Archive for December, 2010

A Win for the Athletic Department, A Loss for Education

December 31st, 2010 by under The University in the Future, The University Today. No Comments.

This week brought a huge win for Maryland’s football team in the Military Bowl in a game that turns out to be the last one for football coach Ralph Friedgen. The Maryland Athletic Director, Kevin Anderson, evidently made the decision to buy out Friedgen’s last year of his contract. According to the Web site www.ncaafootball.fanhouse.com Friedgen was asked to leave after the coach-in-waiting, James Franklin, accepted the head coaching job at Vanderbilt.

The site reports that 1) Friedgen was earning about $2 million a year as head coach and 2) in 2009 Franklin was promised a $1 million payment if he stayed at Maryland and for some reason did not become head coach in 2012.

For faculty members who are responsible for achieving the two major purposes of a University, educating students and conducting research that contributes to society, these numbers are staggering. The best-paid faculty do not come close to the coach’s salary. If the numbers are correct, Friedgen made about four times the salary of Maryland’s outgoing President, Dan Mote.

For the last three years the faculty has had furlough days and no raises. For some of us the unpaid furlough days have added up to 25 over three years. Spending $2 million to buy out a coach’s contract is in extremely poor taste under any circumstances, and much worse in today’s economic climate.

Yes, I know that the state does not pay the coaches’ high salaries, but those millions could be put to use for education. To do so would require that alums and other donors value the educational mission of the University over varsity athletics. Fortunately there are a few of these people, like the late Robert H. Smith who generously endowed the Business School and whose wife contributed heavily to the performing arts at Maryland.

In an earlier posting I described what a university of the future might look like. One component was to franchise the University’s name to private sports organizations that would be financially independent of the University. These organizations would field varsity football and basketball teams for the University. The events of recent days have convinced me that such a mechanism is a necessary first step in fixing American higher education. Let a private sports company operating like a baseball farm club be responsible for recruiting players, paying coaches and selling tickets. Athletes could apply to attend the University, but would not have to be students to play. The University could then dismantle its elaborate recruiting and tutoring systems for athletes. We can stop pretending that someone playing two or three basketball games a week is actually able to get a college education at the same time. The University should negotiate a high fee for this Club calling itself the official team of the University of Maryland and using the Terps trademark.

It is time for universities, their students, alums and administrators, to remember why we exist and that athletics should only be a small part of what we do.

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In Hopes of Ethical Behavior

December 8th, 2010 by under Business and the Economy, Ethics. No Comments.

Some academics criticize business education as being too vocational and argue that a student majoring in business does not receive a liberal education. Most undergraduate business programs include a healthy dose of general university requirements; students are not able to take four years of nothing but business courses. One of the purposes of a college education is to teach students the art of critical thinking, and there is much analysis and thinking required in our business courses. Business and the economy are key to determining the quality of life for individuals and for the political power and influence of nations. So I have always been comfortable with my choice to teach business.

What I find discouraging, however, are the distressingly frequent lapses in business ethics. The financial crisis of the last few years provides a large number of examples of questionable ethics. One widespread destructive practice was mortgage brokers moving people from loans they could afford into completely unaffordable mortgages. A Stanford MBA at Goldman Sachs constructed a security which he designed to lose money for one client so that a favored client could “bet against” that security. It is not that ethical problems are new, we have had them since the beginning of business, even predating the patent medicine salesman. But in a complex economy with many different incentives and pressures, the opportunities to behave unethically are abundant.

Business schools have long struggled with their role in teaching ethics. I remarked to some friends that the financial meltdown shows that we were not successful in teaching ethical behavior to our students 25 or 30 years ago as it is those students who were responsible for much of what happened. Ethics courses are hard to design and teach, and they often get low student ratings. Maybe it is because the students don’t perceive them as immediately useful in their careers.

I believe that a simple approach to ethics might help. I have some questions taken from different sources that a manager should ask when confronted with an ethical dilemma:

1. How would you feel as a customer if the company takes a certain course of action (think exploding gas tanks, sudden acceleration, adulterated medicine, tainted food).
2. How would your actions look if reported in the newspaper or posted on a web site?
3. And the acid test: what would your mother say if you discussed the issue with her?

In the technology field one of the major ethical questions revolves around intellectual property (IP). The Internet has made a lot of content free, but there is clearly content that originators think should be protected. Will individuals provide content if there is no way to be compensated? In a knowledge economy IP is the product, and people cannot survive without some way of obtaining revenue for their labor. We continue to struggle with what IP should be protected and with the ethical considerations of sharing content.

The challenge for business schools is to find a way to weave ethical considerations into the curriculum and to make the experience have a lasting impact. As our graduates rise in the ranks they will encounter more situations in where they need to be guided by ethical standards. I understand the tremendous pressure managers are under to produce results, show strong quarterly earnings and keep their stock price up. But ethical lapses have destroyed companies (think E.F. Hutton for one) and caused incredible harm to individuals (Bernie Madoff comes to mind). The three ethics questions stated earlier are a start and it might be good to post them in every CEO’s office.

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