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Knowledge@Australian School of Business

The Only Way is Ethics: What Business Schools Learned from the Crisis

Published: August 25, 2011 in Knowledge@Australian School of Business
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Confronting ethical dilemmas on the job gives rise to numerous, often awkward, questions, including how to tackle thorny issues with the boss without putting your job at risk. Business students are now being asked to reflect on past behaviour, consider case studies and practise role plays as part of a broader trend to ensure the next generation of corporate leaders outstrip their predecessors when it comes to ethical business practices. It's a proactive response to the executive misdemeanours exposed by the global financial crisis. Tony Buono, of the Bentley Alliance for Ethics and Social Responsibility at Bentley University in Massachusetts, identifies an upsurge in interest in ethical education aimed at preventing businesses from behaving badly. Initiatives challenging academics to introduce ethics in courses abound across the world – one was the first United Nation's Principles for Responsible Management Education Summit held in Australia and New Zealand in July. The next generation should be taking responsible leadership concerns very seriously, Buono assures Julian Lorkin of Knowledge@Australian School of Business.

An edited transcript of the interview follows.

Knowledge@Australian School of Business: Looking back over the past few years, do you think the global financial crisis caused a rise in interest in ethics or was it always there?

Tony Buono: One would like to think that we've always had this focus on ethics, but it does seem to materialise after each wave of scandals. Unfortunately this last crisis was not our first and will probably not be our last. One of the things that has concerned many of us in education is that we seem to increase our focus and interest in this area after the latest round of scandals or ethical wrongdoings. But as things smooth off, it very quickly seems to go back to business as usual. We're very good at correcting the last generation of scandals and we really don't position ourselves for the next generation, and that's where I think we need to spend much more focus on creating a good foundation for ethical and responsible behaviour.

Knowledge@Australian School of Business: Do we need to look at it holistically to anticipate those things that we don't know? We know what has happened in the past, but might the next corporate scandal be a totally different beast?

Tony Buono: One of the real challenges is not knowing what you don't know – so there's no way that we can regulate ourselves out of this. We seem to tie up all of those knots and loose ends, yet who knows what the next wave of scandals is going to entail. That's why I think we need to stress this foundation of responsible behaviour.

Knowledge@Australian School of Business: Do business schools need to emphasise the importance of corporate responsibility and ethics now, or do the people who are there now take it as a given?

Tony Buono: I think it's critically important to embed that in the courses that we teach. I do not think that business students are more immoral than other students. But we teach business and focus on the functional areas of business as if it were an amoral series of decisions; it's just business, we're doing this for financial or operational reasons. Yet the reality is those decisions have far-reaching repercussions. What we really try to do is to instil a sense of principled reasoning in how business students approach these issues. So they realise that they're not simply making a financial decision, that their decision has repercussions in the lives of a wide variety of stakeholders.

Knowledge@Australian School of Business: How can they actually translate the teaching into real practice throughout their business career?

Tony Buono: Part of it is a combination of different pedagogical techniques. It can be very simple to have an informed discussion around these issues to raise the possibilities and to get students to think much more broadly about the impact that the decisions will have. Case studies tend to be very useful, but one of the difficulties in trying to teach ethics solely through the case approach is that it's fairly easy for a student in the confines of a classroom to say: "Of course I would do the right thing, I would never do this if I was in this position." In that situation, they really don't have anything at risk. In real life when faced with something at risk there's a different set of pressures that are really very hard to simulate in the classroom. It's also important to get students experiencing these different events in the community. That's where I think self-reflection is also critical. It's very unusual for any student, especially at the MBA level, not to have been exposed at one point or another to an ethical challenge and we can use those experiences to get students to think back about how they handled it, what impact it had on them, what might they have done differently. There are a number of ways that you can make this as real as you can, given the confines of the classroom.

