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Social Responsibility in Business: Breaking Down Barriers to Ethical Leadership

To encourage tomorrow’s leaders to care about planet and people—not just profit—Dr. Tim Hart shares real-world cases that challenge assumptions.

Educator

Tim Hart, PhD

Assistant Professor of Management, The University of Tulsa, OK

PhD in Strategic Management, Doctor of Jurisprudence (JD), BS in Accounting, CPA

For years, Dr. Tim Hart, assistant professor of management at the University of Tulsa, has been fascinated by the power of corporations.

“Even before I started studying businesses in graduate school,” he says, “I would think about all the good they can do, and all the bad.” In many businesses, he says, it is just a few people at the top whose beliefs and values impact the lives of hundreds or thousands at the company itself, as well as millions of customers, surrounding communities, foreign countries where products are made, the natural environment, and even future generations. Those multidimensional impacts are a key part of Hart’s Social Responsibility in Business course, in which he empowers students to develop business practices that address the so-called “triple bottom line” of people, planet, and profit.

Hart’s business ethics perspective, and the one he wants to impart to his students, is that when companies make responsible decisions that balance the needs of people, profit, and planet, then better, long-term, more sustainable solutions are achieved for everyone. This means that when companies treat people (employees, customers, community residents, and others) well, it encourages those people to continue their relationship with the company; when companies make responsible environmental decisions, access to natural resources are preserved, the risk of environment-related lawsuits goes down, and their image improves; and when companies make sound, long-term financial decisions (rather than just aiming for short-term profits), then their financial outcomes improve, too.

Many of his students are surprised by this thinking, as most have been led to believe that the top priority for business is making profits. Hart has put together a course to show that financial, social, and environmental practices are not mutually exclusive.

Context

“I want to teach undergraduates a different way to look at business. I want to provide a more accurate perception of the challenges businesses today face in meeting their financial, social, and environmental goals.”

— Tim Hart, PhD

Course: MGT 4013 Social Responsibility in Business

Course description: Examines the place of ethics and social responsibility in business decision-making. Focuses on the impact of ethical problems and dilemmas on a firm’s stakeholders.

Challenge

Students think good business focuses on profit

“Students don’t realize that good business is not just about making a company’s shareholders happy,” says Hart. He feels that many business students need a mindset shift, especially those who hold the mistaken belief that executives are legally required to maximize shareholder value. They are not. Rather, they are required to make decisions for the best interest of the company. Overall, he says, students want companies to “do good” and do well—but they do not see how these goals can coexist. In fact, many are surprised simply by the very idea. “Teaching this course is like being a unicorn,” says Hart. “You are an outlier if you challenge the commonly held shareholder value–maximization assumptions.”

Innovation

Use a human approach to introduce business ethics

Hart believes that students are more likely to be open to challenge their assumptions if they are comfortable and feel acknowledged. So he strives to connect with his students as people, just as he hopes they will do with the employees they are managing in the future. Hart commits his students’ names to memory by the second week of class and regularly invites students, by name, for their opinions to get everyone talking. After intentionally creating this open environment, Hart walks students through a series of exercises designed to help them rethink their current conceptions, examine real-world ethical dilemmas, learn about the wide array of ethical theories, and—finally—apply what they know to develop multifaceted solutions to real challenges faced by real companies.

See resources shared by Tim Hart, PhD

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Lesson: A 6-step approach to challenging students’ assumptions

Hart loves a quote he once heard: “We teach students, not topics.” Instead of viewing his role as a downloader of information, he sees it as an opportunity to engage with other humans. “So I want to get them talking—to each other and to me,” he says. This human-centered approach sets the stage for his focus on the people-planet-profit perspective on business. “Some students might think of business as cut-and-dried and even a little mechanical, but, in fact, it’s all about people,” he says.

Here, he shares six exercises that help him open students’ eyes to some new ways to do business, by looking beyond just the bottom line:

1. Challenge students’ general assumptions

Hart kicks off his class periods with provocative questions, such as “Why do corporations exist?” He says students will often reference commonly held myths, such as that companies are legally bound to maximize shareholder value. To dig into this, the class looks at the actual state statutes that spell out what the duties of executives are—and the answers are surprising to most students.

