What Can Business Schools Do to Avoid Bad Apples?

by James Heskett

Summing Up

This month's column resulted in a number of suggestions for sorting out the "bad apples" among applicants to MBA programs across the country. But just as many respondents questioned the underlying assumptions of the column.

Many respondents expressed the view that while care might be taken in admissions to sort out the "bad apples," the primary responsibility of business schools is to provide a place where ethics and values can be discussed by all, rather than just those clearing some admissions hurdle regarding values. As Mike McCarthy put it, "... it is very presumptuous for business schools ... to feel they should 'weed out' or 'license' the moral credentials of students." Alexander Magoun echoed this view when he asked, "Would it not benefit society and corporate culture as a whole if these individuals, who will doubtless pursue a career in business in any event, were socialized in corporate ethics courses with the rest of the world's best and brightest?" Others objected to the assumption that teaching values to adults is difficult at best and impossible at worst. Sven Bislev commented, "'teaching values to adults is done every day. Not so well by us in the business school field, but in the training of genuine people-handlers like nurses and social workers."

Others responded to questions posed (whether or not they accepted the underlying assumptions) more directly. This resulted in an interesting list of suggestions, including: 1) designing "a practicum where MBA students [with a focus] on ethics ... practice ... hiring/interviewing skills ... by interviewing 'short list' candidates that are being strongly considered for admission by the school." (Ted Ruddock); 2) "... look[ing] for a person's commitment to service outside of their profession ... as good an indication as any of a person's commitment to more than just achieving status and making money" (Tammy Doty); 3) encouraging a school's admissions group to "focus inward and nurture in its own people and systems the kind of qualities that it wants to see in its students." (Umar Khalid); and 4) suggesting that "letters of recommendation ... comment on the applicant's exercise of leadership or judgement in an ethical situation." (Jasper Ho)

Those who appeared to have responsibilities associated with the sorting process in industry were generally more sympathetic to business school admissions offices and the Herculean task they face in taking values into consideration in admissions. As Linda Abraham said, "Considering that ... time devoted to evaluation is so limited, admission offices do an admirable job of separating out the bad apples. However, assigning them the job of 'first line of defense' reminds me of expecting the cavalry to defend against a blitzkrieg."

It is admittedly difficult to know whether admissions practices in place today will produce the desired results twenty years from now. But is it unreasonable to expect continued efforts to improve the quality of the process with regard to personal values? Or should a greater effort be made to identify the "bad apples" after they are admitted and sort them out as part of the educational effort? Failing both of these, should we, as someone suggested, strip MBA degrees, once awarded, from recipients who later prove unworthy of the designation? What do you think?

Original Article

New students are arriving on business school campuses for the first fall term since the flood of management malpractice disclosures hit the headlines. For this reason, it is perhaps a good time to solicit creative ideas about how leading business schools that mint a high proportion of senior executives in large organizations can identify and weed out candidates whose personal values suggest potential long-term risk to themselves and to business in general.

I'm not suggesting we delude ourselves into thinking that business schools can solve the problem. As we have been reminded many times, the problem begins in the family, or what serves for one. But can schools at least attempt to "license" leaders and managers in whom they can have some degree of confidence? Judging from the large proportion of those accused of wrongdoing as part of the "Enron syndrome" who possess MBAs from leading business schools, this is a valid question. It's a question made more urgent by what we now know as the immense cost to individuals, and the economy in general, of a loss of trust in our business institutions and those who lead them.

We know a few things on which to base a judgment. First, any organization can best avoid loss of productivity and the achievement of quality through the quality of its hiring. Several outstanding organizations I have studied regard hiring as their leaders and managers most important task, an "almost religious experience," in the words of one. The admissions process at business schools thus becomes the first line of defense in raising the quality of eventual graduates. In business, we "hire for attitude and train for skills" because it is very difficult to shape attitudes in adults. An MBA program can provide an opportunity to discuss and make us aware of the nuances of business "gray areas" when it comes to ethical business decisions, but no method has yet been devised to teach values to adults with any expectation of success.

