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Business Schools

Can They Restore Ethical Leadership

A king can easily cross the oceans of the world with kingly duties as
his boat, urged on by the breeze of gifts, with the scriptures as the
tackle, intelligence as its helmsman and kept afloat by the power of
righteousness. – The Mahabharata.
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GRK Murty

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“It is probably true that business corrupts everything it touches”,
said Eric Hoffer, an American social writer. Does it mean that no one
should touch business? The answer is: an unequivocal “No”, for that
is not what it means. All that it says is: Don’t get corrupted by
business. Now, the natural fallout of this is another question: Who
should not get corrupted? Obviously: the leader, for it is the leader
who heads a business – the organization created to carry out
whatever business it undertakes – and steers it through for success.

It otherwise means that business leaders must be conscious not to


get corrupted, for it drives away ‘trust’ from businesses. Secondly,
“Our market system depends critically on trust.” Trust is the bedrock
of business organizations – all transactions ultimately rest on
personal, emotional, and social trust. Which is why, it is often said
that it is not desirable to carry out business in an atmosphere of ‘no
trust’. It is indeed said that in the absence of trust and cooperation
between businessmen, the state would collapse soon. Yet, human
beings, as Roderick Kramer observed, are naturally predisposed to
trust. This propensity to trust indeed makes each one of us
vulnerable to: all pervasive abuse.

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That’s indeed what has happened …

Eroding trust means a great challenge to the wit of nations. That is


what indeed happened in 2008 – when businessmen lost trust in
Lehman Brothers; the very financial architecture of the US collapsed,
pushing it into one of the worst recessions since the Great
Depression of 1929. With it, the global economy was derailed, the
woes from which it is still struggling to come out.

Business is, after all, an ethical activity – ethics directs businessmen


to abide by a code of conduct that facilitates public confidence in
their products and services. With globalization, the need for ethics in
business has only become imperative, that too, increasingly. But this
simple truth does not appear to have had any bearing on the conduct
of business leaders. At least, that is what one infers from the current
Congressional hearings on Goldman Sachs: lawmakers accused
Goldman Sachs of betting against investments they had sold to
customers. Nor did the happenings at the JP Morgan Chase have any
comfort to offer to the common man about the businesses and
businessmen’s conduct. Bernard Madoff, by depriving his clients’ of
their hard-earned savings of around $50 bn in a decade-long fraud,
has further intensified the aversion of the public for financial
professionals.
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We are today in such a mood where nations have lost confidence in
economic institutions: no longer does one trust investment banks,
rating agencies, central banks, including regulatory bodies. Indeed
people are more disturbed by the fact that the current mess in the
global financial markets is created by leaders who are no less than
the alumni of Ivy League business schools – for instance, Henry
Paulson, the former CEO of Goldman Sachs and the US Treasury
Secretary and James Dimon, Chairman of the Board and Chief
Executive Officer of JPMorgan Chase, are the alumni of Harvard
Business School. Many wonder if it is the management education –
that has focused more on imparting tools to maximize shareholders’
wealth while relegating “value-based leadership and ethics” to
sidelines – that is responsible for the current global economic crisis.
The general mood of the nations at the mess created in the global
financial markets by the business leaders was well captured by Nitin
Nohria, the newly appointed Dean of the Century-old Harvard
Business School, when he said: “Throughout history, there has been
this notion of the honorable business person. Business people have
taken pride that they can do business on a handshake. I don’t know
where we lost that …” Similar feelings were echoed by Drew G.
Faust, University President, when she said: HBS students are “very

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concerned about the image of business and its place in American life
and the world in general.”

What does it all mean …

Today, business education is being faulted on two counts: one, the


leaders turned out by it are grappling to cope with the problems –
blurring of traditional boundaries of businesses and the resulting
spillover challenges, hazy business goals, no known and clear
pathways for achieving goals, diverse demands from politicized
stakeholders, and no one knowing who is in charge of what –that
have emanated from globalized economy; two, leaders turned out by
it have “lost legitimacy”, particularly, in the past decade.

To come out of its current predicament, B-schools have to rejig their


education – they have to get it dramatically better; should learn to
value what society values most and provide its students a broader
range of tools and a broader range of ethical perspectives.
Encouragingly, B-schools appear to be aware of the current public
mood, and what they need to do as is reflected in what Nitin Nohria
got to say: “With business education at an inflection point, we must
strive to equip future leaders with the competence and character to
address emerging global business and social challenges.” He is

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hopeful that the missing leadership bond with employees and public,
as is revealed by the recent multiplication of business scandals, can
be reestablished and suggests: “What we have to do as a school is
usher in what I think of as a new century of innovation, to really
remake business education,” so that businesses can have leaders
“with the competence and character to fulfill their positions of
power and privilege.”

