Taking care of business

by Barbara A. Melville

Mention the term “business ethics” and someone will invariably quip, “Isn’t that an oxymoron?”Absolutely not, says James Kennelly of Skidmore’s management and business department. “Business doesn’t operate in a vacuum. It’s embedded in society and affected by society; it’s part of life,” he asserts. You can’t compartmentalize business and life and say ‘a different ethic holds here.’”

And Kennelly should know. He’s currently teaching “Business, Ethics, and Society,” a course that this semester is practicing what it preaches by adding a community-service component to its coursework. The course itself combines readings in philosophy, social issues, and governance (Kant, Mill, Marx, and more), as well as case studies “to make the ethical dilemmas come alive,” explains Kennelly. In any given semester, those dilemmas might span employee rights, the environmental impact of Shell Oil in Nigeria, tobacco marketing, drug testing, whistle-blowing, sweatshops, plant closings, Internet privacy, discrimination, deceptive advertising, Union Carbide’s deadly chemical leak in Bhopal, India, and much more.

Jim Kennelly and Chris Kopec bring different perspectives to bear in teaching Skidmore’s business-ethics course.

Of course, the ethical sticky wickets are not always as prominent as the Exxon Valdez oil spill or the tire blowouts on Ford Explorers. “They’re more likely to be smaller issues in everyday commerce,” Kennelly says. “Like how you report the numbers; who you hire and fire; and your résumé—how much puffery is proper? We aim to surface these issues and ask our students to consider them. When do you blow the whistle, dig in your heels, draw the line, just say no?”

A relatively new entry in business curricula, ethics courses reflect a corporate trend of hiring ethics officers and incorporating ethics into management-training programs. About half of Skidmore’s business majors take the ethics course; if the major didn’t already have so many requirements, they’d all have to take it, according to Roy Rotheim, chair of the department of management and business. “Business students tend to come in thinking that the bottom line is everything,” observes Rotheim. “It’s our responsibility to teach them that there are right and wrong, ethics and justice, in business.”

Offered every semester, the course has been taught alternately by accountant Kennelly and lawyer Christine Kopec. It’s a good fit for both. Both believe that corporations have obligations not only to their stockholders but to their “stakeholders”—their employees, customers, banks, suppliers, government, and environment; in short, to their communities. And because both are community activists themselves—Kennelly in Little League, Boy Scouts, the Battenkill Conservancy, and Kopec in PTA, school board, YWCA, and literacy—it’s not surprising that a volunteer component has been slowly taking shape in the course they teach.

When Kopec asked her students to study and report on volunteer organizations, she says, “my students loved it. Several said they’d like to do volunteer work.” This semester, Kennelly assigned his students fifteen hours’ volunteer work for an organization of their choice, anything from Saratoga’s soup kitchen to the Sierra Club. He also required them to conduct a management analysis on the organization they chose, then to “pitch” its needs to the class as if to a firm interested in corporate philanthropy. “This is a way to take our study of business ethics outside the realm of theory and into real life,” says Kennelly.

In the classroom, Kennelly and Kopec use different textbooks, separate syllabi, and different approaches. Kopec, who serves as a New York State Ethics Commission administrative-law judge and has practiced law for state agencies and private corporations, takes a more philosophical approach than Kennelly, who jokingly describes himself as “a recovering accountant.”

On a typical day, Kennelly pulls his chair into an informal circle with his fourteen students in a sunny Bolton Hall classroom. This day’s case involves a young accountant, newly hired at the auto-parts-supply company called RUN Inc., and promised a rapid rise to CFO. When his initial review of the books turns up serious problems, the accountant urges his bosses to do the right thing: restate the falsified earnings. They say they only “borrowed some profits” to get through the stock market downturn and promise that if he stays on, all will be made right when the market goes up again.

“Imagine you are this accountant,” says Kennelly. “What would you do?”

“I’d resign,” says a student firmly. “He’s a CPA. He knows the rules of the game.”

“No, he should stay,” another student argues. “Maybe he could do some good, get the company to be a little more legitimate.”

“But how much real power would he have to change what they’re doing?” asks a third student.

And a fourth butts in with, “What’s wrong, anyway, with borrowing profits if you know the sale is coming in?”

“Well, what do you do next month?” somebody counters.

“What’s the effect of this on the stakeholders?” probes Kennelly. “Who does it hurt? Stockholders? Customers?” And what about the accounting profession itself, whose code of ethics is based on integrity and serving the public trust?

The vigorous discussion ends, as it often does, with students split on what’s right. “There are few black-and-white answers in ethics study,” says Kopec. There are even fewer a week later, when the topic in Kennelly’s class is Enron, the Texas-based energy-trading giant that went spectacularly bankrupt last December. The students capably tot up Enron’s ethical debits: employees’ retirement funds wiped out, dubious accounting practices, probable insider trading, shredding of financial documents, misguided market analyses, etc. What stumps them is that much of what Enron and its auditors did was technically legal. When Kennelly asks, “What are the ethical lessons of Enron?” the most confident answer is, “It’s a wakeup call.”

Enron is tough because it’s much less straightforward than RUN,” says Kennelly, who clearly enjoys the tough questions. The door of his office is decorated with a “Question Authority” sticker and a nineteenth-century illustration captioned “Should Robber Barons Reign?” Kennelly left a corporate accounting career to teach college because “I always wanted to teach and to write. You can make an impact, and you can think about large issues.” He is currently researching the societal and environmental repercussions of the “Celtic tiger” phenomenon—Ireland’s hugely successful takeoff into the global market.

Like Enron’s sudden failure, Ireland’s sudden success is a slippery issue that is still evolving. “Ethics happen in real time,” says Kennelly. “We make all our decisions under pressure and often without adequate information. The best we can do is sensitize ourselves and our students to recognize ethical situations when we see them.”

Actually, they can do a little bit more. This spring Kennelly’s students were doing good works at the YMCA, a child-care center, Saratoga’s Children’s Museum, and other nonprofits. Kennelly urged them to keep detailed journals, to analyze their organizations’ management structures, and to develop compelling cases to present to corporations looking to “do well and do good.” And yes, plenty of such companies exist.

“Look at Ben and Jerry’s,” says Kopec. “Look at the companies that dedicate a percentage of profits to a volunteer cause. It’s really not all about the bottom line. Maybe our course won’t change the world, but our students will definitely have some ideas on how to change the workplace.”

Barbara Melville’s business experience has included a job booking cruises for the Lake George Steamboat Company.