Social and environmental impact is increasingly being integrated into the curricula of leading international MBA programs, according to the latest Beyond Grey Pinstripes survey by Aspen Institute’s Business and Society Program.

“The core curriculum is changing,” reports the biennial survey. “There is a striking increase in content on social, ethical and environmental issues in required courses across departments.”

Between the 2009 and 2011 survey cycles, Aspen said, there was a 38 percent increase in the number of relevant core courses in finance departments across schools, a 41 percent increase in marketing departments, a 22 percent increase in Accounting departments, 57 percent increase in Operations and Productions Management offerings, and a 22 percent increase in relevant core IT / MIS offerings.

The survey also ranked the top 100 MBA programs for their focus on environmental and social impact.  Here’s the top 10:

1.    Stanford Graduate School of Business

2.    York University, Schulich School of Business (Canada)

3.    IE University (Spain)

4.    Notre Dame, Mendoza College of Business

5.    Yale School of Management

6.    Northwestern, Kellogg School of Management

7.    University of Michigan, Ross School of Business

8.    Cornell University, Johnson

9.    University of North Carolina, Kenan-Flagler

10.  UC Berkeley, Haas School of Business

Aspen said its rankings were based on “blind” ratings by a team of Ph.D. candidates who examined data submitted by 149 schools regarding courses, faculty research and institutional support. Nearly 600 schools were invited to participate in the survey.

Among other findings, Aspen noted an increase in the percentage of schools requiring students to take a course “dedicated to business & society issues.” The percent of schools surveyed requiring students to take a course on business & society issues: 34% in 2001, 63% in 2007, 69% in 2009, 79% in 2011

Courses on social entrepreneurship are also gaining far greater prominence across MBA programs, the survey found. “Importantly, most of these courses focus NOT on non-profit, mission based organizations BUT on how business models can be adapted in ways that produce companies that intentionally strive to achieve positive financial, social and environmental results,” Aspen said.  “Between 2007 and 2011, we saw 60% more schools in the survey offering courses being on social entrepreneurship.”

Photo by Yanec, via Flickr

The Symposium is expected to attract an audience of prominent business leaders, government and agency officials, deans and students from top business schools, and members of the media.

Also keynoting at the Symposium will be William M. Isaac, former chairman of the Federal Deposit Insurance Corporation and now Chairman, LECG Global Financial Services and Fifth Third Bancorp.

Attendees will meet the inaugural 2010-2011 class of McGowan Fellows, second-year MBA students representing ten of the premier MBA programs in the country, who are receiving scholarships from the William G. McGowan Charitable Fund.

Mr. Connor will be speaking about trends in the field of corporate responsibility.   Readers and friends of Business Ethics Magazine are invited to attend the Symposium.  Please RSVP by contacting Jacqueline Lara at the McGowan Fund, jlara@mcgowanfund.org or 312.243.3198.

By Mary C. Gentile

Reviewed by Michael Connor

A senior business journalist whom I know – a veteran of reporting and editing stories about some of the biggest corporate scandals of the last few decades – has a simple theory of how business people and companies often get themselves into trouble with the law.

“Most people don’t wake up in the morning and say to themselves, ‘I think I will commit a felony today,’” he explains. “Instead, they cross what seems like a small ethical line one day, then another line a few days later, and so on. Before they know it, they’ve done something seriously wrong.”

That’s not to say that outright liars and thieves don’t exist in the business world.  Bernard Madoff’s multi-billion dollar Ponzi scheme – in which he stole even from friends and charitable organizations - is an example of sociopathic criminality at a high level.   But more often than not, the battle over ethics and values is fought on a daily basis, by average people, in face-to-face confrontations involving routine business issues.

And when things go wrong in that day-to-day world – as they have recently, at firms like BP and Goldman Sachs - an implied assumption is that individuals have lost their sense of right and wrong, driven by expedience or greed. The theory is that no one speaks up because their moral compass has gone haywire.

Babson College business professor and consultant Mary C. Gentile thinks it’s a lot more complicated than that.  In an insightful solution-oriented new book, Giving Voice to Values: Speaking Your Mind When You Know What’s Right, she argues that most people do indeed want to do the right thing.

