Why MBAs should not sign the Harvard Business School oath(knowledge.insead.edu)
knowledge.insead.edu
Why MBAs should not sign the Harvard Business School oath
http://knowledge.insead.edu/contents/csr-mba-hbs-oath-091125.cfm?vid=342
6 comments
As for people not being driven by pledges, again, I am a professional engineer and I took an oath when I graduated. I have so far been true to it and I take it very seriously every day of my professional life.
Yes, but you are most likely someone who strives to behave ethically regardless of oaths and pledges. The people who need the pledge the most are also the least likely to follow it when it's really put to the test.
That's why reading about the HBS pledge was one of the few times I laughed out loud - long and hard - at something I read online. Maybe I'm too cynical.
The article's tone is a bit hard to swallow, but I think the point about "externalities" is valid. In other pledge-driven professions (medicine, engineering, I'm guessing law) the interests of the professional tend to be aligned with the contents of the pledge - or, at least, not usually in direct conflict. That will never be the case in business as long as taking the moral high ground will put you at a competitive disadvantage.
Yes, but you are most likely someone who strives to behave ethically regardless of oaths and pledges. The people who need the pledge the most are also the least likely to follow it when it's really put to the test.
That's why reading about the HBS pledge was one of the few times I laughed out loud - long and hard - at something I read online. Maybe I'm too cynical.
The article's tone is a bit hard to swallow, but I think the point about "externalities" is valid. In other pledge-driven professions (medicine, engineering, I'm guessing law) the interests of the professional tend to be aligned with the contents of the pledge - or, at least, not usually in direct conflict. That will never be the case in business as long as taking the moral high ground will put you at a competitive disadvantage.
Anyone who is not willing to promise to behave ethically will have a hard time doing so, regardless of effectively promising it or not.
I would never, ever, under no circumstances, let someone like this graduate. Ethics are not optional in any profession.
And don't be cynical. Instead, try to actively be a force of good. Just a little push here and there.
It doesn't matter if it's just a trickle. With enough trickles we can make a very nice river.
I would never, ever, under no circumstances, let someone like this graduate. Ethics are not optional in any profession.
And don't be cynical. Instead, try to actively be a force of good. Just a little push here and there.
It doesn't matter if it's just a trickle. With enough trickles we can make a very nice river.
It doesn't matter if it's just a trickle. With enough trickles we can make a very nice river.
That really depends. I'm not saying social change never happens from the bottom up, but for me, this pledge is just one step up from, say, an internet petition. Show me one internet petition that has ever made a meaningful difference, and I will change my mind about this topic.
I do the best I personally can, but I don't think changes to business ethics can come from within, because too often ethical businesses put themselves at a disadvantage and fall behind. Whenever changes aren't directly aligned with business interests, they have to come from outside forces - whether it's legislation, or pressure from society, or both - and be applied evenly to all businesses. That's how we've got all progress so far, and I don't see it changing any time soon.
That really depends. I'm not saying social change never happens from the bottom up, but for me, this pledge is just one step up from, say, an internet petition. Show me one internet petition that has ever made a meaningful difference, and I will change my mind about this topic.
I do the best I personally can, but I don't think changes to business ethics can come from within, because too often ethical businesses put themselves at a disadvantage and fall behind. Whenever changes aren't directly aligned with business interests, they have to come from outside forces - whether it's legislation, or pressure from society, or both - and be applied evenly to all businesses. That's how we've got all progress so far, and I don't see it changing any time soon.
It's not an internet petition. HBS's MBAs will make it. They will say those words and make a promise.
I have no doubt many of them will just go on and rape and pillage whatever they find in front of them, but others will take it seriously, will keep their promise, remembering what they said and why they did it and, in the end, the world will be a better place for that.
It's also a statement that some of the ways of the past will no longer be tolerated. It sets a code of conduct.
Like I said elsewhere, there are very few rites of passage left in our society. It's pretty obvious there are far too many executives running companies like kindergarten dictators, overgrown babies that want everything the way they like no matter what. Maybe something that helps them realize they changed because of all the work they did in the MBA course helps.
It's a big maybe, but it's also clear it's a step in the right direction.
I have no doubt many of them will just go on and rape and pillage whatever they find in front of them, but others will take it seriously, will keep their promise, remembering what they said and why they did it and, in the end, the world will be a better place for that.
It's also a statement that some of the ways of the past will no longer be tolerated. It sets a code of conduct.
Like I said elsewhere, there are very few rites of passage left in our society. It's pretty obvious there are far too many executives running companies like kindergarten dictators, overgrown babies that want everything the way they like no matter what. Maybe something that helps them realize they changed because of all the work they did in the MBA course helps.
