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by RONALD ALSOP | March 10, 2009


Paul Argenti, a professor at Dartmouth College's Tuck School of Business, has long taught his M.B.A. students strategies for managing corporate crises. Recently, he helped his own institution practice what he preaches.

He and school administrators discussed potential risks for Tuck's reputation and how to deal with them -- or, even better, avoid them. "For example, we have talked about whether we need to be more careful about the people we bring to campus to speak," he says. "We also decided that we need to have clear procedures in place, such as who to call in case of an emergency."

What Mr. Argenti did at Tuck isn't much different from his consulting work with companies and CEOs. Like companies, business schools can be touched by scandals and crises, yet many haven't prepared for events that can tarnish their reputations. They are often caught off guard and must scramble to react, sometimes exacerbating the damage by failing to communicate effectively with the media, alumni, students and employees.

"Business schools need to develop crisis-management systems in case a faculty member is arrested, a student dies or a dean does something improper," Mr. Argenti says. "Large business schools with programs all over the world are accidents waiting to happen."

While corporate scandals have been rampant this decade, business schools have faced their share of embarrassing, highly publicized crises, too. Here is a sampling of the incidents that could become provocative case studies for b-school ethics courses:

  • The dean of the University of San Diego's business school resigns after being arrested for trying to buy cocaine. He pleads no contest and is found guilty of a misdemeanor charge of attempted complicity.
  • The Yale School of Management's institute on corporate governance faces its own governance scandal when the director steps down over alleged financial misconduct.
  • A professor emeritus at the University of Pennsylvania's Wharton School is arrested and pleads guilty to a child pornography charge in federal court.
  • Angry New York restaurateurs sue Columbia University after a business-school professor sends them letters, as part of a research project on customer complaints, falsely claiming that he became violently ill after dining at their eateries.

Such incidents are especially damaging if they undercut the image the school is trying to project. The San Diego dean's arrest, for example, is clearly at odds with the school's description of its M.B.A. curriculum as being "focused on developing socially responsible leaders who make thoughtful decisions that impact their organization and the world at large."

Given its technology prowess, Carnegie Mellon University's Tepper School of Business found it particularly disturbing to report a computer breach two years ago involving sensitive personal information about students, alumni and staff members.

Indeed, the value of reputation can't be overstated. "All we've got as business schools is our reputation," says Angel Cabrera, president of the Thunderbird School of Global Management in Glendale, Ariz. "Students are buying a brand and an experience, and they use the school's reputation to decide where to go."

Dr. Cabrera himself has dealt with recent financial problems at Thunderbird and rumors about selling the campus or merging with another school. "You need to be proactive when you're dealing with negative publicity," he says. "We have tried to keep journalists posted on what is happening with our turnaround."

Especially rife with risk is the popular practice of slapping donor names on buildings. The Ohio State University is still wrestling with the image problem of having its business school's hotel named for donor Roger Blackwell, a former professor who was convicted on charges related to insider trading. "The Blackwell issue has had a very serious impact on the college," says Joseph Alutto, dean of the business school. "We have used the event to engage students in discussions about how slippery-slope issues can quickly result in loss of reputation, not to mention money or jail time."

Dr. Alutto adds that the situation is complicated by the fact that Dr. Blackwell has met his endowment commitments and "there is no allegation that ill-gotten gains were used in fulfillment of his pledge." Because of the Blackwell brouhaha, donor gifts have become part of the school's "risk-management planning process."

Dennis Kozlowksi, the former CEO of Tyco International who was convicted of looting the company of millions of dollars, eventually saved Seton Hall University from further controversy by proposing that his name be removed from the business-school building and the library rotunda.

For communications managers trying to protect reputation, academia can be more challenging than the corporate world. Vincent Hammersley, communications director at Warwick Business School in the United Kingdom, had to adjust to one big difference when he switched from the automotive industry. "At my old job, I could insist that employees not talk to the press on company issues without my consent," he says. "Now, academic freedom of speech means that I am happy if I hear about a comment from a member of the staff before I read about it in the press."


Filed Under: Education|Grad School