The MBA Oath: Toward a More Perfect World

Last month we watched as news broke of one of the largest insider-trading scandals in history. While the urgency of the financial crisis may be dissipating, the need for a higher ethical standard in business is as relevant as ever.

The MBA Oath is a voluntary pledge to create value responsibly and ethically. With over 1,700 signers and growing, the Oath has helped MBAs from around the world examine their own ethical standards and belief systems.

Started at Harvard Business School (Harvard Full-Time MBA Profile) in May 2009, the MBA Oath has received both criticism and praise. At HBS, in this new academic year, there have already been several op-ed articles in the campus newspaper on both sides of the issue. We think this discourse is good. Members of the class of 2010 at HBS are now designingTown Hall meetings for students and faculty to engage in a constructive conversation. Importantly, student leaders from other campuses are getting involved, contributing diverse perspectives.

The Oath has succeeded in fueling a meaningful dialogue about integrity in business management. In the interest of advancing the conversation, we address four salient questions regarding the Oath's purpose and relevance.

Is the MBA Oath anti-business?

No. At the heart of the Oath is the deepest respect for capitalism and free enterprise as a means of creating value. The Oath asks leaders to "manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves." This commitment is in the long-term interest of the enterprise and its shareholders.

Business leaders are stewards of enormous amounts of resources—financial, human, and environmental. As rising business leaders, we sign and support the MBA Oath because we fundamentally believe business managers should be standard-bearers of ethics and professionalism. To sign the Oath is to acknowledge that our actions have far-reaching consequences in shaping society.

I'm an ethical person. Do I really need an oath?

A Harvard Business School professor, in his closing remarks following a case discussion on the financial crisis, told students: "Leadership is about protecting yourself and others in your organization from becoming morally disengaged." Even the most ethical among us make decisions in a world of relative standards: We evaluate, make, and rationalize choices using the people and institutions around us as benchmarks. In a world where all business leaders operate with the utmost integrity, relative standards would be enough. Unfortunately, business history has shown that relative standards gradually lead good people to make bad decisions, from the halls of Enron to the mortgage-backed securities desk.

To put this into context, Harvard Business School recently hosted two white collar criminals to share with students how a slippery slope landed them in federal prison for fraud. The lesson was that we "practice" making bad decisions through daily, seemingly inconsequential, unethical choices (adding $5 to an expense reimbursement, for example). The felon reflected: "Through small acts, I built up a capability for making and rationalizing unethical decisions."

The MBA Oath offers a compelling alternative to relative standards—a higher absolute standard that holds steadfast in a world of shifting relative ones. As one student explained after signing: "The Oath is a reminder of my own potential."

Will the Oath really affect my behavior, today and in 30 years?

Will having the Oath on your office wall or pocket-size in your wallet still keep you accountable in 30 years? Perhaps not. But we believe it can help.

Upon signing, MBAs are asked to post a statement on what the Oath means to them and are encouraged to designate accountability partners on whom they can rely for support. By publicly articulating a set of beliefs, signers will have exercised their "ethical muscles" in advance of adversity. We will encourage signers to revisit and update their statements annually. Dan Ariely, the behavioral economist and author of Predictably Irrational: The Hidden Forces That Shape Our Decisions, found in a research study that when people are merely reminded of a moral benchmark, instances of dishonesty and cheating are notably reduced.

Ultimately, we hope signers use the MBA Oath as a platform to engage employees and colleagues in and outside their organizations around how to align behavior with the Oath's principles. In 30 years, this is a discussion that will have evolved with the world around it.

What is the vision for the MBA Oath?

We see the MBA Oath as an important "first step" of a long journey toward improved business leadership. The Oath is not a silver bullet that in and of itself will suddenly alter the course of business. Rather, it is a catalyst to bring serious business leaders together to engage in the difficult work of asking how a higher ethical standard can drive decision-making—how principles can drive action.

There is much work to be done in understanding and articulating what the Oath looks like in practice. How does a community of Oath signers make decisions differently than they would absent the Oath? How are trade-offs evaluated differently? How are the interests of stakeholders balanced differently? What drives accountability? These are the urgent but incredibly difficult questions to which the MBA community is now turning. We invite the broader global business community—MBAs, academics, and business practitioners—to join us in moving this important dialogue forward.

Humberto Moreira, Harvard Business School class of 2009, and Whitney Petersmeyer, class of 2010, were instrumental in creating the MBA Oath, a voluntary pledge signed by MBA students and graduates to "create value responsibly and ethically." It has been signed by more than 1,700 people to date.

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