After the financial crisis Business Schools were criticised for the content of their teaching and the character of their alumni. Although that critique continues today, most recently in the Oscar-winning documentary ‘Inside Job’, the appetite for business education appears strong worldwide. Business Schools will continue to play a role in training our leaders in business, finance, government and beyond. Various initiatives have been launched to promote their social responsibilities, but are they doing enough? What does it mean to be a responsible business school in the post-crisis world?
When the concept of business education, or management science, first developed, it was largely with progressive and egalitarian intentions. By outlining the skills that could be learned and mastered by anyone with the right talent and application, it challenged the assumption that future bosses would always be the sons of the former bosses. There was a meritocratic thrust, that businesses are rational enterprises that can be run by anyone with the relevant skills, from whatever social background. That original intention is not often acknowledged today, as more business schools worldwide aspire to be considered elite institutions embedded in elite social, economic and political circles. From Singapore to Sydney, people drop the names of Harvard Business School, INSEAD and others with either reverence or pride. That elitism is both an opportunity and a challenge for how they play a positive role in social progress. As educational institutions, with many charitable foundations, or government owned, or partly government funded, how they make a positive difference in society is a central question. In my ten year association with business schools I have witnessed how their efforts on social responsibility are largely focused on the content of teaching and research, or adopting some environmental measures for internal operations, rather than a full embrace of social purpose relevant for today’s challenges and applied to all organisational functions.
A responsible business school makes social progress its central purpose, through enabling students and staff to contribute significantly to that goal. It involves the integration of social, environmental and ethical considerations into the core strategy and operations of the school, and collaboration to create a supportive context for such integration to be sustainable in the long term. Aspen Institute’s ‘Beyond Grey Pinstripes’ survey and ranking has been useful in encouraging change, but it focuses only on the social, environmental and ethical content of teaching and research, rather than a broader agenda. Although the UN Principles for Responsible Management Education (UNPRME) have played a useful role in internationalising the conversation amongst university staff, they do not provide a management framework for responsible business schools. It is promising, therefore, that the hosts of those principles, the United Nations Global Compact, are collaborating with The World Business School Council for Sustainable Business and The Globally Responsible Leadership Initiative (GRLI) to prepare a high level report on transforming business education. To help, in a forthcoming study in The Journal of Corporate Citizenship, I identified sixteen steps for responsible business schools to take. These came from my experience of advising the Pro Vice Chancellor of Griffith Business School (GBS) on their sustainability strategy from 2007-2009, participation in related UNPRME and GRLI working groups, and insights from outside the university sector on how for-profit and not-for-profit organisations have enhanced their accountability and sustainability in recent years.
Sixteen important steps for responsible business schools are:
1) Clarify the social purpose of the institution and what it means for today’s context, and incorporate that into organisational mission and governance;
2) Upgrade existing curricula and pedagogy to incorporate the social purpose of the institution, such as teaching on social, environmental, and ethical issues;
3) Create new curricula and executive courses with content and pedagogy aligned to the social purpose of the institution;
4) Encourage the research projects of existing faculty and students to include more social, environmental and ethical themes;
5) Encourage and fund new action-oriented rather than theory-driven research;
6) Incorporate social, environmental or ethical expertise into recruitment of faculty and research students;
7) Upgrade admissions procedures, fee structures, scholarships, advertising and outreach, to improve diversity of students and their ability to do progressive work upon graduating;
8 ) Support students and alumni to organise to promote learning and action on social, environmental or ethical issues;
9) Incorporate consideration of social, environmental, and ethical issues into the operations of the organisation (i.e. practices at work), including core issues such as executive compensation or student welfare;
10) Encourage an organisational learning environment by requiring departments put forward academics to lead internal staff training on the social, environmental or ethical dimensions of the organisational functions they are experts in;
11) Host events and produce newsworthy reports or papers that stimulate public and professional discussion on social, environmental and ethical issues;
12) Encourage and support staff to engage helpfully with issues affecting the local community, using their particular talents, either as volunteers or in their work for the school;
13) Seek and support collaboration outside the organisation to align external factors such as institution and staff rankings, accreditations, awards, and funding, as well market demand, with these steps;
14) Develop policies and procedures for private donations or consulting fees to be received transparently and in-line with the mission of the organisation and without threatening the success of the organisation’s other activities;
15) Align incentives within the organisation with all these steps, including reducing perverse incentives;
16) Communicate internally and externally on implementation of these steps, using (and perhaps developing) relevant benchmarks, as well as providing mechanisms for stakeholder feedback on progress.
These steps cover those areas of activity that have important lasting effects on the social role of business schools. I have seen some of the steps taken at different business schools, but not all of the steps taken at one yet.
Given the elitism in the business school sector, their responses to social inequality have been particularly problematic, with public rows in both the UK and France in recent years. A business school’s response to social inequality, and to finding a progressive role in social mobility, is a litmus test for whether a school sees corporate responsibility and sustainability as either a new management fad, teaching product, or marketing opportunity, or, on the other hand, an aspect of the very purpose of the school. With that in mind my colleague Ian Doyle at Lifeworth Consulting and I looked for innovations on social mobility from business schools worldwide for The Journal of Corporate Citizenship.