They just don’t know how.

The unfortunate reality is that, in almost any workplace in history, advocating for a particular strategy or course of action based on principle has always been a challenge.  An argument for “doing the right thing” can seem high-handed, judgmental, holier-than-thou and out-of-touch with the profit-making imperatives of business – even when doing the right thing might actually improve long-term profitability, boost employee morale and minimize legal and financial risk.

“Most of us want to find ways to voice and act on our values in the workplace, and to do so effectively,” Gentile writes.  “The focus here is on those times and situations when we believe we know what is right and want to do it, but we experience external pressures – from our boss, our colleagues, our customers – to do otherwise.”

Ethical theory and the study of high-level strategic dilemmas are important, according to Gentile, but “they don’t help future managers and leaders figure out what to do next – when a boss wants to alter the financial report, or their sales team applies pressure to misrepresent the capabilities of their product, or they witness discrimination against a peer.”

The solution, she suggests, is helping workers at all levels, from clerk to CEO, learn how to anticipate and counter predictable patterns of misbehavior.  She likens the process to an individual learning a new physical skill or a sport. The more one performs practices drills, the more instinctive the response when the game is really being played.   Expressing values openly and frequently, Gentile says, builds muscle for when it’s really needed in the marketplace.

“If enough of us felt empowered – and were skillful and practiced enough – to voice and act on our values effectively on those occasions when our best selves were in the driver’s seat, business would be a different place,” she writes.

Giving Voice to Values incorporates personal and organizational dynamics to help business people develop an “action” plan to deal with commonly heard “reasons and rationalizations” for questionable practices.  Introducing new information and data into an argument might be one tactic.  Another would be recruiting allies on behalf of your argument.  Gentile recommends actually developing and practicing “scripts” to deal with anticipated issues.

In fact, Giving Voice to Values has been developed into a broad problem-solving educational curriculum.  Launched at the Aspen Institute with founding partner Yale School of Management, the approach has already been piloted at over 100 institutions worldwide, including leading schools such as MIT, INSEAD, Columbia and Harvard Business School.

The ultimate goal is to make voicing values “a habit, a default position.”  Given the human condition, that’s no simple task.  Giving Voice to Values provides valuable straight talk and straightforward processes that can open up the corporate decision-making dynamic to new possibilities.  It’s a challenge, really, for management and workers at all levels – to prove that speaking up for values does indeed make for better business.

Criticisms of business seeing value creation only in terms of achieving short-term, unsustainable results and how business schools prepare future leaders predate the financial meltdown. Warren Bennis and Jim O’Toole talked about the need to reform business education several years ago. The crisis simply made it more obvious that business as usual isn’t working, either in the classroom or boardroom.

The piece of management education reform that involves the role of ethics has added importance not only because trust in business has fallen so far, but also because it is tied to how leaders behave and the impact that has on a company culture as well as society.

When students return to campus in coming weeks, dialogue and debate on the purpose of management education and how ethics is handled will continue, impacted by initiatives that seek to help reinforce high ethical standards. Some examples are the MBA Oath project, and programs giving students experience practicing values and integrating ethics into other organizational risk considerations.

While well-regarded companies that have recently suffered reputation meltdown are real-world examples for the classroom, even more important is learning about other models for doing business, like Pepsico, a company that is intentionally setting high ethical standards for itself while still making significant profit.

For many companies ethics has a walk-on part—not much focus beyond the compliance function and website rhetoric about how a company describes its values. If integrating ethical considerations into strategic business decisions was the norm, we wouldn’t keep enduring debilitating crises where consequences of actions apparently aren’t clear to leaders until a regulator shows up or media headlines send stock prices lower.

Performance with Purpose

The reality is that crises at Toyota, Goldman Sachs and BP – to name a few -- involved ethical failures as potent as the business miscalculations and addiction to gaining ever-higher quarterly profits, where choices and shortcuts harmed stakeholders. Just as the ethical debacle of Enron was a wake up call met by additional regulation and beefed up ethics focus in companies, the corporate crises so far this year offer another kind of wake up call that companies and management education would do well to heed. How many more examples do we need of value creation only being about profit at the expense of society?

