Another year goes by, as does another round of MBA scandals and controversies. Put hundreds or more competitive and driven young professionals together with often equally competitive and intelligent faculty and administrators and something will go haywire. Of the three years we’ve compiled this list (we skipped last year but did 2014 and 2015), Stanford’s Graduate School of Business has the dubious distinction of making the list every time. And this year, like the last rendition in 2015, the GSB takes the top spot. In 2015, it was former GSB Dean Garth Saloner’s affair with a GSB professor married to another GSB professor, and the resulting lawsuit. This year it was the revelation that Stanford’s GSB has been — at minimum — misleading thousands of applicants and donors regarding how financial aid packages were dispersed. But it wasn’t just the misleading — or flat out lying — that lead Stanford to the top of this year’s list. It was also the combined botching of how they handled it afterwards.
This year’s ‘winners,’ however, goes well beyond deceitful financial aid practices. 2017 was yet another busy year covering for controversies and scandals covering the gamut of graduate business education. It included another case of TOEFL fraud, multiple lawsuits among current and former B-school faculty members and administrators, the odd fall at Wisconsin’s School of Business that eventually led to the resignation of their fledgling dean, and another revolt against rankings, among many others.
Here is the list of our Top 10 Favorite Scandals & Controversies of 2017.
Elliot Bendoly of Ohio State has co-authored a new research paper that is the latest attack on business school rankings
10. A New Rankings Revolt In The Making?
Last May, a group deans and faculty from more than 20 universities signed off on a research paper suggesting schools boycott rankings. The paper, which was published in the May edition of Decision Sciences Journal, said schools should “acquiesce to methods of comparison we know to be fundamentally misleading.” Like other public grumblings and attempted boycotts to rankings, this one most likely has a hidden agenda. In the past, schools have attempted to abstain from rankings after taking big year-over-year falls. This particular academic research paper was co-authored by Elliot Bendoly, a dean at The Ohio State University’s Fisher College of Business, who lobbied aggressively behind the scenes to factor in cost of living during Poets&Quants’ first undergraduate ranking of business schools at the end of 2016.
“This is going to impact the perception of P&Q as a responsible and thoughtful steward,” he wrote to P&Q on one occasion. “All schools have both salary and placement city information. One approach would be to provide all schools a standard cost of living reference by US city (established indices exist and are regularly updated), and have them weigh salaries by the respective indices – reporting that rather than the actual dollar value.
“Imagine the extreme case where unadjusted salary was the only measure in ranking. Would we ever put any stock into such a ranking if only the schools that placed people in the most costly urban settings remained at the top? Is that what all students are looking for? Is that what we as a society hope they are looking for? If not, why would we ever include such a misleading element in a comprehensive ranking? It’s a good time to rethink what these rankings are trying to do – and who they are trying to help.”
Ohio State Fisher willingly participated in this year’s undergraduate ranking, which was published just weeks ago. Many other schools that signed off on the research paper also participated, including the University of North Carolina’s Kenan-Flagler Business School, which placed seventh this year.
Stanford GSB Dean Garth Saloner on campus in August 2015 – Ethan Baron photo
9. Stanford GSB Wins Key Legal Battle Against Professor
It’s been more than two years since we broke the news that then-dean of the Stanford Graduate School of Business, Garth Saloner, was in an ongoing legal battle including two faculty members, leading to his resignation. Last August, after a three-year legal battle, Saloner and Stanford got a victory. As we wrote in August, among other things, the lawsuit by Professor James A. Phills accused Dean Saloner of railroading him out of the business school while sleeping with his wife, also a Stanford GSB professor.
At the time of resignation, Saloner stated: “As many of you know, the university and I have been vigorously defending a baseless and protracted lawsuit related to a contentious divorce between a current and former member of our faculty. I have become increasingly concerned that the ongoing litigation and growing media interest will distract all of you from the important work that you are doing and unfairly impact this stellar school’s deserved reputation.”
Saloner might have been onto something. Nearly two years after that statement, on August 1, 2017, Superior Court Judge Theodore C. Zayner on granted the requests of Stanford and Saloner for summary judgment. The judge said that Phills had “failed to show that he was subject to discrimination, was wrongfully terminated or was subject to harassment.” Phills’ attorney said that he might be considering an appeal, but as of now, it looks like the GSB has dodged the legal torpedo.
