Anyone who read the Mar. 14 New York Times op-ed piece that Greg Smith wrote about his then-employer Goldman Sachs (GS) might wonder why business schools bother teaching ethics to future investment bankers in the first place. In the editorial and now in his book, Why I Left Goldman Sachs (Grand Central Publishing, October 2012), Smith accuses the investment bank of seeking out unsophisticated clients to sell them complicated financial instruments they don’t understand, so they can overcharge, have the clients pay hidden fees, and keep them in the dark about risks.
Recently, for a news story about Smith on CBS’s 60 Minutes, Frank Partnoy, a professor of law and finance at the University of San Diego, said the public should trust Goldman Sachs more than any of the other investment banks, although that didn’t mean much. “Wall Street ethics is sort of an oxymoron,” he said.
If that’s true, if the most sought-after jobs for MBAs are those where ethics is at best an afterthought, why should business schools spend any time teaching morality? Mary C. Gentile, author of Giving Voice to Values: How to Speak Your Mind When You Know What’s Right (Yale University Press, February 2012) and the moving force behind an ethics curriculum now in use by many top business schools, including Duke’s Fuqua School of Business and Columbia Business School, has thought a lot about that question. She recently spoke with Bloomberg Businessweek reporter Francesca Di Meglio. Here are excerpts from their conversation:
What do you think about Partnoy’s comment on Wall Street ethics?
I have heard the joke often. On the one hand, I understand where it’s coming from. The temptation to behave in unethical ways is not going to go away. But calling ethics on Wall Street an oxymoron is not constructive. It’s a way of saying that it is not possible to be ethical. I’d rather shift to rolling up our sleeves to do the work of making change. Find out how people are managing to do these jobs ethically. Think about how you can do the job ethically or how to create change in an organization.
How can business schools help students learn about doing a job ethically?
Rather than focusing on students who we think are going to be unethical and trying to change them, we think of them as being part of a bell curve. On one end you have opportunists, and on the other end you have idealists. The majority of people fall under the bell. They’re pragmatists. They want to work within their set of values, but they also don’t want to work against their own interests all the time. [Educators] can give them the tools to make it seem possible to be ethical and still work within the system. We don’t need everyone to do the right thing. We just need enough of them to do it to make it the norm, so the opportunists don’t thrive. It’s a more realistic approach to teaching ethics.
What more can business schools do to teach ethics effectively?
Professors tend to focus on awareness, so students will recognize ethical issues, and analysis, so they know how to think rigorously about all sides of the issue. This type of education doesn’t tell them what’s the right thing to do. It equips them with the ability to rationalize whatever side they choose.
Now, schools need to teach action. Giving Voice to Values is a curriculum we teach [at Gentile’s Babson College and other schools] that presents students with a scenario that ends with the protagonist determining what is the right thing to do. Then the question for students is how does the protagonist accomplish this. Students work in teams to come up with a plan [which they act out]. Then they are coached on their approach. We give students the chance to practice moral behavior, and we frame ethics as an opportunity for creative thinking.
This sounds great. But what should students do if the culture of the organization is such that unethical behavior is rewarded? What can educators do to prepare them for that?
When the problem is systemic, you must address it at a systemic level. People think that takes the onus off them. It becomes about government regulation, for example. We say, “No, individuals help make change.” Individuals can form alliances, determine where change lies in an organization, and think of themselves as mechanisms for change. We’re not pretending [that making ethical choices and trying to bring change to an organization] is easy or even always possible. But you can get better at it. You just have to practice.