The Buck Stops (and Starts) at Business Schools

Case analysis on The buck stops (and starts) at business school It’s really strange that on one hand, most people who were laid off in 2009 after the crisis went into the business schools. On the other hand, medias were seriously criticizing the damage business school graduate brought to the financial crisis. Does business schools need to change? Or they’re just the scapegoats? In Joel Podolny’s view, business schools definitely should be blamed and should be reinvented. He believed that historically, business schools have largely ignored the teaching of values and ethics because those aren’t subjects of inquiry for traditional business school academic disciplines.

Also, those leadership and ethics courses that are taught are flawed since attention to detail and taking responsibilities were not emphasized. Furthermore, case teaching method alone doesn’t enable students to learn that being consistent in various situations and continually paying the right amount of attention to detail are among the most challenging aspects of leadership.

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Podolny also put forward several suggestions about how business schools can change to win back the trust from the society. I think foster greater integration and encourage qualitative makes most sense among the five recommendations. I vote for these two because I simply think the other three just don’t work. In Fisher, we are doing “appointing teaching teams” right now. But as a student, or the subject of this way of teaching, my feeling is that we don’t like this way. When we see the ethics teachers come in, we naturally feel a kind of reluctance since no one subconsciously or consciously admits that their ethic need to be “taught”.

We either think we’re really good people or we think it’s all BS and making money is always the most important thing. But I feel the most compelling lesson of ethics I learned was actually from an International Business class professor who almost “unwarily” lead the discussion about a manager facing whether or not firing a disabled worker who has contributed a lot to the success of the company in one case.

It’s so natural that the class did not even take it as an “ethics class” but really took a great lesson unguardedly through the extremely heated discussion and the concluding succinct but thought provoking words from the professor. That will be my own suggestion for teaching ethics. Stop competing on ranking is a dream. To me it’s just like asking companies to stop competing on net income and EPS. That will never happen though companies can pay more attention to social benefits. Similarly, we can expect business schools to pay more attention or at least act like they pay more attention to candidate’s moral aspect. Withdraw degrees for violating codes of conduct sounds powerful but it’s just so hard to really enforce. Just look at doctors and lawyers in our society now and one can see if it really works.

Ethics is still a huge issue in many of the hospitals and courts. What’s more, withdraw the degree for lawyer and doctors can forbid them to continue work as a doctor or lawyer, but in the business world, as long as you have a pretty good experience in your resume, you can always find a job regardless of the degree. Business schools might really need to transform but another question is, should they be responsible for the recent financial crisis as all those business graduates are selling CDS and telling ignorant people to leverage more on mortgages? I don’t think Business schools are largely culpable for the global economic crisis of 2008-2012, at least not largely. First of all, my understanding of the 2008 financial crisis is that we call it sub-prime crisis but sub-prime is just the blasting fuse of it. On one hand, most people are so accustomed to living on credit with zero savings or little savings. On the other hand, Greenspan has planted the seed for all this in his monetary policy and the burst of the bubble is more of an inevitable result of the false prosperous real estate market than wicked business school students cheating people around.

It’s very easy to treat innocent civilians as victims and find someone making money on that as chief criminals. But don’t forget that it’s the illusion that one can live a pretty good life without working hard and enjoy your life today as much as possible that really destroyed many of the families. The strong dollar and the world’s trust in dollar had brought US people so much benefits that most people just took that for granted and dreamed that could last forever. The repeated cycles of financial crisis or the ups and downs of economy itself is a manifestation of uncontrollable greed insides human beings that has nothing to do whether one has graduated from a business school or not. To put it another way, if Wall Street does not hire a single business school graduate, the situation will be roughly the same. So attributing the bane of financial crisis mostly to the business schools is more of finding a scapegoat in my view.

That said, does that mean business schools had no wrong doings? Definitely no. The pressure from the job market really puts the business schools at a place that they have to pay much more attention to the placement after graduation. Rankings, whether you care about it or not, are out there closely starred at by most of the applicants. These seem to be perfect excuses why business schools pay extreme little attention to ethics and responsibilities. But as a school, it should always take the essence of education as the guideline, which is to teach people to become better people, not to become better financial modeling makers. We can have various training classes that teach the sophisticated technics of Excel but we can never learn about how to make the world better in business skill training classes.

So business schools should be blamed for not having planted the seeds of ethics and responsibilities in students. Can business schools teach more about ethics and how to make a better world? Well, it depends. It depends not because the schools can or cannot set up more ethics course and have more ethics teachers. I say it depends because I believe ethics and responsibilities are not taught by ethics teachers but by every single teacher in the classroom even if he teaches financial modeling. I believe ethics are best taught and accepted when the students really feel the leadership inside the professor and genuinely want to follow him or her instead of through simulation case discussions. Do most of the professors in most schools have such leadership and such deep embedded understanding of ethics and responsibility? I seriously doubt about it.