Developing Leaders Rather Than Managers May Be the New Objective of MBA Programs

Many MBA programs today are under intense scrutiny, with the objective of re-emphasizing leadership and ethical behavior, and de-emphasizing single-minded, aggressive pursuit of maximizing shareholder value at all cost.

With the turmoil of the financial crisis impacting businesses at all levels of their organizations, and with the exposure of so much wrongdoing and unethical behavior, many of the nation's business school programs are undergoing a significant evaluation -- both internally and by outside parties.

An article in The New York Times (March 15), "Is It Time to Retrain B-Schools?", citing the recent problems in the financial services industry, says that "analysts, and even educators themselves, are wondering if the way business students are taught may have contributed to the most serious economic crisis in decades."

“It is so obvious that something big has failed,” said Ángel Cabrera, dean of the Thunderbird School of Global Management in Glendale, Ariz. “We can look the other way, but come on. The C.E.O.’s of those companies, those are people we used to brag about. We cannot say, ‘Well, it wasn’t our fault’ when there is such a systemic, widespread failure of leadership.”

"Critics of business education have many complaints," the article states. "Some say the schools have become too scientific, too detached from real-world issues. Others say students are taught to come up with hasty solutions to complicated problems. Another group contends that schools give students a limited and distorted view of their role — that they graduate with a focus on maximizing shareholder value and only a limited understanding of ethical and social considerations essential to business leadership.

“Instead of being viewed as long-term economic stewards, managers came to be seen mainly as the agents of the owners — the shareholders — and responsible for maximizing shareholder wealth, said Rakesh Khurana, a professor at Harvard Business School.

"There is a need to broaden from the analytical focus of M.B.A. programs for more emphasis on skills and a sense of purpose and identity,” said David A. Garvin, a professor of business administration and one of the project’s authors.

"Indeed, students themselves may welcome an emphasis on character skills. In surveys that the Aspen Institute regularly conducts, M.B.A. candidates say they actually become less confident during their time in business school that they will be able to resolve ethical quandaries in the workplace."

A growing number of business schools are trying new approaches — and many are finding valuable lessons to draw from the economic crisis, the article states.

At the Yale School of Management, for example, the new dean, Sharon M. Oster, has called for a renewed focus on the social value of management. “Business creates value in terms of services and products,” she said. “That’s what business delivers, just like medicine delivers a healthy person.”

Professionalism is hardly a panacea, the Times article states. "No one would argue that lawyers, doctors and accountants are immune from wrongdoing or poor judgment, and they have long been taking certification exams and promising to act ethically. It is also unclear who would monitor continuing education and what kind of certification would be required."

"But surveys of business students show that they are starting to focus more on social issues and ethics, and that this could intensify talk of making managers’ obligations to society more explicit."

“The challenge for a lot of business schools is how to develop leaders and not managers,” said James Tran, a candidate for an M.B.A. and a master’s in public administration at Harvard. Many of the top schools are moving in that direction, he said, but “I don’t think they have actually figured out how to do that in the most effective way.”