BOSTON -- When Securities and Exchange Commission chairman John Shad last week gave $20 million to Harvard Business School to set up a $30 million ethics program, the story grabbed headlines about Harvard's commitment to business ethics.
Some, however, weren't so impressed with Harvard.
Critics say that Harvard Business School, the preeminent business school in the country, has rebuffed repeated efforts to create a full-scale business ethics program as a matter of policy, not because of a lack of money. They question whether the school is changing its position only after announcement of the biggest gift in its history.
In interviews last week, the critics and some Harvard officials made three major points:
Harvard Business School has steadfastly refused to require a course in ethics and has no plans to change that policy;
Harvard University President Derek Bok acknowledged that the business school so far has not done an adequate job teaching ethics within its regular curriculum, despite a years-long campaign;
The school has recently declined to keep on staff all three untenured professors that the school itself has identified as its business ethics specialists.
"People here have been working and struggling with this for years," said assistant professor Barbara Toffler, one of the Harvard Business School ethics specialists who was not given tenure. She is author of a new book on business ethics called "Tough Choices."
"Unfortunately, all of a sudden this money comes in and money legitimizes things," Toffler said. "Now there is money. Now there will be an ethics program."
Outside critics are even harsher. Manuel Velasquez, president of the Society for Business Ethics, whose 600 members form the majority of the nation's business ethics scholars, said:
"Harvard has not taken ethics seriously. There has been a rhetorical commitment, but there has been a problem of attitude and they have a record of not giving tenure to their ethics teachers. Considering Harvard's past record, I'm surprised they got the gift."
No one is questioning the sincerity of Shad in giving the gift in the wake of the Wall Street insider trading scandal that involved several Harvard Business School alumni, or questioning whether Harvard will put the money to good use. The questions are over the school's commitment to ethics before the announcement of the gift.
Shad, in a telephone interview, said ethics should be taught in all required Harvard Business School courses and not necessarily be required as a separate course. Asked about Harvard's commitment to teaching ethics prior to his gift, Shad said, "I have no comment on that. You'll have to ask the dean those questions."
Harvard Business School Dean John H. McArthur, who announced the Shad gift in New York City two weeks ago, refused repeated requests for an interview. School officials referred calls to two senior associate deans, Joseph L. Bower and Thomas R. Piper, but they also declined to be interviewed.
However, Derek Bok, president of Harvard University, which has influence but not control over the independently funded business school, said that he both agreed and disagreed with the critics on various points.
Bok strongly denied that the business school had committed itself to ethics teaching only after the announcement of the gift. Bok said he is one of the leading academic advocates of ethics instruction, saying he wrote a paper 11 years ago holding that professors needed to be much better trained to teach ethics.
Nonetheless, Bok acknowledged that few professors on staff at the university or the business school are qualified to teach ethics even as a minor part of a course.
If Bok has been committed to the subject for years and still feels Harvard teachers are unqualified, why has there been little progress?
Bok said "it is my belief that there is only one person in the country qualified" to head an ethics program "and I tried to have him come to Harvard for eight years." He was referring to Dennis Thompson, recently hired to head a university-wide ethics program that has no authority over the business school. Thompson declined comment. Bok said that while the Shad gift was announced shortly after Thompson was hired, it is the hiring of Thompson and not the much-appreciated gift that signaled an expanded commitment to ethics.
Said Bok: "It is extremely difficult to find well-prepared people in the field."
Bok declined to comment on why the business school, faced with a shortage of ethics scholars, recently decided not to keep on staff the three persons it had hired during the past seven years as ethics experts. He said university officials are prohibited from publicly discussing a tenure decision, but added that the fact that the three were not kept on staff had nothing to do with the school's commitment to ethics.
Bok said he is against a required ethics course, saying ethics can be taught within existing courses. At the same time, Bok contradicted Harvard Business School spokesman James Aisner's statement that the business school now has many professors able to teach ethics as art of a regular course. Several leading business school professors also said they were qualified to teach ethics as part of their curriculum even though they have never taken an ethics course or seminar.
