Archive for July, 2009

If there were still any doubts about the harming effects of corruption, check out the recently released 2009 Transparency International Global Corruption Survey.  Business continues to be part of the problem and needs to be a key part of the solution.  It is essential that any professional code of conduct for business leaders include an unequivocal, zero-tolerance statement against corruption and that business schools take an equal unequivocal stance against corruption.  Here are some of the headlines from the survey:

1. Corruption matters to consumers
2. Petty bribery and economic crisis: poor punished twice
3. Government anti-corruption efforts are seen as ineffective
4. Public demand for greater integrity in government and business

The University of Texas at Arlington announced today that, as it happens at Thunderbird, its EMBA students will begin taking an ethics oath going forward.  Hopefully they will consider a direct mention against corruption and bribery.

“This is a great step for our EMBA program at the University of Texas at Arlington, and for business schools nationwide,” said Dan Himarios, Dean of the UT Arlington College of Business. “Because of the current issues on Wall Street, it’s essential that future business leaders understand the importance of ethics…we want to be sure that our students will uphold standards of integrity and honesty in their careers and be able to serve the business community with their skills, rather than exploit it.”

As part of a special section dedicated to “rebuilding the economy” The Christian Science Monitor writes about the MBA Oath started up by two Harvard Business School students and the Thunderbird oath, adopted by the School in 2005.  The piece surfaces some interesting criticisms:

For David Hammons, an MBA candidate at Missouri State University in Springfield, the problem is the preamble’s first line, which reads: “As a manager, my purpose is to serve the greater good….”

“In that statement, this oath has ceased to be an oath advocating capitalism,” Mr. Hammons says. “It means that my individual pursuit of happiness is not ethical.” The notion of the “greater good” has too often been abused, he says, citing the Cultural Revolution in China as one example.

Such dialogue highlights “a deep fundamental difference about what the purpose of the corporation is and whether it has any responsibility to society other than maximizing profits,” says Rakesh Khurana, a Harvard business professor whose writings on professionalizing management have informed the student oath. It will take this kind of pressure, he says, for business schools to shift curriculum and practices to emphasize different values.

Princeton’s bioethicist Peter Singer addressed the idea of a business oath in this syndicated op-ed (which was printed last Sunday in Spain by El Pais):

The MBA oath is an attempt to replace the Friedmanite view of the social responsibility of business with something quite different: a management profession that commits itself to promoting the long-term, sustainable welfare of all. The sense of a professional ethic is conveyed by clauses in the oath that require managers to “develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society.”

Another clause stresses accountability to one’s peers, a hallmark of professional self-regulation. As for the ultimate objectives of the managerial profession, they are, as we have seen, nothing less than “to create sustainable economic, social, and environmental prosperity worldwide.”

Can such a code really take hold in the competitive world of business?  Perhaps the best hope for its success can be glimpsed in a comment made to a New York Times reporter by Max Anderson, one of the pledge’s student organizers: “There is the feeling that we want our lives to mean something more and to run organizations for the greater good,” he said.  If enough business people would conceive their interests in those terms, we might see the emergence of an ethically-based profession of business managers.

At the 2009 World Economic Forum Annual Meeting in Davos, the Forum of Young Global Leaders launched an initiative to produce an oath for business leaders that would serve as a guide when facing difficult trade-offs and paradoxes. During the course of 2009 the YGL Global Business Oath Initiative has drafted a set of principles and has been testing the content and implementation with leaders from all sectors and regions of the world.

The Forum of Young Global Leaders is an initiative of the World Economic Forum, self-described as “a unique, multistakeholder community of exceptional young leaders who share a commitment to shaping the global future”.  In addition to the contributions of many YGL members (yours truly included, for full disclosure), the initiative has been supported by Profs. Rakesh and Nohria of the Harvard Business School.

With at least two such oaths in place so far (the Thunderbird Oath and the MBA Oath) with some degree of overlap in content but also some differences, the goal of the Global Business Oath is to provide an international standard that will cover the most critical areas of value creation and potential social harm associated with management as a profession and that could be used as a reference by any interested organizations.

I reproduce here the latest draft of the Global Business Oath with the hope of receiving as much feedback as possible before producing a final text.

Global Business Oath

As a business leader I recognize that

• The enterprise I lead must serve the greater good by bringing together people and resources to create value that no single individual can create alone,
• My decisions can have far-reaching consequences that affect the wellbeing of individuals inside and outside my enterprise, today and tomorrow,
• As I reconcile the interests of different constituencies, I will face choices that are not easy for me and others,

So I promise that

1. I will manage my enterprise diligently and in good faith and will not let personal considerations and compensation supersede the long-term interest of my enterprise and society at large,
2. I will understand and uphold, both in letter and spirit, the laws and contracts governing my own conduct and that of my enterprise,
3. I will respect and protect the human rights and dignity of all people who are affected by my enterprise and will oppose all forms of discrimination and exploitation,
4. I will respect and protect the right of future generations to enjoy a clean and resourceful planet,
5. I will not engage in nor tolerate bribery or any other form of corruption,
6. I will represent the performance and risks of my enterprise accurately and honestly to each of the constituencies that are affected by it,
7. I will actively engage in efforts to finding solutions to critical social and environmental issues that are central to my enterprise, and
8. I will invest in my own professional development as well as the development of other managers under my supervision

In exercising my professional duties according to these principles I recognize that my behavior must set an example of integrity and responsible conduct.

This pledge I make freely and upon my honor.

The OECD and the G8 are trying to produce a set of principles that will contribute to building a “stronger, cleaner, fairer economy“.  This so-called Global Standard “aims to develop a set of common principles and standards for propriety, integrity and transparency in international business and finance”.

In true 2.0 style, the OECD has created a blog to encourage broad, inclusive discussion of their work.  Harvard Professor Rakesh Khurana, with whom I have been working in the development of a new Global Business Oath, has been invited as one of the key bloggers.  It is a great sign that the OECD so explicitly recognizes managerial professionalism as a key component of their Global Standard.

One of Prof. Khurana’s postings in this discussion includes the current draft of the Global Business Oath, an ongoing initiative of the Young Global Leaders, which is a multistakeholder community of global leaders under 40 created and supported by the World Economic Forum.

I just landed in Spain over the weekend and was happy to see the debate over the role of business schools in the financial meltdown alive and well in Europe.  Partly responsible for keeping the fire going was Harvard Professor Rakesh Khurana who spoke at ESADE during an EGOS conference.  His presentation, together with an analysis of Thunderbird’s work, was picked up by Cinco Días (¿Centros de enseñanza o de búsqueda de contactos?).  Spanish newspaper La Gaceta also dedicates some attention to this ongoing debate.