Amtrak, Baltimore, Kathmandu and Business Education

Business schools teach students the skills needed to analyze economic and other issues dispassionately. A key ingredient in our ability to perform objective analysis involves the minimization of emotion in the calculation. The idea is to remove our biases so we can look at a decision deliberately and objectively.

Our accepted approach works well if all of the factors related to a decision are included or assumed in our calculations. The approach is less effective when our calculus relies on public goods or ignores externalities or issues that are important to people affected by our decision.

Three recent events illustrate how passion or emotion can create situations demanding alternative analytical approaches. Powerful emotions have emerged in response to the recent Amtrak derailment near Philadelphia, the public response to the death of Freddie Gray, a black man who died in police custody in Baltimore, and the desire to help overcome the devastation resulting from the major earthquake in Nepal. Each of the situations is different and the nature of the emergent emotion varies, but each has the potential to influence institutions and business schools.

The Amtrak disaster raises questions, including why key safety equipment controlling a train’s speed had not been installed on the stretch of track in question. There will be much discussion of inadequate funding for Amtrak, the lack of investment in public transportation more generally in the U.S. and the intrusion of politics into the operation of many critical national systems. Regardless of whether or not a projectile hit the windshield of the train prior to the crash, the safety equipment would have likely prevented a derailment. While this Amtrak question is a business question, the questions raised in response to the events in Baltimore and Kathmandu will seem removed from the operation of businesses. They may reflect views about family stability, economic security or failure of government policies (ranging from providing proper training to police and maintaining appropriate building codes). Business deans may take solace in the fact that business practices – especially those recommended in business school – are seemingly not being questioned.

But the reality is that businesses are being affected by the passions arising here in America and abroad. What responsibility, if any, do business schools have in the face of the recent tragic events?

Carolyn Woo, president of Catholic Relief Services and a former b-school dean, suggested in an address at the 2015 AACSB Annual Meeting that many people see business as a necessary evil. That is, business is an amoral institution. By amoral, I mean that business is rational, self-interested and focused on generating profitable outcomes, and not laden with obligations related to societal circumstances. Dr. Woo suggested that it would be so much better if business were viewed as a necessary good.

Colorado Lt. Gov. Joe Garcia went a step further in an address at the 2015 Partners in Business Ethics Conference when he asked why so many students come into business school seeking to do good and leave seeking to do well. His statement challenged whether business schools were contributing to the problem. Does our standard approach break students of their youthful idealism in the name of objective and rigorous analysis? And while we’ve assumed that the world is better off because of our approach to business, the view is not uniformly embraced.  Massachusetts Sen. Elizabeth Warren, for example, recently observed that “when the top 10 percent gets 100 percent of the income growth over the course of a generation, then the America of opportunity is vanishing.” As people question our assumptions or become cynical to the current situation, they are more likely to embrace the passions that say we should teach something else instead. There are three lessons for business schools to remember in the face of the passions generated by the Amtrak, Baltimore and Kathmandu tragedies.

First, business educators have an obligation to make social responsibility a core part of the curriculum. Students need to understand that they have obligations that extend beyond the free market, which gives them the absolution to focus only on themselves. This duty exists in the form of corporate social responsibility (CSR), which is usually taught in business school. Ironically, while there continues to be much debate among academics (and some practitioners) about CSR, the inability of government to solve many societal problems has increased expectations that business must step in and create solutions. The increasing expectation of business will lead to ad hoc approaches and decisions regarding exactly what a firm should do. It will be better for business schools to provide guidance on what obligations companies should reasonably accept.

Second, while the Amtrak, Baltimore and Kathmandu examples seem to be very different, they are related in their connection to aspects of business or commerce. Amtrak did not install speed controls on the section of track where the crash occurred, in part because there was a view that excess speed could not occur for trains traveling north. Regardless of the judgment’s sincerity, it is also likely that the lack of resources available to the company contributed to the judgements. Funding for Amtrak has been greatly affected by political viewpoints about the value of supporting mass transportation and infrastructure. Business decisions, as we know, are regularly made in a resource-deficient environment.

The issues in Baltimore are more complex. It is likely, however, that the instances of the brutal transportation of prisoners, as widely reported in the media, is related to the lack of economic opportunities for segments of the population. The opportunity gap is clearly affected by government policy and business decisions. A solution will require some compact between political authorities and business organizations, for inadequate education and training limit the opportunities for many individuals in poorer parts of Baltimore and the broader U.S.  At some point, businesses will be forced to take responsibility for providing the education and training that the government has neglected, or businesses will choose to abandon such locations. But firms will have few other choices than to take responsibility. And this will be especially true for small- and medium-size firms, as well as entrepreneurial organizations, health care and educational institutions. In turn, the community will develop strong expectations regarding what firms should do to aid people who are less well off.