In addition to academic performance and test scores, the devices that are used to sort applicants to MBA programs today include letters of recommendation, essays written by applicants about how they have handled or would handle various value-laden leadership challenges, and careful checks for inaccuracies in resumes that might suggest fraudulent claims. Applications are read and reread for suggestions regarding an applicant's sensitivity to the needs of those whom he or she might one day be leading. Only in some of the smaller programs are personal interviews by admissions personnel of every candidate possible.

What more can be done at the MBA program entry level? Or is it unrealistic to expect that there is any set of processes that can adequately address the problem of sorting out "bad apples" at this point? Specifically, what kind of evidence, in addition to that described above, would you try to obtain in order to insure that our graduate schools of business grant the MBA to those in whom society and the business community can have some degree of trust? How would you go about getting it? Is it worth the effort? What do you think?

    • Mike McCarthy
    • VP, Berks County Chamber of Commerce

    I think it is very presumptuous for business schools, even those regarded as the best in this country, to feel they should "weed out" or "license" the moral credentials of students. As Professor Heskett states, the school can certainly play a role in providing the opportunity for students to explore "gray" areas and questions. As an undergraduate business student some thirty years ago, a required course dealt with legal issues and, yes, business ethics. Experience in the intervening years reinforced the values instilled growing up in a family business and practiced, at times painfully, during a Navy career and beyond. Explore the issues, questions and situations, role-play, let some of these folks whose judgment lapsed share their experiences, but do not presume to "license" students. If you would license them, how's your malpractice insurance?

    • Ted Ruddock
    • Chief Learning Officer, MBIA Corporation

    I am admittedly a bit skeptical about the likely success of such an effort. However, if nothing is tried, nothing will be gained. You can attempt to divert people at the door on the way in, and if they get in and are now (or do become) a problem, figure out how to get them out before they receive their degree.

    Since recruiting talent is a critical competency of senior managers, one could design a practicum where MBA students focus on ethics, and hiring/interviewing skills and then practice those skills by interviewing "short-list" candidates who are being strongly considered for admission by the school. Two-person student teams could be paired to interview one candidate, and they could interview different candidates each week over some portion of the practicum—a true learning-by-doing experience. Not only would students have an opportunity to build this important skill set, they would provide a potentially valuable service to the college and society.

    Looking for evidence: If colleges are serious about this, then faculty clearly need to focus—really focus—on ethical behavior and have a zero tolerance policy. Further evidence in the form of background checks—even spot checks—to confirm veracity of information provided would be useful. The additional cost could be passed along as part of a "final entrance/acceptance" fee that would be payable once a person is conditionally accepted to the school—on the condition that the background check is acceptable. Many companies already take this approach with new hires.

    There would obviously need to be appropriate safeguards in place to assure the integrity of such a system.

    Will all of this eliminate untrustworthy candidates from getting MBAs? Certainly not. It may weed out some, even though they'll probably get into some other program. But we won't know unless we try. And students won't take this issue seriously unless we do.

    • Robert D. Kestnbaum (HBS MBA 1955)

    Business schools, especially HBS, should emphasize as strongly as possible a high level of ethics and morality. I have been appalled at the examples I have seen in my career of people in leadership positions taking actions that are in their own self-interest rather than that of the organization, or cutting corners or screwing customers or suppliers in order to make a few extra dollars.

    Further, I think that any evidence of weak ethics or morality by individual students should be reflected in lowered grades and comments on the transcript. Students should recognize that the business community and society will jump on them vigorously if they display any deficiencies. There is nothing like a strong sense of enforcement to help people maintain good ethics and morality.

    • Anonymous (HBS MBA 2004)

    I think it is imperative that BOTH organizations and business schools continue to try and identify smart business leaders who also possess the appropriate ethics. I believe that the interview process is a necessary if time-consuming part of the admissions process. A face-to-face meeting is in my opinion the best way to read a candidate's personality both through their responses to questions and through their body language (e.g., eye contact, enthusiasm). While there can never be a fail-safe mechanism for guaranteeing all accepted students have a strong moral fiber, this is one way to weed through any potential "poseurs."

    • Linda Willis

    Interesting question. I would not have considered it the role of the business schools to "screen" students for ethical standards—to me that's the role of hiring. For what it's worth, I don't think the MBAs whose names are surfacing in connection with corporate scandals learned their tricks in business school or at home. The business leaders they worked with in senior management and on Wall Street probably instilled in them the importance of relentless growth, well managed earnings, and creative accounting.