Indra Nooyi, Pepsico’s chairman and CEO, told students at Yale’s School of Management in May 2010 that “performance with purpose is how we run the company.”  She explained that “Performance with purpose is about how you can intimately link what a company can do with what the needs of society are and together deliver great performance.”

“Pepsico wants to be the model of the good company,’ she continued, “an example of how business should be done in the 21^st century.” This sets the bar very high at Pepsico. The business model requires integrating ethical considerations into the mix of business considerations, aligning decisions with purpose, and acting in a manner that inspires employees to do their best work. The result, if made a reality, establishes trust with stakeholders.

It is the inconsistencies that often trip a company up. Simon Webley, Research Director at the Institute of Business Ethics in London, makes a distinction between doing ethical things (like philanthropy and environmental activities) and doing things ethically. Doing the former is no substitute for doing things ethically, he says, mentioning a company in the U.K. known for the wonderful things it does for the community, but yet it doesn’t pay its suppliers on time. “It is easier to do CSR (corporate social reposnibility) than to integrate high ethical standards throughout the organization.”

Adhering to high ethical standards is at the heart of the Oath Project started at Harvard Business School last year as a grassroots movement of students and faculty. The voluntary pledge to “create value responsibly and ethically” seeks to create a community of MBAs (signers are from more than 250 schools) who share a high standard for ethical and professional behavior. Nitin Nohria, who became Dean of Harvard Business School this month, has been a strong supporter of the project.

Role of Values

Will signing a piece of paper change anything? It depends. We should consider how change occurs; it starts with a personal act of intention, followed by action, gaining reality through repetition and reinforcement until it becomes how things are done by an individual, and a collection of individuals. It is too soon to know the success of the movement or its influence on the companies graduates join. However, it is a start. The Oath Project is supported by many organizations, including Aspen Institute’s Business and Society Program (BSP).

Part of expressing high ethical standards is the ability to speak up in support of those values. Over 100 business schools globally are participating in an innovative, cross-disciplinary business curriculum called Giving Voice to Values (GVV) created by Mary Gentile. The program raises different kinds of questions than the case study approach: “Rather than asking ‘what is the right thing to do?’ she says, “we ask ‘how can I get the ‘right thing’ done?’” In GVV, students go on to answer other questions raised including: “What do I say to whom, what will they say back, and then what do I say? What data do I need? What allies do I need, etc.”

In GVV, Gentile says, “we ask students to create and practice literal scripts and action plans so that the program goes beyond awareness building and analysis to action.” The relatively new program was incubated at the Aspen’s BSP and also sponsored by Yale School of Management before moving to Babson College last year.

To help students practice integrating ethics into the decision-making mix, Loyola Marymount University (LMU) has developed an invitational intercollegiate business ethics case competition which attracts international participation. It is also sponsored by the Ethics and Compliance Officer Association, a professional group for corporate compliance officers, whose members serve as judges. MBA and undergraduate teams make presentations showing their understanding of the legal, ethical and financial dimensions of problems.

“Every decision you make in business generally occurs when you are under pressure, without all the information or time you’d like, and in the midst of competing factors – usually financial, legal or ethical issues,” says Thomas White, professor and director of the Center for Ethics and Business, who created the competition. “There needs to be more emphasis on ethics education in MBA programs (however it is done) because individuals need more technical ability in recognizing and resolving ethical issues, which are as sophisticated and complex as any financial problem, and getting more so.”

The success of business education reform has many champions, and is coming up again at a time when there is crisis fatigue as well as examples of successful companies with a value proposition that puts a priority on social good. Will current business leaders support training new leaders in skills and competencies that support new models of business or will we need to endure more business as usual?

Gael O’Brien is a Business Ethics Magazine columnist. Gael is a thought leader on building leadership, trust, and reputation and writes The Week in Ethics, a weekly column at http://theweekinethics.wordpr

Nitin Nohria, a member of the Harvard faculty since 1988, succeeds Jay Light, who will retire at the end of this academic year.

