BW Online | May 6, 2002 | For B-Schoolers, Jailhouse Shock

MAY 6, 2002

B-SCHOOL NEWS

For B-Schoolers, Jailhouse Shock
A University of Maryland ethics course brings senior execs face-to-face with inmates doing time for white-collar crime

STORY TOOLS

Some call it a version of Scared Straight, but for the suit-and-tie set: a daylong, face-to-face encounter with execs who are much like you -- except that they've traded their Brooks Brothers pinstripes for prison-issue khakis.

The Enron and Arthur Andersen scandals have thrust business ethics to the top of Corporate America's agenda, prompting companies to take a hard look at whether such difficult issues might affect them. Now, one business school has decided it's time for chief executives and vice-presidents to see firsthand the possible consequences of being too aggressive in the pursuit of higher profits. Starting in June, the University of Maryland's Smith School of Business will offer senior execs four days of intense ethics training, including a session with white-collar convicts at a federal prison.

The school first had the idea last year, then forged ahead after the Enron story broke. "We're trying to drive at the reality behind white-collar crime," says Scott Koerwer, Maryland's associate dean for executive education.

ROLE-PLAYING. So far, about a dozen companies have enrolled in the ethics course, costing $3,150 a person. Some two dozen more have expressed interest, including energy, accounting, and consulting companies, plus a few defense companies and financial-services firms. The initial plan is to sign up 35 to 40 executives, who will hear directly from prisoners about how cutting corners can lead to a life behind bars.

The class will also read case studies on white-collar crime and engage in role-playing about ethical dilemmas, among other things. None of the participating companies would comment for this story.

Maryland's jailhouse shock treatment expands on a class it has offered to regular MBA students since 1996. In the final weeks of its two-year course, the B-school takes students on prison sit-downs with corporate convicts to show fresh-faced twentysomethings what crossing legal lines could mean.

EYE-OPENER. At least one precedent exists for offering a prison reality check to senior executives. Since the early 1990s, Pepperdine University's Graziadio School of Business has put its executive MBA students, typically senior-level managers, through a grueling day at Nellis Federal Prison, near Las Vegas, as part of their ethics training. Behind the gray concrete walls, a class of about 60 students meets former execs who often still profess their innocence, even as they spend their days sweeping floors or doing menial tasks for 30 cents an hour.

Execs who have been through it say the experience is an eye-opener. Many convicts, they say, seem to show little regard for the people who were hurt by their wrongdoing. "These guys talk themselves into believing what they did was O.K.," says Rich Noyes, a 1999 Pepperdine graduate and now a controller at Mercury Fuels in Los Angeles. "But then we go back after the visit and look at what was presented in court, and realize the truth. It's a valuable lesson."

He and other alumni of the program say they're struck by their own outward resemblance to the inmates, right down to the country house and two children. "You value your freedom, and see that you can lose it pretty quickly if you're not careful," says Scott Kurtz, a technical service manager at the Electric Power Research Institute in Palo Alto, Calif., who took the Pepperdine class in 2001.

NEW PERSPECTIVE. It's such a powerful experience that some 2% of those who visit Nellis switch jobs within weeks, says Scott Sherman, a professor who leads some of the visits. Overall, 70% or so Pepperdine grads say they more closely examine their business practices after the prison trip. Such hands-on education "blasts away the 'it couldn't happen to me' mentality," says Boston University business ethics professor Laura Nash.

One chief financial officer for a private company says he quit his job a few months after a Nellis visit, when his boss pushed him to report financials in a questionable way. "I'd like to think I would have made the same decision, but the experience kept the consequences at the front of my mind," he says. In the current climate, perhaps the prison course should be required on the way to the corner office.

By Jennifer Merritt in New York

Get BusinessWeek directly on your desktop with our RSS feeds. XML

Add BusinessWeek news to your Web site with our headline feed.

Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.

To subscribe online to BusinessWeek magazine, please click here.

Learn more, go to the BusinessWeekOnline home page