Do No Harm

Thunderbird’s president says it’s time for a “Hippocratic” oath for business executives

Managers consumed with maximizing short-term profits and the value of their stock options — rather than creating real, sustainable value — have destroyed billions of dollars in shareholder and taxpayer money. A culture of unrestrained greed lies at the root of the current economic meltdown that has seen banks collapse, markets tank and unemployment rates soar.

This global catastrophe demonstrates the enormous responsibility business leaders hold, not only in their companies, but in society at large. Managers are entrusted with incredible power to create or destroy value, and in so doing, affect the lives of thousands, if not millions, of people. This is a power that should not be taken lightly. As with medicine and law, business management is a profession that requires standards and ethics.

If there is a silver lining in the current economic crisis, it is the opportunity it has afforded to reopen the debate on whether business managers should be required to take a “Hippocratic” oath of professional conduct. The issue was heavily debated in the early 2000s in the wake of the Enron and WorldCom scandals, but the subject was too controversial for its time, in both the corporate and business school sectors.

In 2003, I was one of a group of young global leaders at the World Economic Forum who initially proposed the idea. The German newspaper Handelsblatt facilitated an online debate that attracted contributions from business school deans from around the world. But, to many educators, imposing a code of conduct on future managers was anywhere from useless to plainly wrong.

Some of us carried the torch, however, and in 2004, the Thunderbird School of Global Management was the first business school in the world to adopt a professional oath for its graduates. It is a set of core, universal principles of responsible management that is now embedded in the school’s admissions process, curriculum and commencement ceremonies. The impact it has had on our academic culture and programs has been remarkable.

If a code of conduct for business is going to succeed, it will have to be rooted and grown in business schools throughout the globe. It is there that young global leaders form their business-value systems, and it is there we can instill a more responsible approach to management — one that emphasizes sustainable value creation over short-term greed.

It would be irresponsible for business schools not to accept their share of responsibility in creating a broken system. Many of the leaders of the failed financial institutions hold advanced degrees from the finest business schools in the world. These individuals created the biggest economic crisis of our time, not by ignoring what they had learned in business school, but by carefully and systematically applying the tools and frameworks they were taught.

Business schools must begin educating future managers in a manner that produces global citizens who understand that the choices they make day-in and day-out can and will impact the people and communities in which they operate. Those managers must fully understand the huge responsibility they have to making sure those decisions are for the greater good.

This does not mean corporate leaders ought to disregard the need to make money for shareholders. On the contrary, professional managers understand they must strive to compensate investors for the risks they assume, and that only by providing competitive returns to investors will they be able to secure future capital to fuel growth and seize new opportunities.

But what they need to understand is this can be accomplished while at the same time providing real lasting value to customers, opportunities to employees and suppliers, and having a positive impact on society at large.

It is time that we reject the fallacy that being a steward of the greater good is incompatible with creating competitive returns for shareholders. Or that the values of professionalism and social responsibility are incompatible with innovation and entrepreneurship. And it is time for the business community and business schools worldwide to step up and work collaboratively to develop and adopt a professional code of conduct for business professionals.

Ángel Cabrera is president of the Thunderbird School of Global Management, www.thunderbird.edu.