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Monday, June 01, 2009
Do No Harm?
An oath for the MBA set:
When a new crop of future business leaders graduates from the Harvard Business School next week, many of them will be taking a new oath that says, in effect, greed is not good.
Nearly 20 percent of the graduating class have signed “The M.B.A. Oath,” a voluntary student-led pledge that the goal of a business manager is to “serve the greater good.” It promises that Harvard M.B.A.’s will act responsibly, ethically and refrain from advancing their “own narrow ambitions” at the expense of others.
What happened to making money?
That, of course, is still at the heart of the Harvard curriculum. But at Harvard and other top business schools, there has been an explosion of interest in ethics courses and in student activities — clubs, lectures, conferences — about personal and corporate responsibility and on how to view business as more than a money-making enterprise, but part of a large social community.
As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face choices that are not easy for me and others.
Posted by Richard Anderson on June 1, 2009 | Permalink
Comments
"The "greater good" is undefinable. Aside from military defense, national security and a defense of basic rights, nations or societies do not have interests."
Not true. A nation's economic security is its single greatest interest. And I'm sorry if you find the burden of professional ethics to be tiresome.
Posted by: Shane Matthews | 2009-06-01 6:57:52 AM
agreed....greater good is a matter of perception.laying off from a not so profitable facory, may prevent shutting down of the same in pretext of cost cutting,thus saving many more jobs eventually.
Their is nothing called absolute truth.
Posted by: aks | 2009-06-01 7:55:28 AM
I'm doing an MBA part-time right now. It is amazing what they are teaching today. Profit maximization is apparently no longer a company's primary objective.
The problem with my MBA at least, is that they are teaching students that ethics and profit-maximazation are mutually exclusive.
Posted by: Charles | 2009-06-01 8:05:12 AM
"The problem with my MBA at least, is that they are teaching students that ethics and profit-maximazation are mutually exclusive."
Yes, the new breed does not understand that economics is not a zero-sum game. That said, they do have a point--devotion to profit before all else usually makes for an unscrupulous and unethical businessman. Better striven for is profit *optimization*, wherein you make your profit as high as it can be without sacrificing such things as infrastructure, staff relations, customer relations, supplier relations, and your own quality of life.
Ethics are about rules. Perhaps that is why, as a libertarian, you appear to frown on them.
"His wealth is of no use to him. He don't do any good with it. He don't make himself comfortable with it. He hasn't the satisfaction of thinking -- ha, ha ha -- that he is ever going to benefit us with it." - Fred, nephew of Ebenezer Scrooge
Posted by: Shane Matthews | 2009-06-01 8:20:55 AM
"Their is nothing called absolute truth."
Of course there is. What is it, you ask? Quite simply: That which is.
Posted by: Shane Matthews | 2009-06-01 8:22:25 AM
"Better striven for is profit *optimization*, wherein you make your profit as high as it can be without sacrificing such things as infrastructure, staff relations, customer relations, supplier relations, and your own quality of life."
Sigh. Thanks for the business lesson Shane. Profit maximization does not necessarily mean in the short-term. Those who sacrifice the long-term to make unsustainable short-term profits will be penalized by the market and hence will not be able to maximize profits in the long run.
"Ethics are about rules. Perhaps that is why, as a libertarian, you appear to frown on them."
Complete garbage. I believe, as a classic liberal, that most rules must be enforced by society, not government. Ethics are very important in business. Profit-maximization and ethics are not mutually exclusive. If I attain my profits in an unethical manner, eventually, people will find out about it and refuse to do business with me. I will be punished by the market and my profits will fall. I will therefore not have maximized profits.
Posted by: Charles | 2009-06-01 8:57:28 AM
MBAs tend to be corporate carpetbaggers. It wasn't too bad when they were simply ATDCF zombies but with the continual decline of free market capitalism, no thanks to the rent seeking whores of big business, their short term thinking has become an embarrassment, even to MBAs. It's simply the next logical progression for MBAs to see themselves as part of the mixed economy's governance class (greater good - mush). As Milton Friedman said, the biggest threat to capitalism is from businessmen and academics. MBAs have become the perfect marriage of the two.
