Business Ethics and leadership don't just come with a designation, how the McGowan foundation is trying to change that.

(upbeat music) - Welcome to the Business Ethics Podcast. Brought to you by the Business Ethics Alliance. Exploring the ethical questions of today to create a more equitable tomorrow. (upbeat music) Welcome to the Business Ethics Podcast. My name is Blake Peterson, and joining me today is Brian Pekro from the McGowan Foundation. Brian, thank you so much for joining me. Where are you based out of? Where are you speaking to us from today? - Thank you Blake. It's a true pleasure. I'm joining you from Chicago, Illinois, the headquarters of the McGowan Funds. - Awesome. This is our first podcast that we're doing via Zoom. So excited for it. I mean, it seems pretty easy. It seems a lot easier than getting a recording studio and getting set up. So, hey, maybe it'll be a trend. But thank you for reaching out to us. I'm very excited about learning more about the McGowan Foundation and the work that you are all doing. Of course, we focus on Business Ethics here and everything Business Ethics. It sounds like you all do a very similar thing. And they are obviously doing a lot in the community and with these different MBA students to ensure ethical business standards continue moving forward. So maybe you can give us a little bit of background, Brian. What is the McGowan Foundation is a whole and what do you do for the foundation? - Of course, I'd be glad to. So for the past 29 years, the William G. McGowan Charitable Fund has been working across the United States really aiming at reducing the cycle of poverty. We fund grants that help organizations break the cycle of poverty and allow individuals to thrive. Now, our benefactor, William McGowan, Mr. McGowan was the CEO of MCI Communications, it's a telecommunications company from the 80s and 90s. He deeply believed that education allowed him to thrive in his role and, you know, amass a lot of influence in the United States as a kind of a successful CEO. Because of his commitment to education, our program pays homage to Mr. McGowan. Now, Mr. McGowan was known for doing business one way and that was the right way. So because of that, our program focuses not on just supporting education for second year MBA students, but really engaging these individuals in a style of business that focuses on leading in a way that benefits both business and society by leaning into your ethics and values. So over the course of a second year of the MBA program for 10 students that are at top 25 schools, we embed ethics into their, into their, kind of their supplemental business school education and design a model that ensures that once they leave and they take on leadership roles, that this is their core for leadership. And I'd be glad to talk more about that. - Yeah, that's really great. I mean, ethical leadership should probably be a part of almost any MBA program. Maybe a part of this, a lot of schooling in general, but it's good to know that you guys, why the second year MBA students give you any specific, like, and then how do you pick the top 25 schools? How do you measure that, exactly? - So we've been doing this program for 14 years now. And back 14 years ago, when we decided that this was in a very important initiative, we started in 2008. Certainly there was a lot of reasons back in the, at the end of the 2010s that it was clear ethics were needed in business. We decided to partner with 10 schools that we believed really create influential leaders that can change business. The schools are Carnegie Mellon, Temporal School of Business, Columbia Business School, Dartmouth, TuX School of Business, Duke Fuqua, Georgetown McDonough School of Business, MIT Sloan, Northwestern Kellogg, Michigan Ross, Penn Warden School, and UVA, Darden School of Business. When we saw elected these schools, we knew that their students will ascend to important roles in the C-suite. They have a tried and true record, and these were the schools that we knew could really achieve the aims that we're looking for, which is to kind of revolutionize and change the way that individuals think about ethics in business leadership. And to your point, I do believe that every school, not just in business, but all around the world, should really embed this style of leadership into their model. And it would really benefit not just business, but also all of society as well. - Yeah, undoubtedly. And I think that here in Omaha, the Clayton School of Business, the Hider College of Business, they have a lot of ethics around their program. That's how the Business Ethics Alliance was formed. Dr. Beverly Crocker has kind of been at the forefront of business ethics for a long time. So we understand that. And it's interesting to me, well, interesting and also effective that you've chosen those schools because of where their graduates end up, and it makes a lot of sense. So how is it you're able to find graduates and are right for the program? Who's a good fit to be a part of this program? - That's a phenomenal question, Blake. We have a fairly robust system that we have developed in tandem with our partner schools. The truth is, is who knows our students best it's our partner schools. They've spent a year with these students, so they're familiar with who they are as individuals. They're familiar with their academic backgrounds, they're familiar with their hopes and ambitions as leaders. So we partner with our schools, and ultimately, we empower them to select these individuals for our program. But what we do is we've created an application that we orient our partner schools on every single year. The application is made up of five essays, and then an interview following it. We're looking for its individuals who have a proven track record of leadership, but also potential for great