Welcome to Season 2 of The BIS!
In this season, we're talking about the future of business ethics, pulling forward the conclusions drawn in the 1993 Harvard Business Review article “What's the Matter with Business Ethics?” by Andrew Stark, and also exploring the future and purpose of the corporation and business overall.
“It’s not knowing what to say, it’s translating what you think is right into action when something real is at stake.” John Hasnas (Season 2, Episode 1 of The BIS)
In the latest episode of The BIS: Business Integrity School Podcast, Cindy Moehring speaks with Professor John Hasnas from Georgetown University. Their shared passion for business law and business ethics is evident in this episode of the Business Integrity School.
In this edition, Professor Hasnas and Dr. Moehring discussed their insights on how far business ethics have come and what the future of business ethics could look like.
How much have business ethics changed over the last 25 years? Where have we seen sufficient growth and where are we still lacking? Tune in to find out the answer to these questions and many more!
If you haven't already, be sure to subscribe to our channel or subscribe to our podcast to not miss an episode!
#TheBISPodcast #BusinessIntegrity #WaltonBILI #Leadership
Podcast:
Episode Transcript:
00:00 Cindy Moehring: Hi, everybody. I'm Cindy Moehring, the founder and executive chair of the Business Integrity Leadership Initiative at the Sam M. Walton College of Business. And this is The BIS, the Business Integrity School Podcast. Here, we talk about applying ethics, integrity and courageous leadership in business, education, and most importantly, your life today. I've had nearly 30 years of real-world experience as a senior executive, so if you're looking for practical tips from a business pro who's actually been there, then this is the podcast for you. Welcome. Let's get started.
00:35 Cindy Moehring: So I have with me today John Hasnas, who's a Professor of Business at Georgetown and also a Professor of Law at the Georgetown University Law Centre, and shout out for my alma mater for that law school, Go Hoyas. He's also taught at some other universities, including Duke Law School, George Mason Law School, and the Washington College of Law at American University. And he's been a visiting scholar at the Kennedy Institute of Ethics in Washington, DC. John is also the executive director of the Georgetown Institute for the study of market... Markets and ethics. So, welcome, John, and thanks for taking some time to be with us today.
01:17 John Hasnas: Thank you.
01:18 Cindy Moehring: I appreciate it very much. So John and I share a passion for business law and business ethics, and so, today, we're gonna be talking about advancements that have occurred in the last 25 years or so, in the way that business schools prepare their business students to both understand ethics issues and practice sound business ethics when they enter the business world. And a lot has been written on this topic, including an article that was in Harvard Business Review about 26 years ago. It was written by another professor, Andy Stark, and it was titled 'What's Wrong with Business Ethics?' And it's still a very commonly-cited article. And so I started thinking about that and read it through several times, and thought to myself, you know, a lot has been done since then, and it's time to bring this article current, and talk about what's going on today and what's the path forward. Okay. So, let's jump in. So, Andy, in the article said, really, to sum it up, that what was wrong with business ethics 25 years ago in business schools was that the approach was, at the time, too theoretical, it was too general, and it was too impractical. So, theoretical, general and impractical, and it didn't provide any, really, actual guidance to business students. And so what I wanna know is, do you think he was right about that, first of all, in terms of the way it was being taught? And do you see that still as an issue in business schools today, or are we past it?
03:01 John Hasnas: No, I think he was right, and I don't think we're past it. I think he was right. I think it's still a problem today. Maybe I'll... I'll say that he was half-right, in this sense. There's two ways in which business ethics... In which ethics is taught in business schools. One is the one that Andy was describing, which is very theoretical. So, after the scandals in the 1980s, business schools imported a lot of philosophers in to teach ethics courses, and what you got was a very abstract, theoretical course in which you tried to apply the principles of moral philosophy to the kind of issues that businesspeople face. One real problem with that is the language that philosophy professors use usually doesn't communicate very well with business students. This is not a philosophy course, though. It's a problem with the actual use of terms. It is highly abstract and theoretical. And it has the features that Andy described. So, when I say he's half-right, that's a description of part of the way business ethics is taught. There's another model that's used, which is completely different, schools that don't use philosophers or ethicists. They run their business ethics courses based on people who just are interested in-house, and these are completely atheoretical.