Knowledge@Australian School of Business: For many people in the first year or two of their working lives, when faced with an ethical dilemma, they feel that their job may be on the line. If they stand up and say, "I'm not doing this because in the classroom we were taught that this was ethically wrong", very quickly they may be hunting for a new job. How can you teach people to deal with such situations?

Tony Buono: There's some really interesting work being done in this field. One of my colleagues, Mary Gentile who is currently at Babson College, has been working on a very innovative program called Giving Voice to Values. Her premise is that we really don't need to teach students ethical reasoning per se. In many instances they know full well what is right or what they shouldn't be doing, but the dilemma they face is in knowing what to do with that insight. As you said it's very difficult to stand up to a boss when asked to do something you think is wrong or unethical, it could result in having to find another position. In a lot of instances, students are uneasy about putting themselves at risk and they don't think it through fully.

The Giving Voice to Values program is an attempt to normalise ethical challenges and show this is not something that is necessarily unique. It's something that's likely to be faced at several points in a career and a set of skills and strategies is needed to deal with those issues. For example, if your boss asks you to do something you're uncomfortable with, how should you respond? What are ways in which you can talk to that individual without necessarily putting yourself or your job at risk? What are some strategies for raising concerns you have in a way that's going to be seen as supportive rather than adversarial?

Knowledge@Australian School of Business: It sounds almost as if you're teaching communication and how to manage your manager?

Tony Buono: That is one way of capturing it. There's a whole school of thought about managing your boss – understanding what that person prefers and his or her style and how best to raise issues. Those are very practical skills that I think are critical for the next generation of business professionals. We find that by drawing on peer support, by having students practise those discussions in the classroom through simulated role plays, it increases their skills and abilities to raise those issues in a more confrontational context.

Knowledge@Australian School of Business: At Bentley University, you've got the Business Ethics program called the Gadfly. What is this and how does it integrate all this knowledge?

Tony Buono: The whole notion of the Gadfly program actually goes back quite a way at Bentley. We started it in the late 1980s and the gadfly reference goes back to Socrates who defined himself as a gadfly in ancient Greece. His goal was to sting the citizens of Athens out of their complacency to get them to focus on critical issues of the day. Mike Hoffman was the founding director of our Centre for Business Ethics – he started that program in 1976, well before the current fascination with ethics. With Mike, we began to think about how to best prepare a faculty to deal with these issues within their discipline-based courses. For example, most accounting professors are not going to be really comfortable lecturing on Kant or Aristotle, but clearly there are a lot of ethical challenges within the profession itself. You know the ethical challenges that auditors face – the issues that come up when putting together a certain narrative around financial statements – how do you deal with those issues?

It was felt that we should begin working with our colleagues in all of the different business disciplines to make them comfortable with the terminology and different frameworks of ethics, and then work with them on how they could begin incorporating those into the courses they teach. The idea was to start with a small group of faculty each spring and put them through an intense one-week workshop on ethics – the application of ethics within the confines of accounting, finance, marketing, operations and so forth. The idea was to seed all academic departments with these ethical gadflies who would "bother" and "sting" their colleagues out of complacency and try to push them to begin incorporating these issues into their classes. We've found over the years that it has been a very successful program.

Through the support of the State Street Foundation in 2005 we went global with the program. So for the first time we began inviting faculty from around the world to join Bentley faculty in this venture. It has been a very exciting and phenomenally interesting time because we have brought in scholars from the Pacific rim area, China, Japan, Africa, throughout Europe, Canada and even South America. We engage in discussions of the ethical challenges and how you teach business ethics, and bring these concepts into different courses – not only in terms of the different functional areas but in terms of different parts of the world as well. It's been a fascinating experience.

Knowledge@Australian School of Business: Have you found the ways of teaching ethics vary around the world? There is a debate about what is morally correct that differs around the world.

