|| Corporate scandals spotlight need for ethics
By PATRICK ONEILL
In times like these, when corporate scandals are rocking the nation, Jesuit Fr. Martin Calkins admits its sometimes frustrating to teach business ethics.
Weve been at this for 30 years as a scholarly group, and we just seem to be getting nowhere, Calkins, who teaches at Santa Clara University, said he told a colleague recently. There seems to be just one scandal after another.
The recent revelations of malfeasance at corporations such as Enron and WorldCom have shined a spotlight on the role ethics is -- and is not -- playing in the business classrooms that are training corporate professionals.
Business schools, both undergraduate and graduate, usually have a required ethics course for students, but not all schools make such training a priority. At Santa Clara, a Catholic institution, ethics is not an aside. Since 1985, Santa Clara has been home to the Markkula Center for Applied Ethics, which offers integrated ethics training throughout the campus. The centers 11-member staff also does consulting for private corporations and leads research efforts in ethics.
Headed by Kirk Hanson, a Catholic who was a consultant on the U.S. bishops pastoral on the economy in the 1980s, the Markkula Center is recognized as a national leader in the field of ethics.
Todays problems point to a need to increase the available resources in the field of ethics. Hanson is encouraging the establishment of regional centers, similar to Markkula, that could be used to help both schools and corporations place greater emphasis on ethics training.
Like winning the lottery
Hanson said he disagrees with President Bush, who has placed blame for the recent scandals on a few bad apples in the business world. The problem is cultural and systemic in scope, he said. Obscene salaries for CEOs, which usually include stock option compensation packages, have in some ways changed the rules. Many executives now see business as a vehicle through which to achieve personal wealth, Hanson said. Being named a CEO today is like winning the lottery, and fabulous wealth comes with getting to be a CEO.
The culture is saying, This is your chance to get rich, and [CEOs] ought to be thinking, This is my chance to serve. Being a CEO is a noble calling. This is not simply a self-centered opportunity.
Its not only CEOs who see business as a path to self-enrichment.
Victoria Lee Maxwell is a 26-year-old Santa Clara student earning dual degrees in business and law. Maxwell enjoyed the ethics course she took under Calkins, but she thinks ethics training is lacking and undervalued in business education.
I dont think [ethics is] taught well at the business schools, she said. I dont think that its taught well at the law school. Its always a sidelined issue. Its a class that you take because youre required to take it, but its never emphasized. It would be beneficial to have ethics emphasized in every single class that you take.
Maxwell, a Presbyterian, said shed like to earn about $70,000 a year as a business lawyer and places a high premium on being ethical.
Most MBA students have goals such as career advancement and earning a better salary, she said. I would say the average student doesnt care that much about ethics, and I think that definitely is one of the main reasons why we have such shady business practices today, Maxwell said.
Ethicists have limited influence, Calkins said. Decision-making is done in the workplace. Businesspeople are the ones that have to actually make the decision about right and wrong, not the ethicist, he said. So I think our impact is limited. I wont say its for nothing. ... I think we do have some influence, but that its limited.
The business world is badly in need of ethical leadership, Hanson said. You cant look to the church to fill that ethics void. Not only does the church not know much about economics, but its own leadership is absolutely bereft of credibility, he said.
With Boston Cardinal Bernard Law, the darling of the right, and Milwaukee Archbishop Rembert Weakland, the darling of the left, both sullied by the sexual abuse scandals, youre not left with anybody of credibility, Hanson said.
John Boatright, who holds an endowed chair in business ethics in the graduate business school of Loyola University Chicago, said the current scandals have to do with problems stemming from the pace of change in the corporate world, not an ethics void.
Im a little bit uncomfortable with trying to cast this as a matter of ethics because this is not something that ethics can easily prevent, said Boatright, who also serves as executive director of the Society for Business Ethics. We have to have a good system in place first of all. I think the main role of ethics is first of all to help us build the system.
Business, says Boatright, is a rapidly moving field and regulation, so to speak, can only fight the last war.
There will always be clever lawyers, accountants and financial people who will always put together innovative mechanisms where regulation really hasnt caught up, Boatright said. I think there will always be a kind of window of opportunity where one can be technically in conformity with the law, but do something that probably is going to be illegal within a few years.
Patricia Werhane, professor of business ethics in the Darden Graduate School of Business at the University of Virginia, said the recent corporate scandals will ultimately have a more severe impact than the Sept. 11 terrorist attacks.
I think its worse than the explosion of the twin towers, she said. If we dont clean this up were losing the very core sense of who we are; its a moral explosion, a moral collapse.
Missing the balance of unions
Werhane said literally hundreds of lower-level executives knew about and chose to ignore the problems with the books at Enron and WorldCom. Accounting giant Arthur Anderson represented the gold standard when it came to ethics, she said. Anderson even poured $5 million into an ethics program that taught business schools how to integrate ethics into the curriculum.
We had one whistleblower at Enron, she said. There had to be hundreds of people who knew what was going on there. We have no whistleblowers at WorldCom. Nobody blew the whistle there. Thats ridiculous.
As an ethicist, Werhane said, We cant exempt ourselves from blame here. [Ethics] has to be thought of as an integral part of management thinking, and if it isnt thought of that way, then I think were going to see more problems. Maybe were not encouraging our students to be independent enough; to step out and say, Wait a minute, this is the wrong thing.
Werhane said the demise of unions has contributed to the problem. Theres no balance to corporate governance, she said. Theres no union balance here to raise the questions. Were not going to go back to unions. We dont like unions much in this country.
For some Catholic business schools, the responsibility for teaching ethics is to outsource it to the philosophy department or theology department and have someone come in to the business school and teach it as an outsider, said Catholic ethicist Kenneth Goodpaster, who holds an endowed chair in business ethics at St. Thomas University in St. Paul.
While Catholic educators have strict guidelines -- in the form of a mandatum -- when it comes to teaching theology, the same kind of mandate is not in place to guide Catholic educators in other disciplines.
Goodpaster said the spirit of Ex Corde Ecclesiae, the 1990 papal document that called for a strengthening of Catholic identity in Catholic higher education, suggests that Catholic universities that have business programs would want to give special emphasis to ethics. I think that almost goes without saying.
St. Thomas is also home to the Center for Ethical Business Cultures, an independent, nonprofit organization that was originally founded in the mid-1970s as the Minnesota Center for Corporate Responsibility. The center is made up of about 130 corporations from the Twin Cities and Upper Midwest.
Elizabeth Kiss is director of Duke Universitys Kenan Institute for Ethics, an interdisciplinary center with a staff of seven that provides campus-wide ethics training. Kiss says in recent years she has observed more of a bottom-line mentality, among students, especially business students.
Recent studies of academic integrity have shown an increase in cheating among college students, Kiss said, and business majors are among the ones who cheat at the highest rates, she said. There is a bottom-line mentality that is fostered in a lot of business education.
Still, Kiss said, There is a hunger for serious discussion of ethics among students. For Kiss, there is different bottom-line: You ignore ethics at your own peril, she said.
Patrick ONeill is a freelance writer living in Raleigh, N.C.
National Catholic Reporter, August 2, 2002