Teaching Business Ethics – and Governance

July 2005 saw former WorldCom CEO Bernie Ebbers sentenced, more Enron suits settled, and the pork-packed federal energy bill greased toward passage. So, a conference on "Teaching Business Ethics" seemed a likely place to gain insights into today’s moral climate. And indeed it was.

At the height of the mid-July heat wave, 250 B-school professors and others came to the Leeds School of Business conference on business ethics in Boulder, Colorado. I was not surprised at the commitment and enthusiasm most attendees demonstrated.

Nor was I disappointed in the innovative ways presenters had devised to engage students. For instance, Kai Larson of the University of Colorado gave a witty talk on guiding a class that produced a self-published book of essays on ethics in business.

Carl Oliver of Northrop Grumman described his experience with adult learners: they want to learn about ethics and are willing to direct themselves in the process. They won't take a job with a bad company, so they are motivated to learn how to identify companies' ethical business practices. They also factor into their evaluations of their career success their own ability to act ethically.

Mr. Oliver's objective is, he said, to create a body of experience within Northrop Grumman that its employees could draw upon. His emphasis on the practical, on the applied, is reflected in his intriguing title, "Corporate Ethics Process Administrator." His was a theme repeated in many presentations.

Some attendees had a practical process reason for attending: the business school accrediting body may soon require ethics to be taught. The head of the accrediting agency, the Association to Advance Collegiate Schools of Business International (AACSB), John J. Fernandes, made a presentation on "Ethics and Corporate Governance Education."

We had heard in an earlier presentation that only a third of accredited business schools offered stand-alone ethics courses. That hadn't bothered me much, since ethics has always seemed to me to be an integral, even inseparable, part of every element of a business curriculum. And, something that has to be taught in practical contexts.

But one of Mr. Fernandes' PowerPoints shocked me: "While 67 percent of MBA programs have a corporate governance module or section, only six percent have a corporate governance course." To resort to a very tired analogy, what we have here are MBA programs offering the blind aspects of an elephant's physiology – marketing, managing, financing – but not on what holds the parts together and how they look – much less on how an African elephant is different from an Indian elephant.

Years ago, it infuriated me when people in financial services tossed around the word "governance" with only the dimmest idea of what it meant even in the context of the corporations for which they worked. Over time, it became simply a matter for wonder. It was the rare B-school "product" who had any knowledge of governance. Now, I know why.

For many reasons, it’s unfair to compare B-school with Law school. But if there's a law school that doesn’t offer a "corporations" or "business associations" course, I'd like to hear about it. Not the least reason to take such courses is to learn the structural barriers to ethical behavior. Or to put it differently, the incentives to unethical conduct.