04:33 John Hasnas: There's actually no normative element to it. There's no true ethical core. What happens there, typically, is people will discuss what public sentiment is about an issue, or what people believe, or they'll have... This sometimes is a model that I call The Serial Interview Model. You go around and you get everybody's opinion on what they think is right and wrong, and then somehow you try to reach some consensus. So it's as though ethics is just a matter of getting people to agree, and there's no real ethical core. So, you have these two models. Both of them, in my opinion, are inadequate. Andy's characterisation of the typical ethics course in the higher-ranked schools tends to be accurate. It's still accurate today. There's still a great deal of that. I'll go a little further. I'll even explain why.
05:25 Cindy Moehring: Okay.
05:27 John Hasnas: With regard to ethics, there's many issues. I'm gonna refer to one as the cognitive issue, and that means do we know what the right thing to do is? Is there some lack of knowledge that we have? And there are some issues that are really interesting and engaging, and can be controversial. So, to some extent, our lack of understanding of what the right thing to do is... It's relevant, it's important, but that's a small part of what goes on. The other areas are, even if you know what the right thing to do is, is there something in your organisation that's making it so people don't act in that way? Are there psychological impediments? What is required to translate knowledge into performance?
06:09 John Hasnas: So there could be organisational areas, there can be psychology, there could be purely economic elements of this. Any ethical argument has two dimensions. One is a normative premise that describes what the right thing to do is, that has a 'should' in it. And then empirical premises, which describe the way the world works. And that will have to do with how human beings act, and how they respond to incentives, and things like that. And the problem that Andy was addressing, which still is a problem, is that business ethics courses often devote almost all of their attention to the normative premise, what's the right thing to do, and not enough attention, or very little, to the empirical premise, how does the world work, how do people behave, which is important if you're going to attain results. So, to that extent, I think he's right. It's still a problem. There are more and more courses that are trying to overcome this problem, that's one thing we're doing at Georgetown, that's the way our system is designed. But if your question is, have things changed in the last 25 years? The answer is yes, but not enough.
07:22 Cindy Moehring: But not enough. So let's talk a little bit about that. He, at the end of his article, talked about what he saw as the answer to the problem. And the words he used to describe it at the time, were moderation, pragmatism and minimalism. What do you think he meant by that? And then... Well, let's just start there. What do you think he meant by that?
07:53 John Hasnas: I have no idea.
[laughter]
07:56 Cindy Moehring: Ask Andy when we talk to him?
07:56 John Hasnas: Moderation here... Moderation is good. Since Aristotle, we've known moderation is good. What does that mean? Minimalism, pragmatism, I... He identified a problem correctly. If he's saying things are too theoretical and too abstract, what's the opposite of that? Pragmatism sounds like the opposite of that. So he's just saying, "Let's go in the other direction." But as far as what it means, in a concrete sense, I have no idea, and that wouldn't be watch words I would use to go forward. I think my way of looking at it is what I just described, we need to balance the attention on the normative premise and the empirical premise, and it has to be integrated. The direction we're taking and the direction that is taken more and more...
08:45 Cindy Moehring: Yeah, let's talk about that.
08:47 John Hasnas: Is to not have an ethics course, but to have a course that now would be referred to as PPE. So the P is philosophy, the second P is politics, the third P is economics. Actually, we probably should include another one, which would be social psychology, but what you want is an integration of all of those disciplines to get things across. The other thing that I'll say is his critique is that we're spending a lot of time talking in the abstract about how things should be done.
09:22 Cindy Moehring: Right.
09:24 John Hasnas: So now I'm gonna... I'll just go off on a long digression on this. First of all, when students walk in the door, every single student is completely ethical and honest in every way. They would never do anything wrong, just give them the cases, they know what to say, and they're entirely ethical and honest. That's why what we do is we don't ask them for their opinion, we put them in situations where they have to make decisions where they have some interest at stake, and before too long, they discover we're really not so honest. But when they have to... It's not knowing what to say. It's translating what do you think is right into action when something real is at stake. So, in a course that I teach, there's a situation in which the students are supposed to do an assignment where they have to keep contemporaneous entries of their opinion on certain things. They always forget to do that at the end, when I say, "Okay. So what do you wanna do now? Are you gonna hand in a journal that's backdated and is unethical and get an F, or are you going to do the... Hand in an honest journal. Since half of them have forgotten to do this, they all look at themselves and realise, I'm gonna cheat.
