Davos Special: Business management & ethics!

Published on Sat, Jan 30,2010 | 14:29, Updated at Mon, Feb 01 at 09:37Source : CNBC-TV18 | Watch Video :

CNBC_TV18 caught up with Dr Angel Cabrera, President, Thunderbird School of Global Management at the Davos annual meeting. It is under Dr Calrera leadership that Thunderbird became the first business school in the word to incorporate a professional oath of honour all the way back in the year 2004. This year Dr Cabrera helped designed a global business oath for the young global leaders programme.

Here is a verbatim transcript of CNBC_TV18's interview with Dr Angel Cabrera. Also watch the accompanying video.

Q: In a global economy that is constantly beset by boom and burst cycles there is always be a time when greed overcomes good decision making, overcomes ethics � how do you in some sense not regulate but how do you thought of prevent that from happening and definitely not be enough?

A: It is definitely not enough. But it is a big first step. We would need to make sure that those who are going to be in a position to make the decisions they understand what the responsibilities are. For many years business goals have been pushing this very over simplistic idea that the only role and responsibility of a business manager is to maximize the bottom-line, is to provide benefits for shareholders. As the ultimate existence of a corporation is its financial results and what we want to do is turn that around. Corporations exist to serve people, to serve society, to create value and money is a vehicle to achieve that purpose not the other way round. We have got in it backward.

Q: So what do some of the students in your school tell you now that you have now been doing this oath for six years what are some of the young global leaders telling you when they take this oath. What are they taking back from the oath in that sense?

A: When the students graduate for example it is actually quite a moving movement to see. Imagine 300 students, the families are in the room, the faculty is there, dressed in traditional academic gown and they stand up and recite very big words. They are saying we are committing ourselves to create real value, to make difference. We are not going to do certain things. One, is not going to participate in corruption. We are going to advocate in defend human rights, we are not going to explore, we are not going to discriminate, we are going to do a reasonable, responsible use of the resources. These are big words that they are saying in public and that goes with you.

Q: I get the concept of a responsible enterprise- but at the end of the day business to business has to be a profitable enterprise are we not overloading the concept of governance and therefore it calls for companies to do. For instance at one time when governance become more and more entrenched concept across businesses, across the world it was not to do with trying to avoid fraudulent practices to ensure that managers stayed on the right side not just of the law but spirit of the law as well- over the years we have added a whole bunch of different things to it risk mitigation, environment protection and recently a few weeks ago the UN is working on a human rights charter that it would like to incorporate in the entire governance manual of company? So are we not asking companies to do a bit too much outside the job actually being able to run a business, profitably so?

A: We need companies to do a whole lot of things. What we trying and do is yo turn negative discourse into positive discourse and until now you see the increase in regulation. We are basically looking at governance from a negative stand point. What can we do to avoid abuses, to reduce risk, to make sure that these people in charge of business who we do not trust that they do not do much harm to the society? We are trying to do is turn that around into much more positive discourse from the very beginning the person has to go into business.

Q4: Has the fact that your students take an oath and they have been doing so for the last six years, influence the companies that come to your campus or placements � do they look at the fact that Thunderbird students are doing something different, committing themselves to different set of values that most of the business schools students and therefore they are more employment friendly?

A: That is a great question. We do not have the full answer. We do have a great evidence that is students choose our schools because our discourse resonates with them. They say I want to do business, I want to be successful, I even want to have a good life. But I also want to have a difference and when they hear the discourse it attracts them. So we do receive a lots of students, lots of interest and when we say, why did you choose Thunderbird, they say, "Well, this was a big part of my decision." When we started this journey some of our critics said we are going to scare employers away because employers need aggressive individuals who are going to drive the profit line or whatever. We are not seeing that. Employers are not running away.

On the contrary, employers value individuals who are entrepreneurial, who are well trained but also who they can trust, who are going to have solid values. So I cannot claim that new employers are flocking into Thunderbird just because of this but at least we have not scared them away yet.