That aside, it must be remembered that leadership is a complex


issue, for it needs to be evaluated beyond its ‘utilitarian’ outcomes.
To create a more sustainable world, B-schools have to obviously aim
at turning out graduates as fully informed and conscientious leaders
in every business discipline. For it to happen, B-schools have to give
voice to values, without of course, undermining the importance of
building stronger analytical skills. Giving voice to virtue involves:
designing a new ethics curriculum that is based on both qualitative
research and neuropsychological studies, followed by the
prescription of Joel M. Podolny – teaching of ‘hard’ and ‘soft’
disciplines simultaneously, and teaching such courses which reflect a
mix of academic disciplines, linking analytics to values. Students must
be sensitized about value-based leadership by repeated practice so
that they tend to take right action when the situation demands.

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B-schools must shun their crazy competition for rankings, fee-
structures, and quantitative research and focus more on qualitative
enquiries. In addition, as Nitin Nohria suggested in an article co-
written with Khurana in 2008, management professionals may be
asked to commit themselves to a “code of ethics” like the
Hippocratic oath, for it might “create and sustain a feeling of
community and mutual obligation that members have toward each
other and toward the profession.” Simultaneously, they may even
explore withdrawing degrees for violating codes of conduct. Such
pressure, it is hoped, would “turn managers into agents of society’s
interest in thriving economic enterprises.”

Now, the big question is …

Can ethics be taught? Encouragingly, Plato and Aristotle say: “Yes.”


As Aine Donovan believes, most of the students coming to business
schools do “come with good intentions and their values fairly intact.”
But once they are into the mechanics of business, as Stanely Milgram
observed, they tend to “compromise their values, or overlook the
bad behavior of their peers or bosses with a wink and nod.” But with
an education in ethics – multi-coherence theory of ethics and the
complex psychological process of reaching ethical conclusions – and

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“with an honor code that instills and reinforces a healthy sense of
right and wrong”, it is hoped that this can be averted.

After all, an individual’s character is not something that he was born


with. It constantly evolves through repeated actions. Aristotle avers
that just as to become a musician one needs to practice music
repeatedly, of course, with the necessary skill, to be ethical one
needs to practice ethics, i.e., repeatedly do ethical deeds. Thankfully,
learning is a natural pleasure of mankind – it is inborn. Learning
“extends our lives into new dimensions”, which incidentally, acts as
a greate incentive for learning. It all means that ethics can be taught
in a systematic style by B-schools.

Nevertheless…

“Capacity for the nobler feelings”, as John Stuart Mill said, “is in
most natures a very tender plant, easily killed, not only by hostile
influences, but by mere want of sustenance; and in the majority of
young persons it speedily dies away if the occupations to which their
position in life has devoted them, and the society into which it has
thrown them, are not favorable to keeping that higher capacity in
exercise.” He also says that no one who has remained equally
susceptible to both the classes of pleasures – higher and lower level

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pleasures – has ever “knowingly and calmly preferred the lower;
though many, in all ages, have broken down in an ineffectual attempt
to combine both.” In this regard, he blames the “present wretched
education and wretched social arrangements” as “the only real
hindrance to its [nobler pleasures] being attainable by almost all.”

That being the reality, it pays for leaders to bear in mind three things:
one, ‘personality’, that magnetic and mysterious something which
one’s followers easily notice and be excited if its is relatable, can only
be acquired from within – education or no education, training or no
training – it is to be released from within, nothing more or, nothing
less to it; two, ‘peace’ – peace of mind, peace of soul… throughout
the ages …great minds and simple ones, all have acquired it by
eschewing “fear, guilt, envy, malice, and anger”; and three, the evil
associated with these words often attracts, of course, the weak
leaders by its promise of a sense of power – power to accomplish, of
course, short-term gains. And changing attitudes mean changed
leadership – ethics would then become its own motive.

We become ethical by being ethical...

History reveals that social improvement is a mere series of transitions


by which one practice replaces the other as a universally accepted

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custom, and there is no reason why it will not continue into future. In
which case, all is not lost: societies can hope to overcome the
present greed-driven crisis in the markets, and businesses can
become honest vocations. But act the leaders must, of course,
collectively and constantly, towards nurturing higher pleasures,
values, for it is nevertheless a “tender” plant that can wither at the
slightest threat.

In the ultimate analysis…

“A human being is not one thing among others; things determine


each other, but man is ultimately self-determining”, asserts Victor
Frankel. According to him, what a man becomes is what he has made
out of himself. He has both the potentialities within himself – which
one is actualized depends on decisions but not on conditions.

Interestingly, Indian ethos insists that man is responsible for his


actions – ethics or no ethics is his choice. Upanishadic ethics – that
are not only teleological but also hedonistic – preach that man better
cultivate an attitude of ‘non-duality’, for it would have a
revolutionary impact on his/her conduct: senses are controlled, mind
is tranquil, intellect is purified, and one experiences union with all
beings, which means there is no opposition, no conflict – either from

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inside or outside. This automatically leads to mastering of all desires,
and therefore all attachments and infatuations, which means Ananda
and in Ananda, where is the room for being unethical?

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