In a column posted yesterday at Business Week, Dr. Mary C. Gentile pulls no punches on the title: "Business Schools: A Failing Grade on Ethics". She then provides a description of how her new curriculum, "Giving Voice to Values", can help to develop a sense of ethics in a business world that today is rife with greed and corruption.
Her description of the problem of how ethics is taught today in business schools:
The typical business ethics classroom is too often a kind of school for scandal, where students read case studies and then spend 90 minutes outlining all the reasons why being ethical is not so easy, or even so clear after all. Often we hear: "Well, when I’m CEO I can take action on this kind of decision, but as a middle manager, I have neither the power nor the influence to do so." On the other hand, when students put themselves in the place of the CEO, we hear: "Well, if I were lower in the organization, I might be able to take this kind of personal risk and stand up against this behavior. But I have the jobs and lives of thousands of employees and investors depending on me. I can’t afford the luxury of my values." Sounds like Citi (C) Chief Executive Chuck Prince in July 2007, a few months before his resignation, when he said: "As long as the music is playing, you’ve got to get up and dance."
Giving Voice to Values starts from the premise that the case study actor knows what he or she believes is right and wants to do it, and then asks: How can we get this done? What will we need to say, to whom, when, and in what sequence? What are the kinds of countervailing "reasons and rationalizations" that we are likely to hear and what will be the most persuasive responses?
And then, drawing upon the vocabulary of the field, whether it is accounting or marketing or something else, and building upon the latest research about how to frame and deliver compelling arguments, students practice delivering their arguments out loud, in front of each other, working together to collaboratively strengthen them. The collective product of these peer coaching sessions is the best possible "script" and action plan for voicing our values, as well as the opportunity to practice delivering it in front of classmates who stand in as proxy for our future colleagues.
I applaud the approach and wish Dr. Gentile much success in spreading the idea of instilling an ethical sense in today’s business students. I remain highly skeptical of the entire concept of the MBA. I prefer the concept of the executive with training in the field of endeavor for the business and a business managed by the original founders along with those who have risen through the ranks over time. Long term values of companies seem to fare best under those conditions. My prejudice is that the underlying concept of the MBA education is to maximize the short term value of a company at the expense of long term development. That attitude is inherently tied to the ethical failings which have created the current economic crisis.
In the meantime, it appears that President Obama has found a way to foster more ethical behavior on the part of current executives. Since he announced this week that firms seeking additional funds under the various bailout programs will be required to limit executive compensation, we now have this from CNN:
Some major financial firms are getting anxious about giving back the billions in U.S. government rescue funds the [sic] took hold of late last year. But it may not be that simple.
David Viniar, Goldman Sachs’ (GS, Fortune 500) chief financial officer, made headlines Wednesday when he voiced that very sentiment to attendees of a Credit Suisse conference, saying it would be easier for the company to run its business if it could pay back the $10 billion in capital it received from the government last fall.
And in a statement to CNNMoney.com Thursday, Bank of New York Mellon (BK, Fortune 500), which received $3 billion last year, said it was looking to redeem the government’s investment "as soon as is practical."
As the CNN article further noted, "it remains to be seen whether Goldman Sachs, or any other leading bank for that matter, is indeed healthy enough to shun government assistance and go it alone".
This response to the prospect of limited executive compensation prompts the interpretation that the executives at today’s financial institutions care first and foremost about their own compensation. They are quite happy for their firms to take government rescue funds if they are allowed to continue their exorbitant compensation. Once the pay is in danger of being reduced, they are willing to pay back the funds prematurely and risk the future of the company rather than take a pay cut.
When the prevailing ethics in business are that self-centered and corrupt, I think it’s going to take more than a one semester course in business schools to turn things around. The President’s program to limit executive compensation at bailed out firms is a start. If that is coupled with a restoration of meaningful government oversight that includes significant penalties for firms and individuals who break the rules, our economy, and our country, will be much better off.