VIEWPOINT October 25, 2007, 7:12PM EST

Teaching Business Ethics: A Critical Need

Business schools aren't doing enough to build ethics—as a foundation course and part of other disciplines—into their curricula

Dean Krehmeyer
Executive Director
Business Roundtable Institute for Corporate Ethics

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Earning an MBA today is an expensive endeavor. Add the costs of lost salary, housing, and living expenses to tuition and course materials, and the price of an MBA degree from a top-ranked school can reach $200,000 or more. These escalating costs have led many to question whether or not an MBA is worth the trouble.

Some attempt to answer this question by comparing either the salaries or corporate rank of MBAs with those of non-MBAs 5 to 10 years after graduation. While there is nothing wrong with such measurements, there is another metric that is of far greater importance: To what extent are business schools creating ethical leaders who are prepared to build long-term value in an increasingly complex and dynamic global marketplace?

Developing ethical leaders is both an academic imperative and a critical issue for any business school that wants to remain relevant for the long term. This is not just my view; it is a position that is confirmed time and time again in my conversations with CEOs and C-suite executives from leading companies. Every day, leaders of large corporations—the same companies that hire the vast majority of MBAs—face enormous challenges brought on by the velocity of globalization and rapid advances in technology, especially in the area of communications.

Model Program

These challenges cannot be solved by spreadsheets alone. It was for this reason that my institute's recent report, Shaping Tomorrows Business Leaders: Principles and Practices for a Model Business Ethics Program, called on business schools to adopt principles and practices for building model business ethics programs. The report, based on the thinking of noted faculty and business leaders, recommends that business schools adopt principles in three interrelated areas: the ethics course, the overall curriculum, and the broader school community.

A recent McKinsey Quarterly survey revealed that today's business leaders are called upon to play an increasingly significant role in helping to resolve some of our most pressing social issues, from health care to climate change. As The New York Times columnist Thomas Friedman has noted, communications technology has empowered the average citizen—armed with only a camera cell phone and an Internet connection—to have an immediate and powerful impact. Now multiply Friedman's observation by 100,000 employees working for 15 business divisions with operations in 50 countries—each of which has unique cultures, laws, and interpretations of moral values—and you begin to get an idea of the challenges of leading a large company.

In an introductory letter to our report, Harold McGraw III, chairman of Business Roundtable and chairman and CEO of The McGraw-Hill Companies (MHP), the parent company of BusinessWeek, states that these changes affect "every business, every industry and every country." McGraw, who earned an MBA from the Wharton School in 1976, concludes his letter by stating: "The business world eagerly awaits tomorrow's strong and ethical leaders."

Many leading businesses no longer debate the legitimacy of the role and importance of ethics; rather, they are finding new ways to put ethics into practice. And the vast majority recognizes that the challenges for tomorrow's business leaders will be even greater. Clearly, ethics is a core discipline of business and an essential competency for the next generation of managers.

Integrated Content

Unfortunately, not all of America's business schools have risen to this critical challenge. One of our report's most important recommendations is that business schools should require ethics as a foundation course early in the MBA curriculum and integrate ethics content into all other business disciplines.