UMKC Chancellor Leo Morton, who announced last month that he will retire after the 2017-2018 academic year, is named as a co-defendant in a lawsuit by a former professor who claims he was fired in retaliation for calling out the business school’s practice of inflating its statistics to earn more favorable rankings. UMKC photo
8. Fired Missouri-KC Prof Claims Retaliation
As noted above, there are certainly at least two sides to school rankings. On one hand, they are calls for transparency from universities that charge a ton of money to attend. On the other, they can cause people in power to do bad things — like fudge data and numbers. And that’s precisely what one whistleblower at the University of Missouri-Kansas City’s Henry W. Bloch School of Management alleged the administration was doing. In December of 2016, Richard Arend, a tenured professor of strategy and entrepreneurship at Bloch was fired for what the school called a “substantial lack of fitness.” In June, Arend retaliated claiming the school fired him for his five-year crusade to raise awareness of the school’s systematic and orchestrated inflation and falsification of data that led to undeserved accolades, including a No. 1 ranking in 2012 for research in innovation management from the scholarly Journal of Product Innovation Management (JPIM) and four years of top-25 rankings in entrepreneurship from the Princeton Review.
First reported by the Kansas City Star, Arend was terminated because he “demonstrated substantial lack of fitness in the professional capacity as a teacher and researcher at the University.” At the time, the school cited three causes for the dismissal: “research and/or other academic misconduct; his actual or attempted intimidation, threats, coercion, and/or harassment directed against students, faculty, and staff; and other misconduct.”
After a February 2015 audit by PricewaterhouseCoopers, the Princeton Review stripped the Bloch School of four years of top-25 rankings for entrepreneurship because key metrics had been inflated in areas like number of students enrolled in entrepreneurship programs and the percentage of students to launch a business in school, among others.
Yue Wang, a 25-year-old graduate of the Hult School outside Boston in a photo from her Facebook page
7. Chinese Students Arrested In Latest TOEFL Fraud
It’s a lesson often learned at an early age: Cheating is bad. In the case of four Chinese nationals, it was really bad. Last May, the foursome were arrested by federal officials and charged with them with conspiracy to defraud the United States after they allegedly engaged in test fraud on the Test of English as a Foreign Language (TOEFL). Specifically, Xiaomeng Cheng, 21, of Arizona State University; Leyi Huang, 21, of Penn State University; and Shikun Zhang, 24, of Northeastern University were all arrested for allegedly paying Yue Wang, a 25-year-old graduate of the Hult International Business School to take the TOEFL for them.
“Illegal schemes to circumvent the TOEFL exam jeopardize both academic integrity and our country’s student visa program,” William Weinreb, acting U.S. Attorney for the District of Massachusetts, said in a statement. “By effectively purchasing passing scores, (the students) violated the rules and regulations of the exam, taking spots at U.S. colleges and universities that could have gone to others.”
According to the charging documents and reports, Zhang, Huang, and Cheng paid Wang about $7,000 between 2015 and 2016 to take the TOEFL test after they had failed to meet their universities’ minimum scores. Federal agents investigating fraud involving Chinese nationals and admissions exams in the Boston area last year received a tip that a Chinese student was planning to impersonate another Chinese student and sit for the TOEFL test. As Reuters reported in August, the three students that paid Wang the $7,000 could have served up to five years in a federal prison, but were deported back to China in exchange for the served time. At the time, Wang had yet to be charged.
Clayton Christensen, author of The Innovator’s Dilemma and a Harvard Business School professor, is in a legal dispute with a former manager of his investment fund, Disruptive Innovation LLC. Wikipedia photo
6. HBS Star Prof In Court Over Investment
The concept of “disruptive innovation” is one of the most maddeningly popular terms in the tech world at the moment. Clayton Christensen, the original articulator of the concept and a Harvard Business School professor, experienced a bit of disruption of his own late last year. Late last year, Shawn Cox, a former employee of Christensen filed a lawsuit claiming he was lowballed out of his promised 6% ownership stake in Christensen’s Disruptive Innovations GP, LLC. Besides the less-than-expected buyout, which occurred after the company’s value climbed considerably, Cox claimed Christensen and his son, Matthew Christensen, threatened with legal action to avoid any buyout payment.