Third, business often has special expertise that can be leveraged during crises. Companies with logistical strengths and organizations with health care emphases provide great value during recovery efforts, such as the one ongoing in Nepal. The outpouring of generosity from people across the world must be coordinated and managed. Governments will play a critical role, but it is inevitable that firms will be expected to pick up responsibilities, especially as foreign governments withdraw resources over the course of the recovery and rebuilding effort. The availability of the business expertise will fuel expectations (likely voiced in social and other media) for firms to orchestrate a better recovery effort. At a minimum, the expectation for business involvement in creating solutions will make it difficult for firms to disclaim interest in helping. Confidence in business efforts means that firms must engage in social responsibility efforts or risk alienating customers and clients.

Business obligations to society have grown, even as some firms and many academics have denied the connection. The underlying lesson is that business needs a strategy to manage society’s new expectations and that few organizations will get a free pass, particularly as social media and information transparency broadcast tragedies graphically to people who in turn react emotionally. Even if some of the expectations placed on business are unfair or unwarranted, the uneven response of firms means that pressure will exist for more systematic and consistent approaches. Although people know that future tragedies cannot be eliminated, they seek competent responses and have more confidence in business to provide them than the government. To business schools this can mean only one thing: CSR anyone?



How Baby Boomers Who Don’t Retire Are Affecting Education and the Economy

I smiled when I saw a recent article in the Chronicle of Higher Education titled “Retire Already!” The article pointed out that many professors are remaining in teaching positions well into their 70s and, in some cases, don’t plan on setting a specific retirement date. The topic of pushing off retirement first cropped up in the 1990s, when a generation of newly trained PhDs discovered that many baby boomers weren’t retiring, which meant there weren’t enough jobs in academia for aspiring new faculty. This trend continues today in the faculty pool of colleges throughout the country. The situation at universities is a result of two forces: tenure and law. Once a faculty member receives tenure, it is exceptionally difficult to fire him or her. Faculty can’t be forced to retire either as a result of a 1994 law that, as a means to eliminate the problem of age discrimination, ended mandatory retirement for university professors at age 70. Two decades later, some observers now wonder if the situation is creating too little turnover in academia.

The trend of working well into one’s golden years is also relevant in other contexts. For example, one in 10 baby boomers never plans to retire. This is most prominent in higher education where professors have the option to work as long as they wish. I’m not opposed to faculty, or anyone for that matter, working as long as they wish to, provided they are still able.  Several faculty members at Pitt continue to be incredibly productive scholars and excellent teachers well into their 80s, but I know this isn’t always the case. I fear that examples of professors remaining in the classroom for too long will be used as evidence for why tenure should be abolished. After all, tenure is the driving force when mandatory retirement is not allowed.

Mind the Gap

It can be challenging for students to relate to faculty from a different era. While the knowledge content offered to students may be the same across teaching generations, the nature of teaching differs because of preferences and resistance to change often associated with age. The age gap between students and tenured professors is widening, and with it the gap in relatable teaching.

Many students expect and in fact prefer a hands-on approach to teaching as opposed to lecturing.  Today’s students are digital natives and thrive on all things technical and web-based. For many older professors, this creates a disconnect between their teaching style and students’ processing of information. Older professors may want to turn off the Internet in the classroom, while students wish to use it to enhance a traditional lecture. As the gap between teaching approach and student learning preferences widens, student learning may suffer. This could be one factor behind the too-low 6-year graduation rates exhibited at many colleges. It could also explain some of the resistance to change in higher education as older tenured faculty control curriculum and other student requirements based on academic governance systems.

Simultaneously, some older faculty lament that today’s students aren’t as respectful or as able as those of earlier years. I regularly hear about some students not being good enough — despite the fact that test scores and admission factors suggest the current generation is better than the past. I don’t know whether the fact that students expect more from faculty is causing pushback or whether faculty dedication to research is causing less available time to connect with students. Whatever the cause, it is apparent that expectations of faculty and students are diverging.

I know that students expect a different educational experience today; they tell me as much all the time. One of the challenges of having a generation of faculty used to lecturing is that many professors don’t have the skillset of coaching that young people relate to. Instead of being spoken at, students expect to be engaged in the classroom through exercises and the chance to debate or discuss their own opinions and questions. Student preferences for learning have changed, and therefore it is important to have faculty who relate to the way students now absorb information.  In fact, the intensive, active classroom is the antidote to widespread acceptance of online instruction. Ironically, by continuing a lecture-based instruction approach, schools hasten the movement of students from mainline institutions to online schools. This in turn likely heightens frustration for both faculty and students.

