August, 2010 (Bloomberg Markets) -- Can getting graduates to promise to do no harm rein in the excesses of the financial markets?
The global financial crisis, Bernard Madoff’s $65 billion Ponzi scheme and scandals at Goldman Sachs Group Inc. have heightened the need for top managers to rethink their role in society, says Rich Leimsider, director of the Aspen Institute’s Center for Business Education in New York.
His organization is helping coordinate a global movement to get newly minted MBAs to swear a pledge modeled on the Hippocratic oath taken by doctors. Created last year by Harvard Business School students to counter a growing public distrust of finance, the oath is being championed by Nitin Nohria, a specialist in ethics and leadership who was scheduled to take over as dean of the school on July 1.
“One of the things we’re hoping to do is force hundreds of thousands of people in business to talk about and think about their responsibilities,” Leimsider says. As of early June, more than 3,300 students had signed the pledge, according to the MBA Oath website. Leimsider’s goal is to get 6,000 graduates at 50 MBA programs to sign--a fraction of the 100,000 students awarded MBAs in 2009 by 408 schools worldwide.
The oath consists of seven principles, including obeying both the letter and spirit of the law, refraining from corruption, opposing discrimination and exploitation and protecting the right of future generations to enjoy a healthy planet.
Not all Harvard business students support the project: Slightly more than half signed last year. It’s “the knee-jerk reaction by business apologists to the current financial crisis,” Justin McLeod, 26, a Harvard business student, wrote in the Harbus, a school publication.
The pledge is “well-meaning but in the end, very mushy and not well thought out,” says Steven Kaplan, a professor of entrepreneurship and finance at the University of Chicago Booth School of Business. All business schools teach students to be ethical, Kaplan says.
One who did sign is Larry Estrada, who was to begin work at Goldman Sachs in Seattle after graduating from Harvard Business School in May. “For me, it was a stake in the ground, to say here are my values, here’s what I believe in,” Estrada, 30, says.
If Goldman Sachs’s leadership had followed the oath’s tenets, the company might not have entered into agreements to sell to its customers mortgage-backed securities that a client, New York hedge fund firm Paulson & Co., was betting against, says Rakesh Khurana, the Harvard Business School professor who worked with students in drafting the oath.
“There’s enlightened self-interest that doing good will simultaneously be a benefit to society but also raise the respect and legitimacy of the institution,” Khurana says.
Oliver Staley is in New York at email@example.com
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