    As an employer (and parent) I would prefer the business schools to discuss frankly the ethical issues raised, in all their shades of gray, and the importance of honesty and credibility in business dealings and corporate reporting. There's an old saying, something like "there are lies, damn lies, and statistics." Well, the same can be said of financial information. The folks who teach investment analysis and financial reporting should focus on the critical reading of corporate disclosures, and the limitations of "the numbers" etched in stone as they may appear.

    • Anonymous

    It's a tough question that you ask, especially since a pivotal actor in the Enron tragedy was a Baker Scholar and a former alumni class leader, implying that this person epitomizes what HBS stands for and teaches. Indeed, the culture of Enron and the stereotype of "aggressive, pushy, greedy Harvard MBAs" were closely linked because there were a large number of HBS alumni working there.

    Setting aside any allegations of fraud, one of the key issues is that the business strategy of Enron, with its emphasis on "intellectual" rather than capital-intensive physical assets was not unlike many of the latest ideas that were confidently presented by HBS faculty during those heady dot-com days of Alumni Week 1999. In retrospect, there was a lot of hubris there, and I'm not referring to the alumni. If I recall correctly, one of the senior faculty said something like "we train the raptors."

    Clearly HBS and other leading business schools have to step back, take ownership, and admit that they have contributed to the problem, and that now they will have to help fix it.

    • Shanti Fry
    • President, Families with Children from China/New England

    A willingness to understand and undertake responsibility for all of one's actions—whether the consequences of those actions were deliberate or not—forms the basis of morality. I suggest that HBS lead by example and examine its own role in vetting and, probably unwittingly, encouraging some of its graduates who are a disgrace to the school. Such an analysis should be deep, subtle, and worthy of the best minds of the school. It is only by owning this problem that we can hope to contribute to its solution. Our economy, indeed our way of life, depends upon a base level of integrity—if we fail to promote that integrity, ultimately everything else we hold dear will be undermined.

    • Tammy Doty
    • Poelmann Chan Group (Hong Kong)

    This is a great topic that should generate a flood of opinions. Here's one:

    Gauging a person's ethical and moral compass is a potential slippery slope. As fallible creatures we are prone to ethical/moral lapses that should not automatically preclude us from furthering our education, which ironically, is supposed to enlighten us.

    However, I believe an assessment of an applicant's ethical compass is a reasonable pursuit, if an imperfect one. One straightforward tactic is to look for a person's commitment to service outside of their profession. A commitment in any form to the world at-large is as good an indication as any of a person's commitment to more than just achieving status and making money.

    • Alexander Magoun
    • Executive Director, David Sarnoff Library

    Neither this [column] nor any of the news reports I've read regarding the post-bubble acts of corporate malfeasance mention the formal education of the heads of WorldCom, Enron, or Arthur Andersen. Before arguing for the need to weed bad apples from the educational system, Professor Heskett might first establish a link between amoral MBA curricula and executive criminals. If one exists, then he might ask who benefits when degree candidates who meet some sort of unethical or antisocial profile are kept out of the better business schools. Would it not benefit society and corporate culture as a whole if these individuals, who will doubtless pursue a career in business in any event, were socialized in corporate ethics courses with the rest of the world's best and brightest?

    • Sven Bislev
    • Associate Professor, Copenhagen Business School

    First, the current corporate government problem has two aspects: morals and inequality. If the access to resources (power, remuneration) was less unequal, "faulty" morals would have lesser effects.

    Second, "teaching values to adults" is done every day. Not so well by us in the business school field, but in the training of genuine people-handlers like nurses and social workers. The problem in our field is that we miss the right formula for teaching. An uncertain blend of compassion and opportunism seems necessary to get ahead in the commercial world.

    • Ajit de Silva
    • General Manager - Technology & Project Delivery South Asia Software Solutions (Pvt.) Ltd.

    I think "good apples" could become "bad apples" any time, as much as "bad apples" have equal potential in becoming "good apples," if the person accepts his or her faults and becomes mindful to eradicate that fault.