leadership. Now, all of our applicants are in the top five percent of their business school class after that first year. So we know that they're very smart, but this is not a merit award. It's based on the potential of these individuals to lead. These essays, they really focus on the inflection points of leadership. Everyone has had lots of different moments in their lives that have been formed who they become as leaders. We asked these individuals to talk about their greatest failures in business, and what have they learned. We asked them about some type of moral issue or challenge that they've faced and how did they take it on. We asked them about what is a deeply important moment in their life that has informed who they want to be. So what we're ultimately looking for is individuals who've embraced their own authenticity where transparent about who they are and who have a high level of humility while also believing that they can achieve great things. This combination is what we think is really core and crucial to being an ethical leader in the future who really embraces one's own values in their leadership style. - Yeah, that makes a lot of sense, and it's interesting, you know, go to humility. And when you think about students in college, of course, maybe you're thinking about young people. I mean, I have a lot of experiences to bring to the table, but MBA students particularly, they could be any range of the spectrum, right? Either MBA students who already had multiple failed careers and multiple successful careers and able to come to you and then take on this leadership, but to attack poverty specifically, 'cause that's your goal, right? How are one of the real things that you need that leader to be passionate about? How do you find out that that's something that they are gonna be, you know, not only just for this program or for the sake of getting some kind of notch on their resume, but they're truly going to go and be effective towards achieving that for you guys and reducing poverty. - I guess our goal as a foundation is to address, to disrupt cycles of poverty. Our fellow's programs aim is to create ethical leaders who benefit business and society. But with that in mind, we have a really unique model to imbue ethics and individuals so that they're primed to create that change to positively impact business and society. And to do so, we use a, what we call the 70/2010 leadership model. The 70/2010 leadership model is created by our partner, the Center for Creative Leadership, who leads the leadership development aspects of our program. Now, the leadership development aspects of our program is the 10%, it's the smallest ratio within this 70 to 20, 10 ratio. The 70% is a challenging stretch experience, something that takes our individuals outside of their comfort zone, makes them question their previously held assumptions about themselves and about the world and helps them understand what they might need to do to become the person that they want to be. For our stretch experience, we use the case study of youth experiencing homelessness specifically with the intersection between well-paying jobs and homelessness. In America, one of every 25 children, 4% of children at one point are homeless. It's a larger problem than I think a lot of people realize. And oftentimes, good paying work or kind of steady career-influenced work is the crucible of remaining housing stable or becoming housing unstable. So we plug our fellows into this problem so that this challenge so that they can learn more about this challenge, but also challenge their previously held assumptions. It's no surprise that individuals who are at the top of their classes and NDAs bring a lot of privilege to the table. So through this social impact project, they can kind of learn more about themselves. Now, our social impact project isn't just some type of academic project. They spend the first couple of months doing research and discovery into this theme, but in the heart of December, in January, late January, December, in Chicago. I know it's just like in creating, it's very cold. Our fellows come to Chicago and they participate in a bunch of experiential opportunities to get them to get to really understand personally and kind of viscerally what this experience is like. So the first thing we do is we participate in the Point and Time cap, which is an annual census across the entire United States of the unsheltered population of America. So they're out in the streets of Chicago at 1am, 2am, 3am, 4am, interviewing individuals who just so happen to be on the streets that night. For our fellows, this is a different type of experience. They've never probably been in these types of communities at 1am in the morning, let alone in the middle of the winter, not talking to individuals, definitely not talking to individuals. So this is a challenging experience. The next day, the fellows are at youth shelters interviewing this population, 16 to 24, learning about their story, maybe not learning about the worst day of their life, but learning about the challenges and barriers that they have faced, that have kept them from achieving the lives and dreams that they want. More than anything, our fellows always come away understanding that these youth want the same things that they want. They want a stable house, a stable career, a family, and a house. And through this experience, our fellows really can work on their empathy. They can understand that we all are the same, we all want the same things, they can understand the resilience that a lot of these people have faced in their lives. To achieve what they have, and they can reflect back on themselves and ask, do I have the same amount of resilience despite being a successful business student. And they can really set a course for being the leader that they want to be. Now, underpinning this