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June 16, 2013 11:56 pm

A business school tackles ethics

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Jonathan Haidt of NYU Stern©Hand out

Jonathan Haidt of NYU Stern: 'People tend to think: "I have my own moral compass"... but as a moral psychologist I know that's not true.'

In Jonathan Haidt’s The Righteous Mind, which argues that people base moral decisions on gut feelings, not reason, he writes: “Nobody is ever going to invent an ethics class that makes people behave ethically after they step out of the classroom.”

Shortly after the book was published, Peter Blair Henry, dean of NYU Stern, asked Prof Haidt to redesign the school’s ethics class.

Why is an ethics class necessary?

“The previous approaches weren’t working,” says Prof Henry. “We needed to think bigger. There have been repeat episodes of bad behaviour [in business] and we needed to take an honest look at society and where we are.”

Stern’s revamped course – mandatory for second-year MBA students – examines ethics through the lens of moral psychology. The goal is not to wag the finger but to show how even those with the best intentions can face ethical traps.

Stern aims to teach students how to design more ethical organisations. An example: creating an incentives system for employees that rewards long-term success over short-term performance. “We have to recognise that a lot of organisations are not set up to get people to do the right thing,” says Prof Henry.

How does the new class work?

On the first day of Stern’s week-long class, students watch videos of experiments on obedience to authority figures conducted in the 1960s by Stanley Milgram, the Yale psychologist. Milgram found that most participants were willing to deliver electric shocks to another person merely because a scientific authority commanded them to. The study was part of what participants thought was a learning experiment, though the “learner” was actually an actor pretending to receive shocks.

They also watch footage of the Stanford Prison Experiment, in which undergraduate volunteers who played the roles of guards turned sadistic, denying food to student “prisoners” and stripping them.

“People tend to think: ‘I have my own moral compass. I’m the captain of my own journey.’ But as a social psychologist, I know that’s not true,” says Prof Haidt. “We’re much more like marionettes than we tend to believe.”

What ethical dilemmas could students face?

This is not to absolve students of any personal responsibility but to help them develop a greater understanding of their own values and motives. “These psychological situations apply amazingly well to business situations – they all involved risk,” he says. “The subjects are asked to do things that they thought could be wrong but they did them to avoid social awkwardness with a stranger. So what happens when the students are five years out, deep in the corporate world, and they’re asked to do something by their boss that they think might be wrong?

“Would you backdate an invoice or letter so that it looks like it came from last quarter rather than this quarter? What if nobody’s harmed by it? These are the kind of situations that our students will face.”

Prof Haidt says his students’ careers are like an epic “hero’s journey” – one in which they will be severely tested and challenged. Students must “recognise that there are societal forces impinging on [them] all the time”, and that “in the long run ethical behaviour and high professional standards do pay”.

And if you do take the left-hand fork?

Making the wrong decision ruins careers, destroys companies and brings shame. Prof Haidt presents a cautionary tale in the form of guest speaker Walter Pavlo. Once a rising star at MCI, Mr Pavlo spent more than 18 months in prison and was ordered to pay restitution for his role in accounting fraud at the company.

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