Why Business Schools can never teach ethics?

Ethics and MBA Programs
Business Schools have accelerated the inclusion of ethics courses in MBA program post-2008 financial meltdown, across specialization. But the question still remains – can MBA programs change human behavior? Drastic changes cannot be expected with a few courses on ethics. Curriculum designers should develop a learning framework that includes ethics as one of the foundation for decision-making.

Environment Dictates Behavior

The unfortunate truth is that the environment influences our behavior the most. Genes and Gender influence aggression and behavior in the early years but the environments sets behavior patterns that are conducive for success in a chosen field. In an environment where profit margins is the most revered metric, behavior that maximizes profits are sub-consciously chosen.

Although Business Schools have the right intention, the effort to understand how environment influence behavior is limited. The student who leads the ethics committee or professes about ethical decision-making can change behavior when the stakes are high in a real-world Business environment. The true test of character comes at a time when an MBA’s career is at jeopardy for not following a group or an influencer’s suggestion to traverse along unethical lines.

The environment that Business Schools create in an MBA program is far off from the real world Business experience. The artificial hostility seen in classroom discussions and group activities are within the framework of learning and listening to other participants. In the real world, power is not balanced, and the stakeholders have their own agendas. Making ethical decisions in such environment is much more complex, and involves understanding Business from a personality’s point of view, far away from the academicians, who might be good at analyzing behavior but would poor at understanding how environment, group dynamics and power play influences unethical behavior.

Decision Making Framework

The failure for Business Schools to replicate the real world lies in the fact that all participants have equal power in an MBA class. Some might dominate the class, and be more active in classroom discussion. Professors might have powers that are one level above the class, as they guide the discussion along relevant topics. But the real power dynamics comes into play when role play is involved. A classroom cannot replicate the real environment when the major portion of the discussion is focused on analysis and ethical dilemmas. 

Analyzing a scenario and contemplating different paths of action cannot be the basis for behavior change. It is not that the decision makers who triggered the Financial Meltdown in 2008 were not aware of the alternative paths. The environment, the factors that influence self-image and the power to make decisions encouraged the decision makers to make assumptions about how markets would behave. Betting on success and failures made it possible for investment managers to bet on their client’s investment, thus making money in both outcomes.

When the decision-making framework in an environment doesn’t penalize poor decisions, unethical behavior will continue to exist in the system. MBA programs cannot simulate an ideal world when the real systems encourage risky and borderline unethical behavior. Unless the changes come from within the system, an MBA program is preparing students for an environment that is non-existent.

No Absolute Morality

Another bitter truth is that there is no absolute morality in decision-making. It is relative. Each participant in an MBA class has a different degree of ethical perception. What seems unethical in one culture might seem profitable in another. Who has the absolute morality scale? No one. Professors are influenced by the practices followed by successful Businesses and their own experience interacting with MBA students over the years.

Starbucks, Apple and Google didn’t build up humongous cash reserve by following ethical behavior. They were clever with their tax planning or in some culture, unethical. Will an MBA appreciate a less successful company that had followed ethical decision-making? The heroes in the corporate world cannot be looked down for their “minor” unethical behavior.

The majority of the MBA class is the judge and jury for ethical behavior in a Business decision. Can a group of highly competitive management students be the judge on ethical behavior? There lies the problem. An environment that encourages competition and profit booking cannot be the initiator of ethical decision-making. Even if the class knows the right decision, humans are known to flip-flop when it comes to actual behavior in a high-stake environment.

Aristotle understood the importance of habit. His quote on excellence applies to ethics as well “Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit”

Unless Business Schools shift their focus from analysis, and treat ethical decision making as a day-to-day practical challenge - the courses, committees and preaching will not change the system. It just confuses the MBAs.

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