is developmental coaching. So a lot of individuals have executive coaches to help them unlock their potential. We use coaches that are focused on ethics and values. So while they're going through this program and learning more about the social impact project and kind of challenging their values, they have a coach who's each month talking to them about empathy or resilience or character and integrity, our six McGowan principles, which are character and integrity, accountability, courage, empathy, resilience, and self-awareness. Every month, this coach who's an alum of the program talks to them about where does your self-awareness stand. They have some readings about it and through these conversations and through this really challenging experience, they begin to understand where their strengths and weaknesses are and how they can improve those weaknesses so that when they're in business, they can make real values-based decisions. Yeah, that's so important to actually go and experience things for yourself. And I really appreciate that you all do that. I'm a my wife live in Chicago for a long time. I frequent Chicago all the time. We love going back there and it's it's a different world from block to block. And if you never decide to go down those other blocks and experience things, you'll never know. And so it's kind of a blind spot, I think, for some individuals, you know, here in Omaha, there's a where I used to live, people would come to my home when they use the word, I don't really love to use a lot, but wow, you really live in the ghetto, they would say. And I could say, well, if you lived here, you know, these are just families that were trying to get by like I am, you know, and that's really the truth of it. So that's a really good thing that you're actually able to instill in these potentially very powerful, very influential people. They're already on the track to get there. You assume they will be. So I think it's important that you do that. That's a very valuable lesson, I'm sure. That's probably one of the most impactful things that you do. Would you say that that's kind of what they what the students say after they're finished? Definitely. Our students are fellows always say that the social impact project in this experience really opened their eyes and helped transform them into the leaders that they want to be. And ultimately, at the end of the day, if our fellows say that this program helped them understand the impact of their leadership decisions, you know, I know our fellows will have to make some very difficult decisions in their lives as a future business leaders, those decisions that lives and people in their well-being. That's that's the nature of a difficult challenging leadership. But if we can just help them understand the impact of their decisions, I think we did a good job. Yeah, absolutely. And so when your fellows move on and they graduate, right? They actually move into the business roles. Do you still follow up with them? Do you have any kind of metric that you've been able to use to kind of gauge the success of the program? How do you kind of see that? How do you guys monitor that? Of course. That's a great question. We spend a lot of time on monitoring evaluation. We actually have an entire evaluation team that looks at the program during the fellowship year, but also in subsequent alumni years. So we're always looking at how our fellows are ranking their principles, how they're speaking about principles and trying to glean how they're both the fellowship as well as leadership roles are changing the way that they're thinking about leadership and trying to see if this is different than the general public. Every year, we hold a conference for all of our fellows in our alumni in which we engage in some type of theme around ethical leadership. This year, the conference theme was the future of being true. Basically, in a complicated, challenging world, how do you keep true to your North Star when everything is trying to push you off track? So we had several speakers who were focused on that and it was really well but perceived by our alumni. In addition to that, every year, we have a professional development seminar for our alumni and we have an alumni committee that's always looking at future opportunities and ideas for our alumni to engage in the world. One of the cooler initiatives we have is that our alumni compete from class over class and how many volunteer hours they can acute over a year. So this year, actually, our top winner was our first class, the class of 2011. Wow, that's awesome. How many hours did they compile? I can't remember if it's on my head. I'll get back to you on that. I'm sure it was a lot. That's really great. When I think about the different challenges that you hope these business people tackle, it makes me excited because I see, for instance, on government spending and poverty, for instance, we've done nothing but increase that spending over time. I'm not saying we shouldn't spend money on it but they spend exorbitance amounts of money and poverty somehow doesn't seem to decrease. And I think the big reason for that is where the money flows to. It's not really flowing to necessarily the people in those situations, the people who understand what is happening. But I think that's something that businesses can change because hopefully your business people can provide jobs in those areas. Perhaps they can actually take their money and help cities in which they live in and they set up shopping and they decide that's their headquarters and they can make an initiative to make that city better. Sorry if you hear my daughter running around the background there. I think it's the many cartoons might have worn off by now. Those are problems that I think business leaders really can tackle better than necessarily a government who just is