Nohria has been a faculty leader of the movement to adopt an MBA Oath, a voluntary pledge for graduating and current MBAs to “create value responsibly and ethically.”  The Oath now involves a coalition of MBA students, graduates and advisors, representing over 250 schools from around the world, and partnerships with the Aspen Institute and the World Economic Forum.

“Society's trust in business has certainly been shaken” Nohria said following the announcement of his appointment.  “My hope at Harvard Business School is to restore that trust in business and business education.”

Of the recent raft of business scandals, Nohria added: “There's something about the way that we began to run business that made the pursuit of short-term profit maximization more important than creating long-term sustainable businesses.”

Nohria has co-written or co-edited 16 books, and is author of more than 50 articles and dozens of teaching cases and notes.  He is past head of Harvard Business School’s required first-year "Leadership and Organizational Behavior" course, and he co-directed a team that designed a required first-year course on "Leadership and Corporate Accountability."

An Indian-born American citizen, Nohria is expected to also bring more global perspective to the Harvard program.  He recently taught in such executive education programs as "Building a Global Enterprise in India" and the "New CEO Workshop." Earlier this year, he was one of four instructors from Harvard Schools who co-designed and taught a January term workshop on "Faith and Leadership in a Fragmented World."

When I was a practitioner leading “CSR Integration” at a Big 4 accounting firm, we frequently asked the question, “had our Andersen colleagues applied a CSR perspective to their day jobs would we have remained the Big 5?” Today, within a business school context, I’m being asked a similar question: If business schools did a better job of graduating responsible business leaders, might we have avoided the financial meltdown?

The similarities between my corporate role and academic role are considerable. As a CSR professional, despite being quoted in The Wall Street Journal as having landed my “dream job,” I was committed to making it go away. My goal was to so fully integrate social and environmental responsibility into the way the business was run that my job would become obsolete.

Now, within a business school setting, I face the same challenge. I envision a day when CSR will not be handled by separate centers of excellence focused on business responsibility and sustainability but instead will be integrated throughout the curriculum and research programs.

Modifying the Framework

In short, what I argued for in a corporate setting is what I’m still advocating for today’s business schools: Integration.

Sounds easy enough, but in fact, integration of social and environmental factors into business represents a fundamental shift in the way companies are run and what students are taught. Neither companies nor MBA courses focus on long-run value of the firm; strategy and finance courses assume the goal is to maximize shareholder value and companies get rewarded for quarterly performance.

So I ask: is it fair to expect MBAs to create this change without company executives and business school faculty modifying the framework from which they respectively lead and teach? Similarly, is it realistic to think that a small group of CSR professionals sitting in “corporate headquarters” can really change the way employees think and business gets done?

Today’s students are already instigating changes. Indeed, almost 40% of incoming full-time MBAs indicate that they chose to attend Haas based at least in part upon its focus on “social impact.” And for this group we offer our student the opportunity to engage with leading companies that are making the fundamental shift toward integration. We want our students to experience what it feels like firsthand, to be a part of that change, so that they can go do it in their own companies upon graduation.

Here at the Center, we’re adamant that they not become Chief Sustainability Officers or CSR managers, but instead integrate sustainable thinking and action into their day jobs as consultants, product managers, financial analysts, etc. This semester, our MBAs have helped WalMart determine the ROI on its employee sustainability program, worked with eBay to identify business opportunities to reduce the shipping and packaging impacts of the millions of eBay transaction each day, and pitched to Gap Inc. how it might extend its successful social media presence to encompass its leadership in CSR. Not to be outdone, our undergrads are helping Disney Consumer Products understand how to reduce the environmental impact of the division's paper usage.

Graduating Conscientious Leaders

But to fully realize the goal of integrating CSR we must reach the other 60%, connecting with them on their own (non-CSR-related) turf. In the last three years the Center has successfully engaged some of the future financial and software “wizards” of Wall Street to become principals in a $1.3 million investment fund managed with an eye to both financial and social returns. In fact, applications to become managers of the fund—the only one of its kind run by a top business school—were up 50% this year.

