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Ethics Leadership Education

Wednesday, September 22, 2010

Mike Haley and John Kraus at Heinz headquarters

The Point, Fall 2010

It doesn't take an MBA to figure out that the frauds perpetrated by Bernie Madoff and Enron executives were immoral and illegal.

But how do you avoid those spectacular scandals by teaching students from the start that businesses can be both profitable and ethical? Business students at Point Park University are learning precisely that.

The innovative program, a partnership with the H. J. Heinz Co., teaches students how to become ethical leaders and to manage in a way to safeguard against ethical lapses.

"Doing the right thing is actually the smart thing. If you only focus on money and the bottom line, the organization is not sustainable," said Associate Professor James Michael Haley, Ph.D., who holds the H. J. Heinz Endowed Chair in Business Management at Point Park.  "We want our students to have values and not be short-term profit maximizers."

Many business schools created ethics programs in the wake of the 2001 Enron scandal, amid complaints that students were being taught to win at all costs. But Haley said some of those ethics courses have since been dropped or focus narrowly on legal and compliance issues.

"What makes us different is that our programs are practitioner-based," said Angela Isaac, Ph.D., dean of Point Park's School of Business. "We attract mid-level managers or people who aspire to be mid-level managers. Our training builds on the fundamental belief that ethical leadership is good business leadership for the sustainable organization . Most of our students are already in the business world. They are able to apply what they learn in the classroom as soon as they walk out the door." 

Both undergraduate and graduate business students watch a video created by the business school and write an essay regarding ethical leadership.  Guest speakers from the Pittsburgh business community engage students in lively discussion of the challenges and benefits of building a business culture with strong values.

John Kraus, vice president of corporate governance, compliance and ethics at Heinz, visits some Point Park classes, explaining to students how he travels around the world for the food company to offer ethical training for salaried employees. He also encourages employees to report ethical violations through an anonymous hotline.

"You can never convince the young Bernie Madoff to change his spots. Maybe what you can do is to educate people in that we all have a vested interest in being ethical. There is no shame in speaking up.”

Kraus said there is a growing body of evidence that shows that top-performing companies have fewer ethical violations.

Haley even has his MBA students in his Organizational Behavior class read two chapters of The Prince by Niccolo Machiavelli, the power-hungry leader. "We are not trying to be naive and say there are no bad actors," he said. "But we are trying to teach students how to protect themselves against people like that."

Students also read recent headlines -- Enron, WorldCom, and Tyco -- to find modern examples of companies that cut corners, only to pay the price in the long run.

"The Challenge of Teaching Ethical Leadership"
Videos 1 and 2

"It's essential that business schools teach ethical leadership," said Justin Lokay, a recent MBA graduate. "Look at companies like Enron. It's a company whose stock went through the roof.  The company's underlying unethical leadership made it drop even faster."

Students don't learn only about companies that put profits over ethics. Haley also teaches case studies of successful ethical companies, including Heinz and Southwest Airlines. “Southwest is committed to safe, low-cost travel and courteous service,” Haley said. “They are united as a team to provide it on a regular basis. They are less likely to lose your luggage.”

Students are encouraged to look inward and examine their own values in the workplace. Often, ethical dilemmas come down to the little things.

"If something is legal, it is ethical?" is the question Assistant Professor Michele L. Langbein, Ph.D. poses to the undergraduates in the Accelerated Business (Saturday Fast) program she heads.

She presents a case study of an employer sending you out of town to a conference, offering to pay $42 per diem for meals, but not reimbursing for parking. The conference hosts give you free meals the first day of the conference, but you are forced to pay $50 for parking. When you fill out your expense report, you ponder claiming the $42 for meals to compensate for the parking.

But is that ethical?

That question often leads to lively classroom discussions. While some students can justify it, Langbein asks what happens if a superior discovers your creative expense report down the road. 

"All these little white lies go to your integrity.  Once you ruin your reputation, it takes a long time to build up your integrity. Is your integrity worth $50?"

The course changed the life of Nicole Givner, 38, who just graduated from the Saturday Fast program and who is going on to pursue an MBA at Point Park in the fall.

Givner, who works in the health care industry, said she that would never do personal business during work time or spend the first five minutes of her shift getting coffee.

"You just want to be ethical at all times," she said. "It is so important."

Giver, an aspiring corporate executive, left the class with one clear message: "It's so important to have an ethical leader at a corporation. Just because someone is a leader doesn't mean they are ethical."


Article by By Cristina Rouvalis
Photo by Ric Evans

This article originally appeared in the Fall 2010 issue of The Point, a magazine for alumni and friends of Point Park University.

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