shoveling money at the wrong things. So what are you hoping? Because obviously there's donating your time, there's donating money. But what are some other initiatives that you try to teach them they can do as business leaders once they get out the ground. What are some things that you hope they do to help? And poverty or disadvantaged communities in some way. You know, I think your first point was really interesting. And we were very encouraged in 2019 when we saw the business round table's purpose of a corporation article. When they were describing what that we need to redefine the purpose of a corporation from being just a shareholder, like shareholder profit maximization, to be more holistic about how they think about stakeholders. Everyone from their customers, their employees, suppliers, the communities in which they work, and the environment rather than just maximizing shareholder value. That was something that deeply resonates with us as a foundation and certainly with the fellows program and how we see the potential of good and ethical business leaders. Certainly one of the areas that we really would love to see ethical leadership thrive is where we work with business schools. The idea of more business schools embedding the principles of ethical leadership into their models. So this is really a virtuous cycle and which year over year there's more individuals who are thinking about ethics and those decisions that they make, these of these business leadership, I think that would really begin to, you know, turn the lever in the right way. And we're constantly talking to our business fellows about that. How can they be the change in their communities in their organizations that they work? I would say that when it comes to your question directly, my biggest focus is that our fellows take the steps in their business to help transform them into the ethical businesses that they can be. So that's their biggest focus is, you know, a lot of individuals, they just hop to hop to hop from business to business to business until they find a nice warm place. I want them to, you know, take a stand and be the ethical leaders in the businesses that they work, rather than finding the place that's the easiest to work. That's awesome. Now when it gets tough, don't necessarily just bail, right, and move on to the next. They stick around and make it into something. And that is something that we miss. And I'm in finance. So obviously, the stock market is how I earn my money. But I agree with you very much. So, you know, when it comes down to just having the purpose of a business to be maximized, shareholder, profit, it is almost disgusting sometimes what it gets to. And then you even see times in the market where companies make a lot of money but they're like, oh my gosh, but they didn't hit the projection and they get so brutally punished. It baffles me. So what you're kind of mentioning really brings up to my mind B corpse, right, a benefit corporation. So is that something that you try to like encourage your students to learn more about? Is that a focus at all? I mean, I'm sure they're learning about it just in their regular MBA studies and whatnot, but maybe not as much as they could be. That's a good question. So our, our fellows, because of our, our application, our fellows are always inclined to leadership in B corpse in their, their business education. So in our fellowship, I don't think we speak a lot about B corpse particularly, but I think what one of our challenges is for our fellows to understand that those lessons and those learns about triple bottom lines are not just limited to that space, that in their regular work, they should be thinking about these metrics in the same way. You know, there's one of the great elements of this, this most recent generation of business leaders or MBA students is they've really embraced kind of a principle to approach as to business like ESG. And I think that these individuals, we challenge them to think about how they can be like an ethical force in all their businesses and not just ones that have that as a stated mission. Yeah, that's, that's really good, because you can't have every single corporation be a B corpse at this point in time. It's, you know, it's, it's too far. You can't put the genie back in the bottle with where it goes. And these companies who are making a lot of impact that you see, you're talking about a lot of newer, maybe your, the next generation of employee, they want to see something different from their company than necessarily people did in the past. And I don't know, maybe people didn't want to see that in the past, but it's like they could vocalize it. And maybe just the fact that my generation's been coddled at the point and we're like, we can say whatever we want because we, you know, there are no repercussions. We're finally doing it, but it is positive in a lot of ways to see that come through. So when you, you have the foundation, obviously, you only suck 10 students a year, you know, and that you, how many classes have you gone through now? So from 2011, so you'd be on to 11th class? 