[laughter]
10:38 John Hasnas: What happens is we're making them experience ethical decision-making rather than talk about ethical decision-making.
10:45 Cindy Moehring: Right. Yes.
10:45 John Hasnas: All these honest people are completely honest, but if they make a mistake, or if they are not observant, or if they inadvertently become trapped in a situation where there's no ethical way out, they now realise what the issues are. And the idea is let's have them do that in school so that they don't encounter that in their real life.
11:07 Cindy Moehring: Yeah. Yeah, and in fact, that's one of the other things that I think that was what was talked about in the article, is that, 25 years ago, there was too much emphasis on talk and not enough emphasis on action or practice and making it experiential. So I think the example you just gave of the way you teach and for them to have to... The students to experience what they would do in the moment when they forgot to enter their contemporaneous entries is a really interesting way for them to experience what it's like.
11:44 John Hasnas: Well, that's part of it. The other half of it is something like this. The typical way business ethics is taught sees ethics as an afterthought, in this sense. Students are giving cases that are representations of something that's actually happened. So there's a business plan, there's a business model. It's gone into effect, let's do an ethical evaluation of it. It's as though there's business, and then there's ethical evaluation, which comes later. And my analysis of this or my analogue for this is they treat ethics as though we've got a business plan, let's go run it by legal and see what they say. That's ineffective. One of the stories I tell is, I worked in a corporation in which everybody hated the lawyers, because after they made these brilliant business plans and they set them down to the lawyers to check it out, they said, "You can't do this," everybody said, "But you're stopping us from making money." That company was smart enough to take its lawyers and put the lawyers on the business planning teams so that any plan they came up with was also legally-acceptable. So that's a model that we wanna use for business ethics classes as well. There's no sense having students go ahead and make business plans, and then, after the fact, find out whether it's ethical. That's wasteful.
13:06 John Hasnas: So the other way we want to change the way business ethics is taught is we want to build the ethical considerations into the business planning process.
13:15 Cindy Moehring: Yes.
13:16 John Hasnas: And so one of the models that we use, called The Business Project, has the students make fictitious business over the cause of the entire semester, knowing that, at the end, they're gonna be confronted with an ethical dilemma that's designed for their business. And that each step along the way, we're reminding them are you thinking ahead about ethical issues when you're making these business plans, not something separate, not something after the fact, that's something that you just tack on. So these are the two ways in which we're trying to change the model that Andy Stark was talking about 25 years ago. And yet, we're still pretty distinct in the sense that there are few other programmes that do this. A lot of it is still talking about ethics and trying to solve cognitive problems rather than integrating it into how do we do something that's useful for the real world, and what happens when there's something at stake and you have to make the decision?
14:20 Cindy Moehring: So I want to spend just a minute talking about that issue of integration, and talking about that. And so we've talked about Andy's article, and that was written about 25 years ago. And then, about 10 years ago, there was an article in the Wall Street Journal, talking about...
14:36 John Hasnas: Really?
14:37 Cindy Moehring: Really does getting an A in business ethics have any value?
14:42 John Hasnas: Yeah. Okay, good. You've asked me about the issue of... The problem I haven't solved yet [laughter] The Wall Street Journal op-ed that you mentioned, I cut that out and I gave that to our then dean who was coming in as a new dean as my reason why we should be trying something new. So, I said, "Does an A in ethics have any value?" The article says, "No." It was right. I gave this to the dean and said, "Look, let's... We're Georgetown. We're supposed to be committed to ethics. We're a Jesuit institution. Let's try something else that makes the ethics course worthwhile. So that was the genesis of the approach that we're taking. So, if that was 2013, that's about the time we got started on this. Integration is important. Integration is the difficult nut to crack. There's many reasons for that. Every business school has a limited amount of time with a packed curriculum. The vast majority of professors aren't trained in ethics. There's no reason why they should be. They don't know how to make it part of their course, that makes it hard to integrate. One thing that I have learned over my time at Georgetown is you can't say, "We're gonna have ethics integrated to all of the... Across the curriculum, and then expect the professors do it, if it's an added burden to them, with no compensation.
