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Fixing the MBA identity crisis

Peter Escher
Peter Escher is the co-author of The MBA Oath: Setting A Higher Standard for Business Leaders (Portfolio, April 2010) with Max Anderson. Escher and Anderson are founding members of the MBA Oath movement that began at Harvard Business School among a group of students in the graduating class of 2009.

Not all MBAs are created equal. That was the topic of discussion over lunch with a classmate of mine, whom I'll call Greg. If the MBA degree is, as many entrants believe, a ticket to a more impressive network of friends, Greg is the archetypal member of the network. His career path reads like an ideal MBA check-list. Management consulting - check. Private equity - check. Harvard Business School - check. After graduation, Greg passed on lucrative job offers to start his own small hedge fund - check.

At our lunch of burritos at a local Qdoba (Greg is more accomplished than glamorous), he was questioning the social stratification we encountered at business school. As he saw it, financiers were at the top, and then there was everyone else. Because of the heavy curricular emphasis on finance and accounting, the students who had managed money and knew financial modeling were often deemed the smartest. Socially, they were the ones you wanted to network with. Students who had "merely" managed people, products, brands, and even non-profits were lumped together in the lower echelons.

This perception seemed to be confirmed during recruiting season. The biggest post-graduation paydays are found in the halls of Wall Street banks or the office parks of Greenwich hedge funds. Indeed, the percentage of MBAs going into financial fields after graduation has never been higher. Greg admitted that he had benefited from this business school caste system.

Is this what the MBA degree was intended to be, a program that values financial acumen above all else? As MBA classes of 2010 graduate this spring and head for jobs in investment banking, private equity and management consulting, the question becomes: What is the meaning of that degree you just received?

The rise in status of the financier at business schools has created an identity crisis for the MBA degree. Looking back a hundred years, the origin of MBA programs was based on the idea that business had both an economic and social purpose. Business schools would teach finance and accounting, but more importantly, they would empower managers to oversee public and private companies in the interest of a broad set of stakeholders: shareholders, customers, suppliers, and society at large. Therefore, MBAs were intended to manage people, products, capital, and societal resources at a professional level, with the idea of long-term value creation in mind. It is a sophisticated mandate and one that requires a broad range of skills.

Today, the need for this type of manager, one who is able to make decisions with a long-term perspective and broad constituency in mind, is more acute than ever. Goldman Sachs, facing increasing scrutiny, must provide customers with financial services and disclosure within a landscape that does not always have regulatory guidelines. Google, as it expands into international markets, must grapple with balancing revenue growth in China in light of the company's stance on censorship. BP, faced with a spill of epic proportions, must balance its search for oil with environmental safety, and must now also wrestle with its responsibility to make restitution for the damage done. These companies are stocked with MBAs who won't find much guidance from the simple, ubiquitous mantra of "maximizing shareholder value."

So where do we go from here? Curriculum change is needed and is coming: We need more emphasis on leadership, decision-making, and cultural awareness. As prominent business thinkers Warren Bennis and James O'Toole write, business is "essentially a human activity in which judgments are made with messy, incomplete and incoherent data, statistical and methodological wizardry can blind rather than illuminate."

But students and graduates also have a role to play. We need to rebuild the principles of business school from the ground up. That is why I and a group of fellow MBA grads created the MBA Oath. Simply put, the MBA Oath is a code of conduct for managers in the same way that the Hippocratic Oath is for doctors.

It starts with two statements about the social role of the business leader:

"My purpose is to lead people and manage resources to create value that no single individual can create alone."

"My decisions affect the well-being of individuals inside and outside my enterprise, today and tomorrow."

Having acknowledged this role, the graduate then makes seven promises: to manage with loyalty and care; to uphold law and contracts; to refrain from harmful business practices; to protect human rights; to consider future generations; to report performance accurately; and to invest in the development of myself and others.

More than 3,000 students have take the oath, and we hope this is just the beginning.

Perhaps financiers will always be on top. Certainly, 20 years from now, we want to see an MBA marketplace that still values Greg's financial abilities. But we need MBA programs that prioritize the creation of responsible managers who strive toward long-term value creation. After all this is where the MBA program was born: in the desire to improve and professionalize the art of management.

By Peter Escher

 |  June 1, 2010; 5:00 AM ET |  Category:  Business Leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Anyone who has graduated from a business school knows is that their job is to increase the value of the stakeholders/stockholders wealth.

