Yesterday, the Harvard Business School named its new dean.
According to the Wall Street Journal (May 5, 2010, p. B9), Professor Nitin Nohria says “his focus will be on business ethics, a cause he has long championed, particularly during the financial crisis. He has also been a vocal critic of management education and the leaders it produces.”
What does that have to do with the legal topics that usually occupy this space?
As the Great Recession deepened, Nohria and a colleague wrote that management should become a profession, complete with a code of ethics similar to that for lawyers. (“It’s Time To Make Management a True Profession,” Harvard Business Review, October 2008) Nohria wants to move business leaders away from a myopic focus on maximizing shareholder value toward a broader social vision of their roles as institutional custodians and citizens. Looking to the legal profession as a model, he hopes to restore legitmacy lost over the last decade.
Maybe he has Atticus Finch in mind. Sadly, Finch is a fictional character. It’s too late for the most lucrative and influential segment of the profession to help him.
The tide has already taken most of biglaw out to sea in the direction he seeks to reverse. Following their corporate clients’ examples, firm leaders have embraced an MBA-mentality. Increasingly over the past 20 years, large law firm managers themselves have MBAs and have relied on business-school metrics — billable hours, leverage ratios, and profits-per-partner — to dictate decisions that shape the culture of such places.
How that happened and the unfortunate behavior that adherence to such deceptively objective metrics can produce are subjects for another day (and the novel I just published — The Partnership.
For now, the point is this: If Dean Nohria is looking for a new model of something that is a profession, rather than a collection of bottom-line businesses where MBA-type metrics set the tone, he’ll have to look elsewhere.
Does anyone have any candidates?
Very interesting proposal by this new HBS dean. I wonder exactly what a code of ethics would mean for business. I mean, I’m sure there’s one out there, but is this code ever any more than nominal in a capitalist society? Won’t corporations and investors continue to do whatever they can within the bounds of the law, thereby gaining a competitive advantage? The free marketplace encourages this. So the only response seems to be legislation and regulation, creating the massive government agencies that free-marketers hate.
Of course, corporations can innovate new money-making schemes we might find unscrupulous faster than we can legislatively patch up such loopholes. This, I think, is what causes financial crises like the one we’ve been in. The system is far from perfect. Maybe my assumptions above are cynical, and a new ethos in corporate culture could change things for the better. But history hasn’t shown that to be the case. The same people who champion the free markets, are, ironically, the ones who cause it to fail, and who necessitate the regulation they despise.
p.s. I wrote this at work.