What do you think business schools get right?
Business education has done a fabulous job of marketing itself—and I don’t say that to be facetious. The fact that we now have more than 200,000 MBAs graduating each year is a result of very effective marketing. Business schools also have developed fabulous courses and important research, and they’ve contributed in important ways to the development of the social sciences.
Unfortunately, business schools don’t do enough to promote their research. I once served on the compensation committee of a publicly traded company. We were on a call with its compensation consultant to discuss what stock options we should give the CEO. Several days before, I had read a new study from a professor at Penn State showing how stock options can lead CEOs to engage in risky behavior. I asked the consultant whether he had read the research, and he said no. So I asked him if he would like me to send him a copy of the study—and he said no. After the meeting, I asked my colleagues whether we should get a new compensation consultant who was the least bit interested in research. They also said no. Any doctor who did not read the latest research in his field would have zero patients. This lack of interest in research is an enormous problem in business.
What are your biggest concerns about business education?
Business schools face two different problems. The first is that, according to AACSB, there are now 13,000 providers of business education, some of which have been under tremendous government fire for delivering inferior products. Of these 13,000 providers, only 5 percent to 10 percent are accredited. What percentage of law and medical schools are unaccredited? I know it’s not 90 percent. We can argue that law and medical schools must be accredited because of licensing requirements, but business schools still have an “anything-goes” attitude with respect to enforcing standards.
We have no quality control. The second problem is that many of our full-time MBA students believe they’re at school to drink and party, rather than work. The business school culture is different from the cultures in engineering, law, and medicine, where students are more focused on academics. I’ve talked to many deans about this problem, and none of them know what to do about it. Many are closing their eyes, hoping that a catastrophe won’t happen while they’re still dean.
Business students’ lack of concern with the academic aspects of the program is nothing new. Twenty years ago at Stanford, for example, a student named Scott Dunlap created the “Free Rider Home Page,” a website that allowed students to share answers so they didn’t have to read the cases. One day, in my human resource management class, Scott asked me why I didn’t like the site. So I told him: “Someday when you’re older, God forbid you have a cardiac event. I want you to picture the following scene: You’re wheeled into the emergency room, and the attending physician looks down at you and says, ‘Wow, you’re Scott Dunlap. You’re a hero.’ And you’ll look up and ask, ‘Why?’ And he’ll say, ‘You created the Free Rider Home Page—that’s how I got through medical school!’”
Scott looked at me and said, “The difference is that in medicine decisions can mean life and death, but what we learn in business school is basically irrelevant.” The fundamental problem is that many business students still believe that—that’s still where we are. People have not been willing to address it.
In many ways, I blame this situation on the popular idea that we should view students as customers. We have not been willing to say to our students, as medical schools have, “These are the standards we’ve set, these are the skills you must learn.” We have not developed a common set of criteria for evaluating what our students learn, so that we do not send them out into the world to do damage because they didn’t learn the material.
What would you most like to see business schools do in the future?
I would like to see business schools become more like other professional schools. I would like them to enforce standards—both ethical standards, so that there are consequences when people behave badly, and academic standards, so that business is perceived as a serious intellectual and academic discipline. I would like the business school community to do what the medical school community started doing more than 100 years ago and police itself in a better way. I’d like to see organizations such as AACSB and EFMD do more to enforce standards in the industry.
As part of this, I think more schools should be willing to throw people out for bad behavior. They wouldn’t have to throw too many people out before everyone learned the lesson. But in many cases the universities won’t allow the business schools to do so. The problem starts with the university.
In her 2006 book University Inc., Jennifer Washburn argues that universities have lost their souls, and I think that’s also true for business schools. They’ve become commercial enterprises, and issues of standards and values have been subordinated to money. When we evaluate the quality of business schools by talking about how much we raise our graduates’ salaries, we separate business schools from other professional schools.
Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Stanford Graduate School of Business.