129 right now. 129. And now, are there any notable people that you can mention that maybe have like that are now from the earlier classes? Are they working a lot of tech industry? Are they working? Is there really any kind of like common theme amongst them? So our fellows, you know, when they start out, many of them go into management consulting. We have a lot of fellows at McKinsey. We have a lot of fellows at the big four. Certainly, many go into investment banking in their first years. And that's, that's basically where a lot of them get their starts. Today, our top class, we do have a couple individuals who are in in C-suite leadership of construction companies, of techno product developments in tech, the top tech space. So we're at that inflection point where our first class that graduated in 2011, they've been in the workforce for, you know, 12 years following their MBA. And, you know, we're really excited about what the future will hold as more and more of our, of our alums enter into that C-suite or partner status at large influential management consulting firms, etc. Yeah, and it's funny, you know, it's cool. You mentioned a C-suite executive in a building company. In my mind, you know, I worked in the oil field in like a previous life, it seems like now, but I didn't feel like any of those executives really cared about me no matter how much, how many, you know, videos they made and whoever they paid to write what song about safety that given year. So is there a conversation with your fellows about that and how they should be, you know, engaging with employees because I, it's not just executives who are bouncing around company for company employees are two. And you're leaving for what better benefits, more pay, it doesn't really matter about where, you know, you enjoy work as much for some people just because they're like, hey, if I can get paid more and I can have better benefits on leaving because I don't like either of these jobs anyway. It would be refreshing to see people be at a company for 20, 30 years for a change. It would be, you know, because you can really build something in that way. So is there a part of your program that is kind of centered around how to be a leader to your employees and how to maybe try to make a culture within a company that really reflects, you know, your core values as a company, but also what those leaders are trying to project. So that's a, that's a really interesting point and we do professional development once our fellows become alumni on that, on that theme. It's more relevant five, six years out than right right after business school. But one thing that we've recently launched that I think really touches on this is the ethical leader of the year award. So after 13 years of running the fellowship program, we realized that we, we shouldn't just be kind of honoring, celebrating the next generation of business leaders. We need to do something to kind of put a post down and so this is what ethical leadership looks like today. And also think more about how can we inspire today's leaders to be ethical. So we launched last year the ethical leader of the year award, which is given to one CEO of a large prominent company each year. Last year at the Society for Human Resource Management Conference in New Orleans, we gave it to the CEO of Prudential Financials, Charles Lowry, and you know, we had a selection committee of several C-suite leaders, of several individuals that are the head of prominent, not for profit organizations, select Charlie. And he was selected based on our, you know, our ethical principles that I mentioned a little bit earlier. When we were doing our vetting and learning about Charlie, one thing that was super clear was not just is he an ethical leader who's made really solid and firm decisions for his, for his firm, but the staff and employees at that organization stay. And they stay because of good leadership. And you know, the age old adage people don't leave jobs, they leave bosses. I think that there's some truth there. And the ethical leader of the year award is one way that we're trying to pay homage and celebrate those types of leaders who people want to work for. That's cool. And to give it to someone in the finance industry, that's interesting. So that's the first year that you've done it. Is that correct? That is correct. He was our inaugural winner. That's awesome. And then there is no kind of limitation on what kind of industry these people are in. Do you guys have, is it, you know, could it be given to a CEO of a smaller company, do you think, or is it kind of important that they have a widespread impact to be qualified for this? Well, this came up a lot during our selection committee. The award is open. And we definitely are encouraged to see different types of individuals nominate candidates for this award. But ultimately, our goals for the Fellows program as a fund, as an award, is to change the way people think about leadership. And when we were comparing two different candidates against each other, it's pretty clear that individuals who are working in the publicly-traded space in the Fortune 500 and the Fortune 200, they faced really difficult challenges. The challenges that they face every single day are our novel and they're different and they really take all, if they're hard to sleep over. Privately-traded companies, they don't, we don't know a lot about their leadership. They don't have to share out. So really, I think when we crunched the numbers and looked at the vetting, our process really kind of slid towards individuals of large publicly-traded companies, just because of the challenges that they face every day in their business leadership. Yeah, it would make sense, right? Because really, if you're in a publicly-traded company, and you are making the decisions that are right, not only that what is easy as you come kind of mentioned when we first started. That's a big deal. And it's kind of far and few between, unfortunately. I don't want to say that to say every company is, but it's very easy to make those decisions based purely on profit and not on retaining employees over the long term. I mean, we're seeing some pretty wild stuff happening with Twitter right now. We're seeing some crazy things happening with FTX at the moment. I mean, that FTX individual would have probably been a very good, should have went to this program prior to starting the business. It might be better off than he is right now, huh? - I wish we could have saved him, but it's a little too late at this point. - Yeah, I think he's on his own. He's on