Posted by: John Chittick | 2009-06-01 9:59:58 AM
Sadly I have to agree with John. I actually am currently taking a class which teaches students how to best implement a strategy to extract corporate welfare from taxpayers. Sadly, again, I am the only one offended by the notion.
Posted by: Charles | 2009-06-01 10:08:07 AM
"Sigh. Thanks for the business lesson Shane. Profit maximization does not necessarily mean in the short-term. Those who sacrifice the long-term to make unsustainable short-term profits will be penalized by the market and hence will not be able to maximize profits in the long run."
They may also be locked up for breaking the law or sued into bankruptcy by a mistreated employee. Or murdered. There's a lot more to business than making money. And you're welcome.
"Complete garbage. I believe, as a classic liberal, that most rules must be enforced by society, not government."
Which is another way of saying you don't believe in rules. Because when everybody is responsible, it means that ultimately, nobody is responsible.
"Ethics are very important in business."
Yes. So I suggest you acquire some.
"Profit-maximization and ethics are not mutually exclusive."
Says you--and apparently, only you. Perhaps you and your instructors have different ideas as to what constitutes "ethics."
"If I attain my profits in an unethical manner, eventually, people will find out about it and refuse to do business with me. I will be punished by the market and my profits will fall. I will therefore not have maximized profits."
At which time you will decamp with your ill-gotten gains and start over where nobody knows you, and do it all again, as a million shady businessmen and/or con artists have done before you. Unless, of course, you have ethics, which will keep you out of that whole mess to start with.
The greatest monetary profits reside in unethical practices. That's why we have crime. If crime didn't pay, who would turn to it?
Posted by: Shane Matthews | 2009-06-01 10:30:31 AM
Shane, that's also why we have politicians. If it didn't pay, who would turn to it?
Posted by: TM | 2009-06-01 11:26:18 AM
Shane,
I don't really know what your problem is here. There is a difference between unethical behaviour and criminal behaviour. Fraud and theft is criminal because your natural rights are being violated (property rights). Unethical behaviour, such as lying to your employees for example, will result in lower profits since you will not be able to keep the best talent. This in turn will result in lower profitability. That's why I say that ethics and profit maximization are not mutually exclusive.
"There's a lot more to business than making money." Yes. There is Shane. But all those things lead to a business making more money. Having a high ethical standard, investing in your employees, investing in your infrastructure, they all lead to more profits.
"Which is another way of saying you don't believe in rules. Because when everybody is responsible, it means that ultimately, nobody is responsible."
I've already dealt with this. For someone who disparages libertarians, you sure don't know a lot about what they believe.
"Yes. So I suggest you acquire some."
From who? You? Suggesting I am unethical won't win you this argument Shane.
"Says you--and apparently, only you."
Even if that were true (it isn't), it's not relevant.
"At which time you will decamp with your ill-gotten gains and start over where nobody knows you, and do it all again, as a million shady businessmen and/or con artists have done before you."
There is a difference between con-artists and shady businessmen Shane. The reason you punish the con-artists with strict laws is to encourage investment. Investors don't like lawless jurisdictions. You can weed-out the shady type rather easily through market forces.
"The greatest monetary profits reside in unethical practices. That's why we have crime. If crime didn't pay, who would turn to it?"
Wow. So unethical practices must all be criminal now? So how do we define unethical Shane?
Posted by: Charles | 2009-06-01 11:36:46 AM
To sum up. My problem is that too many ethics classes now teach that it is impossible to treat your customers and employees correctly and maximize profits at the same time. That is patently false.
This does not mean that I believe everything should be legal. I hope I've made myself clear.
