I spent two years of my life and a substantial amount of money earning an MBA, a degree I share with many of the people running the largest companies in the world, and many of the people who ran those companies into the ground. NPR recently considered to what degree business schools are responsible for the financial crisis still running its course. After diligently giving voice to both sides of that debate, the story then explores the idea of turning management into a true profession, with a standard set of values, knowledge and, perhaps, a Hippocratic-esque oath akin to medicine or law.
It's indisputable that changes of this sort would be valuable to society. But not for the reasons one might expect. Arguments for teaching a stricter set of values and forcing people to swear to a code of ethics imply a transformative process at work in the MBA education -- people are changed by their experiences in an MBA program. Of course that's true to an extent; livers damaged, vlookup skills gained, networks widened, people walk away from MBA programs with broader horizons, loftier ambitions, and some skills. What they don't learn, even at the Yale School of Management with its commitment to creating leaders for business and society, is a coherent set of professional ethics. There are no required ethics courses, and the State and Society course taught in the core curriculum is a disorganized agglomeration of political science, law and sociology, not a true exploration of business's role in creating social benefit.
This results in some strained conversations about professional ethics and responsibility. When we discussed a case about pharmaceutical companies, I pointed out that the consistently high returns on equity suggested that they were over-compensated for the risk of drug development and that we could afford to shorten patent terms and gain cheap generics more quickly. Rather than addressing the empirical questions of how consistent the returns on equity really are, or what returns are necessary to encourage entry and drug development, my professor called me a "communist" for using that line of argument. In a subsequent class, we discussed the case of the acquisition of one publicly-held government defense contractor by another. The acquired firm was characterized as being deeply committed to delivering unbeatable value to the government, consistently pricing below competition and delivering higher quality work. The acquirer was more profitable, but charged higher prices and had had complaints about quality. I pointed out that the acquisition was a clear social detriment; we as taxpayers would all be paying more money for the same or slightly lower quality services, while the debt- and equity-holders involved in the acquisition would benefit. A few students argued against me, and the professor shrugged his shoulders. In both these cases, there were obvious trade-offs between social benefit and corporate profits, and in both cases the notion that we had a right as a society to determine how those trade-offs were made was dismissed. Conservative students who ascribe to free market orthodoxy over-apply it to these instances where there is no free market; the government creates monopolies with patent law, and is the monopsony buyer of defense contracting. Meanwhile, students who might be more willing to consider social benefit do not have a vocabulary or framework with which to make their arguments. These incidents occurred in the same year that the school released the first issue of its magazine Qn, asking the question, "Can we make management a profession?" The Yale School of Management was asking the right questions, but has shown little desire to implement any answers.
All that said, the Yale School of Management is a very different place from Harvard Business School or Wharton. The curriculum is structured differently, classes are smaller, electives in not-for-profit management are many and of high quality, and the case method is supplemented with a hefty dose of classic rational-market and behavioral economics. However, it is not these differences in curricula that make the Yale School of Management so different -- it is instead the student body. Many people come from not-for-profit backgrounds, and there are a lot of joint degree students with the Forestry School. Even the bankers and consultants If students at the Yale School of Management become leaders for society and business, it has more to do with their values coming in and their mutual support of those values than it does anything they learn while at the school. More generally, for a Hippocratic oath of business or a beefed up curriculum to be most valuable, it will have to change the pool of applicants to business schools, not necessarily change the students once they arrive.
If you want to change the applicant pool to business school, you're going to have to make it attractive to the right people and painful to the wrong people. Unfortunately, I don't think shoving an ethics class or two into the core curriculum and requiring an oath upon a graduation is going to significantly deter the greedy and conniving. And the marketplace does not care enough about ethical MBAs to give those who demonstrate their values a leg-up in hiring, which could serve to attract the right kinds of people. These steps may turn management into a profession, but they won't consistently turn out managers that act like professionals. The people who come into MBA programs who care about social impact will leave with a better sense of what that means and how to achieve it. But those who come in concerned only with the marginal increase in salary, or access to venture capital networks are likely to leave no different than they do now.
The ugly truth is that professions are not constituted only by values and curricula -- they require regulation and punishment. The bar examination and the medical licensing examinations are necessary to police the profession and ensure sound professional practice. Until every vice president or above in a public corporation is required to pass a management licensing exam -- until there are some serious sticks and carrots at work -- management will not be a true profession. These regulations may go against every fiber of the free-market champions that typically enter business schools, but the market has shown itself to be completely incapable of letting the social-value maximizing cream rise to the top of corporate ladders. Instead, we've had villains, hucksters and incompetents, alongside the occasional paragon. If the management profession is going to spot the bad apples before they drive the economy of another cliff, it's going to have to look for them and kick them out. Business school might not be the place to apply that rigorous filter, but it has to exist.
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