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      Copyright 2002 The Hartford Courant Company    
           
      July 12, 2002    
           
      Business Classes Taking Care of Ethics
Colleges Teaching Straight and Narrow Route to Bottom Line

   
      By Jessee Leavenworth and Maryellen Fillo
   
           

SAN DIEGO - Pepperdine University runs its MBA candidates through a white- collar variation of the "scared straight" program.

Students at the California school spend a day at a Nevada federal prison talking to former business leaders about the decisions that put them behind bars.

"Talking about ethics while sitting in the classroom or being preached at is not the successful way of teaching it," said Professor Scott Sherman of Pepperdine's Graziadio School of Business and Management.

"Our students meet with these people, mostly former CEOs and CFOs who are serving five to 10 years," Sherman said. "They are talking to former executives who thought their ethics weren't an issue. ... Our students see that these people are now in a place where they cannot come and go as they please. There is a reality to seeing that."

In interviews Tuesday and Wednesday, business ethics teachers across the country talked about the message they are trying to instill amid the cheating and creative accounting that have putrefied the nation's corporate towers. In the wake of President Bush's Wall Street speech Tuesday, the professors also talked about whether the nation's universities are doing enough to create responsible corporate leaders.

Bush called on business schools to help mold honest leaders.

"We need men and women of character who know the difference between ambition and destructive greed, between justified risks and irresponsibility, between enterprise and fraud," Bush said. "Our schools of business must be principled teachers of right and wrong and not surrender to moral confusion and relativism."

That's a big load to carry, some educators say.

"The concern I would have is that values and value perspectives are acquired in the first dozen years of a person's life," Professor Alec Horniman of the University of Virginia's Darden Graduate School of Business Administration said. "By the time they arrive here, they already have a perspective on a host of issues. We can only provide a framework."

But colleges can help mold people beyond what they've heard or haven't heard at mother's knee, said W. Michael Hoffman, executive director for the Center of Business Ethics at Bentley College in Waltham, Mass.

Educators, Hoffman said, "have to get it through to students that ethics is just as important a dimension of your business education as anything else you have in your course. ... Otherwise, you will put your business at risk. They need to come out of business programs realizing that ethics is a necessary condition of their success in their future."

Pressure And Perspective

Pure greed drove much of the boardroom wrongdoing in the late 1980s, when names like Michael Milken and Ivan Boesky became synonyms for Wall Street greed and insider-trading intrigue. That's still a factor, but the common element in many of the more recent scandals, ethics educators said, is pressure from shareholders to produce wealth.

"My goal is always to have my students make decisions which take into account the human, social, and environmental consequences of business decision-making ... rather than merely focusing on maximization of shareholder wealth," Professor Craig P. Dunn, a specialist in managerial ethics and values at San Diego State University, wrote in an e-mail. "Shareholders are entitled to a fair return on their investment, to be sure, but the mantra of shareholder wealth maximization has to a great extent resulted in the problems we are seeing in the business world over the past month."

Professor Ralph Miccio, clinical professor of business law and ethics at Rensselaer Polytechnic Institute in Troy, N.Y., said, "These people [corporate leaders] are put in a situation where they're told, `Produce or leave.' In that environment, they produce."

Hoffman said, "Polls have indicated that employees feel pressure to sacrifice personal integrity to achieve corporate goals. "I'm not sure if the most recent out break is a result of that kind of pressure, but do think that CEOs have felt pressure to be `creative' with regard to manipulating the stock price, because if you don't meet expectations, you are punished for it."

So business students who will eventually face that heat must be taught "the long-term benefits that come from acting ethically," as opposed to the short-term gains from illegal acts, Miccio said.

"Being successful in business is part of being successful as a person," he said.

"Obviously, the people who have been implicated in the most recent situations didn't pay attention in ethics class, but I feel sorry for them in some ways," said George Generas, who has taught at the University of Hartford Barney School of Business for 25 years. "They grew up in the '90s, and that era bore no relationship to reality when it came to profits and salaries. They were greedy, and as soon as you put people in a position of receiving obscene remuneration or profits that are tied to the bottom line, you are going to run into problems."

"Those that run into problems as executives often have lost an understanding that there is a tie between who you are and what you do," Sherman, of Pepperdine, said. "Many do not consciously think they engaged in criminal behavior. We are finding that people implicated in these corporate scandals are saying, `I thought it would be OK to do this just this one time.'

"Perspective is important, too. If I begin to believe that my life begins and ends with what happens in my company, then I will surely lure myself into whatever is necessary to make the company successful for the short term."

"It seems to me that some people just get so driven by economic success that they lose perspective on things," Professor James S. Reece of the University of Michigan Business School said. "My untrained point of view is that very few, if any, of these people are inherently evil. Rather, I think what starts as minor ethical compromises (so minor they may not be viewed as such) in the name of `success' snowballs into, at worst, criminal activity, with an increasing, and eventually total, loss of ethical perspectives along the way."

Adequate Lessons?

The question of whether the ethics curriculums in the nation's business schools are solid or lacking depends on the school, Dunn, of San Diego State, said. The accreditation agency for schools of business, he said, "requires that ethics be addressed in the curriculum ... but allows for a great deal of latitude in this regard. Either ethics can be taught as a stand-alone class, or integrated into other content courses.

"Most universities opt for the latter," he said. "Unfortunately, the content experts in such areas as accounting, finance, marketing, etc. do not generally have adequate training to discuss issues of ethics from a philosophical point of view. The bottom line is that business schools do need to take some responsibility for the training -- or the lack of training -- we are doing around issues of ethics."

Sherman agreed that the approach must be much more comprehensive. At Pepperdine and several other schools around the nation, ethics are being built into many of the business classes and stressed as an integral part of being a successful executive.

The widespread allegations of fraud and other criminal activity have given business ethics professors and students much to talk and think about.

"I think students, especially graduate students, are coming up with a new way of looking at business," said Generas of Hartford's Barney School. "They see that what is going on is wrong and that the stakeholders are not being treated properly. They are going to be a much different type of chief executive than those implicated in the recent scandals. It might be in part because of the fear of getting caught and the realization that there is no immunity in the corporate world."

Sherman said some former Pepperdine students have quit jobs because of ethical concerns.

"I have sensed a growing interest in ethics here because of recent scandals," said Richard S. Coughlan, assistant professor of management at the University of Richmond. "Students are starting to grasp the realities of the workplace. This summer I have received more than a dozen e-mail messages from former students seeking advice on some ethical dilemma or another.

"Their notes indicate to me that they are thinking very deeply about the consequences of choosing one course of action over others in the workplace," Coughlan said. "If they are at least thinking about the ethical ramifications of their decisions, I'd call that progress."

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