• July 30, 2014

Corporate Responsibility Should Start in Business School

Corporate Responsibility Should Start in Business School 1

Katherine Streeter for The Chronicle

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close Corporate Responsibility Should Start in Business School 1

Katherine Streeter for The Chronicle

Recent charges of widespread fraud at Standard & Poor's, along with admitted Libor rate-fixing at several banks and violations of the foreign corrupt-practices act, represent yet more moments of shame for Wall Street. But when scandals erupt in the business world, academe should feel a little sheepish. Especially in business schools, our job is to prepare leaders to make workplaces vibrant, financially successful, and driven by values. The seemingly endless stream of business scandals is evidence that business schools are falling short.

Because we play critical roles in preparing tomorrow's work force, business schools must take some responsibility for developing students' ability to discover and apply values. There's no longer any question that critical thinking about obligations to society must be as much a part of business success as finance and other traditional skills. It's up to business schools to make new ways of business thinking contagious. We've done it many times before on topics like core competence and sustainability. We need to be equally ambitious—probably more so—about concepts of corporate social responsibility that go well beyond public relations and unvarnished self-interest.

Scandals occur partly because decision makers often fail to consider the full range of potential negative consequences each time they set corporate strategy, priorities, and incentives. Even less frequently, it seems, do they look for ways to factor in opportunities to do good. They should: each time, every decision. And workers up and down the hierarchy should be equipped to spot moral deficiencies in what they're told to do as well as to invent their own daily opportunities to do good.

We have a long way to go to get the work force pulling in the right direction, as research by a team led by the University of Notre Dame's Christian Smith has shown. That team discovered that two-thirds of 18- to 23-year-olds either didn't understand what a moral dilemma was or couldn't think of one they'd ever faced. If young people don't even understand what an ethical issue is, how can we expect them to understand how to resolve one? Even more important, how can we expect them to make decisions that improve the future of our world?

It is costly and dangerous to send people into the work force so ill-equipped. For many future business leaders, college is the last stop before they start their careers and set into motion a lifetime of behaviors. We need to take more seriously our role in better preparing them, first by moving social responsibility and ethics off the academic sidelines. That can be a real challenge, as often the faculty in traditional business schools does not recognize the importance of these critical issues. This means that either they will be loath to give real attention to ethics and social responsibility in their own classes or will resist institutional efforts to have others offer serious classes in these areas.

Given this institutional resistance, many faculty members committed to offer ethics and social-responsibility education struggle just to shoehorn a great philosophers' class into the schedule at 8 a.m. Mondays. Even then, it's often isolated from other subjects. Business schools pride themselves on innovative programs that develop students' ability to integrate strands of academic training from accounting, finance, marketing and so on. Yet the integration of ethical issues into all business decision making seems to remain optional.

Business schools also compete to see which can be the best at preparing students to apply traditional, discipline-based knowledge and skills to the real world of commerce. Yet very few do nearly as much to develop applied values and ethics. Business-ethics classes taught primarily from a philosophical perspective can often teach concepts at too abstract a level, and case studies often teach more about how to avoid others' mistakes than how to make values-based decisions.

The best way to be serious about teaching ethical behavior is to give students tools to discover and develop personal values and a sense of individual responsibility. When students discover what matters to them and make decisions consistent with that discovery, their values become resilient and instinctive. There is no need to remember to consult a guidebook, and they are less likely to look for ways to bend rules. We in the academy have an additional job to do. We need to define social responsibility for a new era and head off the shrinking definition of corporate social responsibility, a term that's often simply a synonym for philanthropy, compliance, and taking up only the most visible causes. Equally important, we need to shift from the notion that socially responsible decision making occurs only at the corporate level and with corporate edicts.

The headlines may say that Standard & Poor's as a company is charged with fraud. But a corporate entity doesn't commit fraud, people do. Individual responsibility, in the form of continuing challenges to standard operating procedures and positive twists to routine decisions, is essential to successful corporate responsibility.

At the University of Colorado's Leeds School of Business, we have developed methods for integrating ethics across all subject areas. We were fortunate to have been spurred by a donor's gift and an institutional vision challenging us to do so. But we've discovered new strategies that any business school can adopt, by starting with a class devoted to setting a foundation of values, social responsibility, and ethics built around self-discovery. That is how we begin. Students keep a log of good and bad corporate behavior that they see in the media or hear about in class; this adds perspective to every subject they study.

The goal is to make ethics part of the conversation and the teaching in all classes in the business school. We started by identifying professors who believe that ethics, values, and social responsibility are critical topics in students' education and having them sign on as advisers and ambassadors. Eventually, this resulted in our establishing the Center for Education on Social Responsibility, which codified the school's commitment and was helpful for establishing internal and external legitimacy.

More business schools producing more values-driven leaders—practitioners of individual social responsibility—could be instrumental in turning the tide. And without those kinds of changes, in the months and years ahead we'll be stunned anew by the audacity of corporate malfeasance. We'll be saddened by the impact on innocent people, the jobs lost, and the public trust further frayed. We'll wonder whether the perpetrators might have done things differently—or their colleagues might have intervened—if only we had equipped them better to do so.

Donna Sockell is executive director of the Center for Education on Social Responsibility in the Leeds School of Business at the University of Colorado at Boulder.

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