There is an ongoing discussion right now in and out of business schools about what, if any, blame for last year’s financial melt-down should be placed on business schools. According to Philip Delves Broughton, in a much-quoted piece in UK newspaper The Times back in March 2009, "The masters of business administration, that swollen class of jargon-spewing, value-destroying financiers and consultants, have done more than any other group of people to create the economic misery we find ourselves in."
On the surface, this rather strong indictment does have a basis in fact. Many of the people at the top of the banks and institutions that have been central to the financial collapse are indeed MBAs from the top universities in the US. But, with over 500,000 people now receiving an MBA each year, there is obviously a very large number of MBA graduates who have discharged their duties without creating bad press.
This isn’t to say that business schools and their approach to training managers had no role in the recent economic catastrophe. These institutions clearly have a role in shaping the perspectives and values of the people they train. But how much should we expect from business schools?
Based on my own experience as an MBA student 20 years ago, and my 10 years of experience teaching and now directing an EMBA program, I personally think that business schools in general, and the leading schools in particular, do have a central role in the financial collapse. We owe it to our students and the companies they work for to take stock of the selection and development systems we oversee to ensure that the lessons of the day are incorporated into the admissions and curriculum design decisions of tomorrow.
The goal of every business school program I have been associated with was to have a positive impact on the world. To fulfill this mission, we try our very best to recruit faculty and students who we think will make a positive difference on their organizations. We then give them the experience and access to resources that will help them get into positions where they can make a difference. If we are successful, our alumni will be concentrated at the top of the leading organizations, and their decisions will be informed by the perspectives of our faculty.
Although a typical MBA or EMBA graduate spends only two years in business school, the clustering of these people at the top of organizations means that the legacy of the business school experience can extend well beyond those two years. If our alumni consistently make decisions that provide long-term and sustainable benefits for their communities, then I think we can rightly claim to have done good by our efforts. If, by contrast, they make decisions that destroy value and leave communities in tatters, then we have to accept responsibility as well.
Given our objective to shape the world around us, what can business schools do to increase the chances that the leaders that we train are a force for good rather than bad? First, like any organization, we make choices about who is invited to join our programs, and if our decisions are not based on the values of the individual, then we should not be surprised that our graduates make reckless, selfish, or immoral decisions in their professional careers.
In my experience, the hardest and most important decisions we make in the admissions process are when we say no to technically gifted candidates whose values do not match those of our program. These decisions are hardest because assessing someone’s values is never easy. It has to be based on subtle things: how they interact with our staff, hints in letters of recommendation, their essays, or their presence in their admissions interview.
These decisions are the most important because they define the boundary of the program’s culture. Quite simply, if we don’t turn anyone down because their values don’t match ours, then we are implicitly saying that everyone’s values are acceptable, and we should accept our responsibility for empowering people who have the potential to do a great deal of harm.
Second, if values are not a part of the conversation in and out of the classroom on a regular basis, then we cannot expect to have any positive effect on shaping the perspectives and values of our students. Some programs address this issue with required course or electives in social responsibility or ethics. Although I think this approach does more good than harm on balance, I also feel that it tends to isolate the issue of values and ethics as somehow separate from other business decisions, which is simply not the case.
The human experience
Dilemmas requiring managers to make decisions that must synthesize competing interests, values and beliefs abound in business. Indeed, a lack of awareness of this fact can only lead to a world where simpleminded wealth maximization is our only cultural value.
Most of us will spend close to one-third of our lives at work, and a significant amount of our leisure time either engaged with a service provider that is in a work environment or enjoying the products produced by people whose decisions were made at work. So the decisions of managers are probably the single most important determinant of the human experience in modern economies.
With this fact in mind I think that ethics and values need to be issues that are raised regularly throughout business programs. These discussions invariably come at the expense of technical material. But to not make time for these conversations implicitly posits technical concerns as superior to ethical ones in managerial decision-making.
Therefore, the faculty and the leadership of a program play a key role in defining the relative importance of technical and ethical material through guiding classroom conversations. If these classroom leaders don’t model this importance through their own actions, including a level of openness about their own feelings, we cannot expect our students to understand the importance of their own values as they make decisions.