Prof. Angel Cabrera (Dean, Institute de Empresa, Madrid) put forward the case for a Hippocratic Oath to be taken by Business School Students before they graduate and – hopefully – climb the career ladder in their respective companies. This oath on business ethics would include a binding commitment by future managers to create endurable financial wealth, respect the dignity and rights of the workforce, engage in honest and transparent commercial transactions and utilize natural resources in a sustainable way. The idea which is appealing at first sight, was developed during a brainstorming session of the Global Leaders for Tomorrow, a group of promising young achievers convened by the World Economic Forum.
A closer look at the Hippocratic oath in its primary sense will first of all reveal that its original is obsolete in a modern medical world, while any modern version will never be universally accepted. A survey among 150 medical schools in the United States and Canada, which was carried out in 1993, revealed that only 14 percent of modern oaths prohibit euthanasia, only 11 percent invoke a deity, only 8 percent forswear abortion and a mere 3 percent forbid sexual contact with patients. All of these topics are key components of the original Hippocratic oath developed in the Greek antiquity. So what remains really as common grounds among all the doctors of all the countries worldwide? The answer is: precious little.
The same can be said about the business world: Between the four axioms for a Business oath or binding code of conduct are uncontested as theoretical principles but – alas – quite contradictory among themselves when discussed in and around their practical implications. Businesses which are managed along the principles of sustainable wealth creation, social responsibility and environmental friendliness command respect in many quarters. However, it is equally clear that a company’s first and foremost reason for being is to be profitable. What is more, the concept of “shareholder value” as some of its forerunners hold executives accountable not only to produce profits but to maximise them. As is commonly known, this endeavour comes at a cost: When “overheads are cut” and “downsizing” takes place, dozens, hundreds or thousands of workers lose their jobs. Usually this means hardship for employees who have been loyal to their company for 20 years or more. More contradictions among the implications of the core values could be discussed.
However, there is a more basic problem connected to the Hippocratic and any other oaths: In an ideal world a man of honour will stand by his promises and even more so, by his solemn oaths. Experience shows that this must not be the case in the real world. Lawyers in most countries swear or promise to uphold the laws of their motherland and their spirit – and still we note that mafiosi all over the world hire lawyers who not only guarantee their right to defence in a court of law, but go out of their way to help their clients escape justice. In other words it would make a lot of sense not to rely too heavily on self-control but rather on control.
Rather than compiling lofty principles for a “mercantile” Hippocratic oath, the checks and balances in the business world should be strengthened. Given the sheer amount of corporate governance scandals, cases of blatant fraud and mismanagement as well as unbridled executive greed from Enron over Worldcom to Swissair there is a strong case for stricter laws and better enforcement of corporate governance rules. To begin with there is a strong case for separating once and for all the roles of CEO and the one of chairman of the supervisory board. As we know by now, the interests of management and the ones of the shareholders (represented by the board) need not necessarily be the same.
Stricter controls should be enforced when it comes to compliance with accounting rules and insider trading. Moreover there is a strong argument for better controlled decision-making processes when it comes to mergers and acquisitions. It is blatantly clear by now that AOL and Time Warner would be happier had the mega-marriage not taken place and it is equally known that Credit Suisse overpaid the American investment bank DonaldsonLufkinJeanrette. Corporate deals of this order are a golden opportunity for the executives who sign them but what about the other stakeholders?
Instead of establishing the equivalent of a Hippocratic oath for business school graduates one should therefore strengthen the law-enforcement institutions which deal with white-collar crime and the bodies which control compliance with (stricter) corporate governance rules.