A lot has been written this week about Larry Estrada, who will graduate from Harvard Business School next week and will begin to work at Goldman Sachs Group. Larry was insistent on starting at Goldman only after he signs the MBA ethics pledge developed at Harvard Business School.
While signing an oath is a good initiative, which will hopefully encourage MBAs to think more about ethics, in our view it could be easier to sign the oath than to actually implement it.
Here are a couple of observations about the realities of Wall Street life and some thoughts regarding integrating ethics into MBA curriculums.
- Fresh MBAs starting to work on Wall Street don’t make any business decisions. They don’t decide which deals to execute, how to structure those deals and to whom securities will be sold. Therefore, a pledge to be ethical is somewhat theoretical. Their more senior managers are the ones who will decide on all important details. Teaching students how to raise their doubts about ethical issues to their managers and how to discuss ethical dilemmas in a constructive and safe way may be just as valuable as actually signing the pledge.
- Financial institutions are complex organizations and it may often be difficult for fresh MBAs to understand where the line between ethical and unethical lies. In our view, to solve this problem business schools could integrate ethical aspects into their existing curriculums and emphasize what ethical problems could arise in a variety of transactions and cases. Teaching ethics in a more general form, as some schools do, will be less helpful as students may have difficulty relating the theory they learned in class to specific business situations they encounter.
- If schools decide to teach separate ethics classes, we believe that all such classes should be offered free of charge and be in addition to regular MBA curriculum requirements. In our view, charging MBA level fees for ethics classes may be challenging and not appealing to students.
- Finally, more research should be done as to whether signing an ethics code is an effective tool to actually make organizations more ethical. We are wondering if anyone has examined how many “unethical” managers have signed internal ethical codes at their organizations before they were involved in “unethical behaviors”. We would bet that these numbers are pretty high. A better incentive structure may be a more effective answer to unethical behaviors. However, this problem is more related to those sitting in the boardrooms, not in the MBA classroom.