With ethical controversies surrounding companies such as Enron,
WorldCom, Martha Stewart and ImClone, education in business ethics
has again come under public scrutiny as a result of several
monumental scandals in the past few years.
Each of these scandals revealed important ethical issues in
various areas of business.
Perhaps the most famous ““ or infamous ““ of these was
the Enron accounting scandal.
In the months leading up to Enron’s crash in 2001, CEO
Kenneth Lay and other employees participated in schemes to deceive
accountants by making the company appear healthy, when in reality
it was in serious trouble.
Shortly after the Enron scandal made headlines, WorldCom came
under scrutiny for allegations that employees, including CEO
Bernard Ebbers, had conspired to hide expenditures and other
obligations, in the amount of $11 billion. These fraudulent acts
eventually drove the company into bankruptcy.
The most recent major scandal has involved a prominent domestic
icon and her investments.
Martha Stewart was convicted of obstruction of justice and
conspiracy in 2004 surrounding her earlier sale of personally held
ImClone stock. The conviction came after she allegedly received
tips from an ImClone employee that the company’s stock was
headed for a fall.
These scandals and others have led to an increased focus on
ethics in business and the way it is taught in universities across
the nation.
The basic issue is one of separation of powers, said William
Cockrum, adjunct professor in the UCLA Anderson School of
Management.
“You have to have business operations separate from
administration,” he said.
For example, Cockrum said, the chairman of the company’s
board of directors should not also be the CEO of the company.
Furthermore, the details of the operations of the company should
be transparent and available publicly, Cockrum said.
“The board should assess the effectiveness of the
company’s management ““ it’s really their only
role,” Cockrum said.
He added that this is not unlike the UC Board of Regents
assessing the chancellors of the individual campuses.
Central to the debate over ethics is the question of whether
ethics can be taught, and if so, in what manner, said Bruce Wilson,
dean of the Anderson School.
In recent years, many schools, including UCLA, have begun adding
ethics courses to their MBA programs.
But Wilson tried to dispel the notion that simply adding more
ethics courses would solve the problem.
“The reality is that ethical issues come to a manager not
as ethical issues in their own right, but as important decisions
that have ethical dimensions,” Wilson said.
To this end, Wilson said that it is difficult to create a course
that can deal with every plausible scenario.
“What we need to do is ask faculty to be more cognizant of
ethical issues that might come up in (the courses they
teach),” Wilson said.
The Anderson MBA program includes 10 required core courses
dealing with various areas of management, and there is an emphasis
on ethics in all of them, Wilson said.
He added that there is much more awareness of ethical issues in
UCLA’s MBA classes than there was a few years ago.
Brian Walker, a professor in the Anderson School who teaches an
ethics elective, agreed.
“Students are much more aware now that if you make ethical
missteps in business it can very swiftly lead to the ruination of
your career,” Walker said.
Wilson said about 70 percent of the business schools in the
country have taken a similar approach and increased ethics emphasis
in their curricula.
The other 30 percent, he said, have either made an ethics course
mandatory or have added leadership foundations courses.
The latter represents an increased tendency to view ethics in
business not as a separate discipline, but as an integral part of
business leadership.
The Anderson School has also embraced this view, Wilson
said.
He said that the Anderson School restructured its orientation
program for incoming students two years ago to include a one-week
“leadership foundations” course.
Wilson emphasized that this course has ethics closely interwoven
with the leadership themes.
He added that the school plans to add a “leadership
foundations 2″ course for students who are about to graduate,
as a refresher course for the important themes in leadership and
ethics.
But not all schools have followed this trend.
Marjorie Kelly, in a recent article in Business Ethics magazine,
wrote that many U.S. business schools are actually downsizing their
ethics requirements.
Kelly stated that the University of Pittsburgh recently dropped
a formerly required ethics course from its MBA curriculum.
Other schools, including the Virginia Polytechnic Institute and
State University and the State University of New York at Albany,
have recently either removed ethics as a requirement for their MBA
degrees or cut ethics courses altogether.
But all of this attention to ethics education, and the disparity
among the actions of various business schools, has also fueled a
parallel debate over whether ethics can or should be taught at
all.
Cockrum emphasized that the average student at a U.S. business
school is 28 years old.
“They are already mature adults,” he said.
“Students already have a set of morals that are the result of
the society they grew up in, religious backgrounds, family and
undergraduate education,” Cockrum said, pointing to the
difficulty encountered in trying to “teach” ethics at
such a late stage in one’s education.
Cockrum also emphasized that ethical issues are common to all
professions, and the current approach to ethics in business schools
is not unlike that in most engineering, medical and dental
schools.
The increased concentration on business ethics is a consequence
of the fact that the economy is currently in the middle of a
relatively continuous expansion that dates to the late 1970s,
Cockrum said.
“A lot of wealth has been created, and the net result is
that people’s values tend to get looser,” he said.
Wilson said that over the last 200 years, whenever a society has
experienced a large increase in wealth, there has followed a period
in which business scandals are revealed.
Wilson added that when combined with better business practices,
increased awareness of ethical issues in business should reduce
acts of corporate malfeasance in the future.