The Business of Ethics

Focus on ethics is evident throughout the college

At first glance, the Vietnam War, the civil rights movement and the electric power industry wouldn’t seem to have any connection with the issue of business ethics. But take a deeper look, one that delves into the lives of three leaders inside the University of St. Thomas’ Opus College of Business (OCB) and the Center for Ethical Business Cultures, and the connection becomes clear.

"That's when it first hit me,” said Christopher Puto, recalling the time he spent serving with the U.S. military in Vietnam. Puto, the dean of the Opus College of Business, said being on the inside of a war gave him an understanding of ethics far beyond anything he could learn in a college classroom. It was something he would carry with him to his time working at Burger King’s corporate headquarters and later as a business educator and leader.

For Ron James, who grew up in Port Arthur, Texas, in the 1950s and 60s and experienced the civil rights movement firsthand, ethics and equality were a way of life from the beginning.

“I was raised by a mother and an uncle who very much believed in doing the right thing,” said James, president and CEO of the UST-affiliated Center for Ethical BusinessCultures (CEBC). “I grew up in an environment where African-Americans were just getting access to certain systems. My mother and my uncle believed very strongly thatthere were opportunities in front of us and that doors would be opened, but that it also was important to think about character – who you were and where you came from.”

Ken Goodpaster, the Opus College of Business’ Koch Chair in Business Ethics, unknowingly found himself exploring an area during the 1970s that would later be formalized at colleges around the nation as business ethics.

“I was teaching ethics and philosophy at Notre Dame when a mentor of mine asked me to join a research project studying the decision making going on within the electricpower industry,” said Goodpaster, who has been at St. Thomas since 1989. “This colleague wanted to know what made the mind of a power company executive tick. Ialready loved ethics and ethical theory, but this was ethics in practice. It gave me an understanding of how institutions – not just individuals – made decisions with moralimplications.”

They are three different men with three different backgrounds and three very different roads to the University of St. Thomas. But for Puto, James and Goodpaster, anunquenchable passion for exploring and explaining the role of ethics in the business world brings them together under the same downtown Minneapolis roof.

The result is that students who go through the Opus College of Business are shown in a variety of ways – inside and outside the classroom – why ethics are not only importantto how one conducts business, but also how those same moral issues and decisions directly impact a company’s bottom line.

“There is a constant struggle among students as to understanding where ethics fits in the practice of business because of the tendency to say profits must count more,”Puto said. “But instead of saying profit is the goal of every business, you can say the goal of every business is to be a good business. And that if you are a good business, profit is the reward you get. It changes the framing and the context of it. That’s significant to how we approach ethics at St. Thomas.”

A Rarity

The Opus College of Business is one of a handful of schools around the country that devotes significant resources to programs emphasizing ethics, Puto said. That includes requiring all OCB students to take classes in ethics, connecting students with real-life businesspeople facing current ethical dilemmas and affiliating St. Thomas with the CEBC, whose mission is to promote ethical business cultures and responsible corporate citizenship.

“It’s rare to see a school address business ethics with the intensity that St. Thomas does,” said Goodpaster, who developed the ethics curriculum for Harvard BusinessSchool’s MBA program during the 1980s.

Added Puto, who left his post as dean of Georgetown’s School of Business to take the same post at St. Thomas in 2001: “What I saw when I got here was a strategic opportunity to make a major statement as a business school. To show what ethics meant for businesses and how important it was for a school to be out in front and not merely trailing after on the ethics question.”

The Business of Teaching Ethics

Puto says the Opus College of Business’ focus isn’t on trying to teach students what they should do in certain situations as much as it is getting them in touch with theirown sense of morality and how to apply it in the business world.

“We don’t believe at an adult stage or even at the undergraduate stage you can instill values in people, because by then people’s values are pretty well formed,” he said. “What we try to do is get each person in touch with his or her own values. That’s first. Then, how do I recognize that I’m in a value-conflict with somebody else?”

For Jennifer Parish, who earned her M.B.A. from St. Thomas last spring and works for LaCrosse Global Fund Services, a subsidiary of Cargill Inc., her experience at theOCB left a lasting impression.

