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From the Dean

Ethics, Management, and the GSB

January 2003

Dear Friends,

Managed institutions are crucial to our society and way of life. Because of this, management is an important profession. Done well, it can be a noble profession. But nobility in management requires honest, principled, and ethical behavior. Indeed, I believe that in the long run, management-especially in a mixed capitalist system-can be effective only if managers are honest, principled, and ethical. If you cannot trust the managers who are investing your capital, paying your wages and investing for your retirement, or producing the products you consume, you cannot and will not do business with those managers or their organizations. For these reasons, schools of management, and specifically the Stanford Graduate School of Business, have a special responsibility to teach their students about ethics and ethical behavior.

This is not a new insight at Stanford Business School. Over the years, we have developed an "ethics curriculum" that, we believe, does a very good job. This curriculum has three fundamental pieces:

  1. It begins before the first day of Fall Quarter in the student's first year. In the week or so before the Fall quarter, first-year students participate in a mandatory pre-term program of courses. Five two-hour sessions are devoted to ethical analysis: Students are given frameworks for studying ethical issues and apply those frameworks to cases of ethical dilemmas. This year, for instance, students were taught utilitarian, Kantian rights, and justice (Rawlsian) frameworks, which were used to discuss Enron, an international case on bribery, issues connected to genetic testing, a case on pollution permits (lower aggregate pollution, but concentrated in certain regions), wrapping up with the case of Nike sourcing their products from third-world countries.

  2. This pre-term course has three objectives. The first is intellectual. Ethics should not only be a matter of how one feels, or what values one brings from earlier life. Ethical questions can and should be subjected to disciplined thought. The frameworks give students the tools to do this.

    At the same time, culture influences each individual's perception of what is ethical behavior. The diversity of our student body provides a diversity of opinions on this score, and the discussion of these cases-sometimes heated, often contentious-gives each student the sense that pat answers to the question Is this behavior ethical? often do not exist.

    Finally, and perhaps most importantly, this course sends to our students the message that ethics is a front-burner issue for general managers. Ethics isn't something to be left to a staff ethicist or to be relegated to an afterthought; ethical questions are front-and-center, and will be front-and-center throughout the program and, indeed, throughout the life of a manager.

  3. Then comes the regular curriculum, both core and elective. Stanford is a school of general management, and most of our courses-certainly in most core courses-take a general management perspective. Of course we teach courses in specialized functions, such as finance or human resource management. But we tend to teach even those specialized subjects from the perspective of the general manager.

    For the general manager, questions of ethics and ethical behavior are everyday concerns. Sometimes the issues are big, sometimes more mundane. But general managers have to wrestle with ethical questions as part of their everyday diet of activities. And so, in our curriculum, discussions of ethical issues should be and are integrated into the regular curriculum. The amount varies from course to course, depending on content. As you would expect, courses in strategic management, human resource management, and nonmarket forces have more to do with ethics than courses in models and optimization or in data analysis. But the faculty and I believe that discussions of ethical issues should arise within the day-to-day conduct of courses, just as they arise within the day-to-day conduct of managers.

    How frequently do ethical questions enter courses day to day? We asked the faculty, "In the courses you teach, what fraction of the class sessions include a serious discussion of ethical issues?" The responses we obtained ranged from a high of 75% to a low of 5%, with medians of 20% in the core and 25% in the electives. The mix of courses that reported more than 50% provides an interesting cross-section of the school's curriculum: Among them were courses in investments, financial statement analysis, economic development, entrepreneurship, and inter-organizational politics.

  4. Finally there are elective courses that are specially designed to discuss ethical issues, such as Ethics and Global Business, Ethical Issues in the Biotech Industry, and (new this year) a course taught by Dean of the Chapel, the Reverend Scott McClennan, on spiritual approaches to ethical values. We are very happy to have these courses in our curriculum, of course. For individuals who plan to specialize in biotech, for instance, such courses can be extremely valuable. But such courses are not a substitute for weaving ethics into the whole curriculum: The students who elect such courses are not always the students who would benefit the most by exposure to a discussion of ethics.