his own there now, but that's awesome. I mean, the award is great. I think the following up with your alumni is awesome to make sure that they're still staying ahead of it. Is this something that you think would ever grow beyond the 10 MBA students? Do you guys have any desire to become kind of a larger teacher of business ethics than you currently manage? Or do you think that this is something that's important to keep small and kind of, you know, focused as it is now? - So for us, I think it's important to stay small and focused because our major focus is always on quality, right? We can't sacrifice quality in the delivery of this program. However, we do believe rather strongly that what we're teaching can be taught at business schools across the country. It doesn't have to be a top 25 business school, any business school can teach these. And the truth is is that leaders come from everywhere. Leaders come from everywhere and there's leaders in every level of business with MBAs, without MBAs, with education, without education. And it's really core that all of our leaders have some type of values based framework in which they rely and depend on that is authentic and true to them and benefits society. So while we are not necessarily a physician to grow our program right now, we are constantly talking with individuals about how we can embed principles of ethical leadership within all of their programs. - That's excellent. So it's not something you're trying to keep too close to the chest. Do you want everybody to learn this, never want to operate in this manner? - Absolutely, yeah. - Exactly, perfectly set, that's what we want. - That's great. Well, what are some things that you think so obviously a lot of people who listen to this podcast or current business leaders, perhaps MBA students, not necessarily who are going to your 10 schools or whatnot, but what do you think are some, maybe some tools that the Gaoan Foundation really leans into, like maybe some of the core principles you talked about that some business leaders can use when their face with some ethical decision-making that they have to do, even privately traded or publicly traded, is there anything that the Gaoan Foundation really would say is like this is a staple of our education here and this is a usable thing you can take out in the field and really cause an impact with. - I think that investment in oneself, not just in self-care, but investment in knowing yourself, understanding what your self-concept is and what you believe as a leader is crucial. And this only comes about by deep reflection through difficult conversations with somebody who's challenging you on what your values are, so that you really know what you stand for and that when you make decisions, they're not just quote unquote gut decisions. People, when making a difficult decision someone says, why did you make that decision? A leader really needs to be able to say why and how they made that decision and what they expect the intended consequences to be because I think that's where the leadership fails. When those small decisions that cascade into large decisions come about, it's when people just kind of are flailing around and they don't understand what their true values are. So that's the first core element and the second core element is along the same lines, leadership can be taught. I think there's this idea that some leaders are born. I don't know if that's true or not. I think leadership qualities, some people might have more leadership qualities, but we can build leadership qualities in all of us. And I think that when we kind of lean on the idea that, hey, that some people are just naturally born leaders and we just gotta sit through the dust until we find those diamonds. It leads to so many instances where we have a void of leadership in so many places. So I think that we really need to lean into the idea that anyone can be a leader, anyone if they're dedicated and they have the right amounts of self-efficacy can rise through the ranks and kind of implement a positive model of leadership in their organizations. - Yeah, that's excellent. I think very well said, I think that's something very actionable that we can all do as leaders to really look inward before you try to affect what is outside of you because if you don't have a true North, we some might call it, you know, then it's really easy to get lost on the way. So yeah, I love that. Thank you so much, Brian. I think this has been an excellent conversation. I've really enjoyed learning more about your program. I'm very happy to be able to get this out to let more people know about it. If you are an MBA student out there, those are the 10 schools that maybe you want to target. If you want to think about something like the McGowan Foundation, if you are a leader and you are in a position like Mr. McGowan, maybe you can start another foundation and do this for some more schools. - So anybody out there listening? - Yeah, there's no competition is not what's happening over here, right? We're just trying to make the world a better place in the business world, particularly where these business leaders can really affect change. So thank you so much, Brian. I really appreciate everything that you brought to the table today. And I really wish you and the McGowan Foundation the best. I hope we can keep on checking in with you to maybe hear if you guys have any big stories or some really cool things come up. I know that we would love to hear more from you. - I'd love that, Blake, thank you. - Thank you so much for tuning in to this episode of the Business Ethics Podcast. If you're enjoying the show, please feel free to rate, subscribe, and leave a review wherever you listen to your podcasts. We really appreciate it. And we'll catch you in the next episode of the Business Ethics Podcast. (upbeat music)