Apr 24, 2017 at 12:00am ET By Joanna Hughes

Money may make the world go ‘round, but it’s far from the only thing that matters in life... and in business. This concept is not more clearly exemplified than in the aftermath of the United Airlines debacle earlier this month. By now we’ve all seen the shocking video of the dazed physician being dragged from his paid-for seat on a United Airlines flight after refusing to vacate it to allow a crew member to fly in his place -- a situation made even worse by the airline’s initial victim-blaming response. But the repercussions of that event are only just beginning to emerge.

By some accounts, the company lost a whopping $570 million in market capitalization in the initial week following the incident. However, experts say United stands to lose even more in the form of reputational damage moving forward. In other words, one ill-advised act is costing the airline way more than what it would have to simply book that crew member a seat on another flight.

The takeaway for business students and business schools? Money is only part of the big picture. Ethics -- the system of moral principles which define what is good for people and society -- also factors in. Here’s a closer look at three reasons why the study of ethics is an important part of any b-school curriculum.

 

1. MBAs are leaders, and good leaders are ethical.

Not all MBA students have dollar signs in their eyes -- nor should they. In fact, when MBAs were first conceived, they were not merely about padding the pockets of their possessors and the businesses they represented, but also tasked leaders with the obligation “to see that the corporation contributed to the general welfare,” according to Harvard Business School professor Rakesh Khurana. While society might have lost sight of this along the way, the financial crisis heightened our collective awareness that MBAs have the potential to do more than just rake it in; they can also help make the world a better place.

Khurana and his colleagues have even gone so far as to propose that there be a “Hippocratic Oath for Management,”  and MBAs have hit the ground running with the idea through the formation of the MBA Oath, “a voluntary pledge for graduating MBAs and current MBAs to “create value responsibly and ethically.” To date, the oath has been signed by thousands of MBAs from more than 300 business schools from all over the globe.

 

2. It shines the light on difficult topics.

It’s easy to sweep challenging or divisive topics under the rug. However, the ability to talk about these topics facilitates the development of critical thinking skills while also promoting the understanding of different perspectives.

But the study of ethics in b-school does much more than offer insights into how other people think and feel.  It also helps students clarify not only what they feel but also the degree to which they feel it. Proposes Chris MacDonald in Canadian Business,  “An ethics course also can give students a chance to enunciate their own values in a constructive way. A student who finds herself repeatedly speaking from the heart, in a safe classroom setting, about the importance of treating people fairly may come to realize that that’s an important part of who she is. She may then find it easier to speak up when she observes injustice in the workplace.”

 

3. Consumers are demanding ethical practices.

Millions of people in India recently joined forces to boycott fizzy soft drinks based on allegations that foreign companies were exploiting the country’s water resources, according to The Guardian. As a result, the entire south Indian state of Tamil Nadu -- which, according to The Guardian, boasts a population larger than that of the entire UK -- will make the switch to locally produced soda. This is just one example of a massive movement by the people to rebuff unethical business practices in lieu of transparent ones.

In fact, says Investopedia, adopting more ethical business practices benefits organizations in many ways, ranging from stronger management teams to increased employee morale. It’s also better for the bottom line: “As with all business initiatives, the ethical operation of a company is directly related to profitability in both the short and long term. The reputation of a business from the surrounding community, other businesses and individual investors is paramount in determining whether a company is a worthwhile investment,” says Investopedia. “To retain a positive image, businesses must be committed to operating on an ethical foundation as it relates to treatment of employees, respect to the surrounding environment and fair market practices in terms of price and consumer treatment.”

Cal Boardman, former professor of ethics at the University of Utah’s David Eccles School of Business once said, “You can’t mess with people because it’s a short-run business and not sustainable.” In putting myopic financial concerns ahead of basic human decency, United Airlines, for one, has received an unforgettable education in the matter of dealing with the repercussions of “mess[ing] with people.”

And as consumers continue to hold today’s businesses -- and business leaders -- to higher standards of responsibility and accountability, more companies will discover the benefits of hiring people not just for their potential to do the lucrative thing, but for their capacity to do the right thing.

Read more about MBAs in Corporate Social Responsibility.

Joanna worked in higher education administration for many years at a leading research institution before becoming a full-time freelance writer. She lives in the beautiful White Mountains region of New Hampshire with her family.

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