Tony Buono: I believe we're seeing more convergence than divergence around these different areas. One of the things that has struck me – and perhaps this is the Western influence – is the way ethics is taught in Eastern Europe is not all that different from how it's taught in the US or in Africa. It really has been very interesting to me as to how that's come about. I find if we begin by focussing on principled reasoning – it's not necessarily lecturing right or wrong but trying to get students to see the broader impacts that their decisions have, then you can get them to think about whether they are basing their actions and decisions on universally accepted values. Even though there is a lot of cultural diversity, certain basic values such as respect, fairness, a sense of justice and so forth are fairly common across different societies. So you get students to think about acting based on those values.

One of the real challenges to me is not necessarily right from wrong because, in most cases when you're really talking about right versus wrong it's not necessarily ethics. We have laws that cover a lot of that. But I think the real challenges that we face are right versus right decisions.

In a diverse, pluralistic world when you're talking about decisions that impact a wide variety of stakeholders, you can have different groups that have legitimate claims and demands that will conflict with one another. In many instances, even though we can look for ways to align all these interests, at times it's simply not possible. And there will be instances when a group is going to be negatively impacted by your decision. Part of the idea of principled reasoning is thinking whether or not you are acting based on these universally accepted values. When those values conflict and you have to make decisions that might harm certain groups, are there ways to minimise that harm? And then, are there ways that will attempt to maximise the greater good for the greatest number of people?

There are ways of balancing that. Ethical reasoning isn't necessarily going to lead to the perfect decision or the right decision. Two people approaching it could very well come up with different decisions. What we try to do is to get students to articulate their reasoning, explain what it is that they're doing and why they're doing it.

Knowledge@Australian School of Business: There's a third group of major stakeholders in any company – the shareholders – and they are looking at the bottom line. How much cash are they going to make out of this deal? How can you teach that in the context of ethical business education?

Tony Buono: With the whole notion of putting profits first, the analogy I would draw is happiness – the people who really strive to be happy are pretty much the most unhappy people around. It's not happiness per se that makes us happy but all the other things that make life worth living that lead to happiness. Profits are the same thing. If you continually just focus on profits you begin to develop a shorter and shorter timeframe for what you're attempting to do. In fact, you could very well be undermining profits over the longer term.

We have a research project that's ongoing now on "conscious capitalism". We are trying to understand those companies that strive to fulfil a higher purpose that goes beyond profits, yet we're finding that these companies tend to be tremendously profitable. While they view their shareholders as a critical group, they're not the only ones – they are multi-stakeholder oriented. They try to align the interests of these different groups. We're exploring to better understand what makes these firms as successful as they are.

The simplicity of business is that the more we invest in other activities, the more we try to give customers quality products or pay our suppliers well or give our employees better benefits, then there will be less left over for shareholders. But what the research is suggesting is that this is not necessarily the case. Firms can both do well and do good.

Knowledge@Australian School of Business: Hopefully people are going to be looking at this much more in the future. I understand the UN is now getting involved.

Tony Buono: Yes, when Kofi Annan was Secretary-General, he started the UN Global Compact and initially he reached out to the corporate world. His reasoning was that the problems we're facing today are so complex that nations themselves are simply unable to deal with their complexities and breadth, so it was critical to engage the multi-national community. The Global Compact was a voluntary initiative where companies would sign up to adhere to a set of 10 principles that dealt with issues around labour, anti-corruption, the environment and it was really instilling this sense of responsibility in companies.

In the mid 2000s, this was extended to not only focus on the current generation of managers but the next generation. Through the academic network of the UN Global Compact, they created the PRME Initiative – the Principles for Responsible Management Education. Australia/New Zealand (had) their first PRME Summit at the University of New South Wales to talk about these principles and how they can begin integrating them into their business schools.

I am very hopeful that as more schools sign up for this initiative and pledge to embed these issues into the educational process that we will be preparing a future generation of managers who will take this responsible and ethical leadership very, very seriously.

Knowledge@Australian School of Business: I'm sure many people are going to be hoping that too. Tony, thank you very much.

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