The trend of the older generation not retiring is not limited to the education sector. It affects the overall economy as the younger generation is squeezed to compete for fewer and fewer positions. In 2012, 41 percent of people over 55 were still working compared to just 29 percent in 1993. America’s labor force is growing older each year and staying in jobs that could block the progression of younger employees. Keep in mind that some of this trend is the result of an increase in economic uncertainty for older people. According to a Gallup study on baby boomers and retirement trends, many boomers carry significant debt, have not saved enough or rely too much on Social Security to retire comfortably, which was only exacerbated by the recession in 2008. The economic collapse resulted in layoffs, losses from stocks and a deep decline in home values, causing people to conclude they could not retire. In other words, many baby boomers wish to retire but cannot afford to do so.

Many baby boomers are choosing to stay in the workforce longer because they feel working provides a sense of purpose in life. Bill Byham, a Pittsburgh entrepreneur and insightful author, wrote a book several years ago titled 70: The New 50 in which he predicts that people are going to work longer for a variety of reasons.  We may not see a growth in retirement rates until physical limitations require people to stop working.  And it is important to recognize that it is difficult for people to retire. Beyond the economic concerns already mentioned, many baby boomers don’t have hobbies, which gives them little to focus on outside of their work.

The youngest baby boomers are entering their 50s this year. If they continue to retire later and later, the effect will be tremendous in both the education sphere and across different industries worldwide. We need to address this issue not only to ensure the next generation is provided equal opportunity, but to also offer those who wish to retire an opportunity to do so and a chance to continue using their skills to make the world a better place.


The Hidden Value of Serving Salad

Last Christmas, I received one of the best gifts in years, one that I never could have anticipated, when my family and I participated in a University of Pittsburgh event that provided a hearty holiday meal to people in need. My job was to serve salad — clearly not the glamour job on a day when stomachs were vying for turkey, ham, potatoes, gravy and desserts. As I dished out the greens, I was also challenged in my thinking about how well we in business schools are preparing our students to serve their communities.

People had three options at my station: Italian dressing, ranch dressing or no dressing. I quickly realized the challenge of my task when two people walked by with plates full of meat and sides and two servings of cake. They had no room to hold a salad — either in hand or stomach.

How do you sell salads in such a setting? I chose to thank people, to talk with them, to wish them a Merry Christmas and to offer a salad. It was amazing how well my approach worked. Each person got a special salad. Some chose the one they wanted, some wanted me to choose. Yet, over the course of my three-hour shift, I gave out each and every one of the pre-made salads on the cart.

The most rewarding part of my day were the conversations. In each interaction I learned about interesting new perspectives and more. One woman said she hoped I would not take her comment the wrong way, but she knew I was with the business school, and her experience with business graduates, especially MBAs, was that they cared only for money and themselves. She said it seemed as if we didn’t do anything to show students that there was more to life than wealth seeking. She asked why we were like this.

I explained that we do provide students with opportunities to give back, that we tell students that with success comes the obligation to better the community. She listened politely, but I don’t think I sold her on the arguments nearly as well as I moved salads to people.

Upon reflection, I believe there are many reasons why business schools have not been as effective in teaching generosity over greed. One is that we rarely are placed in circumstances that cause us to change our thinking about people, problems or the cost of poverty and neglect. Second, because we are very busy and mostly connected with a certain type of person, it is easy to assume that everyone can do just as well if he or she only tries. Another reason is our assumption that some problems are too difficult for any one individual to correct, so we may as well use our time effectively (effective time management is one of the lessons we teach), and that means leaving such problems for others to solve. Finally, it’s possible that we are guilty of spending so much time looking in the mirror that we no longer see anything other than what we wish. We become blind to the people and things we wish to ignore.

These ruminations boil down to three important observations: First, any gaps in business school education exist purposely. They reflect choices made by leaders, faculty and staff. It does not have to be this way. Second, it’s our community and our world. I can’t singlehandedly solve our problems, and neither can you. But I guarantee that we’ll never solve our most pressing problems if the vast majority of successful people choose not to act and engage with them. You need to crawl before you can walk. Finally, I learned that it is enormously fulfilling to spend time giving to others.

The enjoyment of volunteering far outweighs the imposition it creates on your time. In a world where many people see few solutions to the problems we face, one simple answer is to be a friend. In so doing, you’ll make a difference and feel great. In my case, I learned these lessons last Christmas, where the simple act of passing out salads to people in my community was a profoundly enriching experience.