Greed is no longer good

A few days ago I blogged a video interview with Professor Mary Gentile of Babson College in the USA who was talking about the need for Values in the Workplace, given as she said:-

Recent years have seen an unprecedented breakdown in public trust of business, spurred in no small part by instances of unethical behavior at some of the world’s most powerful institutions. Mary Gentile, director of business curriculum at Babson College, says the real challenge for business students, employees, and executives isn’t knowing what’s right, but knowing how to act on those convictions within an organization.

I commented:-

My personal and passionate belief is that effective governance requires strong values and ethics within an organisation. Indeed where the values are wrong, then no matter how many governance frameworks and compliance checks are in place it is probable at best that governance is weak and more possibly non-existent.

To me this is where we reach the critical nexus between leadership, values, integrity and how they impact governance and culture.

In fact in some people’s view I may even be somewhat of a bore with my insistence of this ‘front and centre’ position for values and ethics.

Therefore, I was most interested when I came across Promises Aren’t Enough byRodrigo Canales, B. Cade Massey and Amy Wrzesniewski for the Wall Street Journal / MIT Sloan joint publication. The article looks at the increasing practice of MBA graduands taking the ‘MBA oath ‘ to behave ethically and wonders if that really is sufficient to improve behaviours. As the authors, perhaps somewhat cynically note:-

The danger is the false sense of moral inoculation such oaths engender. Just as teenagers who take a chastity vow in lieu of better sexual education are more vulnerable to the consequences of unprotected sex—vow takers are actually more likely to engage in risky sexual behavior—M.B.A.s who take an ethics oath without enough supporting leadership education are likely more vulnerable to ethical breaches.

As the authors note:-

The power of the situation, and our too frequent disregard for it, is an overarching lesson from sociology and social psychology. Situational forces drive behavior to a surprising extent, much more than expected by those who believe character determines all.

This lesson has been implicated in one scandal after another, from Enron to Abu Ghraib. Pledges made without the benefit of experience with compromising situations, and without some kind of supporting structure, actually exacerbate the problem.

To my mind this ties in with Prof. Gentile’s work referred to above and in my earlier post.

The authors then look at how business schools and educators might assist in improving the situation.

For some reason, I think maintenance at Vodpod the related video for this post will not display, in post at this time, the video features:-

Rich Lyons, dean of University of California at Berkeley’s Haas School of business, on producing more ethical, value-oriented graduates. In particular he discusses with WSJ Careers editor Jennifer Merritt the characteristics which his school seeks in new students.

Vodpod videos no longer available.

No longer is Gordon Gekko’s creed of “Greed is good!’ the acceptable mantra or credo for MBA aspirants. If indeed it was ever really acceptable, though for some given the excesses we have seen it clearly was. That does not mean unambitious people are sought, but that strong values and ethics are required as well.

It is very heartening to see some educators seeing the need to bring values and ethics into prominence as part of business education.

The authors conclude educators:-

more creative in our use of technology, and more intentional in our use of alumni gatherings. It is ironic that schools exert enormous effort to create alumni networks that facilitate regular business transactions while our alumni must make their hardest choices alone.

The solution to ethical challenges in business is not to create an army of M.B.A.s who promise to do the right thing. Rather, as educators we must assume more responsibility by providing better, not less, leadership development. Only then might our graduates take an oath they can actually live up to.

This post highlights some key messages from the article that resonated with me, but I recommend that you read the article in it’s entirety. It is well worth it, in my opinion.

Let me know your views.


4 responses to “Greed is no longer good

  1. I like your blog and writing style. I also have a business and consulting background and write about similar subjects only applied at the individual level. It’s amazing how many business and strategy concepts transfer over to living a purpose-guided life — one that is meaningful and fulfilling. These include trust, vision, values, goal setting, purposeful action, and ethical decision making, among others.

    I’d love for you to visit my blog and share your thoughts. Your readers may also find it thought-provoking.
    You can find it at:


  2. Sorry to rain on your parade, Peter, but I find talk about values, morals and virtue to be a little hollow if there is no discussion or advocacy of actual moral position or rule of law or practice. What does greed mean, and if it is not good, what’s wrong with it? and what is the alternative virtue and how is it practiced?

    Perhaps a practical example can illustrate some of what I’m talking about. Friday’s NBR had an article about an offshore transaction carried out through Westpac NZ. Westpac got spooked and thought they may be dealing with money laundering, and froze the customer’s funds for a substantial period of time, and insisted the customer obtain a court order to release the funds. The court then found against Westpac, including that it had breached its obligation to pay to the customer’s order — the very essense of the bank’s obligation under the bank-customer contract. So, in this case, Westpac, in trying to be so ethical and compliant and ‘holier than thou’ to its customer was in fact fundamentally in breach of its obligations. This example also shows other ethical issues, such as the public policy issues of the ‘anti-money laundering’ brigade impacting on customer service, bank operating costs, customer confidentiality/bank secrecy, and customer due process rights. And the merits of prohibiting drugs, and of criminalising dealing in the money side of the transaction. Ultimately this case, therefore, get us to one of the most troublesome public policy issues of our time. If managers and directors are to navigate corporate policy and practice, do they need to take sides in the debate? Or just cover their arses and keep the company from being penalised for providing their core product to the ‘wrong’ customer, as judged after the event? Peter, why not venture into some suggestions for managers and directors in this minefield, as an example?

  3. David

    I read that article as well. I understand the point you are making. In fact, I have been giving some thought as to how one might approach this. Your comment re minefield refers, but need to do some further research.

    I was not quite so sure that Westapc was seeking to be on the side of the angels here.

    It is a thorny issue and undoubtedly there are some very grey, indeed murky, ares to navigate.

    Plus one runs into the issue that one person’s view of ethical may well be someone else’s view of unethical.

    In fact I wondered about writing about this at all, but decided debate and discussion was infinitely better than ignoring the issue.


  4. Peter, in this case the bank was clearly in the wrong to dishonour its obligations to its customer, and the bank could have protected its position re money laundering without restorting to a court order. From a governance point of view, however, the issue is the conflict between complying with the bank’s obligations to its customers and with its obligations under the Crimes Act and the Financial Transactions Reporting Act at the same time. The question is how you organise this compliance and I think the typical problem is that the people responsible are held responsible for detecting suspicious transactions and not held responsible for compliance with the bank’s obligations to pay to the customer’s order. The result is that the bank typically will screw their customers in the name of complying with the other obligations. The courts, however, consider both sides of the issue at the same time, and are likely to decide in favour of the customer. Surely the bank will respond by putting into its bank-customer contract express terms giving itself a broad ‘out’ to compliance with its obligations to its customer. The result is that the customer gets screwed every time and has no recourse, even if the bank’s actions are unreasonable.

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