Business students get a dose of ethics
Students in a business lecture class at La Roche College listen to Lance Shaeffer, right, give instructions on an upcoming exam.
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When Lance Shaeffer was an undergraduate and residence hall adviser at Drury University in Springfield., Mo., a couple of guys tapped into the housemother's phone line and put $100 worth of calls on her bill.
"Why would they do it?" Mr. Shaeffer recalled asking the dean. "They were bound to get caught."
"Shaeffer," the dean replied, "They shouldn't have done it because it was the wrong thing to do."
The dean's crystallization of the ethical lapse sticks with Mr. Shaeffer about 40 years later, and the La Roche College official uses the anecdote to teach business ethics.
Business long has been the nation's most popular undergraduate major -- with 318,000 bachelor's degrees conferred in 2005-06, according to the National Center for Education Statistics -- and business ethics is one of the hottest topics in business education. For good reason.
"Just look at Enron. Just look at WorldCom. Just look," said Mr. Shaeffer, La Roche's assistant dean for academic affairs and adjunct professor of administration and management.
Because of its utility, business likely will continue to be a popular major here and overseas.
In a report several months ago, the Global Foundation for Management Education noted that accountants and other business professionals urgently are needed in developing countries with nascent business education programs.
Meanwhile, business schools worldwide are facing a shortage of faculty with doctoral degrees. The number of new U.S. doctorates -- 1,700 in 2005-06, according to federal statistics -- fails to cover retirements or program growth. The need is acute in accounting and finance because private-sector pay can be twice that in academia, said Steve Parscale, director of accreditation for the Kansas-based Association of Collegiate Business Schools and Programs.
Ethics education had been a small part of colleges' business curricula for decades. But a spate of scandals in the past 10 years, including accounting problems at Enron and WorldCom, and the globalization of business, representing the integration of cultures with different values and economic systems, has given the subject a heightened focus.
Now, the mortgage-related economic meltdown, with questions of predatory and irresponsible lending, has upped the ante again.
"We will be studying this for eons," said Susan M. Phillips, professor of finance and dean of the George Washington University School of Business in Washington, D.C.
A one-course "inoculation" in ethics isn't enough, said William J. Hisker, professor of management at St. Vincent College. St. Vincent, George Washington University, the University of Pittsburgh and other schools have tried to embed ethics in the business curriculum, with some requiring discussion of ethics in every course.
Mr. Shaeffer's anecdote may help to keep students morally centered, but most ethical dilemmas are more complex than phone theft.
As Michael Maloney, a junior business major at Pitt put it, "Not everything in ethics is black or white. A lot of it is gray."
"There aren't clear guidelines for handling every ethical situation," Mr. Shaeffer said. "There are guidelines for puzzling out what would be the appropriate thing to do."
Ethics may be taught by analyzing case studies, considering hypothetical examples of ethical dilemmas or analyzing the components of an ethical business culture, such as procedures for reporting violations, safeguards for whistle-blowers and penalties for offenders.
Duquesne University's Beard Center for Leadership in Ethics brings in speakers to discuss ethics issues in business and other fields. At Pitt, Mr. Maloney, sophomore Renee Sweeney and other business students are developing a portfolio of companies that are profitable and also rank high on an ethics matrix the group created. "I think they go hand in hand," Mr. Maloney said of profit and ethics.
Kuldeep Shastri, a Pitt professor of business administration, said he stresses full disclosure to the client when lecturing about the potentially lucrative but risky investment known as derivatives. He noted the current mortgage crisis involves questions of whether consumers understood the risk of flexible interest rates.
To show that fundamentally good people can go astray with careers, homes and families on the line, Dr. Hisker asks students how many would cheat if it were the only way to pass his course. Regularly, a majority of the students indicate they would, he said.
Accrediting organizations such as ACBSP in Kansas and the Florida-based Association to Advance Collegiate Schools of Business require ethics in business program curricula, and prospective accountants and certain other business professionals face ethics questions on licensing exams.
But there's no sure way to know whether ethics instruction will be absorbed by students or put to use, said John J. Fernandes, president and chief executive officer of AACSB, the Florida group. Rather, he hopes business schools will help to institutionalize ethics in the business world.
Related to ethics are other trends in business and business education, including an increasing focus on corporate social responsibility, environmental stewardship and hands-on learning for business students.
"For business schools worldwide, there is an opportunity to move beyond simply being good -- offering high quality education and obeying the law -- to doing good. Business schools should solidify their role not only in advancing the careers of future graduates and improving business, but also in directly addressing social, environmental and economic ills," said the report by the global education foundation, a partnership of the AACSB and the European Foundation for Management Development.
Such opportunities abound in emerging markets, which business schools from developed countries are penetrating with online programs, branch campuses and partnerships with native institutions.
Mr. Fernandes said business schools and students can use their expertise to assist start-ups -- those in health care for water purification, for example -- that will jump-start new market economies and improve living conditions. But many overseas business programs are unaccredited and uneven in quality, leading to questions about how well students will be taught ethics or other material.
Hands-on learning is becoming more important, business schools said, because employers want students who can hit the ground running.
On Oct. 3, Pitt debuted a $2.3-million finance lab that simulates a trading room with 60 computer stations, live stock tickers and news feeds that will allow students to monitor market activity in real time.
First Published October 14, 2008 12:00 am