“Yea”
By Seke Ballard (OG), Section Representative
I’d like to begin by saying that I tend to agree with the notion that business, in general, is impossible to professionalize (i.e., have it be governed by some body of standards/qualifications), namely because it’s difficult to codify norms in a practice as nebulous and dynamic as “business.” I do, however, believe that certain aspects of business, particularly the finance and accounting functions (money managers), should be professionalized.
My reasoning is three-part:
1. The status quo doesn’t offer a sufficient societal hedge for two functions which have the ability to negatively impact the entire economy.
2. A subsequent standardization of the riskiest functions will offer more transparency and thereby foster more robust markets.
3. And, contrary to opponents’ position, the body of knowledge which composes the finance and accounting functions can, in large measure, be systematized.
Most people agree on the general contours of what precipitated the ’07-’09 recession and among them are lax government regulation, overly complex models and poor risk management among the progenitors of these shit-loans. Whether or not you agree with these as the main causes doesn’t matter; what matters is that they were factors at all, and because they were, proper mechanisms need to be put in place to avoid future lapses. One idea floating around is to hold the money managers of the world to higher standards and the Oath, or an Oath, is a compelling method.
Of course, detractors claim that this is simply an ill-thought out reaction to the current recession. I disagree. The U.S. has been a boom-n-bust economy for decades. This isn’t a knee-jerk reaction to the worst financial crisis since the Great Depression; this is a reflection of society-wide discontent with the instability of the U.S. economy. Hell, when HBS students are jumping on the bandwagon to shore up MBA ethics, things must be bad!
As was the case with the Securities Act of 1933, the Securities and Exchange Act of 1934 and the Investment Advisers Act of 1940, more or better regulation of markets and their players unlocks markets’ potential. It’s not difficult to understand why this is the case: as an investor I am far more willing to invest in companies if I know that there is a baseline level of accountability with the managers of these companies. Because it’s difficult (not to mention costly) for me as an individual investor to keep account of all of the different companies, a central regulatory body is given the mandate to do that job for me. With this increased transparency comes increased market activity. That said, holding money managers to higher standards falls into the bucket of bringing clarity to business in the interest of increased investor security.
My final consideration goes to the ability of regulators to even begin to codify the broad responsibilities of money managers. I’ll go out on a limb here and assert that they’ve already made substantial progress in doing so. The Chartered Financial Analyst (CFA) and Certified Public Accountant (CPA) certifications codify a body of knowledge and are either highly desired or required credentials for practitioners. The question is can we sweep more money managers under the rug of these certifications and do more to give the certification sharper teeth? Yes we can and yes we should. One method, and by no means the best method, is to require all decision-making corporate finance, investment management/banking, Private Equity, etc. employees to have this certification. And breeches in the certification could come with a loss of the certification and thus the ability to practice any of the above professions. Just an idea.
The MBA Oath may indeed be a fleeting phenomenon, but the underlying sentiment is solid and this sentiment manifests itself in certifications such as the CFA and CPA. The creators of the MBA Oath showed great leadership in starting this conversation, even if it doesn’t take us exactly where they planned.
“Nay”
By Justin McLeod (NB), Section Representative
The goal of professionalizing management was at the heart of the founding of graduate business schools and the MBA degree roughly one hundred years ago.
Yet today management is still not a profession. In fact, it does not meet even one of the three commonly referenced criteria: an accepted common body of knowledge, a system of certification or a well-defined code of ethics. Before you join the “reform” movement of business education and sign on to the MBA Oath, perhaps it is worth considering that business education’s failure to win professional status is not an accident of history. Management is not and was never meant to be a profession.
For the sake of comparison, consider the true professions of medicine and law in America. Prior to the Civil War no standard model of education and certification existed, and this lack of standardization resulted in wide disparities in skill and knowledge among practicing doctors and lawyers. Of course, members of the general public did not have the information or technical abilities to evaluate the skill or integrity of these practitioners. As a result, they were forced to almost blindly entrust their most intimate possessions (health, wealth or freedom) with individuals who were potentially grossly unqualified. To protect the states of their practices and to better serve the public, doctors and lawyers came together in the late 19th century to form certification boards and bar associations, respectively. Not only did they eventually create standardized evaluation and licensing procedures, but because medicine and law have singular purposes-namely health for patients and justice for clients-they were able to create ethical codes to which practitioners were expected to adhere. In light of why professions came to exist, consider the reasonableness of management becoming a profession.
First, consider certification. One would be hard-pressed to argue that public companies do not have the resources to evaluate the skills or decency of its management hires. In fact, they have entire human resources departments devoted to this single task, overseen by managers. While mistakes are certainly made, it is hard to see how a professional association of managers could do much better.
Second, consider a code of ethics. The tortured logic of the MBA Oath illustrates the impossibility of developing an ethical code for managers that has any substance beyond “be ethical.” While in medicine the doctor’s single interest is the health of his patient and the lawyer’s single interest is justice for his client, a manager’s job is to balance a number of competing interests. According to the MBA Oath, I as a manager must “safeguard the interests of my shareholders, co-workers, customers, and the society in which we operate.” But what about when these interests compete with one another? What if I earned $1,000 in profit for every gram of pollution I release? What if my profitable new financial product carries some risk of creating a market bubble? There are no easy answers to these questions-they are up to the conscience of the manager and his shareholders. Where clear lines can be drawn (i.e., fraud, tax evasion, wanton pollution, labor abuse), the courts have already drawn them. What more could a professional association do?
Finally, consider a commonly accepted body of knowledge. Business education is so fluid, expansive and multidisciplinary that it can hardly be considered a “body of knowledge.” The beauty of management is that it’s fundamentally tied up with our very existence as social animals-to include all of the complexity thereof. It can’t be stolen away, trapped in classrooms and divvied out through professional association membership. For the most part, a business education does not include anything that can’t be learned through first-hand experience and the application of common sense (given enough time and sense, of course). That’s why HBS’s learning model is geared towards peer learning and the study of real-life business situations, as opposed to lectures and book study. It’s also why managers can be quite successful despite not having received MBA degrees-I’m sure you think of a more than a few examples. How, in this context, could a professional association of managers be taken seriously?
While I’m sure those who are trying to professionalize management through the MBA Oath and other vehicles have nothing but the best intentions, I can’t help but see such an effort as the knee-jerk reaction by business apologists to the current financial crisis. As it fades, so will the futile efforts to create a profession out of management. It’s unnecessary and, frankly, quite impossible. The MBA Oath will be a mere flash in the pan in the history of business education because management is not, and was never meant to be, a profession.
