MBA Ethics Oaths

Today’s Times reported that both Harvard and Columbia had instituted variations on a theme: an ethics oath for newly minted MBA graduates. It appears that Harvard’s is more voluntary but also requires a pro-active step; Columbia’s is built into the honors code and is assumed to apply for the entire career yet to be for all in the Columbia B-School orbit.

The article seemed to suggest that ethically driven financial wizards will restrain their greed for the greater good – because of the power of an oath. It is a well meaning and timely initiative. Who can criticize the welcome introduction of an ethics mandate in a curriculum committed to learning all the effective, efficient, innovative, and emerging ways to make money? Surely….

Teaching ethics is a necessary but insufficient way to imbue good behavior. Over 30 years ago, I taught some seminars in medical ethics at a medical school. They were well received and the discussions were lively and sincere. I am told that such courses and seminars are even more prevalent today. Yet, I regret to say, that over the years, I have come across a number of doctors, for whom that thinking was left at the academy gates. When challenged, they had plenty of exculpatory explanations, but it was clear that, when it might have mattered most, ethics was the furthest thing from their mind. Were it not for professional expectations and even laws which help mandate that ethics, however defined, are part of the system, one wonders how internalized these issues would be.

To return to our issue, I am one who believes that greed was not the driving force which led to the dismantling of the world financial order over the last 18 months. Greed isn’t new; it is not that many steps removed from attributes we respect such as ambition and drive. I am not at all persuaded that the Wall Street and hedge fund hotshots of the last era were greedier than their predecessors, or of most others not in the industry.

I do believe though that there has been a more perverse dilemma characteristic of the era we are concluding: and that is arrogance. Greed is having personal interest beyond reasonable expectation, even at the expense of others. Arrogance is that the rules don’t even apply, that one is above or beyond them.

How else to explain the push to dismantle regulation? How else to explain financial advisors who sit on non profit boards and push investments to their own firms, feeling that conflict of interest or prudent investor rules can be by-passed? How else to explain a sense of entitlement regardless of impact on others or even proven results?

We still have rules and used to have even more to limit greed; but arrogance defies easy legislative fixes. One hopes that the corrective of lost pride, wealth, and credibility will do what best practices and rules didn’t – bring a sense of propriety, humility, and balance to the next era. But to do so will require more than ethics oaths. If one doesn’t believe rules apply, what does an honor code mean? It will require a social expectation that judges such behavior, and boards which insist that they indeed do have a higher calling.

Some years ago, I had lunch at a famous restaurant with the scion of the wealthy family which had part ownership of this destination dining spot. There was a dress code for men – sport jackets or suits required. The scion chose to come in a dress t-shirt. The maître d quietly offered a jacket kept for such occasions. My young luncheon companion politely declined the offer – and then commented to me after the maître d was out of earshot. He confided, “Ownership should have its privileges.” Sitting there, I could imagine his father responding more emphatically, and with not a little bit of pique, “No, ownership should have its responsibilities!”

Ethics knows that there are rules; responsibility is knowing the difference.