“I did not know that ethics would be such a big part of my experience when I started the program, but I am happy to see that it is,” she said. “As a businessperson it reallyprompts me to be more aware of the situations that exist around me and ask myself some serious questions about what I would do if I was presented with a situation similarto those we studied.”

In the Lab

To that end, St. Thomas requires all full-time MBA students to take an Ethics Laboratory facilitated by Goodpaster.

“Its goal is to help students connect with senior leaders in industry so that students can learn the ethical challenges these leaders are facing and the approaches they are taking to solve them,” Puto said. “The result is to put a real world stamp on the concept of ethical practices.”

In recent years, Goodpaster has taken students to Fridley, Minn., to meet with Medtronic chairman and CEO Arthur Collins to discuss the ethical issues around manufacturing and selling equipment like pacemakers and defibrillators. He also has taken students to meet with executives at Toro’s Bloomington-based headquarters to learn about how the company’s proactive approach to consumer liability and injury issues helped Toro ethically and financially.

“Every year our students get involved with some powerful people on challenging issues and get to see the real context of things,” Puto said.

Goodpaster also uses case studies on everything from national scandals like Enron to more local incidents, such as the battle between Northwest Airlines and WCCO-TVduring the mid-1990s regarding the station’s reporting and interviewing ethics and tactics.

“All of the content we studied presented different ethical scenarios and also gave us a framework to evaluate our ethical systems,” Parish said. “The class did not provideblack and white boundaries, but it raised questions for me as to what I would do in a similar situation.”

Bringing the CEBC to St. Thomas

James, who has led the CEBC since 2000, worked for 24 years at Northwestern Bell (which later became US West Communications) and faced numerous ethical challengesas he rose through the telephone company’s ranks, eventually becoming US West’s top Minnesota executive.

“I had always led in business focusing on both performance nd also building a culture where people understood the type of behavior you expected,” he said. “What happens in business too often is a company overemphasizes performance and doesn’t focus on expected behaviors. People eventually translate that into performance at allcosts.”

The CEBC is a nonprofit organization that operates inside of the Opus College of Business. The center provides governance and leadership development services and public programs, while joining with the faculty in educating the next generation of business leaders and conducting research.

“Ethics is about doing the right thing, and you ought to be ethical for no other reason than that,” James said. “We also believe that a company that builds a good ethical culture will outperform companies that don’t. Being an ethical business helps you guard against and reduce your exposure to risks that occur when there are ethical  breakdowns – adverse media exposure, having your company’s reputation damaged, losing employees, customers and investors – and you have to spend time internally focused on fixing  those ethics-related problems versus externally focused in the market.”

James isn’t alone in his belief.

The 2005 National Business Ethics Survey (NBES), conducted by the Washington, D.C.-based Ethics Resource Center, found that 69 percent of employees reported theirorganizations implement ethics training, up 14 percentage points from the 2003 NBES. The presence of written standards of ethical business conduct also jumped 19 percentage points between 2004 and 2005, according to the survey.

Teaching Ethics Can Be Tough

So why don’t more business schools put the same kind of emphasis on ethics as St. Thomas does?

There are several reasons, Puto said, including the difficulty of finding faculty qualified to teach it.

 “It’s not easy. Typical faculty are not especially comfortable because they’re not trained in ethics,” he said. “You feel uncomfortable if you’re a professor and you’re nottrained in the nuances of ethics and how to imbue it into your students. Ethics might seem simple at first glance, but often it’s extremely fuzzy, and that makes it complex todeal with. Schools often feel they don’t have the capability to deal with it, so they shy away from ethics or just ignore it completely.”

He also added that schools can only choose so many topics to pursue, and have limited resources and funding with which to do it.

“To put in Business Ethics as a requirement, you have to take something else out,” Puto said. “For schools that have conflicting resources, maybe they can’t make a consciouseffort to make ethics a priority.”

For Puto, Goodpaster and James, the priority and impact of exploring ethics in the business world now goes far beyond their own careers and personal lives.  “I’ve had St. Thomas students come back to me years later and say that the emphasis on ethics at St. Thomas has influenced their decisions about whether to stay in a certain job and whether to blow the whistle on behavior going on around them,” Goodpaster said. “They’ll tell me it’s one of the things they valued most about their experience atSt. Thomas.”


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