A challenge to business schools: Bring out the (ethical) best in students.
OMG! The ethics and leadership programs developed by our nation's top business schools are failing our employers, our economy and our future.
The scope of this failure is chilling. Of the hundreds of employees convicted of ethical or legal lapses in the past five years, virtually all had completed a mandated ethics training program!
And it's not just the Bernie Madoffs and AIG execs behaving badly. The U.S. Chamber of Commerce reports that nearly 38 percent of all employees steal repeatedly, causing one in three U.S. businesses to fail. Government workers are in on the action, too. According to the Ethics Resource Center's National Government Ethics Survey, public sector employees reported falsifying 3 percent more documents and telling 4 percent more lies than their private sector counterparts did.
And yet, with all this, the Harvard Business Review is only now conducting a series of debates on ethics education entitled: "How To Fix Business Schools." And the accrediting agency of business schools in the United States, AACSB International, recently reported that business schools have not done enough to raise the ethical awareness of MBA students.
For years, business schools have been our go-to guys on ethics training and leadership development. Maybe we should be going somewhere else. It's time our top business educators and trainers discover what people such as Steve Young, author of "Moral Capitalism,'' already know -- that ethics is more about conscience, character and courage than it is about compliance and control.
Today's workplace ethics training manuals tell employees the what, why and how of ethical compliance. But they do not help employees identify the strengths and shadows of their own characters, stir their consciences or activate courage in the face of daily risk.
While it's fine for employers to start by establishing organizational rules, policies and expectations, activating virtuous behavior gets very tricky when it comes to getting people to actually do the right thing every time, every day. When it comes to proscribing ethical behavior, you can print it, preach it, frame it and put it on training videos.
But as long as that's all you do, just don't expect your efforts to significantly reduce the risk of unethical behavior. As long as compliance is the primary objective, supervisors just become cops, truth goes underground and no one sees the risk until getting a subpoena or reading about it in the headlines.
Experience tells us that too many employees will behave unethically, given enough fear, pressure and threat. That doesn't mean their misdeeds will always be illegal. Accepting unearned bonuses, making bad loans, staying safe and silent, or just being selfish and greedy are all very legal choices employees can make. And these "shadow behaviors'' cannot be transformed solely through compliance management. But there is hope.
Attracta Lagan, an Australian ethics expert, coined the term "distributive leadership,'' which recognizes that while workplace leadership structure is traditionally top-down and flows from position or title, it is also flat. That is, every employee possesses leadership or virtuous qualities that, when more fully developed and activated, will help improve nearly every quantitative measure of organizational growth and success several fold.
A recent Fast Company article addressed the ethical leadership issue this way: "Plenty of companies (and the people who lead them) are prepared to cut more than a few ethical corners in order to move faster: not gross violations, such as accounting manipulations or outright fraud, but day-to-day dilemmas -- leadership moments in which you do either the right thing or the expedient thing."
And doing the right thing isn't just good for the soul. A 2007 Institute for Business Ethics report suggests that companies that provide basic training on business ethics financially outperform those that merely publish a code.
But what if we went beyond the current business school approach to compliance-based ethics codes and training?
Imagine how robust the U.S. economy would become if business schools found the courage to:
•Agree to be held professionally accountable for the ethical performance of their graduates.
•Develop curricula designed to activate the ethical leadership qualities of every employee rather than a handful with high potential.
•Integrate the teaching of management, leadership and ethics rather than treating them as if they were disconnected from each other.
While ethics-compliance programs clearly remind us about our limits and boundaries, ethical leadership development coaches us about the significance of who we are, what we are capable of and why it all matters.
Business school faculty and senior executives have the responsibility, the self-interest and the means to bring out the best in all of us. But first they must bring out the best in themselves.