Profit and morality not mutually exclusive
It seems that a recession is never a good time for morals. Such was the extent of the rapacious self-interest manifested by much of the financial and banking community in amassing huge personal fortunes at the expense of society's poor and less fortunate, that even hardened cynics admitted to feelings of shock.
For Professor Jeffrey Gandz, managing director of the Richard Ivey School of Business, executive education division and teacher on the Richard Ivey Executive MBA programme, this put into stark relief the role of the business schools in preparing managers for future leadership.
'I'm a teacher, not a preacher. As such I try to steer away from moral absolutes. I won't say this is wrong and this is right, but I will say that you have choices.'
Any element of influence he has, Gandz maintains, can only be to help the student make more reasoned or more broadly informed choices. 'I think that's what a business school can and should do. And it's what a theology college does, too.'
One of the major challenges facing business schools in the wake of the all-too-evident excesses revealed by the credit crunch is how to address a widespread perception that the accumulation of wealth, and therefore capitalism in general, has become divorced from all social moral imperatives.
A widespread belief was taking hold that business was corrupt, grasping and immoral by default. Gandz is quick to refute the notion.
'You have first to destroy the concept that everyone is behaving badly. You need to establish empirically that while some people behaved immorally to achieve great personal wealth at the cost of pushing risk to their customers and shareholders, others maintained different standards that were more consistent with what society tends to regard as morally desirable behaviour.'
Gandz cites the examples of some large banks which had earlier decided not to associate themselves with the risks and toxic assets that were allowing other institutions to post nominal huge profits and pay themselves huge (and not at all nominal) bonuses.
'Those organisations did not contaminate their own strategy or do any of the other things for which others have been held to account. That's because they put emphasis on character, prudence, temperance and transparency.'
Inevitably, Gandz said, these banks came in for heavy criticism from analysts for underperforming while others were booking huge revenues that would never turn into cash.
Today, those former 'dissidents' are held up as models of good management practice.
Business schools, Gandz said, could make a valid contribution guiding managers towards a more morally responsible form of behaviour, even in the necessarily highly charged and competitive world of capitalism.
The key, he insisted, was to make it clear at all times that people had choices and that comfortable blanket self-justifications, such as 'the system made me do it' are a poor excuse for conscious and well-informed unethical decision-making.
'Some people make a conscious decision to behave immorally in business. Others decide that they can integrate morality and capitalism, while others - too many perhaps - wander along blindly without thinking about it until it's too late to avoid action. It's those people where good education can promote thought and reflection, and influence behaviour.'
Gandz said business schools teaching ethics and moral character for businesses should integrate broader ethical principles with practical business ones. He recommended taking a forensic approach to the behaviour that culminated in the recent crisis, analysing precisely why it was that some organisations were able to buck the trend, while others 'jumped a ride on the gravy train of greed' and in some cases faced the ultimate consequences.
'The question we at the business schools have to ask is 'where were the radars of these people and organisations?' We thought we were doing a pretty good job but these were accidents waiting to happen.'
Gandz also pointed to the veritable spate of whistleblowers who came forward once the crisis went public to make headlines with their expos?s of corporate greed and malpractice. It was shockingly clear just how far managers had allowed themselves to become embroiled in indefensible areas of risk.
'The decision on whether to take any business requires you to look at short- and long-term consequences side-by-side. One classic issue from the recent past was whether to take business from tobacco companies, for example. You can lose friends and short-term profits when you say no, but you sleep at night and you look to compensate elsewhere.'
Gandz said it was important to maintain the belief, backed by empirical evidence, that it was possible to lead a life where you tried to do well for yourself and do good for those around you. Business must have ethical consistency with the society within which it operates if it wanted to operate with the sanction of that society, and without oppressive constraints imposed by it.
Together with a task force created inside his school, he is finalising a paper entitled: Moral Character Revisited, in which all of the most challenging and salient issues of corporate ethical and social responsibility are addressed.
This, he said, was a predictable response to the crisis from business schools such as his. It was also an urgent requirement to help students and future managers reach a comfortable moral accommodation with their role as business leaders and members of society.
Gandz refers to the well-established social principle that people really get worried when the system of justice is called into disrepute. The problem now, he said, was that there was a serious chance that the system of capitalism had moved into disrepute.
'Is business an honourable course? I am personally still attracted to a principle that allows people to generate wealth and create employment. And I believe that it is possible to educate a framework within which it is possible to succeed at the same time as behaving morally.'