16:13 John Hasnas: Back in the 90s... Back in the 90s, we made ethics a theme of Georgetown's Business School. It was gonna be built into every course. That was a complete failure, because what the administration expected professors to do was take on additional uncompensated work, for which they weren't qualified, and just do it. So that's a failure. If you do want integration to work, then what the people who are part of the ethics group have to do is offer ethics to the others as a benefit. So, what we do now is if an ethical issue comes up in your class, and you want to address it, well, we'll come into your class, we'll provide this, and we'll provide the... We just offered it as an extra benefit that they can use. One thing that's key to integration is you have to get some component of the ethics programme early in the curriculum. Ideally, it would be the freshman year. The best that we could do at Georgetown is a sophomore year, but you get it in there early enough. And then, to the extent that... Part of what we do is we make sure the students have a basic vocabulary and language to describe the most common type of ethical issues. We make sure that every single faculty member has the same vocabulary and the same understanding of the terms.
17:33 John Hasnas: We tell the students, "If you want to address ethics, you can address it in any class, the professors will understand you." And we make it something they can bring up optionally. So that's another part of it. And if you get the course in early enough, like we get it in as a sophomore year, what happens is the project that they do in that year, they can carry with them through their junior and senior years. So the ethical issues that they address don't go away, they constantly use them in their other courses as illustrations or set pieces of how things work out. The key is gonna be, get it in early, make it experiential so the students walk away with something they can use, make sure there's a common vocabulary with the rest of your faculty, and then make sure the faculty understand that we are providing a benefit or a service, and it's not gonna mean more work for them. The most feedback we get is the student's comments, not in student evaluations but on the way out of the school, they have an exit interview where they describe... Has to describe what was meaningful about their experience. That's changed notably over the last few years so that, more and more often, they're mentioning the way ethics is woven into what they're doing as something that they think they have, that everybody... Georgetown students will compare themselves, usually, to Wharton or Harvard.
19:02 John Hasnas: And so this is the way we're superior to Wharton, especially, because they have this, and the other people at the other schools aren't getting it. So that's the way we're noticing that it's making some difference. It's not a scientifically-valid measure of the results.
19:13 Cindy Moehring: Got it. Right. Right. Right. Right. Right. Well, I'm gonna be speaking with Tom Donaldson as well from Wharton, so we'll see what he has to say about what that approach is like at Wharton.
19:27 John Hasnas: Tom's both of our friends. He's the ethicist at Wharton [laughter], but I think he'll tell you that student attitude there probably is a little bit like the way the Georgetown students depict them.
19:38 Cindy Moehring: Yeah.
19:39 John Hasnas: It's a little bit more let's go for the jugular.
19:42 Cindy Moehring: Yeah [laughter] So if I were to ask you what you think the three most important words are for the path forward in teaching business ethics, explaining business ethics, getting students to understand it so they can live it out in their business lives, what do you think those three words would be?
20:03 John Hasnas: Philosophy, Politics, and Economics. Make the ethics courses PPE courses. Integrate the empirical aspect of things into the normative aspect of things, and then you've got a worthwhile course. So I'm gonna go with PPE.
20:18 Cindy Moehring: Okay. Interesting. Very good. Alright. So, to wrap up, and we've had a great discussion here about the aspects of business ethics and teaching it, but I wanna know a little bit more about you just as a person. And so tell me what... Since we've all been inside with COVID, if you've watched any good movies in the last month, and if so, what's been your favorite one?
20:46 John Hasnas: Yes, I've watched many movies, but I'm a product of my generation. They're typically old classics like 'Bringing Up Baby', 'Arsenic and Old Lace', 'Gunga Din', whatever's on. So they're typically old classics that I'm watching. There is one new thing I watched, which I found interesting, but it's probably a feature that's specific to me. I watch the series 'The Plot Against America', and a lot of people are interested in that because they see parallels between what happened then in Trump's administration, but that wasn't what was interesting to me. It's set in 1940, in a part of New Jersey, which was the part of New Jersey where my mother's family lived, and I found this to be extremely interesting because it was unbelievably accurate in its depiction of the speech, life, culture, at that time. There was an actress in this that sounded exactly like my relatives, and my older relatives have been dead for a long time, it was like hearing the past come back, so that was... Watching that was interesting to me. It was an amazingly good depiction of what life was like in that time period.
