24 November 2009

The MBA Oath: A lot of work still left to do

Last spring a group of MBA graduates from Harvard Business School initiated the MBA Oath—an effort to transform business management into a “true profession” like the practice of medicine or law.

The effort has attracted 1712 signatories so far, limited to holders of an MBA. As the website states, “One of the original purposes of the MBA Oath is to raise the bar on what the MBA degree means and what the management profession should hold itself accountable to. Also, it is meant to offer a new way for graduating MBA students to think about their approach to conducting business. We understand there are many managers in the business world that do not have an MBA; it is not the intent of this organization to set a standard for all.”

This lack of a universal entry requirement, Andrew Sridhar argues, is a key difference between business and the practice of law. 

And in their Harvard Business Review article, “It’s Time to Make Management a True Profession,” Rakesh Khurana and Nitin Nohria agree, “Unlike doctors and lawyers, managers don’t need a formal education, let alone a license, to practice. Nor do they adhere to a universal and enforceable code of conduct.”

The questions Khurana and Nohria ask in their article—“Would formalizing management education make individual managers more effective? More generally, how would creating a professional pool of consistently trained managers affect the entrepreneurial activity that drives economic growth? Could we reach a consensus on a set of common standards that would be plausibly enforceable? Would having such a code have any impact on behavior?"—still have to be answered.

The preamble states in part, “I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face difficult choices.”

The website reinforces this theme, saying a signer joins “a group of like-minded MBA students who believe in a greater purpose for society that the MBA is designed to serve.”

The oath does not say how to resolve conflicts with those who define “greater purpose” differently or who reject the idea of reconciling interests.

For example, the seventh commitment says, “I will strive to create sustainable economic, social, and environmental prosperity worldwide. Sustainable prosperity is created when the enterprise produces an output in the long run that is greater than the opportunity cost of all the inputs it consumes.”

Given the diverging ways a person or a people might measure opportunity cost even within developed countries, it remains unclear how business leaders will reach consensus on "sustainable prosperity."

As stated in the FAQ section of the website, “Business ethics and appropriate behaviors in today’s complex environment are naturally difficult to define with a hard and fast set of rules.”

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