It's a big maybe, but it's also clear it's a step in the right direction.
> Anyone who is not willing to promise to behave ethically will have a hard time doing so
That is not true. Many people don't accept the authority or legitimacy of those who would demand a pledge (religious, anarchists).
I reject out of principal any pledge (and the subjugation to authority it implies). I do the right thing because it is the right thing. Someone asking me to pledge to do the right thing is an insult and an attack on my character/honor.
Pledges are also, psychologically, a cop-out. Like giving money to poor people. They let one feel good about themselves and not dwell on the consequences of all their other actions.
That is not true. Many people don't accept the authority or legitimacy of those who would demand a pledge (religious, anarchists).
I reject out of principal any pledge (and the subjugation to authority it implies). I do the right thing because it is the right thing. Someone asking me to pledge to do the right thing is an insult and an attack on my character/honor.
Pledges are also, psychologically, a cop-out. Like giving money to poor people. They let one feel good about themselves and not dwell on the consequences of all their other actions.
I feel that, by taking the oath I took, I was reaffirming my commitment to act on a set of professional guidelines. It's also a powerful commitment - you state the rules that will bind your professional (and many times, personal) conduct for life. That's a big thing - a rite of passage (something important we have precious little left). It turned engineering students into professional engineers.
It's insane to reject every pledge out of principle. A pledge, specially one like that, sets a good example - a model of conduct. If you are not happy with it (like the author), propose an alternative one, one you would be comfortable taking.The worst that can happen is to make an empty promise, one you know you won't keep. It's deeply demoralizing and we have had lots of that in upper management lately.
And, finally, sorry if you feel attacked, but nobody is obliged to trust you to even know what's "the right thing", much less to do it or to agree with the rest of the society on what "good" means. That's what pledges are for.
It's insane to reject every pledge out of principle. A pledge, specially one like that, sets a good example - a model of conduct. If you are not happy with it (like the author), propose an alternative one, one you would be comfortable taking.The worst that can happen is to make an empty promise, one you know you won't keep. It's deeply demoralizing and we have had lots of that in upper management lately.
And, finally, sorry if you feel attacked, but nobody is obliged to trust you to even know what's "the right thing", much less to do it or to agree with the rest of the society on what "good" means. That's what pledges are for.
To some people, rejecting pledges is sane for the same reason that rejecting the right to sell oneself into lifelong slavery is sane.
Sounds like a rough way to live. No drivers license. No insurance. No access to debt. I'd have had a real tough time getting any work without promising to actually do the work.
Honestly, I'm pretty impressed you're able to maintain an internet connection without promising to behave in a certain way.
Honestly, I'm pretty impressed you're able to maintain an internet connection without promising to behave in a certain way.
The people who need the pledge the most are also the least likely to follow it when it's really put to the test.
There was an interesting study done by the London School of Hygiene recently that found that people were much more likely to wash their hands if others were present in the bathroom, and if they were shamed into doing it by messages such as "is the person next to you washing with soap?" Of course, there are some people who will never wash their hands when they go to the bathroom. T
I think most people really want to do the right thing, but there are lots of gray areas out there, especially when nobody is looking. Reaching people in that situation is what the vow is made for. Maybe a public promise to be ethical will be a gentle nudge to help them behave ethically. Those with really dirty hands are beyond the reach of any vow, and always will be.
There was an interesting study done by the London School of Hygiene recently that found that people were much more likely to wash their hands if others were present in the bathroom, and if they were shamed into doing it by messages such as "is the person next to you washing with soap?" Of course, there are some people who will never wash their hands when they go to the bathroom. T
I think most people really want to do the right thing, but there are lots of gray areas out there, especially when nobody is looking. Reaching people in that situation is what the vow is made for. Maybe a public promise to be ethical will be a gentle nudge to help them behave ethically. Those with really dirty hands are beyond the reach of any vow, and always will be.
Surely nothing is wrong with following the orders of the shareholders. What is the difference between their recommended oath:
I pledge to maximise the wealth of the people who pay my salary, i.e. the shareholders, unless the shareholders tell me in advance that they want me to do something else.
and
All Political Leaders stand as appointed by the Fuehrer and are responsible to him.
There is such a thing in this world as individual, moral responsibility.
I pledge to maximise the wealth of the people who pay my salary, i.e. the shareholders, unless the shareholders tell me in advance that they want me to do something else.
and
All Political Leaders stand as appointed by the Fuehrer and are responsible to him.
There is such a thing in this world as individual, moral responsibility.
Good God people, Why is this even a discussion ? If this Muppet is taken seriously - maximize the wealth of shareholders ABOVE ALL ELSE, then why not shoot rival fund managers? Invade small countries? You are either ethical or not. There is no middle ground.
