Business Schools: A Failing Grade on Ethics

Whether you were among those who lauded the clarity of President Barack Obama's recent inaugural address, or those who bemoaned the lack of "quotable quotes," most listeners heard his call for an "era of responsibility" loud and clear. In fact, when he turned to the topic uppermost on our minds—the economic downturn—he plainly stated that our current woes are the result not only of "greed and irresponsibility on the part of some," but also, and more importantly for our path out of this mess, the "collective failure to make hard choices" by the rest of us. Interestingly, this analysis is the blueprint for redressing what has gone wrong in business education over the past decades.

The current credit-market meltdown and governance misbehavior has, once again, triggered conversations among business educators and the business press asking "Just what are they teaching in business schools?" After all, you don't have to look far to find a lot of MBAs doing the much scorned "perp walk." Even more disconcerting are all those business school graduates who may not have crossed the legal line but have presided over, or at least given silent assent to, a stream of decisions that have led to the current collapsing dominoes in the worldwide financial condition.

Two Inadequate Approaches

What will be disappointing, however, and what we simply cannot afford, is for business education to respond to this internal and external critique in the same way we have responded to scandals in the past. That is, to merely bemoan the problem of a "few bad apples" and then focus on preparing future business leaders to develop awareness of the kinds of ethical breaches they might encounter in their careers—presumably so they can recognize them in time to choose not to work for those bad actors and thereby avoid the problem.

Or business education may take the other most common approach: that is, to focus on the difficulty of reasoning our way through knotty and challenging ethical dilemmas where the questions are not black and white but many shades of grey. Accordingly, business ethics courses are developed to teach the analytics and ethical reasoning models that philosophers have probed for centuries: duty-based decision-making, rights-based decision-making, and utilitarian decision-making.

The first approach is about awareness and avoidance. The second is about analysis. But neither is an adequate response, not if the goal is to equip a generation of business leaders with the tools to take decisive action when confronted with the kind of questionable decision-making that led to the current financial mess. What we really need now is preparation and practice for action, and not just any action but a particular kind of hard, often risky, intricate values-based action.

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."

A New Way

But there is a new curriculum—Giving Voice to Values—that brings an entirely different and much needed approach to the challenges of responsible businesses and that, in its own way, is a resounding response to the President's call for the rest of us to be more willing and able to make the hard choices. Without denying the value of building awareness and developing stronger analytical skills, Giving Voice to Values is premised on the assumption that in many if not most of the managerial and financial misbehaviors that we have seen, there were enough people who recognized the lapses in ethics and judgment to have stopped them. The problem was that they did not believe it was possible to do so.

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.

Practice Leads to Action

The conviction behind this new ethics curriculum—and one that is supported by both qualitative research as well as neuropsychological studies—is that practice makes perfect, or at least, practice makes it far more likely that action, when it's needed, will be taken. After all, despite a never-before-seen complexity in financial products like credit default swaps, the reasons we give for why we do what we do are pretty familiar: "I didn't think we'd get caught," "I didn't know how to say 'no,'" "Everyone else was doing it," and so on. If we get comfortable responding to those arguments, in fresh, persuasive, nondefensive ways, just think of what might happen.

If students have the opportunity to work together to craft these "scripts," they can also begin to see these statements not as coming from a place of self-righteousness—something few of us can truly claim and a stance that rarely wins followers—but as coming from a place of competence and conviction.

Or as our President might say, a place of collective responsibility.

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