Can Ethics Be Taught?

*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*

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* (Repost from May 2010)*

As a Business School Professor I am constantly being asked to incorporate
ethics training into my classes.  I refuse on the simple premise that to do
so would be to teach the stupid people how to cheat!  I suppose I should
explain.

The cry for the teaching of ethics in business school originates in the
assumed lack of ethics in business – and more specifically a lack of ethics
in finance.  As I will explain in several later blogs, I do not believe that
finance people are any more or less unethical than the general population
(more competitive yes, but being competitive is not necessarily unethical).

Ethics in business school has become the strict teaching of right from wrong
rather than the more traditional academic examination of moral dilemmas. 
Teaching people right from wrong is a fool's errand in business school. 
First off, by the time that someone has reached business school they already
know right from wrong.  Furthermore, a person's desire to act ethically
has probably already been set by the time they begin elementary school, much
less when they are twenty-something year's old.

The next time you see a major ethical breach, ask yourself these questions: 
(1) Did that person know what they were doing was wrong?  The answer is
always going to be yes.  Ethical breaches in finance are only extremely
rarely a case of moral ambiguity.  (2)  Would the perpetrator of the
ethical breach have undertaken their actions if they knew that they were
going to be caught?  The answer is always going to be no. 

Thus the teaching of ethics is not going to stop any of the breaches that we
observe in the market.  Ethical people will always strive to behave
ethically, and unethical people will always be finding ways to shortcut and
cheat the system.

Now, the cry for the teaching of ethics in business schools generally comes
down to developing case studies on what people did wrong in the past.  In my
opinion this is just stupid.  If all we focus on is how to cheat the system,
then all we are doing is teaching the stupid people (who are more likely to
behave unethically) how to cheat the system.  In other words, ethical
courses in b-school might very well be counterproductive.

Let's focus on creating cultures of Ethical Leadership (see May 21, 2010
blog); recruiting for characteristics of Ethical Leadership and the rest will
take care of itself.  Oh – and by the way – by doing so you will be
prevented from hiring stupid people!


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