Even in the US where bullish business people and capitalist commerce are traditionally viewed more positively than in Europe public trust in business has collapsed. Scandals from Enron to Bernie Madoff, the sub-prime mortgage fiasco and the demise of Lehman Brothers etc. have turned off a generation of potential future business leaders and led students now entering business schools to seek a the focus on virtue and doing social good.
‘The Wolf of Wall Street’ tells the real-life story of Jordan Belfort who rose from humble origins to run a $200 million stock market scam, a man corrupted by his thirst for the trappings of wealth. The film mocks the main characters for their greed and self-indulgence, portraying them as sad and pitiful creatures. But it does not however really judge or provide an antidote to their unethical behaviour.
In the real world, where scandals persist, there is a feeling that unethical businesspeople have never really received their come-uppance. Bonuses seem to be as big as ever and coming out of recession perhaps the bad old ways are set to return.
Could help be at hand from business schools? In business schools across the world, in IEDP’s experience, the belief that a company’s sole responsibility is to maximize shareholder value has been replaced by a belief in wider social responsibility, and a focus less on developing strategy and more on developing the people who will deliver the strategy.
Yet, according to Professor Jonathan Haidt, business schools — the major pipeline for future business leaders — “don’t really know what to do to turn out ethical leaders.” The courses they offer in business ethics and corporate social responsibility are not hitting the target, and “It’s time for business schools to get more sophisticated about moral psychology. We need to understand why people behave unethically, even when they think of themselves as virtuous.”
Referencing several pieces of social psychology research into why unethical behavior takes root and how social forces can easily outweigh personal integrity, he quotes Medea’s lament, from Ovid’s poem Metamorphoses: “I see the right way and approve it, but alas! I follow the wrong.” The Professor says “You can teach a student all you want about utilitarianism, Immanuel Kant or stakeholder theory, but five years later, when her colleagues are competing to sell worthless securities to unsuspecting retirees, her conscious reasoning is unlikely to be strong enough to stop her from running with the herd.”
Business schools need to make ethical behaviour a habit and to create their own cultures of ethics, professionalism and trust. To do this Haidt suggests they should:
Weigh evidence of character more when they admit new students, and expel students caught cheating
Work with student leaders to define norms of professional behavior for faculty as well as to students
Rely less on class participation when assigning grades—a standard that unfairly rewards extroverts and fosters competition and grandstanding
Foster a culture of collaboration, rather than a culture of competition for scarce resources
Teach our students how to harness social psychology research as they become leaders, so they can guard against pressures to cut ethical corners
Professor Haidt concludes the article: “But designing an ethical organization isn’t just about ‘nudging’ individuals. You also have to think about the culture that emerges, how you as a leader can shape that culture, and how your organization can hire and fire to protect that culture. These are topics we already touch on in management classes. By drawing on a wider set of recent research findings, we can take the next step—we can create a course specifically devoted to the design of ethical systems.”
Read the full Washington Post article
Jonathan Haidt is also the author of The Righteous Mind: Why Good People are Divided by Politics and Religion, and he is a collaborator at EthicalSystems.org