A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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Will it make any difference in the real world if MBA graduates sign an ethics code?
21 May 2010
The MBA Oath: Setting a Higher Standard for Business Leaders, by Max Anderson and Peter Escher (Portfolio, 288 pp., $24.95)
Last spring, the economy appeared to be in free fall. The Dow had plunged about 50 percent from its peak, and unemployment zoomed toward double digits. Angry about bank bailouts and foreclosures, some pundits vilified business in general and MBAsthe alleged leaders of the messin particular. In BusinessWeek, Shoshana Zuboff, a long-time teacher of MBAs, wrote that we managed to produce a generation of managers and business professionals that is deeply mistrusted and despised by a majority of people in our society and around the world.
At Harvard Business School, Max Anderson and Peter Escher were none too pleased about this bad PR. About to graduate and start business careers of their own, they wanted to be viewed as helping society, rather than hurting it. So they joined with other students to create an ethics code, the MBA Oath, something like the Hippocratic Oath for doctors and the Graduation Pledge thousands of young people became obsessed with a few years ago. The MBA Oath states that As a manager, my purpose is to serve the greater good by bringing together people and resources to create value that no single individual can alone. Oath-takers pledged to act with utmost integrity and pursue my work in an ethical manner. They promised to safeguard both shareholders interests and those of the broader society, to represent their organizations performance honestly, and to create sustainable prosperity.
Most of the Harvard MBA class of 2009 signed the pledge, and now, a year later, Anderson and Escher have written The MBA Oath to bring their message to a larger audience. The book describes the oaths eight precepts, and, in good business school fashion, presents case studies of ethical dilemmas associated with most of them. Was Coca-Cola right to try installing thermometers on soft-drink machines, in order to raise prices when it was hot outside? What should the former Beech-Nut CEO have done when he learned his juice was possiblybut not definitelyadulterated? China has managed to move 400 million people out of abject poverty over the past 30 years, but at the cost of producing 18 of the 20 most polluted cities in the world. Is this a good trade-off?
In many cases, Anderson and Escher write, the answer isnt clear. The MBA Oath is a thoughtful book. Though we are tempted to reduce complicated ethical questions to black-and-white superficialities, the authors write, theyre careful not to do so, and on occasion they criticize companies attempts to do the liberal thing to win goodwill. For instance, they describe how the leader of Malden Mills made a big show of rebuilding his factories in Massachusetts after a fire, rather than outsourcing the operations to Asia. Robert Reich declared that every CEO in America should behave that way, but the resulting high costs in a competitive environment ultimately drove Malden Mills into bankruptcy. The authors agree that that was a mistake. If every CEO in America made the same decision, no one would have a job.
Anderson and Escher resist black-and-white superficialities when it comes to people, too. They highlight research showing that people will behave more or less honestly in various situations. Its quite possible, they note, that Jeff Skilling and Bernie Madoff arent that different from the rest of us. They simply made unethical decisions to advance their own interests when faced with situations where they didnt think theyd get caught.
Because people face constant temptation, its helpful to have an expected code of behavior and to be held publicly accountable for it. Thats why Anderson and Escher have started a list (at mbaoath.org) of everyone whos signed the oath. The idea is that this will keep MBAs focused on their promises.
Unfortunately, though, they wont keep them. Anderson and Escher imagine the oath someday being waved in someones face as he leaves his business establishment, handcuffed and in the custody of a deputy U.S. marshal, but most ethical failures come in far more mundane circumstances. Im willing to bet that plenty of oath takers will, in the years to come, do everything from paying their babysitters off the books to speeding and jaywalking, without even recognizing that these are violations of precept four (I will . . . uphold, both in letter and in spirit, the laws and contracts governing my own conduct . . .). The authors dont seem to consider that one reason why some people may not sign their pledge is that they understand that following it in full is impossible.
More fundamentally, though, while discussing ethics is never a bad idea, the book, and the oath movement in general, lean a bit too heavily on the tired narrative of idealistic young people changing a world that older, more compromised folks have screwed up. We are calling leaders to a new way of doing business, the authors write. Yes, their call is simply an affirmation of old-fashioned notions of honesty, trust, and hard work, but Anderson and Escher insist that we want to create a new ethic, a new starting point, and a new way to measure success.
Apologizing for things that you have nothing to do with requires grandiosity, and theres hubris, too, in downplaying the admirable ethics of much of American business and claiming instead that the management profession is lost and needs savingby students. If the authors see most managers as fraudulent, rather than as the hardworking men and women in most enterprises who take risks and thereby create jobs and opportunities for the rest of us, perhaps theyve been spending too much time listening to the grandstanders in government, rather than studying actual business administration. Most of business has little to apologize for. It is already what Anderson and Escher want it to bethe friend, not the enemy, of progress in our worldeven if pundits and politicians claim otherwise.
Nonetheless, The MBA Oath provides a lot to chew on. Reading it, you can almost picture yourself in the middle of a Harvard ethics class, pondering the point of marketing, discussing the categorical imperative, and debating the theories of John Rawls. If nothing else, thats worth the $24.95 cover price.
Laura Vanderkam is the author of 168 Hours: You Have More Time Than You Think, published this month by Portfolio.