Business ethics and the bottom line

Recent news of a New York cabbie tracking down a passenger to return a forgotten bag of diamond rings is a story that speaks to human honesty. It could find a place in ethics courses, and maybe it will – business schools are busily pushing ethics training.

A recent study of the world's top 50 graduate business schools shows a fivefold increase in the number of ethics courses over the past two decades. And the subject is seen as so important that just over half of the schools in the survey have made ethics study a graduation requirement. (The survey was sponsored by the Center for Business Ethics at Bentley College in Waltham, Mass., and the Ethics Resource Center in Washington.)

Student interest is partly driving the trend. But so are deans who see this training as a way to distinguish their schools (now that's a smart business model: right behavior equals competitive advantage). Meanwhile, these deans are broadening the definition of ethics beyond individual decisionmaking to include a corporation's social, economic, and environmental responsibilities.

Especially hot right now: programs in "sustainable" development. With climate change and other green issues suddenly on the radar screen, some employers are eager for B-school grads who can help soften their environmental impact.

Ethics courses enjoyed a campus spurt in the '80s in the wake of Watergate and as the media focused on the ill-gotten gains of high-flying individuals such as junk-bond trader Michael Milken, who pled guilty to securities fraud in 1990.

"Ethics in business schools was formerly addressed as 'don't lie, don't cheat, and don't steal,' " commented survey respondent Steve Jones, dean of the Kenan-Flagler Business School at the University of North Carolina, Chapel Hill. But the definition of ethics is evolving, he said, because "what we are solving for in business is changing."

As long as the ethics evolution doesn't lose sight of those three reliable commandments, it's a welcome one. But the question is this: Will the ethics revival in academia translate to the "real" world? Will corporations listen to the University of Maryland MBA who was required to visit a white-collar prison or the graduate of the Johnson School at Cornell University who was part of a team of students that consulted on ecotourism in Senegal and Costa Rica?

The challenge for ethics is always how seriously it's taken – whether it gets lip service or real service.

Spurred on by Enron and other moral meltdowns in business, about 70 percent of US employers have implemented ethics training, an increase of 14 percentage points from 2003, according to a 2005 survey of 3,000 employees taken by the Ethics Resource Center. Yet there's not much change in the impact these programs are having, the survey concludes. What makes the difference, it finds, is how much ethics awareness and enforcement permeate corporate culture. A policy alone, or a training session alone, doesn't cut it.

Same in business school. Even as schools elevate the standing of ethics, they need to make sure they don't ghettoize it from other key faculty or courses. Ethics is more than a business foundation, it's a life foundation. It can't be compartmentalized.

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