Magazine article Strategic Finance

Colleges and Universities Must Be Ethical

Magazine article Strategic Finance

Colleges and Universities Must Be Ethical

Article excerpt

The actions of colleges and universities provide examples to their students of how to act with--or without--a high level of ethical standards. From grading practices to sustainability, these institutions need to be cognizant of the message they send about the types of behavior that are appropriate or not.

As molders of tomorrow's leaders, academia must maintain a high ethical and sustainable performance. It is in the best interests of all management accountants that superiors, coworkers, and subordinates have the educational foundation to drive their personal, business, industrial, and governmental endeavors in an appropriate and ethical manner. By example and in classrooms, higher education must function as an important determiner of the ethical culture of tomorrow.

In perhaps the most glaring example of setting a poor ethical example, Inside Higher Ed (IHE) reported in June 2010 that Loyola Law School in Los Angles arbitrarily raised the grade of every student by one level--retroactively! Loyola's excuse was that it wanted to make its students more competitive in a tight job market, saying that it was just reacting to easier grading standards elsewhere.

The 2009 Batch (graduating class) of Harvard Business School made headlines when it created the MBA Oath, a voluntary pledge to "create value responsibly and ethically." The oath includes "Wherever I face a choice between my self-interest and the interests of the wider world, I pledge to act in the interests of the wider world." This isn't the "greater greed" philosophy so often linked to many MBAs.

In 2009, about 400 of the 889 business grads from Harvard took the oath. Grads from other business schools also took a pledge to act ethically. Perhaps understandably, the reaction from the public has been disbelief and even ridicule. The disconnect between the ethically high-sounding phrases of the oath and actual behavior of many in business and government reported almost daily in the media was just too great. Like most New Year's resolutions, a promise that is too ambitious is very likely to be broken. Taking an oath isn't enough when most MBA students have never experienced anywhere near the pressures to conform that are put upon them after graduation.

Environmental sustainability is an important demonstration of the strength of a university's ethical culture that is passed to graduates. The most comprehensive study of sustainability performance in large colleges and universities in the U.S. and Canada was reported in College Sustainability Report Card 2010. Included in the research were the 300 schools having the largest endowments plus 22 others that asked to be surveyed. This fourth annual study of environmental sustainability was performed by the Sustainable Endowments Institute (SEI), a nonprofit special project of the Rockefeller Philanthropy Advisors. The study grades university performance using publicly available information, conducting surveys of appropriate school officials, and administering a 120--item questionnaire.

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The overall letter grade of a college or university is based on nine components: Administration, Climate Change & Energy, Food & Recycling, Green Building, Transportation, Student Involvement, Endowment Transparency, Shareholder Engagement, and Investment Priorities. Schools received points representing their level of activity in each of 48 indicator areas. Highly innovative efforts allowed some schools to receive extra-credit points in some indicator areas. For each category, point totals were used to determine the grade. The nine category scores were weighted equally in calculating the school's GPA on a 4.0 scale and then converted into the overall letter grade.

The Administrative area probes sustainability policies and implementation aspects, such as staff dedicated to sustainability efforts and the presence of an advisory council to motivate student participation. …

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