Posted by: Charles | 2009-06-01 11:39:54 AM
Charles, "natural rights" do not exist except in your mind. Ethics classes are not concerned with your libertarian leanings. Here in the real world, our rights are enshrined in a Constitution. Those are the only rights you can count on others to defend, so they are, both de facto and de jure, the only rights you have.
You argue that each ethical breach will cost the businessmen monetarily. But here you assume that everyone else is ethical; they aren't. Many people profit handsomely from unethical and dishonest, and even illegal business practices. The best talent is not necessarily the most ethical. Or perhaps the boss treats his professional staff well, but his easily replaced underlings, like receptionists and janitorial staff, like dirt, paying them less than their due. And that's easy to get away with in a crappy economy when there are fewer jobs available.
"Having a high ethical standard, investing in your employees, investing in your infrastructure, they all lead to more profits."
Well, no, they don't, always. That is why some people find it more profitable to scrimp on them. And even the best-run business can still fail due to external forces beyond its control.
"I've already dealt with this. For someone who disparages libertarians, you sure don't know a lot about what they believe."
I know a lot about what the ones here write, and their writings are those of neo-anarchists who talk about "natural law" and how the government has no business in law enforcement.
"Suggesting I am unethical won't win you this argument Shane."
No. But it may help you see where your conflict with the rest of the establishment lies, and thus benefit you. I'll do equally well either way. So call it a random bit of altruism.
"Even if that were true (it isn't), it's not relevant."
It is TOTALLY relevant. The whole nexus of your complaint is that you stand apart from your fellows in business and ethical philosophy. Are they all wrong, and you right?
"There is a difference between con-artists and shady businessmen Shane."
Yes, just as there is a difference between a petty thief and a murderer. But both are criminals and neither is behaving ethically.
"The reason you punish the con-artists with strict laws is to encourage investment. Investors don't like lawless jurisdictions."
Laws do not exist to provide opportunities for business. Laws exist to protect person and property. The Universe was not created just to provide you with a place to do business, Charles.
"You can weed-out the shady type rather easily through market forces."
How, exactly? Can "market forces" cook my dinner, too?
"Wow. So unethical practices must all be criminal now? So how do we define unethical Shane?"
It's a matter of degrees, Charles. Ethics are defined as a professional standard of conduct particular to a given field or industry. Violating them brings no official sanctions; only unofficial ones. Violating laws will bring you official sanctions. The official sanctions are much more punitive and far less open to negotiation or reconciliation.
Not all unethical practices are illegal. But most illegal practices are unethical. In any case, the point is that clearly some people find illegal and/or unethical conduct profitable, or they wouldn't do it. Who but a lunatic would risk official or unofficial censure for less money?
Posted by: Shane Matthews | 2009-06-01 12:03:32 PM
"Those are the only rights you can count on others to defend, so they are, both de facto and de jure, the only rights you have."
So what Shane? Does that mean I can't be vocal about changing things? Just because something is currently a certain way does not mean I should simply shut up about it.
"But here you assume that everyone else is ethical; they aren't."
Are you a leftist Shane? I'm starting to think I'm having a debate with a socialist. The majority of businesspeople are ethical and honest. Unless you think the business community are a bunch of unethical swindlers.
"Well, no, they don't, always. That is why some people find it more profitable to scrimp on them."
People find it more profitable to scrimp on them but in the long term will be punished with lower profitability. Focussing on your employees, clients, infrastructure, employees, maximizes profits over the long term.
"But it may help you see where your conflict with the rest of the establishment lies, and thus benefit you."
I know exactly where my conflict with the rest of the establishment lies. That's why I am trying to change things. Accusing me of being unethical is dishonest. I have clearly explained to you that I think ethics are very important.
"Laws exist to protect person and property."
Ummmm ... that's what I'm saying Shane. The government needs to step in to protect property rights.
"The Universe was not created just to provide you with a place to do business, Charles."