No one living in a Capitalist society can dispute this!

The problem is the method in which we try to attain those goals. Is it through a long-term, sustained growth or through the quick buck?

All too often in recent years we've seen the quick buck method being implemented with little care or concern for a corporations long term outlook.

I don't necessarily attribute this to MBA graduates. Oftentimes they're only asked to provide several methods to fund corporate projects. It's the Corporate Boards who sit down to make the final decisions.

With the corporate salaries, bonuses and stock options at the higher echelons of the corporate world so disproportionate when compared to lower line level works, why wouldn't they be more concerned for the short term gains?

Though I do believe that it's at this point those same MBA grads should be looking for a job relocation if they're interested in any job stability. Because they aren't going to find it in this job.

Posted by: helloisanyoneoutthere | June 1, 2010 6:40 PM

Any moron can get any kind of MBA. AND all MBAs are unable to distinguish right from wrong to begin with. The facts speak for themselves. Do MBAs even know how to read?

Posted by: therev1 | June 1, 2010 4:44 PM

A proper MBA oath: 1) I promise to play by the rules, however ludicrous they may be, remembering at all times that I did not create them, but that I am bound by them. 2) I will not cheat, scam, sleaze or deceive. 3) If I am a stock broker and if a customer wants to buy a dog of a stock, it is not my job to editorialize about his lousy judgement, unless I am his or her financial advisor. My job is to execute the trade. 4) If I chose a business career in order to escape the gravitational pull of poverty, then I owe it to myself to maximize my own financial opportunities (Thank you Ayn Rand!). 5) If I chose a business career to benefit others, then I must have my head examined unless I can afford to ignore my own interests and place the interests of others ahead of them -- a marvelous luxury (see John Stuart Mills' essay "The Luxury of Integrity" but take out the self-serving sleaze factor which is expressly forbidden). 6) It is legal and fairly brilliant to stop leasing equipment (an expense that negatively affects the bottom line) by purchasing it (an asset conversion from cash to a thing) and boosting the bottom line -- and the various three-cushion shots that enable net/net profit enhancing depreciation advantages are time honored and in accordance with generally accepted accounting practices; besides, one's performance bonus if often associated with an increase that holy bottom line, therefore, be religious about the sanctity of that bottom line and do all possible to increase it... in accordance with Rule 2) above. 7) The same applies to taxes, but in reverse. Pay as little personal income tax as is consistent with our bizarre and arcane Tax Code; besides, the spendthrifts in our beloved government will only squander your contribution. We must not enable or encourage them. 8) Remember that success has many parents while failure is usually an orphan. Avoid failure, be a successful parent. 9) Win, lose, or draw, make charitable contributions a routine part of your life so as to enhance your humanity by recognizing and responding to others's needs. 10) Be humble because no matter how well you do, you are going to die. And remember that you are playing a game. Play as well as you can before you keel over.
-Lorenzo Q. Squarf, Flamekeeper of Western Civilization

Posted by: squarf | June 1, 2010 4:26 PM

I can't be the only one who finds it interesting that while modern day conservative have been attacking undergrad colleges and universities for having a bias, they've not uttered a peep about MBA's and business schools.

Posted by: hootie1fan | June 1, 2010 3:30 PM

Is this a joke - this MBA oath? I do NOT see included anywhere, even in the article any mention of 'I will NOT outsource America's jobs to overseas markets' !!!
With America on the decline and domestic economic prospects bleak at best - it's a matter of National Security to NOT create high unemployment by sending high paying jobs + manufacturing overseas so the selfless executives can lavish themselves in multi-million dollar bonuses and houses around the world and the relentless pursuit of short-term profits to woo investors that manipulate financial markets with the smoke and mirrors of such arcaic practices of 'bought' financial rating services and flouting ridiculous terms such as 'FREE-MARKET' that has become the unspoken code word 'MY-MARKET' by the U.S. Chamber of Commerce out to topple the U.S. Government's democracy style of government for All THE AMERICAN PEOPLE - WHITE, BLACK, RICH or POOR, not just the chosen few passing the GOP's latest libertarian whisper endorsement of JIM CROW LAWS litmus test.
Is there poll 'style' taxes coming or just blatant purging of voter records like that of Florida or Ohio that many believed skewed the national Presidential elections of G.W. Bush to the GOP dominated partial Supreme Court if you happen to be Republican.
That's how many American's believe the United States has become - one BIG GOP 'JUNK SHOT' !!!!!!!!!!!!!!
Posted by: danglingwrangler

Dude...you need professional help. You're out there man!

