Do We Need an MBA Oath? And Should MBAs Take It?

A Point/Counterpoint

The MBA Oath was created in 2009 by a group of HBS ECs. Confronted with the global financial crisis still in full swing, the group met with various faculty members, and the result of their work was a “Hippocratic Oath for Managers” to “transform the field of  management into a true profession.” The oath defined a social contract between business leaders and society as a whole to effectively behave in an ethical fashion.  Was the oath a good idea, and should graduating students take it? Two HBS students take opposing views.

Why We Should Have an MBA Oath and Why I Will Take It 

By Will Clayton (HBS 2012)

Max Anderson, right, with Harvard classmates and their M.B.A. oaths saying they won’t advance their “own narrow ambitions.”

Max Anderson, right, with Harvard classmates and their M.B.A. oaths saying they won’t advance their “own narrow ambitions.” -- Photo and Caption by NYTimes.com

The purpose of business is to create value for society.  Drucker describes it as creating and serving a customer, while Porter’s Shared Value framework implies businesses should be “creating economic value in a way that also creates value for society by addressing its needs and challenges”, but both agree that the purpose of a business is to create value beyond its walls.

If we consider an MBA the professional degree of an aspiring business leader, then the professional purpose of an MBA graduate should be to lead organizations that create value for society.  Indeed the preamble of the MBA Oath begins, “My purpose is to lead people and manage resources to create value that no single individual can create alone.”

Some might argue that the boundaries defined by law make an ethical code for managers unnecessary, but the law simply sets a baseline for what is legal, not what is ethical and certainly not what would be considered “best practice” behavior.  Imagine a society where nobody broke the law but everyone treated everyone they met like dirt.  Would you move there tomorrow?

The law is generally a lagging indicator of acceptability, not a leading indicator of where we want our society to go.  If an MBA education is about equipping people to be leaders in business and society, then I believe it is reasonable to expect these business “leaders” to be leaders in what is right, not followers who do only the bare minimum expected of them.

Business leaders can have a massive impact, for good or ill, on our society and should have a code of conduct that reflects that potential. Doctors and lawyers have professional codes of conduct that go beyond the law and yet a doctor or lawyer would be hard pressed to ruin more than a few hundred lives before being stopped.

As for MBAs…Enron’s collapse destroyed the retirements of 11,000 Enron employees alone and likely hundreds of thousands of others were harmed.  Lehman’s collapse hurt 25,000 employees directly and countless others around the globe indirectly.  Doctors and lawyers can do great harm, but simply by virtue of the scale of resources controlled by MBAs, and business leaders more broadly, their opportunity for far-reaching harm to society is greater.

So why should you, as a future MBA, take the MBA Oath? For me the decision revolves around publicly declaring the type of business leader that I want to be and my acceptance of public accountability for this goal.

I believe in the value of aspirational goals.  Aspirational goals can change the framing through which we interact with the world.  If signing a non-binding pledge saying “I will not drive drunk” can materially reduce drunk driving, then what can the Oath do?  We will only know if we try.  Perhaps by publicly setting a higher standard for managerial behavior, we can eventually shift what is acceptable behavior even among those who have not signed.

I believe business should be about creating value for society, not destroying or stealing it for short-term gain.  I believe business leaders should declare what is an acceptable way to do business and what is not.  Businesses thrive and grow when they create value for their customers, employees, shareholders, and society. They wither and collapse when even one of these breaks down.

Taking the Oath is about publicly stating that the purpose of our leadership (and that of other MBAs) is to create value for society and asking our peers, family, and the public to hold us accountable to that pledge.

The lens through which we look at the world matters and MBAs need to start looking at the world with an eye towards long-term value creation and responsible leadership.  The Oath can help with this framing.

 

I’m Not Taking any MBA Oaths, and You Shouldn’t Either

By Colin Barry (HBS 2012)

Over the past decade, the scions of the most celebrated business schools on the planet have presided over a glaring string of criminal misdeeds and macroeconomic catastrophes.

