Question: Are fewer MBA graduates going directly into the financial sector?
Robert Dolan: In the near term, absolutely. I mean, what we have seen just this year, you know, certainly has been a significant decrease in terms of recruiting activity on campus from the financial community. We were reasonably diversified going into this. About 20, between 20 percent and 25 percent of our students, our MBA students, were going into finance. So we had less repositioning to do than some of those 50 plus schools that you’d be mentioning a moment ago. But definitely, we have seen a repositioning. And, you know, many more of our students are interested in, now, going into, really quite varied set of positions. Consumer package goods are pretty strong, healthcare is obviously growing, technology-orientated things. So we’re a general management school and our orientation to a general management and action- based learning has meant that we, historically, have been less orientated toward finance. But I suspect even for us, being a general management school, the placement of our students in the finance world, we fully anticipate that that will be a smaller percentage this year than it has been in the recent past.
Question: Will business students need incentives to choose less lucrative career paths?
Robert Dolan: Well, I don’t know that we have to incent them so much as that the market will incent them to it. I, you know, I never worry too much about us incenting students one direction or another. I think our responsibility was to educate students, make them be thoughtful about their career choice. And then, while some schools would look at their 50 percent of students going into finance and be horrified at that number or so many going into industries in which you don’t “make things,” I always felt our job was to really provide a great general experience for our students. And then, if they chose to go into one industry or another, that was really their choice. So I don’t think it so much that the company, that the schools have to, now, incent their students to go elsewhere. It’s just that there’s always going to be financial activity but just not at the scale that we’ve seen. And so, as the salaries, maybe, come down a little bit in finance, they won’t be the strong economic incentive to go. And obviously, if the jobs aren’t there in finance, the students are going to be preparing themselves, I think, to have a little broader set of options when they graduate.
Question: Should business schools sign off on students’ ethics?
Robert Dolan: Not in my judgment. I think business schools have really taken the responsibility of developing some ethical education into the curriculum in a really substantive way. Schools have taken that extremely seriously. And if you look at what’s been done over the last 20 years or so, I think the schools have done a great job.
You know, the problem, to me, with the certification, it’s almost like, well, if we can check off the box, then we can forget about it. It was almost like in the old days when everybody had to have a special little set of ethics and law courses that typically were required. And as long as the students took one or two, they were fine. And the ethical dimensions were not as, then, as present in the everyday conversation of the school. And, I think, what we’ve tried to do with Ross School of Business, and I know my colleagues at a number of the other leading business schools have really tried to do the same thing, is to take ethics and sustainability and those kinds of issues to take them not as special topics, which you cover in orientation, and then say, okay, that’s covered, now we can get on to the real stuff of marketing. But you have to embed the ethical discussions into the everyday life of the school.
And, I think, you have to create a student responsibility for doing that as well. So I worry a little bit about whether some kind of certification, program, or passing a test would lead us more back to the old days of saying, everybody saying, okay, we have this few courses and we can check them often and really get the substantive focus distracted from because everybody’s worrying about showing that 99.9 percent of their students pass some certification test.
So I think this is a dimension on which I know business schools are frequently criticized at the moment. But if people really understood what is happening in the curriculum at school and also, I think, in the wonderful, you know, the wonderful students that we, and a number of the other schools, enjoy these days, these students are really going to insist that ethics and sustainability be part of the everyday discussion of the school. So I really feel pretty good about where we are on that.
Question: How does the Ross School teach ethics?
Robert Dolan: There’s probably 3 different ways that we would be doing it. One would be, we have established, a few years ago, the Ross Leadership Initiative, which one of the associate deans run for us. And so, that is an integrated package material that we use to bring up issues of social responsibility and business ethics. So, I think, one of the important elements of our training is during your first week at school, during the orientation program, we spend one day on community service. And so, we all go out and do a community service project then we all come back together, all 450 of us or so, and discuss about, well, what do we learn that day and what’s the meaning of this kind of activity.
So, I think, from very early on, what we’re trying to do is get these issues of corporate social responsibility into the minds of students. And then, our net impact club, which is, I think, the largest chapter in the United States, you know, which fosters the triple bottom line kind of philosophy, social responsibility, ethical responsibility, and profitability as three different important measures to be bringing into discussion. That kind of thinking is embodied in our everyday classes. And so, I think, those are two important ways. And then, the third one will just be what we do in terms of bringing in outside speakers through our club activities, like we have the global corporate responsibility group. So I think it’s the way that we try to, as I was saying a moment ago, really have to be part of the everyday life of the school.
Question: How should executive bonuses be regulated?
Robert Dolan: It would be a good idea to tie bonuses to specific performance goals, I think. And that’s something which seemingly has gotten lost. That the bonuses, while people always call them bonuses, they really, in fact, in many industries, have become more or less an entitlement where there wasn’t a tie of, well, we’ll get this kind of bonus assuming this kind of performance metrics. So, I think, incentive pay in general is not a bad idea. And certainly, there have been lots of industries which have done much better because they tie the, they align the financial performance of the firm with the financial rewards to the employees. So the idea of incentive pay, I think, is terrific. But you just have to make sure that there are metrics that drive the profitability of the firm, that those metrics are the same ones that the employees are being incented to.
Recorded on: April 13, 2009