Cut the crap Shane. Regardless of my personal interests, I believe property rights must be enforced in order to encourage people to invest. Or do you not believe in property rights Shane?
"How, exactly? Can "market forces" cook my dinner, too?"
Why yes Shane. Since you are a part of those market forces I assume you can cook your own dinner.
"In any case, the point is that clearly some people find illegal and/or unethical conduct profitable, or they wouldn't do it."
My point is that clearly this behaviour is profitable short term, but not in the long term. How many times do I have to repeat it?
Posted by: Charles | 2009-06-01 1:44:08 PM
On the other hand: I have a buddy who took his MBA at an ivy league business school south-of-the-border. Now, this buddy of mine was pretty dang right-wing, far more so than myself. And yet, even he was taken aback by the level of cold, heartless, borderline-evil statements that came out of the mouths of his fellow students. Stuff like letting people die of thirst if they can't afford the price you want to charge for a bottle of water. Arguing the merits of a free market is one thing. Advocating that people actually die of dehydration is another thing altogether. (Disclaimer: I am forced to admit that the above anecdote amounts to second-hand hearsay.)
Posted by: Anonymous | 2009-06-01 2:58:03 PM
"So what Shane? Does that mean I can't be vocal about changing things? Just because something is currently a certain way does not mean I should simply shut up about it."
Your rights are what the law says. If you want to change the law, work toward that end. But don't give us The World According to Charles and attempt to pass it off as your enforceable rights.
"Are you a leftist Shane? I'm starting to think I'm having a debate with a socialist. The majority of businesspeople are ethical and honest. Unless you think the business community are a bunch of unethical swindlers."
Ahem. First they have to become AWARE of the unethical practices, and unethical people typically make an effort to hide what they are doing. Because they're well aware of what they face if they get caught.
"People find it more profitable to scrimp on them but in the long term will be punished with lower profitability."
Yes, so you keep saying. But that doesn't make it true. What we are after here is real-world results, not articles of faith, also known as "dogma."
"I know exactly where my conflict with the rest of the establishment lies. That's why I am trying to change things. Accusing me of being unethical is dishonest. I have clearly explained to you that I think ethics are very important."
But not rules. The only ones you are prepared to tolerate are the ones punishable by no one in particular. Has it occurred to you that you, and not the establishment, are the problem?
"Ummmm ... that's what I'm saying Shane. The government needs to step in to protect property rights."
But not with the sole aim of improving the business climate, as you suggested. We're not Ferengi.
"Cut the crap Shane. Regardless of my personal interests, I believe property rights must be enforced in order to encourage people to invest. Or do you not believe in property rights Shane?"
I believe you take an entirely too egocentric approach toward life in general and will no doubt carry that baggage into any business venture in which you become a member. We are discussing ethics, not property rights.
"Why yes Shane. Since you are a part of those market forces I assume you can cook your own dinner."
So now we're back to the Galactic Souk, where everyone and everything is for sale. I am not a "market force." I am a consumer. Market forces are trends, not individuals, unless they are very much higher placed than I.
"My point is that clearly this behaviour is profitable short term, but not in the long term. How many times do I have to repeat it?"
Why is it so clearly unprofitable in the long term? What proof have you provided that this is the case? You just keep saying it over and over, as though reciting an incantation. But there's more to canny business practice than reading sheep intestines. The ability to work as part of a team is one of them. Which you will find difficult considering your "odd man out" approach to things.
Posted by: Shane Matthews | 2009-06-01 3:07:18 PM
"Why is it so clearly unprofitable in the long term? What proof have you provided that this is the case?"
Well let's see. I have explained why it's unprofitable in the long run. Customers, suppliers, employees, investors, etc. don't like unethical businessmen. Just look at the most successful businesses. Did they succeed by screwing everyone over?
"First they have to become AWARE of the unethical practices, and unethical people typically make an effort to hide what they are doing."
