An ethical education

Business schools take steps to prepare students for a global marketplace

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by Heather B. Hayes

Tough choices crop up in business, though Michael Lamb already knew that. At 29, he had started, operated and sold a concrete business before returning to school to get his MBA.
But the Lynchburg native gained a new appreciation of the complications that can come with business decisions when he sat down for his first ethics course at the College of William &
Mary’s Mason School of Business.

There he encountered the predicament of Vijah Singh, a procurement manager for Eskom, a utility based in South Africa. Singhhad made a deal with an Italian company to purchase Chinese electric insulators at half the price of comparable products. The savings enabled the company to provide electricity to 40,000 homes and 283,000 South Africans.

Unfortunately, as Singh learned over a game of golf, the manufacturer’s agreement prohibited the insulators from being exported from China. Singh found himself facing a moral Catch-22:
His values told him it was wrong to keep buying the insulators, but if he stopped, 40,000 South African homes would go dark.

The case sparks spirited debate among William & Mary business students. Some students think that, since no enforceable law was broken, it is simply a case of “no harm, no foul.” Others believe Singh should be true to his integrity in order to maintain business relationships and trust (which, in the end, is what he did). For Lamb, discussing cases with students from different backgrounds involves more than finding answers to tough choices. The experience gave him a new perspective on what needs to be considered in making decisions — and helped him firm up his core values.

“I’m a guy who has lived his whole life in the South, where things are pretty black and white, so I’ve definitely gained this recognition of exactly how messy being a business leader can be and that there are different ways to look at things,” he says. “In the end, you’re not going to be able to just default to an attorney or the law. Sometimes it’s just going to be a matter of your own sense of right and wrong, so you’d better know what you believe and be prepared for the fact that doing the ethical thing might mean putting your job on the line.”

Spotlighting values

The idea of teaching business students about making ethical decisions is hardly new. However, with the evolution of a global economy, Virginia’s business schools have expanded
their curricula to account for a more complex business environment. The challenges business leaders face today “are an order of magnitude more difficult than when you only had to worry about what regulations were going to affect you in Virginia or some other state,” says R. Edward Freeman, director of the Olsson Center for Applied Ethics at the University of Virginia’s Darden School of Business.

Edward Felton Jr., a professor of ethics and strategic management at W&M’s Mason School, says that ethics education prepares students for the moral complexities of operating in foreign cultures, where, for example, paying a bribe might be considered an acceptable part of doing business. “There is no international court for business behavior,” he explains.

“That puts more onus on leaders to act with accountability.” The increased focus has schools implementing a number of strategies. They’re developing stand-alone courses, integrating ethics content into core courses, beefing up case studies and bringing former white-collar criminals to campus to talk about how they might have done things differently. “We don’t really know what works best to make students aware and sensitive to ethical concerns, so schools are doing a lot of experimenting right now,” says Nancy Bagranoff, dean of the Old Dominion University’s College of Business and Public Administration, who is conducting a research summary of ethics education in business schools.There is plenty of support for ethics education from universities and businesses. This fall, for instance, Richard Gilliam and his wife, Leslie (a JMU alum) donated an undisclosed sum to the university’s College of Business to create the Gilliam Center for Ethical Business Leadership. The Gilliams own Cumberland Resources Corp., one of the largest private coal mining companies in the country. The ethics center will conduct research, develop case studies and provide resources to add more ethical content to core courses.

“Ethics is a mushy topic to some, but we believe there are concrete tools that can be taught, that students can learn to run their decisions and behaviors through an ethics filter for better outcomes,” says Bob Kolodinsky, director of the new center. George Mason University’s School of Management recently began offering new coursework in business ethics. That effort includes an honors seminar that allows 20 students to discuss ethical issues with prominent business leaders. This past spring, students visited with Tony Nicely, chairman and CEO of Geico; James DeGraffenreidt, chairman and president of Washington Gas; and James Consagra, president and CEO of United Bank. As a bonus, the entire group traveled to Omaha, Neb., for a two-hour session with billionaire investor Warren
Buffett.Other schools are taking steps to create a culture that emphasizes ethics. At ODU, ethics education is now part of its overall mission. The school recently recast its Executive in
Residence Speakers Series to focus on lessons in ethical leadership, bringing in, among others, Patrick Kuhse, a former financial planner who explains how bad decisions, greed and
a disregard for ethical thinking landed him in federal prison for four years. The school also integrated ethics content into all of its core courses and asked students to help create a code of ethics for the business school.

Even schools that are old hands at the subject are pumping up their activities.  Marymount University, which started its schoolwide Center for Ethical Concerns in 1993, recently hired
a full-time ethicist for its School of Business Administration. And the Darden School now hosts the Business Roundtable Institute for Corporate Ethics, where 160 CEOs from some of
the biggest companies in the country and academic advisers from 12 universities come together to study ethics. “The idea is that business ethics isn’t a one-school thing; it
benefits from being a bigger project,” says U.Va.’s Freeman.

All of this is not to say that business schools believe that they can teach ethical behavior. “If someone is inclined to be dishonest, I think there’s very little that we can
say in the classroom that’s going to change that,” says Michael Sesnowitz, dean of the School of Business at Virginia Commonwealth University, which mandates ethics content in most of its coursework. What schools can do is make students aware of ethical issues and give them tools to make decisions. “Ethics isn’t an add-on,” says Freeman. “It’s not, ‘Oh, let’s make as much money as we can and then if it doesn’t cost too much, then we’ll do the right thing.’ That’s not ethics. Ethics for us is figuring out how a company can do the right thing and make money at
the same time.”

The specter of Enron

Much of the recent push for ethics education can be traced to Enron and the other corporate scandals. “Those have provided some great teaching moments,” says Paul Byers, director of
the Center for Ethical Concerns at Marymount. “The biggest ethical lapses are usually based in little decisions. Frequently, it’s a creeping problem, not some momentous decision made
at the highest levels.”Recent corporate scandals, in fact, have given Virginia Tech’s Pamplin College of Business plenty of speakers to choose from for its annual ethics workshop, now in its 17th year. Eric Pillmore, a senior vice president with Tyco International, spoke in 2005 about the steps he had to take to restructure the company after former CEO Dennis Kozlowski and other executives were convicted for stealing hundreds of millions of dollars from the company. Pamplin, which lists ethical education as a top priority in its strategic plan, also invited Lynn Brewer, a former executive at Enron, to the workshop. Brewer discussed how she compromised her ethical principles and overlooked instances of illegal and corrupt dealings before blowing the whistle on company leaders.

Kolodinsky says that JMU started its stand-alone ethics class so that students don’t unwittingly become party to the type of behavior that led to the Enron scandal. “We want
them…to take a job with [companies] that appear to have leaders that are good role models for ethical leadership.”That was certainly the case for Sarah Simmons, 22, a business management major who graduated in May. She took a job in human resources at Lockheed Martin, a company that she had seen highlighted in Kolodinsky’s course as a leading example of ethical behavior.
Still, there are global issues that provide thought-provoking fodder for ethics professors. How do you make ethical decisions while working in a country run by a corrupt government?

What if you find out that a shipment of highly discounted corn might be contaminated? What if factory workers are being forced to work 18-hour days but their quality of life is
significantly improved? “The thing is, we’re probably going to face these issues when we graduate,” says Lamb, who will receive his W&M degree in May. “Even if you’re sitting in an office in Lynchburg or in the Midwest, you might be buying parts from India that are shipped here on a South African freighter. You really have a responsibility to consider that ahead of time and have some
framework of values for how you’re going to deal with it. Studying ethics helps you prepare for that fact.”

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