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Dean's Column

Restoring Trust in Business

By Dean Robert L. Joss

Philip H. Knight Professor and Dean

As I near the conclusion of 10 years as dean, the noble calling of management has never seemed more important to me. Too many managed organizations have performed poorly. People have lost homes, jobs, and retirement savings. Too many financial institutions have squandered their most important asset: trust. Failures of leadership abound—poor management of credit risk, extreme financial leverage, regulatory lapses, unsustainable federal housing support, misaligned incentives that rewarded risky behavior, and sales of mortgages to people who could not afford them.

Some in the media have asked whether business schools are to blame—did we teach generations of students to pursue short-termism at the expense of prudent value and social good? While I certainly don’t think so (and faculty like Lee Bach, Jim Van Horne, and Ted Kreps did not teach me that!), I will acknowledge there has been a collective community—even cultural—failure. Educators can’t claim complete immunity. We have to ask ourselves constantly, what can we do better? One thing is sure: Our graduates are among those who must restore the lost trust.

Looking to the future, we can say the School’s curriculum (which went through wholesale changes in 2007) today creates an experience that helps students discover and defend their values. That means understanding human behavior, understanding yourself, developing and incorporating your values in how you think and what you do. For example, corporate governance Professor Maureen McNichols has taught Understanding Cheating, which examines how people rationalize all sorts of moral hazards and questionable decisions.

The faculty have built into the curriculum teaching that is deliberately designed to strengthen students’ understanding of the obligations of an organizational leader in society. In the required Critical Analytical Thinking seminar, students must research, think deeply, and articulate and defend a position on an issue such as the pros and cons of the electric car, or eliminating global poverty. Through the Strategic Leadership class, we’ve supplemented classroom theory with experiential leadership development, which helps students learn how to interact better with others (to both listen and influence). Ethics in Management is a required course teaching students how to think about and act in situations where differing ethical precepts collide.

As the first class to complete the new curriculum nears graduation in June, they will experience a closing Synthesis Seminar developed by faculty experts in organizational behavior, trust, leadership, management, and finance. The purpose of this final seminar is to have students reflect on what they have learned and what values and goals they want to live by—so they are better prepared to deal with the many gray areas and difficult decisions they will face. My hope is that they will be leaders with confidence (not hubris) and compassion, mindful of the results of their decisions on the people whose trust they must earn: employees, customers, community members, and investors.

In addition to overarching curricular reforms, recent events have provided significant teaching moments for our finance faculty, who have incorporated substantive analyses of the current situation into Debt Markets, Microeconomics, Corporate Finance, and the Finance-Markets required course, among others.

The current turmoil will have lasting impact on those now in college or MBA programs, just as those who went through the Depression were formed by that experience. We will most certainly change financial regulation but must not overlook the substantial contribution to improved global living standards that three decades of market-based capitalism have produced. A better balance is needed. While entrepreneurship, innovation, and leadership continue to excite our students, we find they are also increasingly motivated by a strong sense of social accountability.

As I leave the dean’s post, I have confidence that trust will be restored to our financial and economic systems. I continue to believe managerial leadership is a noble calling. It has been my privilege to serve as the organizational leader of this School for 10 years. I look forward to seeing how the changes we have put in place will impact future generations of students and help them lead in good times as well as bad.