"I disagree with that," Bok said. "Ethics is a difficult and complicated subject that requires sustained thought and research and experience just like other subjects that are taught." Asked specifically about the business school today, Bok replied: "I don't think professors there are able to put ethics into their courses at the level they should. There is a dangerous tendency on the part of some people to say that ethics is something we all know about."
The business school's long-time ethics scholar John B. Matthews said he has been trying for years to persuade officials that instructors should be better qualified to teach ethics.
Seven years ago, Matthews was the prime mover to hire Kenneth Goodpaster, a Notre Dame University philosophy professor, to teach ethics to Harvard Business School students. Since 1980, Goodpaster has developed the school's ethics program and is now the only professor teaching the lone ethics-only course available to graduate business students.
However, two months ago, it was announced that the school would not give tenure to Goodpaster, or to Toffler. To some at Harvard, the twin tenure decisions indicated that the school still was not committed to teaching business ethics, or at the least was undecided about how to teach ethics. Some critics also said the pair was rebuffed because they did not fit into the "old-boy" network; neither is a Harvard graduate or business person.
Matthews said "it is ironic" that tenure was not granted to Goodpaster and Toffler shortly before the school accepted a $30 million gift to teach ethics.
"I am very fond of Goodpaster . . . it is too bad these bad things have to be linked," Matthews said.
Goodpaster, who is in negotiations with other schools, declined to comment on Harvard's refusal to grant him tenure. Instead, he provided this statement: "The school's potential for influencing management by an institutional commitment to business ethics is extraordinary."
Harvard officials, including Bok, said that interest in ethics among students is growing, thanks to existing school programs. However, a Harvard memo, distributed in a press package about the Shad gift, portrays the ethics course as unpopular among business students. The memo says the lone ethics-only class, Ethical Aspects of Corporate Policy, a Goodpaster course that deals with everything from bribery to product safety, dropped in enrollment the last year to 57 students from 155. About 1,600 students attend the two-year graduate school.
The reason for the flagging interest in the ethics course, according to the memo: "This semester the course is competing with other popular courses such as Power and Influence."
Power and Influence, with 411 students, is booming. The instructor, Todd Jick, called the Harvard memo misleading and stressed that he, in his own way, teaches ethics. An opponent of a required ethics course, Jick said he and other professors are "quite qualified" to teach ethics as part of their courses.
However, Jick later acknowledged he has never attended an ethics course or seminar, or read a textbook on the subject. He said his initial comment should not be interpreted as meaning he is an ethics specialist.
Critics condemned the school's decision not to require an ethics-only course and said many professors cited by the school as teaching ethics within a broad course are unqualified.
"I am shocked that on the same day Dean McArthur announced the gift, he said the school still would not require an ethics course," said W. Michael Hoffman, director of the Center for Business Ethics at Bentley College in Waltham, Mass. "You can't just teach ethics in other classes."
Hoffman said Bentley does not require an ethics course despite his urgings, but it does require that students study a business ethics text he wrote.
Hoffman said a recent survey of the nation's business schools found that while 90 percent claimed to be teaching business ethics, only 6 percent required an ethics course. The reason, he said, is that few schools will require an ethics course unless Harvard Business School takes the lead.
"Harvard has a special responsibility to require an ethics course in accepting this money and being a role model for other business schools," Hoffman said. "Otherwise, it is sending the wrong signal. The people who are running Harvard Business School are trained in management in corporations and they don't understand what ethics is all about."
Goodpaster and Toffler are only the latest casualties in the Harvard Business School's decisions not to retain it ethics faculty. Laura Nash, a researcher hired in 1980 to develop ethics case studies, was not promoted in 1985 and has since gone to Harvard's Kennedy School of Government. She said that the business school officials told her that they wanted her to teach ethics, but then refused to back up their commitment.
"I was very discouraged by their lack of support for teaching ethics or social responsibility," Nash said. "Instead, I was asked to fit into the regular faculty. Ethics is not a traditional academic area, so they were uncomfortable in teaching ethics. The record is that they are letting go all of the young people they brought in to teach ethics."
Like many specialists interviewed last week, Nash said that the irony of the Shad gift is that Matthews has been trying for years to persuade officials to develop a full-fledged ethics program but was rebuffed.
"It was not a question of money," Nash said. "Harvard had the money. I don't see how the money will make any difference."