Eugene Soltes (photo by Russ Campbell)

Eugene Soltes (photo by Russ Campbell)

Making ethical and moral decisions in business can be murky and is difficult to teach in the vacuum of a business school classroom, argues Associate Professor Eugene Soltes in his recent paper, “Teaching Versus Living: Managerial Decision Making in the Gray.”

Just as a coach emulates game conditions during practice, Soltes says, professors must do the same when teaching ethics in the classroom. “We cultivate confidence through case studies, making students feel they can handle complicated situations when they arise,” he says. “They leave HBS with big dreams and the thought that they have a solid grasp on what is right and what is wrong.”

Over the past eight years, Soltes has spoken to more than four dozen former executives who did commit white-collar crimes, discovering they rarely considered the consequences of their actions. He came to see their criminal decisions not as failures of reasoning but as failures of intuition. “Morals go out the window when the pressure is on,” Steven Hoffenberg, who ran a half-billion-dollar Ponzi scheme in the early 1990s, told Soltes. “When the responsibility is there and you have to meet budgetary numbers, you can forget about morals.”

How do we educate students to avoid Hoffenberg’s path? Soltes has three suggestions. The first is to integrate ethical decision-making with core-discipline courses like finance, marketing, and strategy, rather than solely in a stand-alone course. “Practicing managers do not divide their decisions by discipline, so why do we do it as instructors?” Soltes asks. His second recommendation is to cultivate moral humility, rather than moral confidence. “If people knew where their limitations lie, we would see fewer incidents where people with good intentions do things that look, for a lack of a better word, stupid,” he says.

Finally, Soltes suggests creating opportunities for norm reinforcement throughout careers, allowing people to really live what they learn in business school. “Through interactions with people holding different and potentially less laudable norms, the principles that students held during their management education can become corrupted and will no longer be reflected in their behavior,” he says, adding that the key is finding a way to reinvent training and codes of conduct so that they have a real impact on behavior, not just on legal accountability.

“Teaching Versus Living: Managerial Decision Making in the Gray,” by Eugene Soltes, Journal of Management Education.

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