, , , ,

In an essay by Matthias Philip Hühn, “You Reap What You Sow: How MBA Programs Undermine Ethics,” the author outlined a growing problem in the business world; a lack of ethics in business. He traces this issue back to MBA programs—ubiquitous in the business world— where students are taught what to think, but are not taught how to think critically. Instructors rely on modeling and case studies because their limited time with students does not allow for more robust or thoughtful discussion. Ethics has been entirely dropped from MBA programs or the value has been discounted. The pressure upon the students to complete up to 9 courses per semester creates a culture where cramming and taking shortcuts, which includes cheating, becomes the standard. Graduates enter the workforce armed with data-centric models and the arrogant concept that they can manage a business entire by numbers. They have been taught to ignore the messy nuances of reality which cannot easily be measured. The culture of statistical selfishness has been embedded in the industry and MBA graduates can only compare themselves with each other. There is nothing wrong with looking out for yourselves and shareholder value because everyone is doing the same.

It can be argued that this mentality—distancing oneself from any responsibility when business decisions are based on models that cannot accurately capture the full context—led to the financial crisis in 2007/08. The smartest people in the room ignored the possibility that anything could go wrong because none of the models they were using were structured to show a bad or worse case scenario. They should have been aware of the looming problem that they created; it had been discussed in increasingly alarmist terms by the media in the months leading up to the collapse. Most of the firms that caused the problem were bailed out and many at the top who were responsible for taking on too much risk were financially rewarded. Everyone else was just doing their job and could easily rationalize their lack of responsibility. 8 years out we have continued the same trend where financial ethics—how business decisions impact people—is still absent. One only needs to look at culture of greed at Wells Fargo to see that the bottom line, not the customer, is more important to the board of directors.

On the opposite end of the ethics scale, “A Conceptual Framework to Enable the Changes Required for a One-Planet Future” summarized a study reviewing the interrelationships between business decisions and the environment. They studied several business sectors and discovered that most companies base future decisions on past successes rather than adopt new strategies. Although the findings of the study can be applied to any variation of change management, the focus of the study was on the environment. They grouped 14 specific elements under 3 interlocking categories: Awareness of humanity’s impact on the environment and a personal—preferably formative—relationship with nature; Motivation to do something about the problem including modifying social norms and financial incentives/rewards; and Pathways to help connect people with environmental concerns, including strong leaders who can set the precedent, resources to complete the task (i.e. recycling centers) and collaboration among groups. Done in isolation, these elements may not work, but working in tandem can drive behavioral change.

We may turn to Burma (Myanmar) to see this dynamic in play. Aung San Suu Kyi, who was a political prisoner for more than 20 years, saw the deterioration of her country after decades of intermittent civil war with armed ethic minorities.  The country is rich in natural resources and had been a leading exporter, but the military-ruled government had become dysfunctional; poverty, poor healthcare and substandard education were the norm. The citizens who should have been the priorities of the government had instead become the oppressed subjects. In 2007 the military crushed a protest movement, but a catastrophic cyclone that killed 138,000 people in the following year caused concerns of an Arab Spring-like uprising; they began to change. Suu Kyi had been politically active during her house-arrest, but it was not until her release that she was able to lead her party, the National League for Democracy (NLD) into a force for change. Suu Kyi’s party began to make incremental changes from within, working in partnership with the military rulers, and re-establish ethical decisions in the country. This road was not smooth, but came with many obstacles, including amending the constitution, the urgency for swift change that could not be implemented, continued racial discrimination against the minority Muslim population, and trying to right a country that had gone adrift. Most critically, the government system was broken and there were few candidates, even within the NLD, who were trained to run a democracy. The argument has been made that Suu Kyi’s international fame was itself a distraction to the process. However, as noted above, she was a charismatic leader who used several methods, including civic engagement and motivation, to help steer change within her country.  Were MBA programs to use this very complex human case as a model to study, with many overlapping and conflicting issues, they might be inspired to become more thoughtful and ethical managers.