    If a person does not have good values (cheating on a spouse or extra-marital affairs or sneaking around) then I think he is a good candidate for other crimes!

    I think an interview with potential MBA candidates would give a good indication about them so that MBA schools could support them to get rid of bad behaviors.

    On the other hand, organizations must not insulate the upper crust. Everyone should be put under the lens with a lot of emphasis on those individuals who bear the lifelines of the organization.

    • Abbas Hijazi
    • Vice President and Chief Financial Officer, United Real Estate Company

    The issue of integrity is in the middle of this question. To test integrity we need time and real experience, but since they are not available we can use a combination of activities in the admission process. First, by using the definition of "intellectual integrity" as when the leader thinks of himself/herself as the servant of his constituents, not the master, we may be able to incorporate into the admission process a simple essay question to allow every applicant to give his or her understanding of this word and give an example of where he/she saw it practiced.

    Second, incorporate a new stream of required courses into the curriculum that allow the participants to question their understanding of what integrity means and how long-term benefits should always outweigh short-term costs or pains. Thirdly, schools should invite second year students to work in nonprofit organization where the focus is not on making the bottom line as much as it is on making things happen to the benefit of others. This experience might open the eyes of many future capitalists to the fact that doing the right thing does have its benefits beyond monetary gains.

    • Suffolk University, Boston

    I am grateful and proud (as an HBS alum, MBA 1959) of your continuing efforts to formulate and communicate these timely thoughts. I suspect the best way to implement this "attitude screening" of students is by more careful monitoring of unethical behavior among students, and more high-level support for harsh response to the increasing problem of cheating in school. I have noticed over decades of teaching both an increase in cheating and a weakening of meaningful penalties. Thus we faculty/administrators communicate through our actions (in spite of our words) that cheating pays; it's worth the risk to many students. Academe must realize that observed unethical student behavior may reflect an uncorrectable admissions flaw worthy of correction by expulsion. Clever unethical persons are unlikely to reveal their character flaws through admissions essays, questionnaires, or interviews. Only actions reveal their true character, and must result in more consequence than is the current practice.
    Warren Briggs Professor of CIS

    • Associate Professor David Kimber
    • Co-director of DBA program, RMIT School of Management Melbourne Australia

    How to ensure that you employ "good" people, those with integrity and character as well as skill, competence, and capability, was a key area of interest for a research project we undertook for Transparency International last year. It resulted in a report that can be viewed on Transparency International's Web site in Australia: http://www.transparency.org.au/documents/Bisareport.pdf.

    We definitely agree that it is an under-emphasized aspect of recruiting here in Australia. The "hire for attitude" was not particularly evident in our findings or at least primarily [hiring for an] attitude in terms of "fitting in" or "being a good team member" to aspects not necessarily related to integrity.

    I would have to say I think that recruiting in most university MBA programs in Australia would take little account of character. Thus, this factor as a filter I think would not lead to much, and needs reinforcement. Rather, I believe that ethics and values, corporate social responsibility, good governance etc., have to become well understood business capabilities and be built into the curricula. Hoping it has all happened via family and school influence before students arrive is not enough. Ongoing sensitization to these needs in business must also be part of the MBA curricula.

    • K. Prabhakar

    Instead of concentrating at the input level, the training in the Business School can be structured in such a way that the curriculum contains a set on ethics in each subject. For example, we can give a set of guidelines in Operations Management such as "what are the things we should avoid so that the managers are not viewed as wrongdoers?" Each subject or course generally talks about what is to be done. We do not teach or provide input that is likely to cause negative impact on society. Therefore I suggest it is better to have a set of good practices for each functional area. How to internalize these areas? Probably it may be at the knowledge level but attitudes have to be changed. For this more detailed research is needed.

    • Rob Mackintosh
    • Executive Director, The Leadership Institute, Cambridge (U.K.)

    The basic screening approach mentioned is a first step, but I question whether what is delivered in most MBA programs helps the process very much from the entry point on.

    Where "Leadership" is a subject (and mostly it isn't—certainly not in the U.K.) on MBA programs, the focus is on the interpersonal roles through which executives relate to others.

