilize natural resources in an efficient, sustainable way,” the oath states. “I will respect the rights and dignity of the individuals working for the enterprise. I will engage in honest and transparent transactions.” It ends on a very nonbusinesslike note: “If I do not violate this oath, may I enjoy life and art and personal success. May I be respected while I live and remembered with affection thereafter.”p. But some M.B.A. officials are cool to the idea of a mass recitation of an oath. Sean Meehan, M.B.A. program director at IMD International in Lausanne, Switzerland, opposes making Dean Cabrera’s oath part of graduation ceremonies or penalizing students for not agreeing with its message. “M.B.A.s are practitioners,” he says, “not philosophers.”p. To Mr. Cabrera, business schools have an obligation to craft a professional pledge for their students in the same tradition as the Hippocratic oath for doctors. He believe that “swearing to behave in an ethical fashion in front of your family and peers will make you come away feeling, ‘Boy, do I have a responsibility!’”

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