

Why MBAs should not sign the Harvard Business School oath - vrobancho
http://knowledge.insead.edu/contents/csr-mba-hbs-oath-091125.cfm?vid=342

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rbanffy
I have many problems with this point-of-view.

Before any fiduciary obligation, a manager (just like any other human being)
has moral obligations towards society. The fiduciary obligation is to create
value to your shareholders, but not just the present ones that will dump your
stock the same week they bought it. For those long-term investors, I believe
the "I will strive to create sustainable economic, social, and environmental
prosperity worldwide" idea creates a lot of value in the long term.

As for the oath promoting unethical behaviour, the first promise takes care of
that. The ethanol companies... well... They are thriving in Brazil. There must
be something in trying to make it from corn that is fatal to companies.

The oath being a misplaced response... I am not sure about that either. It's
obviously a response to some less-than-ethical behaviour that had disastrous
consequences to shareholder value. But that same unethical behaviour paid
handsomely for those who were able to jump ship fast. I wouldn't call
benefiting that group a smart business move and many companies that aimed that
way no longer exist.

As for people not being driven by pledges, again, I am a professional engineer
and I took an oath when I graduated. I have so far been true to it and I take
it very seriously every day of my professional life.

If he doesn't like the idea of striving "to create sustainable economic,
social, and environmental prosperity worldwide", that's fine by me, but I
think everyone of us would benefit from such a mindset.

~~~
alex_c
_As for people not being driven by pledges, again, I am a professional
engineer and I took an oath when I graduated. I have so far been true to it
and I take it very seriously every day of my professional life._

Yes, but you are most likely someone who strives to behave ethically
regardless of oaths and pledges. The people who need the pledge the most are
also the least likely to follow it when it's really put to the test.

That's why reading about the HBS pledge was one of the few times I laughed out
loud - long and hard - at something I read online. Maybe I'm too cynical.

The article's tone is a bit hard to swallow, but I think the point about
"externalities" is valid. In other pledge-driven professions (medicine,
engineering, I'm guessing law) the interests of the professional tend to be
aligned with the contents of the pledge - or, at least, not usually in direct
conflict. That will never be the case in business as long as taking the moral
high ground will put you at a competitive disadvantage.

~~~
rbanffy
Anyone who is not willing to promise to behave ethically will have a hard time
doing so, regardless of effectively promising it or not.

I would never, ever, under no circumstances, let someone like this graduate.
Ethics are not optional in any profession.

And don't be cynical. Instead, try to actively be a force of good. Just a
little push here and there.

It doesn't matter if it's just a trickle. With enough trickles we can make a
very nice river.

~~~
njharman
> Anyone who is not willing to promise to behave ethically will have a hard
> time doing so

That is not true. Many people don't accept the authority or legitimacy of
those who would demand a pledge (religious, anarchists).

I reject out of principal any pledge (and the subjugation to authority it
implies). I do the right thing because it is the right thing. Someone asking
me to pledge to do the right thing is an insult and an attack on my
character/honor.

Pledges are also, psychologically, a cop-out. Like giving money to poor
people. They let one feel good about themselves and not dwell on the
consequences of all their other actions.

~~~
rbanffy
I feel that, by taking the oath I took, I was reaffirming my commitment to act
on a set of professional guidelines. It's also a powerful commitment - you
state the rules that will bind your professional (and many times, personal)
conduct for life. That's a big thing - a rite of passage (something important
we have precious little left). It turned engineering students into
professional engineers.

It's insane to reject every pledge out of principle. A pledge, specially one
like that, sets a good example - a model of conduct. If you are not happy with
it (like the author), propose an alternative one, one you would be comfortable
taking.The worst that can happen is to make an empty promise, one you know you
won't keep. It's deeply demoralizing and we have had lots of that in upper
management lately.

And, finally, sorry if you feel attacked, but nobody is obliged to trust you
to even know what's "the right thing", much less to do it or to agree with the
rest of the society on what "good" means. That's what pledges are for.

~~~
shrughes
To some people, rejecting pledges is sane for the same reason that rejecting
the right to sell oneself into lifelong slavery is sane.

------
onoj
Good God people, Why is this even a discussion ? If this Muppet is taken
seriously - maximize the wealth of shareholders ABOVE ALL ELSE, then why not
shoot rival fund managers? Invade small countries? You are either ethical or
not. There is no middle ground.

~~~
einarvollset
It's a discussion because it's true. In many countries, including the US and
the UK it is illegal for a board of directors to _not_ do whatever it takes to
maximize shareholder value.

The implications of that are particularly important when, as is currently
happening in the US, there's a discussion of the role of government in things
like health care.

Basically: In a lot of cases it's illegal for a company to do "the right
thing" if that right thing looses the company money, but isn't explicitly
illegal. See pre-existing conditions.

One thing that does fall out of this that is rather counter intuitive and the
Ron Paul's of this world don't like to hear it is that quite often, big
companies are lobbying _for_ stricter regulation.

The reason is that they may have ethical/marketing problems with doing a
certain thing, but can't not do it, as there are other, less scrupulous
companies that don't have these problems and thus squeeze them on price..

~~~
jhancock
"illegal for a board of directors to not do whatever it takes to maximize
shareholder value"

I hear this quite often but have never seen a law that says this. Do you know
of one?

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cduan
So directors and officers have a fiduciary duty to maximize shareholder value,
and therefore any obligation that conflicts with this duty is improper?

I wonder whether the author would apply this to lawyers. They, after all, have
fiduciary duties to their clients, such as that of zealous advocacy. Is he
advocating that no ethical obligations should trump the lawyer's duty of
zealous advocacy?

If not, what is the distinguishing principle?

~~~
jhancock
The lawyer analogy came to my mind as well while reading this article. The
"Hollywood" version of a lawyer's duties to his client is narrow and not
accurate. There are certainly lawyers that operate on this narrow definition,
but its not inline with judicial process or state bar ethics and the lawyer's
oath.

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WinterAyars
I think this is a pretty naive way to look at it. Of course Harvard realizes
their MBAs often end up with a duty to maximize shareholder value at any and
all costs. Isn't that kind of the point? "That" being to create tension
between the two duties and hopefully get people to examine the system?

This whole short-sighted duty to maximize shareholder value is unarguably a
part of the problem with modern capitalism. That was the driving force behind
the rush to the dizzying returns promised by the financial black magic that
melted the economy.

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Avshalom
"board members and, as a consequence, managers have a fiduciary duty to
maximise the wealth of shareholders."

Not all business are publicly traded corporations.

~~~
einarvollset
Doesn't matter, also applies to shareholders of private companies.

~~~
wjy
Yes, it does. In a privately held company in the U.S., the shareholders decide
what the rules are, so long as they're within the law. They have no obligation
beyond that.

Edit: grammar correction

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anigbrowl
Considering the guy is from a rival business school, it may safely be assumed
that at least 50% of these arguments are put forth solely to rubbish the
competitor's product.