    What's missing is any clear attempt to "grow the person to grow the leader" who makes sound decisions. This used to be called "character formation," and needs to be distinguished from courses in ethics. Without it, techniques for control and manipulation of others predominate over genuine people skills based on self-awareness and self-mastery.

    You can't give out what you don't have. But without a formation process in the B-School, the academic community has no way of consistently producing "level five" leaders. And isn't that what the educational process is all about?

    • Umar Khalid
    • Associate, TMT Ventures

    The old adage "you get what you deserve," is probably true for business school admissions. Like their corporate counterparts, B-schools will never be able to gauge the candidates in black and white. The best strategy then is perhaps to focus inward and nurture in its own people and systems the kind of qualities that it wants to see in its students.

    Focusing inward as a means of gaining command over one's environment is a well-traversed ideology in many social philosophies. In the orient, for instance, poets like Rumi and Iqbal have called this concept Khudi—or educated ego, when roughly translated.

    Applied in the context of B-schools, such ethos would be reflected in the quality and depth with which admission systems and personnel evaluate applicants. How good they will be at identifying desirable traits is directly proportional to the extent they possess such traits themselves.

    Such an honorable ecosystem of people and the processes that they create should be able to relate to its own kind on a very deep and personal level—exactly the place moral choices are made.

    • Bob Hardwick
    • Senior Sales Executive, CPRi Inc.

    Diversity in the workplace is an important competitive advantage. In this context, diversity can be defined as a mixture of varying experience, attitudes, backgrounds, and value systems. This diversity can result in a workplace that constantly examines its business practices through the lens of multiple viewpoints. I would hate to see the B-schools build a "profile" of an acceptable student and future leader. Many of our future best and brightest might be excluded. (Would we have been admitted?) We should learn the lessons of modern politics: Too much scrutiny only serves those who seek to tear down, not build up.

    • Jasper F. Ho
    • HBS MBA 1981, Business and Market Research Specialist, Air Products and Chemicals, Inc.

    I think business leaders, whether or not they have MBAs, should learn early in their careers the rationale for honesty and integrity: Business is not the culmination of one-shot get-rich quick schemes but the building of long-term, mutually-beneficial relationships with all the stakeholders in that business from shareholders, to employees, to customers, to suppliers, to communities, and to the world-at-large. Businesses are composed of people and relationships built on trust and mutual dependencies. Dishonesty breeds distrust and the resulting public ill will creates pressures for more unnecessary laws and regulations that ultimately strangles individual initiatives, economic freedom and eventually, personal liberties for the perpetrators and for everyone in society.

    While MBA schools like Harvard can not be expected to guarantee that every graduate has personal integrity, I agree that Harvard can and must screen its MBA applicants as thoroughly as possible. This can be done by asking applicants to show the following:

    1. A History of selfless duty in the service of the community in leadership roles and in individual contributor roles.

    2. Essays that require self-reflection on moral/ethical issues, especially a real-life situation the applicant has had to wrestle with.

    3. A detailed multiple-choice questionnaire posing moral and ethical situation questions.

    4. Letters of recommendation to comment on the applicant's exercise of leadership or judgment in an ethical situation.

    Then throughout the two years for the MBA, MBA wannabes should have case studies that have ethical issues woven into the management discussion. Companies with good ethical practices and bad ethical practices should be profiled, contrasted, and discussed. MBA wannabes should be exposed to situations that require moral vigilance—such as compensation methods that tend to elicit short-term destructive decisions by managers, industries/businesses that are prone to illegal price-fixing or shorting the customer, etc.

    Helping future managers construct frameworks for making ethical decisions consciously—weighing the pros and cons to all stakeholders, including that of the decision maker's own future, carefully. Always impress upon future managers the fact that with a Harvard MBA, unlike folks with lesser degrees, they can and should easily walk out of ethically hazardous situations—money for most Harvard MBA's is just a scorecard as opposed to a life-or-death situation. Preserving one's reputation for honesty and fair dealing should be at all times the paramount, non-negotiable goal. After all, if easy money was our goal, we should not invest in the time, effort, or cost of a Harvard MBA with so many illicit fortunes available to those with lesser talent.

