Can business ethics be taught?

Eager to supply companies with leaders who clearly know right from wrong, business schools are investing heavily in courses and centers where ethics are debated day and night.

But according to experts in executive behavior, all that time, talent, and treasure spent on ethics education is unlikely to change the way top managers behave in the workplace.

Touching off this debate among consultants and academics are survey results published by the Journal of Business Ethics earlier this year. A team of five researchers investigated programs at 50 top-ranked master of business administration (MBA) programs in the United States and abroad.

Among the findings:

• One in three programs requires course work in ethics, sustainability, and corporate social responsibility.

• The number of stand-alone ethics courses in MBA curricula has increased by 500 percent since 1988.

• Thirty-nine of the 50 schools have a center dedicated to ethics, corporate social responsibility, or sustainability.

These developments at top-tier schools reflect trends unfolding across the broader landscape of business education, says John Fernandes, president and CEO of the Association to Advance Collegiate Schools of Business (AACSB International), which counts 1,100 member schools in 71 countries. In his opinion, the focus on ethics is sure to pay future dividends in the corporate world in terms of fewer instances of lying, stealing, and other forms of malfeasance.

"What really causes behavioral change [among future business executives] are changes in curriculum and how one has an outlook of business, and that's where business schools come in," Mr. Fernandes says. "Business schools have a much greater long-term impact on the change of thinking of corporate leaders and managers than do legislation and media coverage."

Ethics education will eventually have an impact akin to that of entrepreneurial education, Fernandes says. After its inception in the early 1970s, it produced a generation of nonbureaucratic corporate leaders, he says. But consultants who focus on executive performance and ethics aren't persuaded that readings, lectures, and discussions are making much difference – or that they will in years to come.

"It's unrealistic to expect people's behavior is going to change because they sit in classes," says Marshall Goldsmith, an executive coach based in San Diego and an adjunct lecturer at Dartmouth College's Tuck School of Business. "Is there any proof in any executive education ... that anyone who went to any course ever changed any behavior as measured by anyone else over any period of time? Not that I know of."

Mr. Goldsmith and others concede that new emphases on ethics in business schools send a message to future managers that ethics are important, even in the corner office. But, they caution, expectations for a big impact from these programs are pie-in-the-sky thinking.

Business ethics as a course of study traces its roots to the mid-1970s, but only over the past five to 10 years has the field grown rapidly. That's according to Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, Mass., and a coauthor of the recent study. He traces its growth largely to two factors: tougher regulations and scrutiny in the press. Together, they have proliferated demand for corporate compliance departments, ethics officer positions, and ethics-savvy business-school grads.

"Higher education, especially after Enron [collapsed], realized it hadn't done enough" in ethics, sustainability, or corporate social responsibility, Mr. Hoffman says. Now "the trend is to integrate the three themes throughout the curriculum so it becomes habitual and becomes part of the thinking of a business executive."

Role models, not courses, are needed

People who coach organizations and executives on ethics, however, say the academic approach doesn't work. Among them is John Bruhn, a Scottsdale, Ariz. management consultant with an ethics specialty and an academic résumé that includes service as provost of Penn State University at Harrisburg.

"No one is going to come out of those courses as a different person," Mr. Bruhn says. "The thing those courses are going to do is create awareness. They're not going to change behavior because ethics is learned by modeling, not by reading a bunch of books over a weekend."

To impact behavior, Bruhn says, organizational cultures need to lead the way. Too often, executives come to learn, he says, that "it's the end product – the results – that count.... Boards of directors don't want to know the details of how you got them." A better way, in his view, is for corporation boards to set higher expectations for conduct and for executives-in-training to spend more time in mentoring relationships. He also says healthy companies affirm that taking less profit is sometimes a necessary cost of maintaining high ethical standards.

Others believe patterns of moral behavior are formed long before students reach college. The key period for shaping a person's moral character falls between the ages of 2 and 10, says Alex Pollock, a resident fellow at the American Enterprise Institute and former CEO of Federal Home Loan Bank of Chicago.

"If you're 22, it's too late," Mr. Pollock says. He sees today's academic centers for ethics-related research as "luxury goods ... another example of the wealth of our society." In his view, companies looking for truly ethical leaders need to study individual behavior on the job and see who can be trusted to resist the smallest temptations.

"I'm looking for someone who has a fundamentally puritanical disposition, [who is] honest, even under extreme pressure," Pollock says. "I want someone for whom not taking someone else's money or anything else isn't a decision. It's just automatic."

For executive coach and psychologist Kevin Fleming of Jackson Hole, Wyo., managers can learn ethical behavior, but not from courses that teach "what you should do." Instead, they need to embrace feedback from colleagues and advisers in order to "understand the values inside you that would determine what you would do" in a sticky situation. Today's courses are having an impact, he says, although not the one he'd like to see.

Ethical action requires ethical culture

"What I see in my field is better rationalization of hiding things," Mr. Fleming says. "I think [executives] have just become brighter. We're always having to deal with the narcissistic executive brain, which has propensity for amazing talents but also for incredible illusions."

On at least one central point, academics and consultants agree: Ethical behavior at the top requires better training.

Organizational structures and cultures, they say, can effectively encourage or discourage decisionmaking that's apt to incur some measure of cost, personal or organizational, in the process of doing what's right.

Goldsmith notes that scandalous behavior among executives is almost always correlated with an organizational culture that punishes people for critiquing their superiors. And for all their efforts, Fernandes concedes, business-school programs aren't going to determine executive behavior on the job as much as incentives from an employer will.

"The governance structure is the conscience of the organization," Fernandes says. "That conscience, the board of directors, has to set the tone for the CEO [and] has to be the conscience of the chief executive when the chief executive thinks about doing something that is more short-term and risky from an integrity standpoint.... In the end, [board members] set the reward system that recognizes the CEO."

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