We at Harvard have tried to muster a response. We added a first-year course on how not to be a crook (Leadership and Corporate Accountability). We welcomed a bold new dean with a reputation as an ethics-focused educator. And in 2009, several of our alumni proposed that we take an MBA oath upon graduation.

MBAs must stop bleeding our world dry. But I think a professional oath for managers is a bad idea. The MBA Oath is flawed in design, inadequate in execution, and destined to fail.

Management is not the same as medicine or law.

Successful and enduring professional oaths — the Hippocratic Oath or the bar oaths for attorneys — are one piece of an elaborate system intended to prevent inexperienced neophytes from masquerading as members of a privileged guild. There is a clear social contract — we endow a select group of people with special trust and additional capabilities (the power to proscribe dangerous drugs, for physicians) in exchange for completing a rigorous, standardized apprenticeship.

MBAs have no exclusive mandate from society to do anything. You can be a Fortune 500 CEO without an MBA. There are no prohibitions against performing a discounted cash flow analysis without first obtaining an MBA. And there shouldn’t be.

Guilds hinder innovation and extract rents from society. We accept them in select professions because we think that maintaining a minimum standard of performance is incredibly important — too important to be left to the free market. That is not the case for the leaders of corporations.

We should not seek to create a guild of managers.

What happened to shareholders?

As written, the MBA Oath neatly sidesteps managers’ primary legal responsibility: to generate profits for a firm’s shareholders. The Oath exhorts managers only to create the more nebulous “value.”

I would be among the first to argue that short-term profit maximization cannot be the only duty of managers. But it is naive to encourage adherence to an professional oath that omits the very reason for our profession’s existence. Managers serve, first and foremost, at the behest of capital owners.

When the going gets tough, how seriously are you going to take an Oath that ignores this?

We’re not ready for this.

Doctors take a professional creed at the end of their formal education because we believe that their schooling will convince them that the Hippocratic Oath is important and meaningful. Even if they arrived in doubt of their duty to others, we think that the “transformative experience” of attending medical school will make doctors more enlightened people.

Most business schools don’t even pretend to buy this. And Harvard is no exception. The closest we come to dictating ethics to students is to bring in the U.S. Attorney from the Southern District of New York to discuss the lengthy prison sentences doled out for insider trading.

The very mission of Harvard Business School is remarkable in its ambivalence about the moral responsibility of its graduates. We proclaim that “we educate leaders who make a difference in the world,” but we will not be bold enough to stipulate that our graduates should make a difference for good.

Jeffrey Skilling, Rajat Gupta, Sam Barai, and Stan O’Neal? Mission accomplished.

Without the buy-in of the institutions that produce MBAs, an oath is doomed.

So What?

So, you should not be a crook when you leave this place. But you should also not take an ill-considered oath that seems more intended to white-wash the failures of our graduates than to lay the foundation for a more honest and just practice of business.

We don’t need an MBA guild.

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One thought on “Do We Need an MBA Oath? And Should MBAs Take It?

  1. Mark Michelman

    Admittedly I have not read the actual oath. The arguments against it are compelling – ignoring commitment to shareholders, intended just to whitewash the failures of misguided alumni, etc. Assuming that it really is “flawed in design, inadequate in execution” and “ill-considered”, I agree that it is not a document that I would feel comfortable basing the future ethics of my career upon.
    I disagree, however, that there is no place for an MBA guild or another form of this oath that addresses these issues. Assuming that future HBS staff continue to lay the foundation for an ethical education, there will be buy-in from the student population and a document outlining values that managers are expected to embody would be a valuable addition to this education.
    Listing alumni that have committed crimes in the past is hardly an argument AGAINST the installation of some ethical document. In fact, just having the concept of an oath on the table is a good way to initiate conversation and give the topic more publicity and transparency.
    For those against some type of ethical commitment, there are two simple options: propose a new oath that addresses your issues or don’t agree to it.

    Reply