Forging Ethics-Based Business Partners

Business leaders readily acknowledge that their organizations struggle to retain the trust and commitment of employees. A national survey reports that less than one in four employees have confidence in their leaders’ decisions and only 10 percent believe that supervisors will make the right decisions in times of uncertainty. That same survey reported that only about 14 percent, or one in seven employees, believes that their company’s leaders are ethical and honest and fewer than 12 percent report that their leaders actually listen to employees.[1] Indeed, business in general is facing a crisis in trust and confidence resulting from highly publicized unethical behavior that led to the demise of WorldCom and Enron and that was the cause of the 2008 mortgage crisis and resulting worldwide economic meltdown.[2]

Current research has not only confirmed that many businesses have lost the respect of their employees and customers but they also struggle to integrate new employees into their organizations.[3] Many of those employees are graduates of business schools where rampant cheating has been called “a plague” and “a crisis”[4] or are members of an American society that Princeton scholar, David Callahan labeled “the cheating culture.”[5] However, evidence suggests that business deans and their faculties greatly underemphasize the importance of teaching students about ethics and values. Despite the fact that 56 percentj of MBA students have openly acknowledged that they engage in academic dishonesty,[6] only about one-third of all business schools even offer a course of business ethics and only 5 percent of all business school deans believe that academic dishonesty may be a problem at their schools.[7] It seems apparent that business practitioners and academic leaders would profit by addressing the need to increase the integrity of present and future business leaders to reestablish a foundation for credibility and trust.[8]

Business leaders seeking to 1) increase employee trust and commitment and 2) hire employees more committed to high moral values would be wise to consider creating partnerships with business schools in achieving these two purposes. The specific action steps suggested herein may improve the effectiveness of business organizations and provide impetus for local business school faculties and administrators to increase their emphasis on teaching business ethics and values-based principles to the future business leaders of tomorrow.

Building High Trust Cultures

Harvard professor, Lynn Paine, is one of many scholars who have emphasized the importance of melding highly ethical behavioral values with financial objectives in the pursuit of organizational excellence. Paine has noted that business leaders have an obligation to be value-based and ethically responsible—owing a broad range of moral duties to the stakeholders affected by their businesses—while they simultaneously pursue high profits.[9] This moral focus sharply contrasts with commonly accepted business thinking that treats employees as cost centers rather than as the means by which businesses create profits and retain their competitive advantage.[10] At the same time, the ability of leaders to demonstrate that they care about the welfare, growth, and wholeness of their employees is essential to building high employee commitment.[11]

Business practitioners must know how to distinguish between flavor-of-the-month programs which promise to achieve success but rarely deliver, and valid ideas that are evidence-based and supported by responsible empirical research. An example of widely accepted but ineffective ideas that actually hurt business was the “downsizing” or “rightsizing” fad which was adopted by nearly every Fortune 500 company.[12] Although downsizing created short-term balance sheet improvements for some firms, it almost never resulted in long-term incremental value creation for those companies and often undermined employee goodwill and commitment.

A growing body of research has demonstrated that organizations which build high performance management systems are much more successful than comparable companies.[13] The evidence from this extensive research suggests that leaders who carefully align personnel systems that select, train, empower, and reward employees with a commitment to both the employees’ welfare and the success of the organization are more profitable, more creative, and more innovative than their counterparts.[14] At the heart of this leadership approach is the treating of employees as valued partners who can contribute to important management decisions, translate organization programs and policies into action, deliver excellent service to customers, and create added value and wealth for their companies.

This “high trust” approach to organization governance contrasts markedly with traditional top-down management thinking that typifies many modern organizations—and that often leads to underutilizing the talents of today’s employees. Unfortunately, many organizational leaders persist in applying outdated “conventional wisdom” about management that is not only archaic and ineffective, but that is often the cause of organization dysfunction and loss of competitive advantage.[15] More significantly, faculty in many business schools—including those that are allegedly “highly rated”—rarely have informed themselves about high performance management systems and do not teach its concepts and underlying values to their students. Driven by the modern business school’s “publish or perish” mentality, today’s business faculty are often encouraged to put in a minimum amount of time on their teaching and focus on getting published in highly-regarded management journals.[16]

To improve their ability to incorporate a values-based high performance culture within their organizations, business practitioners should consider three important action steps.

1) Invest personally in becoming better informed. In a world where information about management practices is increasing exponentially, business leaders must personally become subject matter experts about best practices in dealing with people. Although practitioners may feel spread thin with multiple demands from many sources, the clear evidence in today’s business environment is that it is a company’s employees that add value, deliver quality to their customers, and create competitive advantage. Learning how the best organizations treat their employees well and profit by doing so is the responsibility of today’s business leader.

2) Create partnerships with others who understand leading people. Sharing ideas with other business leaders who recognize how to tap the potential of their employees can pay great dividends to a company and may be accomplished by involvement in local business groups such as the Chamber of Commerce. Faculty from business schools who understand high performance and high trust management systems can also be identified and involved—especially since many faculty members are interested in creating a win-win partnership with businesses on joint projects—often without charging a consulting fee. Most business schools require their faculty members to become involved in serving the businesses in their community as a key element for earning promotion and tenure.

