I hated how the this book, The MBA Oath, began. There were sweeping generalizations, straw man arguments and grandiose proclamations.
Fortunately after about 75 pages, Max Anderson and Peter Escher started to use survey data and sociology studies to build a case for a Hippocratic Oath for MBA graduates.
Rather than continue to recite about how the United States is suffering a crisis of leadership and has a lack of moral education, the authors convinced me that systems and tools currently used to conduct business are divorcing managers from their human values. There are unintended consequences from the mantra of “creating shareholder value”, the pressure quarterly reporting, and even the practice of using digital dashboards. While I can’t yet say every business person must sign this Oath, the book led me to believe we should do more to infuse workplaces with moral awareness.
Current business practices create environments for unethical behavior. Sure, Wall Street is unloved right now. But the authors got a step beyond the current debate to show how why ethical considerations are often not taken into account in business settings.
- MBA programs teach students to think less about societal good when making business decisions. The Aspen Institute found that before business school, MBA students believed the purpose of a corporation was to develop goods and services for the benefit of society, yet, after business school, the graduates believe the purpose of a corporation is to maximize shareholder value. This is particularly disconcerting as MBA enrollment continues to grow.
- Hierarchical like corporations encourage deferral of moral authority. As managers report to senior executives who report to board members who report to shareholders, there are many levels in corporations. At the same time, research from Philip Zimbardo and Stanley Milgram suggests that people can forget to make decisions in accordance with their values in situations in which they defer to a higher authority.
- The pressure of hitting quarterly numbers can affect someone’s integrity. A study by John Darley and Daniel Batson showed that putting students at the Princeton seminary under artificial time pressure led them to be less likely to help a stranger.
- The distance between managers and cash is increasing, making business feel more like a game where cheating is ok. Business people in the Finance sector often make transactions on computer screens, business leaders are often paid in equity, and the booming derivatives market is defined by not involving cash securities. Unfortunately an MIT study found people transacting in a currency one-step removed from cash are twice as likely to cheat as when they’re transacting directly in cash.
Legal and company value systems are not enough to restore values to the workplace. The authors directly address a number of criticisms to their approach. They note that the law usually lags best practices, so it is not effective at enforcing morals. Company value systems are also not enough. Small companies may not have them, and large companies may not define them clearly or distribute them prevalently. Enron apparently had a 20+ page values handbook.
A simple values message and triggers can be powerful. An MIT study found that forcing students to recite the 10 commandments prior to taking an exam reduced the likelihood of cheating. This suggests that you can use “triggering” to get people to behave a certain way in context. Even just hanging the MBA Oath on your wall, like the Doctor’s degree on their wall, could remind colleagues to take morals into account when making a business decision.
Adding a golden rule of business. Overall, I think the signable MBA Oath (as opposed to the book about the Oath) is too long and broad. I don’t know if every MBA should be obligated to create “social prosperity” or “be a mentor”. Near the end of the book, the authors share Warren Buffet’s demand of Salomon Smith Barney employees in the early 1990s:
“[when] contemplating any business act, an employee should ask himself whether he would be willing to see it immediately described by an informed and critical reporter on the front page of his local paper, there to be read by his spouse, children and friends.”
This statement by Buffet covers most scenarios. But I think it still allows for a “everyone else was doing it” excuse from employees, particularly when it relates to complex transactions or consumer products. So, I also would like to add a addendum to Buffet’s statement:
Furthermore, employees should be reasonably willing to buy and consume what they’re selling.
One of the reasons I had to leave consulting was I was occasionally selling work that wasn’t really needed by the client. For similar reasons, I couldn’t sell a mortgage to a person likely to default. I couldn’t sell foods that might be leading to obesity. I couldn’t help arrange a sale of a security I thought was going to implode. So, I ask business people to be reasonably willing to buy what they’re selling. If there is no way you would buy it and/or consume it, even at 50% off or if you had a higher or lower income, don’t sell it. If you think it will help you in both the short and long term, you can bluff and make a big profit. But you should be willing to buy what you’re selling.
Overall, The MBA Oath was a thought provoking read and should be considered by all MBA graduates. I’m glad the authors are continuing to call attention to the intersection of business and ethics, and hope they achieve the ultimate aim of positively influencing the behavior of leaders globally for years to come.
- The authors claim that “many business schools give insubstantial attention to business ethics” and that, specifically at Harvard Business School (HBS), teaching was siloed such that ethics wasn’t taught in a Finance class. I wholeheartedly disagree In the first year at HBS, we we’re required to take “Leadership and Organization Behavior” and “Leadership and Corporate Accountability”–and both these classes focused on ethical dilemmas as 5 or more cases from these classes appeared in the book. And throughout the first year my peers and I discussed ethical dilemmas in classes on private equity buyouts in Finance I, management controls in Accounting, pharmaceutical promotions in Marketing, and globalization in Macroeconomics.
- The authors occasionally make unfounded associations and assumptions. For example, they imply that MBA graduates are likely to add debt to companies balance sheets because they took personal loans during school and “have been trained to operate this way in their personal lives during business school”.
- The authors suggest that now more than ever business leaders are under attack, referencing recent polls and book titles. I wonder whether managers may have appeared worse during the robber baron period in the 19th century, the muckrakers era in the early 1900s, the economic depression of the 1930s, or the excesses of the 1980s.
Would you sign an MBA Oath? How can we ensure ethical decisions in the workplace? What do you think about the claim that you should be reasonably willing to buy what you sell?