Posted by: ihatethisstuff | June 1, 2010 2:44 PM

MBA grads with >$60K in student loans to repay have a number of outstanding financial imperatives. Love Thy Neighbor is fine, but won't win a job or pay back the debts. Nor will it earn a discount on rent or a housing downpayment.

Divinity School is not much of an alternative for the the more altruistic. Imagine incurring the same debt for a job that pays only $20k / year, if it exists at all, unless it's in one of those "the Lord loves millionaires and you can be one too" denominations.

Medicine has been lucrative enough to allow practitioners to be "moral." However, once the cost-cutting gets serious, the "first, do no harm mandate" may morph into "first, verify what insurance will reimburse." "Tierage" of patients will eventually get its sanction, unless their is unlimited money for unlimited treatment of everyone.

Posted by: jkoch2 | June 1, 2010 12:46 PM

Getting business school grads to promise to "first do no harm"?

Gee, that's such a great idea we should try it with journalism grads!

No wonder the Washington Post is bankrupt. Good thing you have that glorified community college selling fake degrees to keep you afloat.

Posted by: diesel_skins_ | June 1, 2010 11:52 AM

I still think the best way to impress soon-to-be B-school grads about the seriousness of getting too greedy and causing way more harm than they should is to ceremoniously trot guys like Madoff, Skilling, etc. onto the stage at graduation and...blow their brains out in front of everybody...That ought to temper a few wild hairs.

Posted by: PanhandleWilly | June 1, 2010 11:38 AM

Oh yeah, the oath should take care of it. LOL. Look, the sooner we stop trying to convince ourselves that we can mitigate corporate thuggery - or punish it enough to make the criminals stop their behavior - the sooner we realize reality and what America is ALL ABOUT.

Ya gotta love the hypocrisy of the good ole US. We claim to be good god-fearin,' moral, family-value folks (thanks for that phony business sales pitch, Republicans!) and yet, we - more than most countries - do ANYTHING to quench our materialistic thirst so we can "get ahead" - whether or not it means stealing money from others.

Posted by: ANTGA | June 1, 2010 11:38 AM

This joke is in poor taste.

The modern business model is indistinguishable from that of organized crime. You'd do as well teaching ethics to a mob hitman as you would an MBA student.

Businessmen are merely criminals who have the "law" on their side.

Posted by: bigbrother1 | June 1, 2010 11:20 AM

Isn't the whole reason why the majority of folks go for MBA's to begin with is to advance their careers-which equals to "better pay"? It would seem to me the motivation to achieve an MBA is self-centered to begin with, a conflict of interest from the very beginning. Then again, this sounds a bit outdated to assume people with MBA's somehow control our finances or something, yet alone have that huge of an affect on our financial system anymore than someone without an MBA does. After all, a plumber can do just as big of a damage as anyone else, just ask Bernard Madoff. And if a plumber can do some damage, how much more for a bank teller like Charles Ponzi?

Posted by: callosumlink | June 1, 2010 11:07 AM

If a student is more serious about knowledge than the pursuit of social connections, alternatives to the MBA and its culture are rapidly arising. The Association of Professionals in Business Management delivers virtually the same educational content through its Certified Business Manager (CBM ) program. You won't hobnob with financiers but you'll learn the material, take the mother of all exams, and sign a code of ethics.

Posted by: CollegeAdminPro | June 1, 2010 11:06 AM

"Here's an idea, look at other professions: Medical, Law, Engineering. They have "oaths" too and if you break that oath, YOU LOSE YOUR DEGREE/LICENSE. You legally lose it. Period."

You never lose a degree. You did the work, it was signed off by the school, you've got it. There is no maintenance responsibility with a degree.

My professional responsibility to be ethical and to take coursework designed to keep my skillset current come from my CPA, not my MBA.

If positions that require ethical behavior expected employees to have certifications demonstrating knowledge and allegiance to a code of proper conduct, there wouldn't need to be an informal, unenforceable "oath for MBAs."