Our Dean Rich Lyons emphasizes that we “prepare leaders who define what’s next for our markets and our societies,” and through our courses and corporate engagement, the Center for Responsible Business is helping our students do just that. But undoubtedly there is more to be done. We continue to work with faculty throughout Haas to integrate a broader stakeholder perspective into teaching and research. I am heartened by the willingness of faculty members whose research is often grounded in maximizing shareholder value and market fundamentalism, to engage in debate on the role of business in society. Together we are committed to finding a common framework where we teach and research what we want our students to care about most.

The financial meltdown, acceleration of climate change and global inequity of social welfare compel us to reconsider how our corporate actions impact the people and world around us. Graduating fully informed and conscientious leaders in every business discipline is the first step in changing the way business gets done and creating a more sustainable world.

Jo Mackness is Executive Director of the Center for Responsible Business at the Haas School of Business at the University of California, Berkeley

Campus Photo: yanec, courtesy of Flickr

The economic downturn has fueled much debate about where the blame lies for the financial crisis we’re in.   Some critics have pointed the finger at business schools which, it is argued, have been teaching the wrong things to MBA students and neglecting topics such as risk management, corporate governance and business ethics. As a result, there are growing calls for business schools to change their approach, and to teach new ways of doing business.

These criticisms overlook the significant changes in business schools that have taken place over the past decade.  Much has already been done to adapt the MBA to the changing demands of modern business.  However, the economic crisis certainly highlights the need for further change and more consideration is being given to calls for a broader, skills-focused and integrated curriculum, with more extensive coverage of ethics, corporate sustainability and responsible management.

Changing times

To assess the requirements of the changing MBA, the Association of MBAs conducted a joint research project with Durham Business School, surveying 100 accredited business schools and 544 alumni from 57 countries to consider the value of the MBA - and how this qualification might change in the future. These findings will heavily inform the review of the Association's accreditation criteria for quality MBA programmes in 2010.

Jeanette Purcell

One of the most striking findings was a move away from the shareholder value-dominated perspective of business. The overwhelming majority of respondents agreed with statements such as “corporate social responsibility (CSR) should underpin the actions of organizations,” and “the MBA should adopt a stakeholder focus concerning all those affected by the actions of an organization, rather than just a shareholder focus.”

Business schools seem even more convinced that a new approach is necessary. Eight in ten agreed to a large or very large extent that MBAs should adopt a stakeholder focus rather than a shareholder one, while a similar proportion agreed that business activity should be underpinned by CSR.

Another key area where further change is called is in the arena of risk. Alumni believe that, although risk management and related issues were covered on their MBA programmes, there is a need to increase this focus in view of recent events and the current climate.   Likewise, business schools acknowledge that both risk management and strategic risk need to be covered in greater depth in MBA programmes in the future.

Be prepared

When business schools were asked how the MBA could be changed to better prepare students post-downturn an how the qualification could maintain its relevance to the changing economic climate, the topic thought to be among the most important was sustainability. This finding reflects the growing concern across society that sustainability is one of the most pressing issues on the global agenda.

When the responses of both alumni and business schools are combined, it is interesting to note that there is a shared consensus on the topics both sides believe are important in today’s business climate. These include business policy and strategy, leadership, and entrepreneurship and change management, as well as external risk factors, business ethics and, finally, creativity and innovation.

The findings also highlight an appetite among alumni for a greater focus on the practical application of learning versus theory. A key question will be the way in which schools can develop the appropriate teaching methods to ensure that the delivery of this broader MBA will translate into long-term learning. Interestingly, the fact that business schools believe that they are putting far greater emphasis on these issues than their alumni believe to be the case, highlights a disconnect between both sides.  While this may only be an issue of perception, it is clearly one that needs to be addressed.

The clear message is that business schools are taking the lead in defining the MBA's future agenda, with a dominant view that the degree should adopt a stakeholder focus over a shareholder one. The development of more rounded individuals with strong leadership skills, and the ability to integrate ethical, sustainable and stakeholder thinking into their management decisions, represents a clear steer for the Association of MBAs and Business Schools as they design the MBA of tomorrow.

Jeanette Purcell is Chief Executive of the Association of MBAs