Subba’s Serendipitous moments

March 13, 2009

MBA schools and Ethics.

Filed under: Business,Learning,Perspective — Subbaraman Iyer @ 5:26 pm
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I recently caught up with my learned friend Dr. Kulwant Singh – Professor of Strategy and currently Deputy Dean of the NUS Business school. Our discussions are always interesting because we hold diametrically opposite views on many issues and the exchanges are often robust, yet mutually respectful.

One such discussion recently was my suggestion that all Business schools should make Ethics a core subject in their BBA/MBA curriculum. I also quoted Dan Ariel’s research on the subject. His response was that by the time the student comes to do the MBA program his values are more or less set and there’s little that the Business school can do to shape it as the prospective student spends only between 1-1.5 yrs there. Fair point. Yet, business schools cannot use this to abdicate their responsibility, especially when most business schools claim their role is to produce business leaders for tomorrow.

Every time there’s a business collapse, invariably the discussion veers around the pedigree of the culprits. The Enron episode put the prominent Harvard Business School into the spotlight as the CEO was a famous alum. With the current global crisis, it is again time for the same school to be on the spotlight as there are a number of Harvard alumni who played a role both in the collapse and now in the rescue.

A recent article (by a Harvard alum) is unsparingly critical of Harvard Business school and makes some great points. It also makes the point of how distinguished professors got sucked by the business fads created by organizations and sung their praises only to be embarrassed when the organization collapsed. Gary Hamel of London Business School also had his share his blame as he praised Enron only to see the firm collapse in months after his book praising Enron was published.

This raises a few legitimate questions about the role of business schools, the faculty and the students:

Are some of the academics as gullible as the rest of us that they can’t see the structural weaknesses that some of the firms (the firms they study) face? Or are does the glitz and the glamor of the corporate world blind them in some way? Recent events seem to provide evidence. This time Prof Joel Podolny of Harvard Business School writes a great case about how Royal Bank of Scotland has deployed a new financial architecture. Another don from Harvard Business school — Prof Krishna Palepu who was on the Satyam board was criticized for not having asked the right questions when the Satyam – Maytas saga broke out.

Does the business school education accentuate their greed and “the get rich quick syndrome” that could be present in many of them? It is safe to assume that a lot of MBA aspirants are there to become rich, and become rich soon.

Do the business school students lose the element of critical thinking about their own personal values and define themselves by the outcomes they deliver, which by and large is making more money for themselves? Would a different pedagogy of learning by reflection that supplements the case study method help them with assessing their own personal value systems and recalibrating them if necessary?

I clearly don’t have the answers. I have been thinking about these issues for many years now.

The article somewhat  loses its credibility by over-generalizing the Harvard instance and seems to overstate the flaws and failures of the MBA education.

Notwithstanding the limitations that business schools face, if one has to consider the collateral damage that businesses and society as a whole pays for the neglect of the Ethics aspect of education, finding a way to inculcate the right values may turn out to be a wise investment.

The current global financial crisis has lessons for all of us including for business school academics and administrators. I do hope they get out of their ivory towers and make attempts to create not just business leaders, but the right kind of leaders.

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  1. You have assumed (with good intentions) that the unethical are those lacking in knowledge of Ethics. You have proposed to remedy such a lack through education. That seems logical.

    But what if they all knew what is ethical and what is not, and yet chose to do the unethical, or, as in most cases, go along with (abet) the unethical ? Isn’t that what happened in almost each of these cases that have come to light ?

    I believe that people enter into unethical behaviour consciously, i.e., knowing fully well that it is unethical, and also believing that they can get away with it or that they will be swimming with the current (the unethical predominant stream led by an unethical superior) rather than against the current.

    So what is needed is probably more transparency, governance, accountability and whistle-blower protection so that unethical behaviour can come to light sooner, and in a fuller measure. For this to happen, the existing management structures and communication/control paths within companies need to be transformed.

    Alas, in most instances of the modern corporation, there are always centers of power, or cliques, that appoint the board and advisors, and also control the decision making inputs that are available to the board or advisors. The small share holder rarely has the capacity to understand the operations or numbers as shared with them by the corporation. The even more successful corporation is also able to hoodwink its customers either with respect to price, performance, or both. Well, under such conditions, it is natural that corporations get away with a lot of internal inefficiency, which it can easily pass on to customers and the large mass of small share holders. The ethical issues also get hidden in this morass.

    That is how these “great” Professors and advisors and board members end up unwittingly lending their names to these scams. Sometimes the advisors do not even spend a full day per year looking at these companies they advise. As long as their names didn’t get dragged in, everything went well. I think the “great” Professors also need to be pulled up for not doing their homework !

    Comment by scienceParker — March 14, 2009 @ 11:25 pm | Reply

  2. Dear Mr. Iyer,

    The key may lie in actually building the character right from a young age rather than “the time the student comes to do the MBA program and his values are more or less set” as pointed out by Dr. Kulwant Singh.

    Comment by Nitesh Chandra — March 19, 2009 @ 5:50 pm | Reply

  3. Hi Nitish: I agree it is necessary to build the character right from a young age.It is a motherhood statement. My view is good character alone is no predictor to be ethical. Exercising ethical judgment is discerning and the person involved should have much more than honesty.