    Finally, Harvard must adopt a zero tolerance level for dishonesty, cheating, plagiarism, violence, etc. from its undergraduate schools and all of its graduate schools. Immediate expulsion should be the penalty and the actual reasons be recorded in the transcripts of those expelled for all hiring managers to see.

    Much of the decay of morals in the MBA world is a reflection of the morals of our society at large. From an ex-President and First Lady who split hairs on legalese over sex and perjury, to the growing tolerance of K-12 public schools and undergraduate schools for moral relativism, our morals and ethics as a nation are almost beyond repair. That's why I think that Harvard has a very important role to play by leading by example as I have described above.

    • Alex Donnini
    • HBS MBA 1981

    After reading the reader responses and the original column, it struck me how nobody (except for Mr. McCarthy's response perhaps) mentioned that over and above a student's inclination, HBS bears significant responsibility for the values it conveys and teaches. It's disappointing to see that rather than present a picture where HBS acknowledges the enormous influence it has on students and on their standard of behavior, the whole question is presented in terms of "avoiding bad apples." Too bad. In my opinion [here is] another missed opportunity to understand how real change can come about.

    • Linda Abraham
    • President, Accepted.com

    Dr. Heskett's article is based on a number of debatable assumptions and consequently arrives at highly questionable conclusions.

    1) Dr. Heskett states "no method has yet been devised to teach values to adults with any expectation of success."

    2) He argues that the admissions offices are the "first line of defense" for producing business leaders with integrity.

    3) He ignores the possibility that perhaps the MBA curriculum could be changed to improve the ethics of B-school graduates.

    Teaching values is hard at any age, but business schools are falling over themselves now trying to improve the teaching of ethics in their curricula. Presumably they don't agree that they can't teach ethics or they wouldn't undertake an exercise in futility. Furthermore, difficulty isn't necessarily a reason not to take action. If previous methods were ineffective, then other methods have to be devised. Simply claiming "no method has yet been devised to teach values to adults with any expectation of success" represents a dangerous abdication of responsibility if the leading professional schools of the world shared Dr. Heskett's view.

    Dr. Heskett makes an excellent argument for businesses who spend hours interviewing executives for top positions, screening for attitude and integrity. Typically a prospective employee has multiple interviews with several people in the company. Companies also do background checks of varying depth. In contrast most B-schools, including Harvard, have one volunteer alum or student interview some—not all—applicants. Yes, applicants submit essays and recommendations, but in terms of personal contact, that one short interview is it. Furthermore at many schools, admissions committee members typically spend twenty minutes on a file. And that's when they're not swamped. Considering that admissions staff members spend a significant amount of their time marketing and recruiting and that time devoted to evaluation is so limited, admission offices do an admirable job of separating out the bad apples. However assigning them the job of "first line of defense" reminds me of expecting the cavalry to defend against a blitzkrieg. The Poles collapsed in less than a month when they used that method of defense.

    Professor Heskett is right that business schools can't "solve the problem." But they can certainly work to ameliorate a serious lack of ethics that he agrees has been devastatingly costly to individuals, businesses, and the economy as a whole. And they don't have to address these decisions as a morality play.

    Business schools pride themselves on teaching cost-benefit analysis and risk analysis. Somehow the individuals who capitalized expenses and later approved of that fraudulent accounting treatment never did that analysis, or never did it thinking beyond the next statement. And those employees who sold worthless assets to off-the-books partnerships also never did a proper risk analysis on any kind of long-term basis. They were just trying to make a short-term financial goal without any thought to the long-term consequences.

    A long-term perspective tends to reduce ethical dilemmas and would possibly have prevented the outrageous scandals that have plagued the economy for the last year. With a short-term perspective, customer service is a joke, work/life balance for employees is an impediment to immediate profits as opposed to an investment in a loyal, productive work force, and treating vendors fairly or paying bills promptly makes it harder to meet immediate profit/cash flow targets. B-schools need to teach their students to take a long-term perspective and perform cost-benefit and risk analyses that look beyond the next quarter and even the next annual report.

    Cost-benefit analysis with a long-term perspective leads to socially responsible business decisions and is the best apple-sorting machine/pedagogical method for instilling an ethical perspective in business.