Posted by: mapleleaves1 | June 1, 2010 10:54 AM

Don't hold your breath.

Posted by: adrienne_najjar | June 1, 2010 10:53 AM

A lot of people, here, think that the pursuit of money is all any MBA or business needs to be concerned with. The Founding Fathers, on the other hand, saw businesses as deriving their justification from service to the country. If a businessman does harm, wrecks lives, drives someone to suicide, I would hold them completely accountable, charge them with murder, and execute them. The same should hold true of a businessman who harms the country. A business is a citizen and a citizen that negligently harms the country for mere money is guilty of treason. That is plain. And we should take them out to a public place and lynch them. The government has no right and no Constitutional authority to give businessmen (nor their corporations, using that fiction) any sort of pass, either, an any of them attempting to do so should join that MBA on their ride straight to hell. The country, the world, is undergoing a transformation, where the sort of predatory, mindless pursuit of profits behavior long tolerated, is now acknowledged as morally repugnant. I suggest that todays MBA's understand that and take it to heart becasue ignoring it will likely cost them their lives.

Posted by: mibrooks27 | June 1, 2010 10:43 AM

I worked for many years with MBA grads who were almost all experienced engineers who pursued and obtained part-time MBA's at local universities. Most had served some time as military leaders.
They were universally ethical and decent people. They had chosen the MBA path to learn more about business.
The ones who dominate the Ivies and were looking for obvious ticket-punching entry to finance seem to be the least ethical of the lot.
Why? Because they have gone into that entry in business with little or no moral compass that comes from working around real people in operating businesses or from a decent family environment.
The oath won't do it.
Screening out the sleazeballs at entry is the right way but the big MBA factories have got to feed the faculty and so don't really look at the ethics and nihilism of their program entrants.

Posted by: gccdavid | June 1, 2010 10:17 AM

As futile as an Oath for MBA's is, the author is at least aware of the problem. Giving a kid an MBA is like giving a petty thief a crowbar and a map of flimsy windows in your neighborhood.

Our parents generation made fun of misers, sitting in the dark counting pennies by candle-light. We've elevated the miser to demigod and guarantee it with an MBA certification.

What America lacks is not business knowledge, but respect for a philosophy. Any philosophy. Philosophy is an intellectual pursuit, and with America's lack of respect for eggheads, it will go nowhere.

Posted by: IGiveup1 | June 1, 2010 9:46 AM

As futile as an Oath for MBA's is, the author is at least aware of the problem. Giving a kid an MBA is like giving a petty thief a crowbar and a map of flimsy windows in your neighborhood.

Our parents generation made fun of misers, sitting in the dark counting pennies by candle-light. We've elevated the miser to demigod and guarantee it with an MBA certification.

What America lacks is not business knowledge, but respect for a philosophy. Any philosophy. Philosophy is an intellectual pursuit, and with America's lack of respect for eggheads, it will go nowhere.

Posted by: IGiveup1 | June 1, 2010 9:45 AM

Very noble. However the primary motivation of most MBA's is future earnings.

The various causes of our current plight are greed, ignorance and complexity. Enlightened greed is not a bad thing, but coupled to the ignorance of homeowners (and many mortgage issuers) and the increasingly complex world of high finance, the system is a house of cards.

As usual the responsible get bailouts and the victims get punished.

Posted by: AlanBrowne | June 1, 2010 9:45 AM

Is this a joke - this MBA oath? I do NOT see included anywhere, even in the article any mention of 'I will NOT outsource America's jobs to overseas markets' !!!

With America on the decline and domestic economic prospects bleak at best - it's a matter of National Security to NOT create high unemployment by sending high paying jobs + manufacturing overseas so the selfless executives can lavish themselves in multi-million dollar bonuses and houses around the world and the relentless pursuit of short-term profits to woo investors that manipulate financial markets with the smoke and mirrors of such arcaic practices of 'bought' financial rating services and flouting ridiculous terms such as 'FREE-MARKET' that has become the unspoken code word 'MY-MARKET' by the U.S. Chamber of Commerce out to topple the U.S. Government's democracy style of government for All THE AMERICAN PEOPLE - WHITE, BLACK, RICH or POOR, not just the chosen few passing the GOP's latest libertarian whisper endorsement of JIM CROW LAWS litmus test.