According to legal documents filed in Massachusetts and Utah in December, Cox began working for the Christensens in 2010 as a principal at Rose Park Advisors, managing its Disruptive Innovative fund. In 2013, Cox left to return to Utah. Two years later, the Christensens offered to buy Cox out — but, Cox says in his lawsuit, they refused to provide financial information that would enable an accurate estimate of fair market value. The Christensens offered Cox a sum just north of $500,000. He says the value of the 60,000 Class B membership units he accrued while a principal for Rose Park is actually at least $14 million. And now he’s seeking more for damage to his reputation and his prospects, as well as coverage of his legal fees. After Cox sued the Christensens earlier this year for the $14 million plus an additional $5 million in damages — claiming the Christensens also injured his reputation with interviews with local press and disparaging comments to other financial advisors. The Christensens have since countersued and the dispute is ongoing.
A screenshot from a video that was used to promote an MBA follies show at Stanford GSB
5. Stanford MBA Video Called ‘Misogynistic’
Business school follies videos often toe the line between hilarity and offensiveness. At Stanford’s Graduate School of Business this past year, the promotional trailer to the upcoming follies crossed that line to the offensive in the eyes of many, including a Stanford Law professor. The video, which was set to Petros & Sol’s Unfinished Business, was removed from the GSB Follies website, but not before sparking a massive amount of controversy. One of the first prominent pieces of criticism came from within Stanford walls. Stanford law professor Michele Dauber tweeted the video, noting “The problem is that this is what a hostile environment looks like. So it’s not funny — it’s degrading to women and diminishes all women in biz.”
Ironically, her tweet was flagged by Twitter because of a screenshot taken from the video showed barely clothed bodies. Up next was the critique written by the editor of TriplePundit, a news site covering sustainable business practices. The headline for the commentary: “Stanford Business Students Release Ill-Conceived, Misogynistic Music Video.”
“This video promotes gender stereotypes and sexual harassment — issues one would hope Stanford students and faculty would be actively working against in the classroom,” wrote Editor Jen Boynton, who has an MBA in sustainable management from the Presidio Graduate School. She called the video “gross, unfunny and unbefitting” graduates who will some day be in leadership positions.
Wharton School of Business
4. Wharton MBA Slams Teaching Quality
Complaining about professors definitely isn’t uncommon. Doing it in a published essay in the school newspaper is less common. That’s exactly what happened at the University of Pennsylvania’s Wharton School last fall. Writing anonymously in The Wharton Journal, a current Wharton student called the quality of teaching in the school’s MBA program “cartoonishly bad.” In one instance, the student wrote, a professor resorted to “reading someone else’s slides aloud” and became “visibly annoyed” by questions in class.
“Students dropped out in droves, complained to academic advisors, but ultimately bore the brunt of his sloppy syllabus and demotivating indifference,” the MBA student lamented in a highly critical essay entitled “Wharton Doesn’t Care About Teaching. Why Should We Care About Academics?”
And the student isn’t alone in the disappointment. According to surveys from The Economist, Wharton not only lags in MBA teaching quality among its peer schools, it also falls behind schools not even considered top 25 schools. Last year for example, The Economist, which surveys alumni from top schools annually, reported that the student rating of Wharton faculty ranked the school 70th among 100 schools. Moreover, in 24 years of Businessweek MBA teaching grades, Wharton has never finished in the top 20th percentile.
Newly arrived Dean Anne Massey has had a tough start at Wisconsin School of Business
3. The Wisconsin School of Business MBA Saga
Last fall, the University of Wisconsin School of Business joined a growing list of business schools — at least for a bit. In an email sent to students on October 18, 2017, Associate Dean for MBA Programs at Wisconsin Donald Hausch said the school was seriously considering closing the full-time residential MBA program, which would have placed the school on a list including the University of Iowa, Virginia Tech, and Wake Forest — all of which have done the same. The announcement came at a surprising time. Wisconsin Dean Anne P. Massey was only three-months into her deanship. The school said it would hold a town hall meeting and have faculty review the proposal before making a decision in November.
But it didn’t take till November. Less than a week after the email was sent — and about three days after the news broke, backlash at Wisconsin had commenced. An online letter and petition to Massey and Wisconsin faculty was created and within hours, hundreds of current and former business and university students had signed it. “We hope you consider the mission of public education as you make this decision,” the petition read. “As one of the oldest and most prestigious public universities in the nation, the University of Wisconsin provides a stellar education for students of all backgrounds. We believe that a public MBA is an essential ladder for future business leaders who may not have the financial means to attend the Harvards of the world.”
