Listen to today’s podcast here, read the transcript below or subscribe and listen on iTunes.As we begin a new year, it is a time for reflection, not on our jobs or the economic and political machinations that may affect them, but on our values, our business ethics – on our very integrity.
In my industry, healthcare, I am always stunned and saddened that a person who made the grueling sacrifice of medical school and residency training, or the promising executive who achieved fellowship status in the American College of Healthcare Executives, could make decisions, or accept decisions from others on high, to engage in fraudulent actions.
From embezzling multiple millions of dollars from the nation’s Medicare and Medicaid programs, or to engage in a business strategy that is best described as a fraudulent connivance to boost profits and enhance end-of-the-year bonuses even when they know their actions are, at best, unethical, and probably illegal, these physicians and executives are deserving of our scorn and they should face consequences of the full force of the law. Still, I find it hard to comprehend why someone would take such a professional and personal risk that, if caught, will forever ruin their lives.
I am also stunned and saddened when I hear a corporate spokesman say that their settlement of a fine, or their agreement to pay back the federal government, is not admission of guilt because the regulations are so complex that it is difficult to understand where the line really is. One hospital management corporation maintains a large reserve on its balance sheet to pay civil fines because, apparently, their business model is built, in part, around routinely pushing their facility CEOs so hard on meeting budget and profit projections. They know there is a good chance some CEOs will cross the line to meet these targets and keep their jobs. Paying fines, while not admitting any guilt, is just a cost of doing business.
Yes, healthcare reimbursement regulations are complex but, and this is important to remember, the overwhelming majority of hospitals in America, large and small – those with sophisticated compliance and legal teams and those without – manage to stay on the right side of the regulations and the law. The vast majority of hospitals and their CEOs do not break the rules.
The issues of wavering integrity and fraud are not a healthcare specific issue although it is the sector about which I am most familiar.
Routinely, across this country, U.S. and State’s attorneys general announce settlement after settlement in which the culprit – aka the guilty corporation – admits no fault or wrong doing and just pays the fine.
This was the case in several of the high profile securities fraud investigations regarding credit default swaps following the mortgage collapse in 2009 that cost honest investors billions of dollars in lost value and took the U.S. economy to the brink of a second great depression. It took the nation’s economy almost 10 years to recover, albeit with tepid growth and more economic Inequality than at any other time in modern history.
Most of the bad actors in this near-miss financial meltdown simply washed their hands and walked away, many with millions of dollars in ill-gotten gains socked away, most with no sense that they had behaved badly, certainly unethically and probably illegally.
There is one good thing about the healthcare industry, when individual physicians and hospital CEOs, or others are exposed and indicted, there have been consequences – people end up with criminal records and many do hard time in prison.
But alas, not so much for the big hospital management companies. Rarely does a senior hospital management corporate executive go to jail. Those executives may be forced out of the industry but most have the financial resources to have a decent life, thank you very much. Once you have the loot, being barred from the securities or the healthcare industries for life apparently is no great punishment. Some even go on to pursue elected political office.
Personally, I favor a plan that in cases in which the actions of corporations and their executives are particularly egregious that fines are certainly in order.
But so is a plea of guilty: a criminal conviction with court-supervised parole and a lot of time in supervised public service. If you have so little integrity that you somehow think that stealing from the American people or the government is OK then you deserve a period of punishment in which a heavy dose of humility is enforced, as in washing pots and pans, scrubbing floors and cleaning bathrooms in food kitchens or homeless shelters.
I think there are other opportunities to proactively reform our ethical decline in business. One initiative, the MBA oath, offers great promise.
When it was first introduced in 2009 to much fanfare at the Harvard School of Business, some idealists, me included, were hopeful that this would contribute to the hard wiring of ethical standards for businesses, particularly in those industries with a history of abuse and fraud.
The oath’s genesis comes from a range of pledges, from the Hippocratic Oath to Thunderbird’s Oath of Honor and the Columbia Business School’s Honor Code.
The oath’s mission was, and is, to facilitate a widespread movement of MBAs who aim to lead in the interests of the greater good and who have committed to living out the principles articulated in the oath. The oath is a voluntary pledge for graduating MBAs and current MBAs to “create value responsibly and ethically.”
When it was first introduced, it quickly spread across the globe. Today the MBA Oath has been embraced by more than 6,000 students and graduates representing over 300 institutions around the world. And all of these people started in the same place. Before taking the MBA Oath, students would have been required to apply for their chosen school, all whilst facing a lot of competition along the way. With that being said, many of these individuals may have checked out this article from Fortuna Admissions that explains how to get into business school – https://fortunaadmissions.com/how-to-get-into-business-school/ – as well as learning about the help that is on offer to help with their application. With this help, a lot of people have now taken the MBA Oath, joining thousands of others in this journey. The fact that there are not more signees is somewhat surprising but I remain hopeful.
You can browse the full list of the signers and look up the schools that participate at http://mbaoath.org/schools-and-signers/
By the way, some of the schools that do not participate is a little surprising.
Unfortunately today the oath is largely out of the public eye, which is a shame, especially in the reporting on corporate and banking scandals like the recent Wells Fargo Bank account scam. In a media world that is now focused more on style and glitz over substance, and in which too many reporters spend their time barking at cars, this movement faces some uphill PR challenges to achieve public awareness and support.
I believe this oath should be a robust part of our undergraduate and graduate business education curriculum. It should be deeply inculcated into our business mores.
I want to share the oath with you. I hope you will reflect on its aspirational intent and consider how you can apply that in your professional life.
As a business leader I recognize my role in society.
- My purpose is to lead people and manage resources to create value that no single individual can create alone.
- My decisions affect the well-being of individuals inside and outside my enterprise, today and tomorrow.
Therefore, I promise that:
- I will manage my enterprise with loyalty and care, and will not advance my personal interests at the expense of my enterprise or society.
- I will understand and uphold, in letter and spirit, the laws and contracts governing my conduct and that of my enterprise.
- I will refrain from corruption, unfair competition, or business practices harmful to society.
- I will protect the human rights and dignity of all people affected by my enterprise, and I will oppose discrimination and exploitation.
- I will protect the right of future generations to advance their standard of living and enjoy a healthy planet.
- I will report the performance and risks of my enterprise accurately and honestly.
- I will invest in developing myself and others, helping the management profession continue to advance and create sustainable and inclusive prosperity.
In exercising my professional duties according to these principles, I recognize that my behavior must set an example of integrity, eliciting trust and esteem from those I serve. I will remain accountable to my peers and to society for my actions and for upholding these standards.
This oath I make freely, and upon my honor.
The next time a corporate executive falls from grace, we should ask if they signed the MBA Oath. And if they did, what changed?
Perhaps another element of punishment for failing to live up to ethical and legal standards, is revocation of the degree by the issuing college or university.
I invite you to share your thoughts on what I think is an important issue in our lifetime.
In fact, I hope this new administration will take the lead in not only draining the swamp, as they like to say, but also in setting new standards of ethical behavior for business and leaders of all stripes.