2. Ask about a personal ethical dilemma

In another class discussion, Hart asks students for examples of ethical challenges they have personally experienced—either at work or in their personal lives—and how they addressed them. Hart says that most students recognize they have faced ethical dilemmas and did not know what to do. This helps students have greater empathy for business leaders who face ethical questions every day.

“Having a personal connection to this topic makes it more relevant for students,” he says. “They have an aha! moment and think, ‘I can use this information.’”

3. Open students’ eyes to ethical alternatives

Hart says it is important for students to examine, through different ethical lenses, various decisions companies face. So, early in the semester, he introduces an ethical theory table that provides the basics on 11 different ethical theories (see sidebar for a quick summary).

Hart’s Quick Summary of Ethical Theories

Egoism: Does this serve my interests?

Act utilitarianism: Is this best for the common good right now?

Rule utilitarianism: Is this best for the common good forever?

Ethics of duty: Is this the right thing to do to or for others?

Ethics of rights: Would this infringe on the rights of others?

Procedural justice: Is the process fair and impartial?

Distributive justice: Is the outcome fair and impartial?

Virtue ethics: Am I acting with integrity?

Feminist ethics: Am I considering others’ feelings?

Discourse ethics: Am I engaging in a dialogue to seek the best solution?

Postmodern ethics: Am I listening to my gut instincts on right and wrong?

4. Introduce companies with a holistic approach

Hart likes to surprise students by exploring companies that do not focus solely on financials. “I bring out books like Force of Nature: The Unlikely Story of Wal-Mart’s Green Revolution,” he says. “Walmart has shifted from ‘profit at any cost’ to including people and planet in their decision-making.”

The purpose is to see the process executives might go through to transform a profit-first mindset to one that includes a consideration of social and environmental impacts as well. He wants students to grapple with the real-world, extremely challenging decisions that leaders are wrestling with in this new era of business.

Instead of simply reading and discussing business cases that pose ethical challenges, Hart’s students also must consider how a different outcome might have been achieved if other steps were taken.

“I have students compare and contrast outcomes based on ethical theories used in real-world examples,” Hart says. “For example, for companies that outsource labor overseas, I have students analyze it from utilitarian and distributive justice perspectives. Or we look at Facebook and the challenges it faced with fake news in the 2016 elections and have students use one theory (such as ethics of duty) and have some students argue for greater oversight by Facebook, and some argue for less. It creates quite the discussion.”

5. Incorporate current events

Hart requires students to bring in current events that speak to ethical dilemmas faced by companies, or actions companies are taking to balance people, profit, and planet. Students share these current events in class, discuss how they relate to a specific topic in the course, give their opinion on the current event, and then invite questions from the class. This helps students connect to the “real world” by seeing the very topics they are studying in the headlines all the time.

6. Conclude with a case-study competition

Competition and teamwork can both increase engagement in a class, and Hart uses that to great advantage: He requires students to form teams to analyze a particular business case and make recommendations as though they were the leaders of that company. They then compete in the annual, college-wide Business Ethics Case Competition and present their findings.

To begin, a business ethics case is selected (often one that has been in the news, such as ethical dilemmas in pharmaceutical drug price hikes). Teams analyze the core issue in the case, apply an appropriate ethical theory, and develop multidimensional solutions that balance people, planet, and profit concerns in the short term and the long term.

Teams produce a short video in which they argue for their recommendations, and the top four teams are invited to defend their answers in front of a live panel of guest judges. Cash prizes are awarded to each of the four finalists, which makes for a lively (though friendly) competition. Each year, the guest judges note how impressed they are by the thoughtfulness of the students’ solutions, and the judges are surprised that the contestants are still undergraduates.

Outcomes

Hart says many students tell him they never thought of ethical business concepts before, and they are changed for the better through what they have learned.

One of his favorite quotes from a student is: “I honestly learned a lot of skills like how ethics can make the company better off in the long term. I learned how to find solutions if the company was facing an ethical dilemma and has to choose whether to practice an unethical approach to gain revenue or be ethical to gain customers’ trust.”

For the future, Hart is considering doing a pre- and post-test of ethical perception so that he can more precisely measure how far students’ perceptions change from the course’s start to its completion.

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