From insider trading to systemic malfeasance with other people's money, we are awash in stories of bad dealings in financial markets, the latest example being the "Libor" interest rate manipulation scandal in London. So an age old question is turning up again: Can ethics be taught? A better question is the following: What is the dominant value taught -- and learned -- in business schools?
Whether we are talking about a few executives actually serving time, or those who commit no crime but contribute to the belief that the system is rigged -- many spend time in b-school. This is no surprise -- one in four post graduate degrees delivered in the U.S. are MBAs, and business is the most highly sought after undergraduate degree, even at liberal arts colleges. Business schools are the proving ground for Wall Street jobs and also figure into the recruitment plans for Main Street. It is where the language of business, the generally accepted models for decision making and the principles of leadership are taught.
Research conducted by the Aspen Institute suggests that ethics IS taught in business schools, and, increasingly, with an eye to making it stick by embedding it in orientation programs, "learning journeys," core course work and hands-on experience. Business ethics goes by many names and the vast majority of schools in the Institute's ranking of business schools require ethics or something that goes by the name of "social responsibility," "social enterprise," "social impact" or "leadership and values."
Well-regarded schools from Harvard to New York University to Columbia have used teachable moments such as the market meltdown to dive deeply into core questions about business and its purpose. Students are asked to consider why they have chosen business education, and what is expected of a business professional. So what is the problem? If ethics is taught, and in many places, is taught well, why doesn't it stick?
One clue comes from the inside. Luigi Zingales, a titan of the academy of finance who teaches at the University of Chicago, argues that business education across the disciplines needs to move from a stance of "values neutrality" to one where students are exposed to the moral decisions that permeate the core of business. Zingales suggests we deliver "ethics" in accounting and finance rather than a course labeled Ethics, which is bound to turn off motivated students looking to get ahead.
Seems like a good idea -- let's sneak the discussion of morals and values into the courses that matter the most in the MBA hierarchy of needs. But wait! Are accounting and finance really value-free zones?
To the contrary -- research also suggests that the big take away from b-school is the same one that permeates board rooms. Ethics are important, but earnings-per-share is the guiding principle. Remember the ethics handbook distributed to each employee at Enron? The more compelling and well compensated message went something like this: We exist to make money. "Profits," aka "shareholder value," is the most important metric. We all benefit when the stock price goes up -- and employees who make it happen will receive the most. Damn the torpedoes; full speed ahead. EPS is the main meal. "Ethics" is dessert.
The scores of examples piling up in my inbox are living proof that Wall Street didn't learn all that much from Enron. No surprise that business schools, which exist to serve business and markets, are tortured by the the same basic conflict. What trumps when private incentives and the public good are misaligned? The proverbial "bottom line." The result is playing out in real time.
The questions we need to ask in business education as well as board rooms are more nuanced. Of course profit matters -- it's like oxygen -- how can it not? But for business to live up to our aspirations for free enterprise requires complex judgments and alignment of the incentives with the values to which we aspire.
Let's start with these questions: First, and foremost, what is our purpose? What would it take for our stated values to be embedded in our decision rules? What compensation system and protocols would take outside factors like social and environmental impact of decisions into account without developing the business equivalent of clogged arteries? How do we avoid group think and make it safe for common sense questions to be heard in the hurry to make money? What are we measuring most of the time, and what message do we send to our clients, our suppliers, our investors about the metrics of business health?
If we are thoughtful about answering these questions, in business schools and the business world, then what we teach, and what students of business actually learn, might converge.
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That was while I worked or a major international bank, and was on the second tier fast track credit program ( the first tier was of course for children of major stockholders or banks execs) and I didn't meet a single one of the top execs and I DID meet the president CEo and CFO and I felt like I wanted to wash my hands afterwards. Another reason I left the bank on my terms
As Americans we refuse to believe that often "through an invisible hand" there is justice in this world (at a personal and / or corporate level) ... sooner or later.
Usually the root cause of corruption and maleficence lies the leadership in the profession and / or business. And contrary to what we may be publicly told, these failures are not isolated situations in the professions or industry. Look at the documentary "Inside Job" about the collapse of the banks and housing bubble.
Here is a question not stated in this la la land article. When the boss tells you to do something unethical, what are you going to do? Let's do some real life research on post MBA students that have been in the job force for a minimum of 5 years and ask them if they ever refused to perform their job as asked to by their superior(s). What percentage would answer that question with NEVER? 10%? 25%? 70%? or (most likely) 98%? By the time you enter the MBA program, you should not need an ethics course. Taught behaviors that are ethical should have started first in the home, then from kindergarten and throughout your years of education. I never took an ethics course for my BA or MA but I knew the subject well by the time I was in junior high. If I was the CEO of a company and I had someone tell me that they committed an unethical act, not having had an ethics course in either their undergraduate or MBA program would not be a good reason for the unethical act. You can have all the ethical young MBA's that you want. If the top management group is unethical, the results are going to be predictable.
It isn't working.
Which class of the HBS had more than half convicted of felonies?
You can teach all the ethics that you want, but if the system itself is unethical then time will break down your ethical values. The problem is that business and economics are a science; Ethics are a philosophy, and the two do not mix. You cannot address the morality of a business decision until you question the underlying facts of your decision. If profit is the main motive then the other factors are inconsequential.
Even this article touches on these questions, but does not question the system. Not surprising that it comes from the Chicago School, the one school that blindly believes in the Free Market system. They will question the teachers, the school, and the programs, but never the system. It is un-American to question Capitalism and those who promote it.