04/22/2013 03:53 pm ET Updated Jun 22, 2013

Education and Enron: Celebrity, Cash and Character

When Beverly Hall, former superintendent of Atlanta's public schools, was indicted along with 34 other educators in late March, it came as a shock to many. The surprise, sadly, was that it was surprising. Hall was charged with racketeering, theft, influencing witnesses, conspiracy and making false statements in what prosecutors charged was a massive scheme to alter standardized test scores so that Atlanta's 52,000-child school system looked far more effective than it really was. One third-grade teacher, who turned states-evidence, described how a group of seven teachers sat in a locked room and methodically erased wrong answers and corrected them before the tests were scored.

In 2009, Hall was named superintendent of the year by the American Association of School Administrators, and she was feted at the White House. She also earned more than $500,000 in performance bonuses.

Hall was not, unfortunately, the first to be embroiled in such a scandal. In October 2012, Lorenzo Garcia, the former superintendent of the El Paso Independent School district, pleaded guilty to two counts of conspiracy to commit mail fraud in test rigging in that community. He was sentenced to three and a half years and ordered to pay back $180,000 in bonuses he had received for good student test scores on statewide exams, which he achieved by such methods as putting poor students in a grade where tests would not be given and pushing them out of school or preventing them from even enrolling if it looked like they would not test well. Garcia had six unindicted co-conspirators, according to court records.

We have seen this before, in the business world. Enron was, according to Fortune writer Bethany McLean, who broke its house of financial cards wide open, the "canary in the coal mine." Waves of corporate scandals were to follow. If we had truly paid attention to the lessons from Enron, we might not be so surprised at what is taking place in the hallways of educational institutions. We might even have prevented them.

Enron's leaders (Ken Lay, Andy Fastow, Jeff Skilling) were driven by one metric: the stock price. Their time horizon was very short range (the daily price and quarterly earnings). They also relished - indeed sought - celebrity status. Being featured in news stories, honored by important figures, and admired by professional colleagues mattered. What did not matter, it seems, was their character. Despite all their skills, their portfolios had a gaping hole where morality should have been. Hall and Garcia appear to have succumbed to similar short-term, single-metric thinking and the faults of celebrity.

Enron's leaders also created a corporate culture which not only tolerated unethical and illegal behavior but demanded it. Its "rank and yank" system of promotion for energy traders ensured that bonuses and promotions only went to those whose peers voted for them, meaning that if you questioned the rules, bucked your colleagues bad behavior, or refused to produce the expected earnings, you were ostracized and out. As one teacher in Atlanta described it, teachers and principals whose students performed well (at least appeared to perform well) got bonuses. For those who did not, it was "low score out the door."

At Enron, while lower level, loyal, ethical and unsuspecting workers did their jobs, its leaders destroyed not only those jobs but the beliefs those workers had in the importance of integrity and hard work. In El Paso, as one former principal, Steven Lane, put it at Garcia's last court appearance: "I loved my job. You and your accomplices took that away."

It is de rigueur and deceptive to chalk all this educator dishonesty to the use of standardized tests to gauge student progress. Tests have their place, if they are kept in their place. But we need to look deeper than that.

In some schools, as at Enron, the over-focus on one measure of success, and indeed a short-term measure at best, is dangerous. Much of what we expect from schools, as well as in corporate America, cannot be easily assessed. Tests scores need to be balanced with efforts to evaluate the level of excitement teachers create in the classroom and how much they like children, to cite two examples. Admittedly, those are harder to measure and are instrumental outcomes rather than terminal ones. But we should not give up on them. As Einstein once put it: "Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted."

The almost obsessive focus on testing and test results in some schools has begun to turn off both parents and teachers. An "opt-out" movement is afoot in some schools, in which parents refuse to let their children take the tests and/or teachers refuse to administer them. As at Enron, when the "bottom line" seems to be the singular focus of all effort, it creates high stress and eliminates the joyfulness that ought to be an inherent part of work - whether in corporate America or in classrooms.
Still further, the over-application of market values in some schools, which has put strong financial incentives in place for quantifiable results, risks cheapening education and encouraging unethical behavior in service to those results. Market values are not the most important ones in schools; we need to keep them in their proper place.

In some schools, as at Enron, too little attention is paid to the culture - that set of norms, practices, rewards and punishments that can, if not properly managed, take good people and pressure them to do bad things. This is not to excuse anyone from responsibility for their actions. It is merely to note that those actions can be profoundly shaped by others who are willing to sacrifice the law and ethics to personal ends.

In schools, as at Enron, the way we select and assess top leaders and accord them recognition needs examination as well. When leaders' desire for celebrity trumps the importance of character, look for trouble. Humility is a virtue we try to instill in children. That task will be easier when they see it in those who lead their schools.

The good news, of course, is that Atlanta and El Paso are aberrations. The vast majority of school systems are trying to do the right thing and keep their practices in alignment with their moral values. The best news will be if we can find ways to help them continue to do so.