Why Management Needs a Code of Conduct

Thunderbird's president argues the case for management as a profession, and makes a plea for a global code of conduct for business

By Ángel Cabrera

The financial meltdown of 2008 and the ensuing global economic crisis have ignited a vigorous debate on the responsibilities of businesses and those who manage them and have raised the question of whether managers ought to be required to adopt the equivalent of a "Hippocratic oath." The pressure is indeed mounting, as public trust towards business leaders has hit historically low levels and questions about business ethics have become a central topic in the media. Even the leaders of the Group of 20 nations, in their most recent meeting in Pittsburgh, singled out "reckless behavior and a lack of responsibility" among the root causes of the crisis.

The idea that business managers should be held to the same standards of professional conduct that are expected of other professions is at least as old as business schools. Yet, practitioners and academics have stubbornly refused to explicitly accept any other responsibility for managers than maximizing shareholder returns, and any code of conduct beyond simply obeying the law.

In the early 2000s, in the wake of the Enron and WorldCom scandals, I was part of a group of young global leaders convened by the World Economic Forum who proposed the establishment of a professional code of conduct that would articulate management's commitment to the public interest. But the subject proved too controversial for its time, in both the corporate and academic sectors.

Oath of Honor

In 2005, the faculty and trustees of Thunderbird (Thunderbird Full-Time MBA Profile) nevertheless agreed to adopt a "Professional Oath of Honor," which had emerged from a student-led initiative. The Thunderbird oath, which included a commitment to act with honesty and integrity, respect basic human rights, combat corruption, and create real, sustainable value, was incorporated in the admissions process, the curriculum, and the graduation ceremonies. It remained, however, an isolated curiosity among mostly skeptical business schools.

Unfortunately, it would take a collapse of the global financial system for the idea to gain wider traction. In the latter part of 2008, as the world began to reexamine the causes leading up to the financial crisis, the finger of blame turned, in part, to business schools who were accused of perpetuating a narrow view of value creation and managerial responsibility. And influential thought leaders such as World Economic Forum founder Klaus Schwab and Harvard professors Rakesh Khurana and Nitin Nohria argued for the need to establish a "Hippocratic oath" for business.

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