But eventually they get caught. They all do. Either your client catches you, or your banker, or you shareholders, or your suppliers, etc. Then you're screwed.
"Yes, so you keep saying. But that doesn't make it true. What we are after here is real-world results, not articles of faith, also known as "dogma."
You mean like religion? Are you saying that you are aware of no cases in business where a company, say underinvested in its infrastructure to save money short term and paid the price long term? Or treated its employees badly?
"Which you will find difficult considering your "odd man out" approach to things."
Your personal insults and insinuations are absurd. I am partner in a small firm where we work closely as a team. The approach works quite well and I support it.
"I believe you take an entirely too egocentric approach toward life in general and will no doubt carry that baggage into any business venture in which you become a member. We are discussing ethics, not property rights."
Again with the personal insults. I have been involved in a few successful business ventures already. I would suggest to you that an ethics discussion must include respect for property rights. It's the foundation of our economy. For example, fraudulent financial statements is a violation of property rights. Selling a fraudulant product is a violation of property rights. I get the feeling you don't quite understand the meaning of property rights.
"Market forces are trends, not individuals, unless they are very much higher placed than I."
That was a joke Shane. But you are part of the market and you influence it. What do you think the market is, some unknown force which only belongs in an X-Files episode?
"Why is it so clearly unprofitable in the long term?"
Because, eventually Shane, people realize what is happening and you are punished for it. That's how the free market system works. I can think of countless examples of companies that I have followed that were unethical and now no longer exist. Take Nortel for example. I can think of countless others.
But here's my rub with you Shane. You obviously don't agree with me that the market can regulate itself when it comes to most matters. Instead of calling me on it you accuse me of being unethical and egocentric. I think that says a lot about you ...
Posted by: Charles | 2009-06-01 4:09:54 PM
Hey, you guys are going to love this! Everyone needs more money, check out http://makingmoneyatoz.com/ a no strings attached website where you can search and add money making ideas and read comments from others who have tried the idea. If any of you have a money making idea you would like to share, you can add it for free with the link provided http://makingmoneyatoz.com/submit.php
Posted by: scott | 2009-06-01 5:09:44 PM
Hey, you guys are going to love this! Everyone needs more money, check out http://makingmoneyatoz.com/ a no strings attached website where you can search and add money making ideas and read comments from others who have tried the idea. If any of you have a money making idea you would like to share, you can add it for free with the link provided http://makingmoneyatoz.com/submit.php
Posted by: scott | 2009-06-01 5:09:56 PM
I’ve decided to take the time and give you concrete example. You probably will find a way to make some kind of personal attack, but here goes ….
I firmly believe that respecting your co-workers and providing fair pay to your employees is a key to long term success. Ask any junior HR employee. When you treat your employees with respect and compensate them fairly, you motivate them to work hard, innovate, and stick around. This reduces costly turnover, and raises productivity and efficiency. This will translate into higher profits. If, on the other hand, you treat them like crap, they will not be productive and turnover will be very high. Profits will therefore be lower and you will not be able to grow your business. The fact is replacing employees is more costly than any savings from treating them unfairly.
I mentioned to you I was partner at my firm. Since we place a high value on our team, we voted to not pay ourselves (partners) a bonus and any dividends in 2009 (regardless of merit) in order to guarantee the staff not only employment but a reasonable salary increase. We did this because we realize that having a stable team is one of the most important aspects of our long term success.
Did you notice how I was willing to sacrifice my short term self-interest for the long term interests of the firm? Did you also notice how everyone was better off?
This is the last time I defend myself against your personal attacks Shane. If you can’t debate without lowering yourself to making baseless insinuations about me then do not bother addressing me.
Posted by: Charles | 2009-06-01 5:25:21 PM
Charles, we have done the same thing at our company. In fact, so far this year us partners are the lowerest paid people at our company. This is intentionally done for all the reasons you mention.
Posted by: TM | 2009-06-01 9:31:24 PM
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