    I am going to do a subsequent post on this some time in the near future.

    Thanks for your post.

    Comment by Subbaraman Iyer — March 19, 2009 @ 7:51 pm | Reply

  4. I think one is lead by their conscience (which I personally believe has a strong correlation with one’s “value system”)to go for the ethical choice, especially in a difficult situation (what you may describe as a “close call”). And I dun think any educational curriculum (at least I have not come across one that is strong enough to feel otherwise) is able to make such a change in one’s character which defines the individual.

    Comment by Krishna Baidya — March 31, 2009 @ 5:21 pm | Reply

  5. I agree with you Subba and wanted to share this piece that I wrote in our company blog recently.

    MBA schools really ought to produce managers that can come in and hit the ground running straight from day one. Considering that most premier institutes insist on work experience for admitting students into their courses, this should have been pretty straight forward I would have imagined. But alas for some reason this does not seem to be the case. And my analysis of why this is not happening and how this could perhaps be addressed is the rationale for this article.

    For one I have consistently noticed that MBAs, particularly from premier institutes, come in with a sense of entitlement rather than with a determination to deliver value and show commitment. This attitude combined with a short term – “let’s encash while the going is good” – mentality results in some level of disappointment to business leaders hiring MBAs. Perhaps MBA schools need to include courses that help ground their students in reality. Exposure to value systems based on Indian philosophy, summer internships with NGOs working for the underprivileged or undertaking socially relevant projects from time to time are some of the ways that some schools have used to achieve this grounding.

    The other aspect about premier MBAs that’s irksome is their compelling need to avoid target based roles. So you have a situation where after a pre placement talk at the campus, most queries that pour in are around available roles in Strategy, Consulting, Mergers & Acquisitions, Marketing, Program Management, Business Analysis etc. Very few are keen on a straight forward sales or a production / delivery role; the only exception being sales roles in IT companies where it involves an overseas posting!!! While such staff roles were aplenty during the good times, in tough times like now it’s the revenue generating role that matters for business leaders.

    While these are the higher level issues that premier MBA schools may wish to address in their wards through appropriate changes to their pedagogy, there are one or two smaller issues that need to be fixed too.

    I hate to say, that the level of English grammar in the vocabulary of a large mass of students from even premier MBA schools is not up to the mark. The sheer inability to construct grammatically correct sentences and the misspellings of even simple words is very surprising. I strongly believe that there is a strong need to have a course in English that includes grammar, composition and perhaps even elocution during every single semester of the course.

    As a corollary to this, MBA schools need to provide skills to students in creating winning proposals. The ability they definitely bring is one around effectively using the latest versions of Microsoft Office and other related PC tools. Creating a winning proposal is a different science altogether and perhaps there needs to be short course introduced into the curriculum to be lead by eminent practicing managers drawn from the industry.

    I believe that these changes if introduced effectively can make MBAs the change agents that they were originally meant to be.

    Comment by Krishna Gopal — April 10, 2009 @ 2:23 am | Reply

  6. “people enter into unethical behaviour consciously” WOW now that is nailing it in the head!

    To take a BIG picture view: business schools produce the talent that goes into serving the needs of businesses. Ergo business schools are part of the system that is shall we say conventional business practice.

    I propose that the issue here is NOT whether business schools teach ethics (or English!), or when we should start shaping the characters and value systems of our children. I propose that there is a fundamental flaw in the system itself.

    Conventional business practice is based on many unquestioned, (unquestionable!) and dubious beliefs. Beliefs are are disturbing when taken into a more humane and holistic context. Examples:

    * Business is just business, it has nothing to do with people, their emotional well being, the environment, etc.

    * Big, growing, growling and powerful (with large numbers) are the only indicators of success worth celebrating.

    * Profits at any cost. Endless growth is the only way forward.

    Is it any wonder that the business world tend to attract sociopaths (as in the clinically diagnosable condition)? Are we surprised that many people with shreds of decency, kindness, passion, and ethics are put off by the idea of “going into business”?

    When everything is ok in the name of making money, is it that surprising that people choose to act unethically?

    Comment by Zern — May 26, 2009 @ 1:37 am | Reply

  7. Great post and good learning! Thanks.

    Comment by dilipnaidu — January 24, 2010 @ 11:48 pm | Reply

  8. You seem to be a knowledgeable person covering MBA and ethics matters, so I hope I can ask you something for expert views.

    My query is simple for you: As an Indian, if you clinch an MBA degree from Indian Institute of Management IIM Kolkata you are considered among the top foreign talent in India – right ? Think of a foreign university with a western name, Preston University (is actually Pakistan based but campuses in USA), and let me ask – As an Indian with top IIM MBA degree are you likely to seriously view a PhD from Preston University for a valuable addition to your IIM MBA ?
    Note that if you don’t know Preston please don’t Google for it first,
    you can Google after answering this please.

    Thank you for help

    Comment by query — February 10, 2010 @ 10:32 pm | Reply

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