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

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

Television viewers in more than 3 million homes in New York City and its suburbs discovered this morning that their cable TV provider was no longer carrying local station WABC, flagship of the ABC Television network, raising the possibility that they might not be able to watch tonight’s globally-televised 82^nd annual Academy Awards ceremony.

The cutoff came after the breakdown of negotiations between The Walt Disney Company, which owns ABC, and Cablevision Systems Corporation, one of the nation’s largest cable companies.   Disney wants more from Cablevision in so-called “retransmission fees” for the right to transmit the WABC signal to the cable company’s subscribers.  When the two sides couldn’t reach agreement by their current contract deadline, Disney pulled the WABC signal.

These two prosperous companies will undoubtedly sort out their dispute, maybe even in time for tonight’s orgy of Hollywood self-congratulation.   What’s notable about the confrontation, however, is the harsh public language used by corporate combatants and the hints it provides of progress in the movement toward corporate governance reform.

On its web site for customers, for example, Cablevision argued: “It is wrong for ABC to demand $40 million in new fees, which is nothing more than a new TV tax, to help pay the salaries and bonuses for top ABC executives.”  (Translation: Executive compensation levels at Disney are a real issue.  That affects the type and quality of TV programming you receive.)

Disney’s WABC fired back: “Cablevision pocketed almost $8 billion last year, and now customers aren’t getting what they pay for – again.  It’s time for Jim Dolan and the Dolan family dynasty to finally step up, be fair, and do what’s right for our viewers.”  (Translation: The Dolan family makes an awfully good living because it tightly controls publicly-held Cablevision through its ownership of a special Class B common stock.  That affects the type and quality TV programming you receive.)

It’s no wonder that The Morning Bridge, a TV industry newsletter, published a special Sunday morning bulletin focusing on the war of words and asking: “Think anybody wins in these situations?”

(Update: Disney and Cablevision reached a tentative agreement and the ABC signal was restored 14 minutes into the Oscar broadcast.)

Is the tide turning?

Well, it could be that the movement for corporate governance reform is actually beginning to score some wins, if only because average citizens and small shareholders are beginning to understand that these issues can really mean something to them.  The question is whether these victories are only short-term tactical advantages or constitute signs of longer-term success.

“Up until now, it’s been sort of a Soviet system,” is the way shareholder democracy is described by Stephen Davis, executive director of the Millstein Center for Corporate Governance and Performance at the Yale School of Management.  “We have been operating in the United States under the myth that boards have been accountable to shareholders.”

Davis’s views are reflected in a generally upbeat weekend New York Times article on shareholder democracy which concludes that “the tide is beginning to turn, albeit slightly” for shareholders.  In addition to various rules changes, the Times cites the availability of more Web resources that help educate smaller investors to the issues, including ProxyDemocracy.org, Shareowners.org and MoxyVote.com.

Governance activist and blogger James McRitchie agrees that that the tide “is turning to become more balanced through increased voice from shareowners. Of course, we are still a long way from the point where most directors feel more accountable to shareowners than CEOs,” he adds.  McRitchie says his optimism about the outlook for shareholders, like that of other activists, is also fed by the work of the Securities and Exchange Commission’s newly-formed Investor Advisory Committee.

“A many-splendoured thing…”

Bob Monks

Seemingly less sanguine about the prospects for shareholder democracy is Robert A.G. “Bob” Monks, one of the world's most provocative thinkers on corporate governance.  Back in 2005, my colleague Marjorie Kelly, co-founder and then Editor of Business Ethics Magazine, wrote that “Monks seems to have invented the term ‘corporate governance.’”  As a co-founder with Nell Minow of the Corporate Library, a governance research firm, and founder of Institutional Shareholder Services (acquired in 2007 by RiskMetrics Group), Monks has an established track record in the field.

“Clearly, the modern shareholder, like love, is a many-splendoured thing, but while we can admire such diversity, we also have to ask whether any single class so broadly writ can ever begin to exercise its ownership rights vis a vis entrenched and well-funded corporate power,” Monks writes in a new, lengthy and colorfully-written post on the Harvard Law School Forum on Corporate Governance and Financial Regulation.

Monks goes on: “The practical effect of having ownership spread so broadly is that shareholders as a group have virtually no effective ownership rights they can exercise. Senior management pays itself, boards sit idly or complacently by, corporations abrogate ever more authority to themselves and gain an ever stronger voice in the political process, and when it comes time for the piper to be paid, the shareholders pony up in lost equity value and increasingly of late taxpayers pick up the final tab. This is a condition that ultimately serves no public good.”

One possible solution, suggests Monks, is a standard corporate structure with two classes of stock ownership: “passive shareholders, who choose not to exercise ownership rights, and stewardship shareholders, who already bear a fiduciary responsibility for funds under their management.”  Accomplishing that, Monks says, would require federal government action to create “a framework of legally enforceable responsibility.”

Speaking of Oscars…

None of this is likely to help some 3 million Cablevision subscribers in the New York area watch the Academy Awards tonight.   Their outrage is reflected in the comments on local newspaper web sites:

“GREED THY name is america.......if you make a gazillion dollars you want a bazillion......”

“Corporate blackmail with the consumer caught in the middle. Time for regulatory reform.”

Indeed, the current state of shareholder rights calls to mind the Oscar-winning performance of Peter Finch as TV anchorman Howard Beale in the prophetic 1976 film “Network.” Outraged by the respective states of society and the TV industry, Beale explodes spontaneously on-camera, driving ratings through the roof as he gets millions of viewers to join him in screaming: “I’m as mad as hell and I’m not going to take this anymore.” (YouTube)

It’s a message that the senior management and boards of Cablevision and Disney – and many other publicly-held U.S. companies – should listen to again and take to heart.

Disclosure: Michael Connor is a past employee of Cablevision Systems Corporation and ABC Television.

Oscar Photo: Darren Decker / ©A.M.P.A.S.