Is there poll 'style' taxes coming or just blatant purging of voter records like that of Florida or Ohio that many believed skewed the national Presidential elections of G.W. Bush to the GOP dominated partial Supreme Court if you happen to be Republican.

That's how many American's believe the United States has become - one BIG GOP 'JUNK SHOT' !!!!!!!!!!!!!!

Posted by: danglingwrangler | June 1, 2010 9:42 AM

Perhaps if business schools could teach their MBAs that while market places do a terrific job of assigning PRICES to goods and services, they generally do a miserable job of assigning VALUE to goods and services. And yes, I mean VALUE in the moral sense, not the the "optimum price" sense.

So how to teach MBAs values . . . . Hmmm.

Posted by: post_reader_in_wv | June 1, 2010 9:36 AM

I'm convinced that a part of our problem with greed in the financial markets has to do with how today's MBAs were taught. I went to a college where the very well known CEO of an extremely damaging company got his education. I also watched the economics professors who taught him.

I think those professors taught their students how to manipulate the government and markets. They also failed to teach ethics. We are reaping that harvest today.

Posted by: tinyjab40 | June 1, 2010 9:26 AM

Your 'Oath' is just another way to legitimize your so called the MBA, the discipline is a facade.

The Ivy league MBA schools would not be so rich in endowments and full of wealthy professors if it wasn't for those unethical, money chasing, networking people that you currently call the cheats of the MBA system. Obviously spending 100K for a 2yr degree is a drop in the bucket for you and still 'too cheap' [according] to Harvard's admissions board.

Getting an MBA puts you into a certain world, where acadaemics and business get mashed into 1 social scene. It's equivalent to being a politician, in the business world. The problem is it has *nothing to do with business, jobs or the bottom line*. It's truly Adam Smith rules in a game that's "rigged" by the few MBA Masters of the Universe.

Here's an idea, look at other professions: Medical, Law, Engineering. They have "oaths" too and if you break that oath, YOU LOSE YOUR DEGREE/LICENSE. You legally lose it. Period.

Doing that would increase the quality of MBAs & push out the money chasers. An oath having no real enforcement gets exploited and ignored. But then again isn't that what most MBAs want (marketing sound bites to sell themselves vs. real rules?).

Posted by: recharged95 | June 1, 2010 9:17 AM

It isn't a joke. It's wishful thinking. The goal of any business is to make as much money as possible for the owners and their investors. If that means cutting corners and risking environmental or financial disasters for others, so be it. Once the money is in the bank, the individual can decide how to use it. That's where CHARITY and DONATIONS happen - from the table droppings of the lord of the manor.

Posted by: jfCua | June 1, 2010 9:04 AM

Here's an alternative proposal for reforming the MBA curriculum: every newly minted MBA should have to serve a year of hard time in prison before going out into the job market - just to get it out of the way.

Posted by: Montana1 | June 1, 2010 8:56 AM

Here's my alternative for reforming the MBA curriculum: every newly minted MBA should have to serve a year of hard time in prison before going out into the job market - just to get it out of the way.

Posted by: Montana1 | June 1, 2010 8:54 AM

We used to joke that the business majors were the ones who were too dumb to study economics. Now that I'm older, the B-school problem is that you can't make silk out of a sow's ear: these people have no ethical compass other than selfishness. The Ivy league has completely lost any appeal as the spawning ground of these ethical misfits. B-school and the Ivys are breeding grounds for classism, Brahmins and nihilism. As Groucho Marx said, " I wouldn't want to belong to any club that would have someone like me for a member".

Posted by: citizen625 | June 1, 2010 8:24 AM

Maybe society should value ethical behavior and community contribution over just the relentless pursuit of cash.

We're not there yet.

Posted by: postfan1 | June 1, 2010 7:10 AM


What could be more ethical than returning a profit to the shares? Then the share owners can begin their own philanthropic endeavors like Bill Gates and Warren Buffet.

Posted by: blasmaic | June 1, 2010 6:30 AM

Is this a joke?


Hippocratic Oath? The money in medicine has spawned more Mengeles than hitler ever did.

Oath


Howsa 'bout we cut from the herd all those who are immoral.

easy but you have ue your head

perhaps the writer might want to run and get someone with moraitly to help him write his next column...

geez

Posted by: JohnAdams1 | June 1, 2010 6:01 AM

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