Two days later — and a week after the initial email — Massey and Wisconsin backpedaled and announced they were no longer considering removing the full-time residential MBA program. Instead, Massey wrote in a statement to the school community, “We will move forward with discussions on how to grow the undergraduate program and expand the graduate portfolio while simultaneously strengthening the full-time MBA experience.”
The fallout from the debacle revealed a heated town hall meeting and eventually led to the resignation of Dean Massey at the end of the year.
Stanford GSB Dean Jonathan Levin
2. Stanford Misleads Students, Donors On Financial Aid Packages
Last February, current Stanford MBA student, Adam Allcock was toiling through mounds of highly confidential data. The exposed data was result of a computer breach and included 14 terabytes of student data detailing the most recent 5,120 financial aid applications from 2,288 students, spanning a seven-year period from 2008-2009 to 2015-2016. The data was mistakenly stored on a shared network accessible to all GSB faculty, students, and staffers. On February 23 of last year, Allcock reported the breach to Jack Edwards, director of financial aid at the GSB, and within an hour, the data was removed.
But not before Allcock saved the data. After more than 1,500 of cleaning and analysis of the data, Allcock produced an 88-page report and leaked the findings to Poets&Quants and circulated it to fellow students on campus Among many other things, the report stated: “The GSB secretly ranks students as to how valuable (or replaceable) they were seen, and awarded financial aid on that basis. Not only has the GSB also been systematically discriminating by gender, international status and more while lying to their faces for the last 10 to ~25 years.”
Specifically, the report stated, scholarship money was prioritized to women and those coming from the financial sector rather than on a need-based basis. It comes as little surprise — it’s no secret MBA programs have gone to great efforts to boost enrollment of women in MBA programs. But the issue is Stanford’s claim to have only awarded scholarships based on need rather than merit. Allcock matched the internal records with LinkedIn profiles.
“GSB fellowships were only in part determined by a student’s financial need despite publicly repeated claims to the contrary,” he wrote in the report. “The GSB has misrepresented and advertised its financial aid system to the detriment of students who make tangible financial decisions on the basis of these representations. Students with identical financial situations receive vastly different GSB fellowships awards and without any knowledge can graduate with up to an additional $80,000 of debt…”
An aerial view of Harvard Business School with the iconic Baker Library in the center. Photo by Gren Hren/Harvard Business School
1. Harbus Editors Call Stanford GSB’s Response A ‘Gross Negligence’
Throwing salt in the wound. Or throwing shade, as the young ones say. Either way, the Harvard Business School’s student newspaper, The Harbus, took the liberty to kick a rival while it was down when publishing an editorial entitled “Can A Business School Die Of Shame?” in response to the Stanford Graduate School of Business’s handling of the data breach fallout mentioned above.
“We feel a tremendous amount of sympathy to our peers at Stanford GSB because had this happened at HBS, there is no doubt that our student body would be outraged beyond words,” the editors wrote in the unsigned editorial. “Not only is regressive economic discrimination in financial aid a breathtaking breach of trust, and a shocking disaffirmation of the school’s purported egalitarian values, but we believe that it also represents gross negligence by the Stanford Administration in their duty to uphold the most important element of any elite business school degree: the school’s brand.”
But that was just the beginning.
“The response offered by Stanford administration offers a case study to MBA students in exactly what they should not do when in damage control,” the editors continued. “In seeking to explain the episode, Stanford GSB Dean John Levin diverted attention away from the core objection, focusing almost exclusively on the issue of the data security a serious technical breach of confidence to be sure, but one that pales in comparison to the revealed compromise in school values. In the few words he does devote to the true problem of the administration’s conduct, Dean Levin minimizes the systemic gender, economic, and national origin discrimination as a mere miscommunication about ‘base level’ versus ‘incremental’ fellowship awards. Instead of showing leadership by taking responsibility for these shortcomings, he offers only the vague promise to be ‘significantly more transparent about the principles and objectives being applied in making financial aid awards.’”
Low blow? Perhaps. But Stanford University’s student-run newspaper did the exact same.
DON’T MISS: OUR FAVORITE MBAs OF 2017; OUR MOST READ STORIES OF 2017; or 2017 EDITORS’ PICKS OF OUR FAVORITES
The post The Biggest B-School Scandal Stories Of 2017 appeared first on Poets&Quants.
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