We believe that this structure for the discussion of ethical issues is the best way to approach the subject. It conveys the idea that ethics is important, which we signal by putting it up front. Students understand that ethical questions are not always easy to answer. They understand that ethical issues are not side issues: They are part and parcel of general management, too important (to borrow a phrase) to be left to the ethicists. And they are too important for any of our students (or alumni) to leave to anyone other than themselves. In the end, each person must decide what he or she is prepared to stand up for. Ethics must become an integral part of each individual's professional (and personal) life.

And when we are done, students are able to do more than tell us how they feel about ethical issues: A core principle of the Stanford Business School is that disciplined, reasoned thought can shed enormous light (and aid in the communication of that light) about all sorts of questions facing managers, and we believe this is as true of ethical questions as it is about finance or marketing.

Have we succeeded in the past with this curriculum? While we believe that we have a well-designed curriculum concerning ethics, we are not satisfied that we have succeeded as well as we might or should. Looking for a silver lining in otherwise dark clouds, we hope that recent events in the business community will help us to achieve more. Certainly, these lapses have given us salient examples to discuss in class; we already have three cases on Enron written and in use, with more cases being prepared about other incidents. Recent events have also raised student consciousness about these issues: More than ever, we believe that we have students' attention.

There is a limit to what we, as a school, can do. If managers are part of a society in which the guiding philosophy is I can do whatever I can get away with or If it isn't against the law, it is okay; and if the law isn't absolutely and expressly clear, I'm allowed to try to get away with it, then discussions about ethical analysis in the classroom aren't going to be very effective. In the end, the motivation to behave ethically has to come from the individual; simple admonitions to behave ethically are not going to do the job. And here, I believe, Stanford Business School and schools of management in general can and should do more:

  1. We should develop a strong culture of ethical behavior in all aspects of life, because this sort of thing carries over. We-and we here means the entire community, including students-should enforce the norm that sliding through with ethically questionable behavior is not at all okay. Both in terms of prospective behavior, and in terms of behavior here at the School, the signal must be sent that our community and society will deal harshly with those who violate ethical norms.

  2. We should educate our students about the consequences of unethical behavior for those who are caught. Maureen McNichols, Marriner S. Eccles Professor of Public and Private Management, tells the story of how, in the executive education classroom, she has made an impact on participants by showing them videos of Chainsaw Al Dunlop "before" and "after." She tells how one participant in particular told her he was going home to quit his job in which he was being pressed to cut ethical corners, because he didn't want to end up like "that." Such cautionary tales are good support for the general sense that society won't tolerate unethical behavior.

  3. We can and should do more to convince students of the link between ethical behavior and long-term success as a leader. As we ramp up our efforts to help our students to learn leadership along with management, the importance of ethical behavior is sure to play a major role.
  4. We can and should do more to raise faculty member awareness of what each professor teaches, so that the different pieces of the "ethics curriculum" fit better and reinforce one another. For just this reason, we recently devoted the better part of an all-day, off-site faculty meeting to issues connected to ethics and ethical behavior.

  5. We can and should spotlight topical issues of the day. As already noted, the faculty has crafted three different cases about Enron, one of which was the first case the first-year students saw here. Atholl McBean Professor of Accounting Mary Barth, Joan E. Horngren Professor of Accounting Bill Beaver, and Maureen McNichols, together with three members of the Stanford Law School faculty, will be offering a special elective course this spring dealing with issues connected to financial reports that are brought up by recent events. Professor McNichols also is planning a new executive education program that will deal with issues of corporate governance and boards of directors. And we hope, later in the year, to have a one-day workshop on issues of ethics and ethics education.

  6. We can and should invite to campus distinguished speakers and role models who can address more explicitly how ethics shapes their leadership agendas every day, or how they came to grips with particular important ethical questions. To some extent, we use the View from the Top speaker series in this way, but we are exploring a supplement to this.

This is a big job. It is as important as anything else we do here. We think we are on the right path, but we can and will do better.

Sincerely,

Robert Joss
Philip H. Knight Professor and Dean
Sloan '66, MBA '67, PhD '70

If you would like to share your thoughts, email me at joss_robert@gsb.stanford.edu

If you would like to tap into the ideas and activities at the Business School, go to https://alumni.gsb.stanford.edu/lifelonglearning/