3) Be evidence-based in evaluating “best practices” in applying concepts. For example, attempting to apply just one or two concepts of a high performance management system has proven to rarely be effective, and is often a waste of time and effort. Knowing how to implement management concepts and practices and doing your research before jumping is often a critical step in differentiating between success and failure. Again, partnering with local faculties can enable business practitioners to understand how to best track key information that many of those practitioners struggle to collect or interpret.

Improving the Ethical Climate

Creating partnerships between businesses and their local business schools can also increase the focus of business students and faculty on the issues involved in applying ethical concepts in business. Publicizing those partnerships can also improve the public’s perception of the business world and can help businesses to have more confidence in the integrity of the business graduates that they hire.

Ironically, despite the growing evidence that business schools have been ineffective in teaching business ethics or addressing the academic dishonesty occurring on college campuses, little has been done to improve that situation—even by those leaders and organizations who one would think should lead the way in addressing these issues. Despite a letter writing campaign and a petition from leading ethics scholars,[17] the Association to Advance Collegiate Schools of Business has not required business schools to establish a course in business ethics—allowing business schools to teach ethics “across the curriculum”[18] even when 45 percent of business school deans acknowledge that their faculties are not qualified to do so.

The Academy of Management, the professional association of business school management faculty throughout the world, has persistently resisted taking a position about teaching business ethics in business schools and their Ethics Education Committee has focused solely on advising management faculty on avoiding self-plagiarism and submitting the same article to multiple scholarly journals.[19] That position persists, despite the growing problem of academic dishonesty wherein business students have been found to be more prone to academic dishonesty than students in any other university major.[20]

Ethics courses at many colleges and universities are not taught by business faculty but are taught by professors in Philosophy or Religion departments. As a result, those faculty are often unfamiliar with business practices and fail to focus on the application of concepts within a business context. Dean Krehmeyer, the Business Roundtable’s Executive Director, has sharply criticized business schools for not taking a greater role in emphasizing business ethics and has called the focus on ethics education “a critical need” that affects both business and society.[21] Despite that strong statement, several business schools have deemphasized the teaching of business ethics in their curriculum or actually eliminated teaching ethics courses in recent months.[22]

To have a more significant impact upon the teaching of business ethics at business schools, business leaders and practitioners should also consider three more action steps.

4) Identify current business ethics education practices at business schools serving their region. Practitioners should not be surprised to find that their school is among the two-thirds of business schools that do not offer a stand-alone course in business ethics. Research from those who have studied business ethics education strongly advocate a stand-alone business ethics course taught by faculty within the business school, and document the ineffectiveness of across-the-curriculum courses which are often taught by faculty who lack an understanding of business ethics concepts.[23]

5) Become involved as members of the Business Advisory Board of local business schools. Partnering with local business schools and participating in their discussion of curriculum will enable practitioners to share their insights about the importance of business ethics education and the need for emphasizing to business students the critical significance of the application of ethical principles in modern business. Volunteering to serve on a business school’s business advisory board also provides the opportunity to participate with local faculty in the classroom to discuss the practical issues of business and to help business students understand how to bridge from learning about business theory to applying those theories on the job.

6) Partner with Business School Faculty with Applied Research in Your Business. Practitioners and business schools strengthen their ability to improve the quality of business school education and to enhance the effectiveness of local business practices when businesses and business schools develop opportunities to conduct applied research in a real world context. The practical application of that research and its behavioral implications for students and business employees has frequently resulted in powerful benefits for all parties involved.[24]

Practical Implications

Both the opportunity to create high trust cultures and the chance to improve the quality of business ethics education have behavioral implications for business practitioners today and in the future in restoring employee trust and public credibility. Despite compelling research evidence, business leaders do not seem to be proactively incorporating available knowledge that can help them to be more profitable and more effective at motivating employees—their most valuable assets. Those employees often lack trust in their leaders and many modern organizations fail to build employee commitment which is acknowledged as the key element in creating long-term wealth and competitive advantage.[25]

Partnering with local business schools to learn more about the implementation of management systems based upon creating high trust organization cultures can improve the effectiveness of businesses which choose to apply those systems. That partnership can also enable business school leaders and faculty to dialogue about improving business ethics education. Both the creation of high trust cultures and improving business students’ understanding of ethical concepts can help businesses to increase profitability and earn customer trust long-term. The growing body of evidence from business research seems to clearly suggest that virtuous leadership and honoring moral duties build commitment and increase long-term wealth.[26]

As business leaders and business schools take advantage of the research knowledge available to them, they have the opportunity to raise their standard of performance and create added value for the stakeholders that they serve. Failing to utilize this important research will negatively impact the image of the business sector and business schools and the ability of both to create long-term wealth for society. Building public credibility and trust in business must become a major priority of practitioners and educators alike.