It's a discussion because it's true. In many countries, including the US and the UK it is illegal for a board of directors to not do whatever it takes to maximize shareholder value.
The implications of that are particularly important when, as is currently happening in the US, there's a discussion of the role of government in things like health care.
Basically: In a lot of cases it's illegal for a company to do "the right thing" if that right thing looses the company money, but isn't explicitly illegal. See pre-existing conditions.
One thing that does fall out of this that is rather counter intuitive and the Ron Paul's of this world don't like to hear it is that quite often, big companies are lobbying for stricter regulation.
The reason is that they may have ethical/marketing problems with doing a certain thing, but can't not do it, as there are other, less scrupulous companies that don't have these problems and thus squeeze them on price..
The implications of that are particularly important when, as is currently happening in the US, there's a discussion of the role of government in things like health care.
Basically: In a lot of cases it's illegal for a company to do "the right thing" if that right thing looses the company money, but isn't explicitly illegal. See pre-existing conditions.
One thing that does fall out of this that is rather counter intuitive and the Ron Paul's of this world don't like to hear it is that quite often, big companies are lobbying for stricter regulation.
The reason is that they may have ethical/marketing problems with doing a certain thing, but can't not do it, as there are other, less scrupulous companies that don't have these problems and thus squeeze them on price..
"illegal for a board of directors to not do whatever it takes to maximize shareholder value"
I hear this quite often but have never seen a law that says this. Do you know of one?
I hear this quite often but have never seen a law that says this. Do you know of one?
So directors and officers have a fiduciary duty to maximize shareholder value, and therefore any obligation that conflicts with this duty is improper?
I wonder whether the author would apply this to lawyers. They, after all, have fiduciary duties to their clients, such as that of zealous advocacy. Is he advocating that no ethical obligations should trump the lawyer's duty of zealous advocacy?
If not, what is the distinguishing principle?
I wonder whether the author would apply this to lawyers. They, after all, have fiduciary duties to their clients, such as that of zealous advocacy. Is he advocating that no ethical obligations should trump the lawyer's duty of zealous advocacy?
If not, what is the distinguishing principle?
The lawyer analogy came to my mind as well while reading this article. The "Hollywood" version of a lawyer's duties to his client is narrow and not accurate. There are certainly lawyers that operate on this narrow definition, but its not inline with judicial process or state bar ethics and the lawyer's oath.
I think this is a pretty naive way to look at it. Of course Harvard realizes their MBAs often end up with a duty to maximize shareholder value at any and all costs. Isn't that kind of the point? "That" being to create tension between the two duties and hopefully get people to examine the system?
This whole short-sighted duty to maximize shareholder value is unarguably a part of the problem with modern capitalism. That was the driving force behind the rush to the dizzying returns promised by the financial black magic that melted the economy.
This whole short-sighted duty to maximize shareholder value is unarguably a part of the problem with modern capitalism. That was the driving force behind the rush to the dizzying returns promised by the financial black magic that melted the economy.
"board members and, as a consequence, managers have a fiduciary duty to maximise the wealth of shareholders."
Not all business are publicly traded corporations.
Not all business are publicly traded corporations.
Doesn't matter, also applies to shareholders of private companies.
Yes, it does. In a privately held company in the U.S., the shareholders decide what the rules are, so long as they're within the law. They have no obligation beyond that.
Edit: grammar correction
Edit: grammar correction
Considering the guy is from a rival business school, it may safely be assumed that at least 50% of these arguments are put forth solely to rubbish the competitor's product.
Before any fiduciary obligation, a manager (just like any other human being) has moral obligations towards society. The fiduciary obligation is to create value to your shareholders, but not just the present ones that will dump your stock the same week they bought it. For those long-term investors, I believe the "I will strive to create sustainable economic, social, and environmental prosperity worldwide" idea creates a lot of value in the long term.
As for the oath promoting unethical behaviour, the first promise takes care of that. The ethanol companies... well... They are thriving in Brazil. There must be something in trying to make it from corn that is fatal to companies.
The oath being a misplaced response... I am not sure about that either. It's obviously a response to some less-than-ethical behaviour that had disastrous consequences to shareholder value. But that same unethical behaviour paid handsomely for those who were able to jump ship fast. I wouldn't call benefiting that group a smart business move and many companies that aimed that way no longer exist.
As for people not being driven by pledges, again, I am a professional engineer and I took an oath when I graduated. I have so far been true to it and I take it very seriously every day of my professional life.
If he doesn't like the idea of striving "to create sustainable economic, social, and environmental prosperity worldwide", that's fine by me, but I think everyone of us would benefit from such a mindset.