22:10 Cindy Moehring: Interesting. So you've been watching some oldies but goodies and some new series that have been on. What about books? Have you read any great books?
22:18 John Hasnas: Yeah, I'm a professor. If I read a book, it's for work [laughter] Other kind of books, I will listen to.
22:26 Cindy Moehring: Ah. Well, what have you listened to lately, that's good. Audiobooks are great. Real Podcasts?
22:29 John Hasnas: Yeah, I listen to books all the time. One that I liked was... 'The Coddling of the American Mind' was a good one. But basically, I listen to books for recreation. So, Bernard Cornwell has a series. He does historical fiction, where he weaves characters into actual battles, and he's got a series of, now, 12 books about England in the time of King Arthur. So I've been listening to those, and it was the most recent one of that. If you like really rollicking good stories based on plot, those are good books to read.
23:05 Cindy Moehring: Very cool. Good recommendations. So, with all that in mind, and you've told us a little bit about your family and from back East, what is something interesting about you, John, that somebody wouldn't know just by reading your CV or your bio?
23:22 John Hasnas: Yeah, I hope that people who read my CV and my bio don't know anything about me [laughter], because that's just my job. Basically, I'm an old-fashioned, low-brow guy who just likes to run around and do sports, and that's... Sometimes... I started out my career as a soccer coach, and I often wonder if I made a mistake by going to graduate school, maybe I should still be doing that. But I have at least one distinctive claim I can make that is a little unusual, which may be impressive to kids now because so many people play the game Ultimate... Ultimate Frisbee. It's very popular. It's played in colleges. It's a real sport now. However, I was on the first college team anywhere in the world, because the guy who invented the game came to college with us, and we started the first team anywhere, which, Ultimate Frisbee started at Lafayette. We were the first team.
24:22 Cindy Moehring: So you started Ultimate Frisbee. That is so cool.
24:24 John Hasnas: I was on the first team. The team was created by someone who's a famous movie producer now, named Joel Silver. He invented it in high school, brought it to Lafayette College, where we were, taught us the game, and we were the first ones to play.
24:39 Cindy Moehring: How fun. Well, no, that is something I definitely didn't know about you before now, so thanks for sharing that.
24:43 John Hasnas: Yeah, that's completely insignificant, but that's the closest thing I'd have to anything distinctive.
24:49 Cindy Moehring: Well, we've got an Australian Shepherd frisbee dog, and so now every time we throw the frisbee and Daisy brings it back to us, I'll think about you and Joel Silver.
25:00 John Hasnas: You should not have told me that [laughter] All Ultimate players hate dogs that eat frisbees.
25:05 Cindy Moehring: She doesn't eat them. She brings them back.
25:07 John Hasnas: That was the problem. We were out there playing and somebody walks by with a dog who jumps out and... We hate those dogs.
[laughter]
25:15 Cindy Moehring: You'd like Daisy, I promise.
[laughter]
25:16 John Hasnas: Okay.
25:17 Cindy Moehring: Well, John, thank you so much for being with us and sharing your thoughts and your just wealth of information. It's been really great to get to spend this time with you, so thanks.
25:27 John Hasnas: Okay. Thank you.
25:29 Cindy Moehring: Thanks for listening to today's episode of The BIS, The Business Integrity School. You can find us on YouTube, Google SoundCloud, iTunes, or wherever you find your podcasts. Be sure to subscribe and rate us. And you can find us by searching TheBIS. That's one word, T-H-E-B-I-S. Tune in next time for more practical tips from a pro.
Cindy Moehring
Cindy Moehring is the founder and executive chair of the Business Integrity Leadership Initiative
at the Sam M. Walton College of Business at the University of Arkansas. She recently
retired from Walmart after 20 years, where she served as senior vice president, Global
Chief Ethics Officer, and senior vice president, U.S. Chief Ethics and Compliance
Officer.
