Roundup: Lectures from all quarters

Reinventing the MBA

Business education has come under fire from many directions, including in these pages, for a tendency toward academic abstraction, the pursuit of celebrity-scholar/consultant status at the expense of real work in the field, and a tendency to pile on the bandwagon, creating a proliferation of cookie-cutter MBA programs tossing out jargon-filled rhetorical chaff in order to distract students and businesses alike from the lack of substance inside. But this may be changing.

According to this item in The Economist, only 20% of international executives think that an MBA really prepares a graduate to be a manager. And MBA programs are beginning to get the message, adding courses on leadership and ethics, and even establishing closer links with businesses, as advisors and speakers. One school completely revised its entire curriculum, developing an integrated program via a series of intense planning sessions involving the entire department’s professors. Gushed one person involved in this process: “. . . most faculty in other places don’t know what other members are teaching in their courses.” Well, then, there’s still work to be done. But it’s a start. Tomorrow, we’ll take a look at one program that is a great example.

Back to legislating ethics

As we’ve noted, Peter Drucker long ago observed that if corporate boards failed to perform their duties, they would be performed for them. Government loves to fill this role, and recent events have provided plenty of fodder for America’s to do just that. The latest is, as reported in this NYT piece, an investigation by a Congressional committee into the relationship between executive compensation work and other projects some consulting firms do for the same companies. The concern is that a consultancy will advise a board to pay its CEO handsomely, then get hired by that CEO to do additional profitable work for the firm.

As a result, several of the country’s largest consulting firms have been asked to provide information to this committee regarding instances where they have provided both executive compensation and other project work to the same company. What will come next? Perhaps questioning of boards and CEOs that are highlighted by the discovery process currently underway? The issue is politically charged, and potentially poisonous. There’s no escaping the fact that if we don’t police our own ranks, the police will. Boards need to figure this out.

The “manager/owner distinction”

In response to my discussion in yesterday’s post about the need to maintain a separation of roles between managers and owners, aligning rather than combining their interests, Steve Roesler went right to the heart of a key difficulty with one facet of that suggestion: what are its implications regarding the now almost automatic award of stock ownership in its various forms? This is obviously a cornerstone of contemporary compensation schemes - how would it be affected if a clear separation of the manager and owner roles were maintained in the strict manner I propose?

That’s a great question, which bears genuine and close examination. After all, while stock ownership (particularly in the form of options) granted to managers has often acted to inappropriately distort their behavior, when done intelligently and thoughtfully, it can also serve to align their interests with owners. It is important to look into the question, because maintaining the distinction, I continue to argue, is important to a well-functioning organization. After all, as this WSJ item points out, studies show that business managers can often be ineffective as directors (while the item was about non-profit boards, and specified those, the elaboration of the finding supports my general contention). They can hardly be very useful when trying to be both simultaneously for the same firm.

When we appear to have reached a consensus on what is right or wrong in management, or on acceptable ways of doing things, to the point that we do them automatically and without further reference to their justifying rationale - that is precisely the time to reexamine and re-question them. Even when they are our own most cherished ideas.

That’s one reason having a forum like this is so useful - because so many of you take the time and trouble to register your thoughts, either directly to me or by posting a comment to a post. Thanks for your participation, and keep it coming!