In France, one business school that has been actively trying to address social justice issues is Bordeaux Management School (BEM). A member of GRLI, BEM claims to be the first French business school to integrate civic service into its management courses. It has a partnership with UNIS-CITE, a non-governmental organisation dedicated to promoting the development of civil society in France, with specific goals to encourage citizen responsibility and engagement, fight against exclusion to reinforce social cohesion and mobilise youth on social and environmental issues. The partnership allows students to participate in the management of a civic project for 6-9 months on territorial and social development and is an integral part of curriculum. Not only does the programme try to apply management education to social issues, it also allows students to have a more systemic view of society in working with local authorities.
BEM has also recognised that access to business schools need to go further than scholarships for those students that show potential. As part of democratising access to the school, it has partnerships since 2006 with two local high schools whereby university undergraduates tutor socially or geographically under-privileged students. The goal is to support and provide guidance in terms of pupils’ professional ambitions and the direction necessary to access to higher education courses whilst removing some of the socio-cultural barriers that impede such access. As well as providing financial access to BEM through a solidarity fund, and thus better access to opportunities, the personalised nature of the process means that it is adapted to the needs of the student in question, thus trying to address other inequality barriers that may impact upon the life of the student.
Another member of the GRLI is the Welingkar Institute of Management Development & Research in India, whose leadership programme, Project Netrutva, aims to provide social-economic empowerment to under-privileged individuals through management education. By integrating disadvantaged students that were unable to complete their school education into a management course at Welingkar, such students are encouraged to complete their higher learning, potentially enabling greater social mobility and professional development.
To facilitate the process, the school needed to think about the practical aspects of incorporating students with lower educational qualifications into the programme. A first step was to pay the selected students a stipend to replace any lost income so that they could focus on their studies. Another step was to reduce the knowledge divide between the students that had passed through the usual entry criteria. Rather than marginalising the disadvantaged students, Welingkar inaugurated a participative approach to the programme so that peers take responsibility for the development of the students needing to catch-up.
Perhaps the leading social innovation in university education comes from South Africa. The Community Individual Development Association (CIDA) University in Johannesburg aims to provide education in business administration for the rural poor with a view to transform its students into leaders of their communities, in turn advancing the socio-economic transformation of the country and the broader region. To do this it focuses on four building blocks: being holistically centerd, by going beyond the technical competencies related to business; low-cost; relevant to the different segments of society including business and government; and encouraging student resourcefulness to study. The school recognises the challenging backgrounds of students including former street-kids, students from geographically isolated areas, orphans and students whose parents have criminal records, and has put in place a life skills certificate as a part of the programme.
These schools are expanding the notion of merit so that it is measured according to one’s contribution to society, rather than one’s place in it.
For more universities and business schools to act on this social agenda in a comprehensive fashion will require reconsidering some core operations and system conditions. Two key issues are school finances and school rankings. Heads of business schools have warned of the financial challenge posed by a lack of endowments and reductions in government funding, due to fiscal tightening. They say this is leading them to raise fees, which will not help them in their social role. However, one answer lies close to home – their own salaries. A New York Times article highlighted how university chancellor compensation is starting to resemble the trends in corporate executive pay. Ms Barbara Bowen, president of the Professional Staff Congress, the faculty and staff union for the City University of New York CUNY has stated, ‘Lavish salaries for top management are unfortunately standard in American higher education…But what’s also standard is underfinancing of the core activity of the university, which is instruction. The gap between the chancellor’s salary [and that of lecturers] , or the standard of living of many of our students and their families, is huge.’ A report by the Guardian newspaper illustrated a similar trend in the United Kingdom where some vice-chancellors had seen their annual earnings double or even triple over the last decade compared with a 45.7% rise for the same period for average higher education teaching professionals. Unless senior executives in business schools curb their pay, then expressions of commitment to social inclusion, or explanations for raising fees in the name of quality, may seem superficial.
Business school heads also need to collectively call for a change in the way rankings are produced. Currently one of the key indicators of the success of a business school is the students’ salary upon leaving the institution. If this remains, then initiatives such as encouraging graduates into social enterprise or public service, will always remain marginal. Ranking systems need to measure the social utility of projects and careers, rather than equating success with monetary worth. Although the rankings assume salary to be a key interest of prospective students, it could be that the status of the business school, i.e. its ranking, is of key interest, and thus the rankings have the opportunity to encourage, not thwart, the social purpose of business schools.
The challenge of transforming management education is at the same time highly systemic, broadly institutional, and deeply personal. Prestigious universities may be able to attract millions from donors for chairs and centres in social enterprise or inclusive business, yet our brief review found that the real innovations in education are occurring amongst people to whom the struggle and creativity of social change is a lived experience, not just a topic of study. Humility and exchange are the parents of new insight. Herein lies perhaps the greatest challenge for elite institutions – to overcome the pride of a high status, or the fear of losing such status. Only then will they authentically embrace a public purpose and take risks to lead, rather than just reacting to public pressure or government legislation. As Mark Drewell, Chief Executive of the GRLI Foundation, explained: “It is about moving from being the best in the world to an era where business success is predicated on being the best for the world.”
Dr Jem Bendell
Director of Lifeworth Consulting
A co-originator of the Finance Innovation Lab.
Note:This blog is based on research for a forthcoming article in issue 41 of The Journal of Corporate Citizenship (Doyle, Visser and Bendell (2011). References can be found in that article. Jem Bendell is an Adjunct Associate Professor with GBS, and Distinguished Visiting Professor at IE Business School.