Boston: Harvard University picked Nitin Nohria, a specialist in leadership and ethics, to be dean of its business school, charging him with transforming management education after financial catastrophes and scandals shook public faith in business.

Nohria, 48, a professor of management at the school, was named dean by Drew Faust, president of Harvard in Cambridge, Massachusetts.

New role: Nohria said that business itself is at an inflection point, referring to events such as the global economic crisis has focused public attention on corporate and executive misconduct. Mike Fein/Bloomberg

“Business itself is at an inflection point," Nohria said referring to events such as the global economic crisis that began in 2008 and focused public attention on corporate and executive misconduct.

“Society’s trust in business has certainly been shaken. And as a result some of society’s trust in business education has been shaken as well," added Nohria, the first person of Indian origin to become HBS dean in the institution’s 102-year history.

Harvard was hurt as its endowment, the world’s biggest academic fund, lost about one-third of its value in the economic crisis, dropping to $26 billion (Rs1.2 trillion today) on 30 June from a peak of $36.9 billion a year earlier. Henry Paulson, the former Goldman Sachs chairman and chief executive officer who went on to serve as US treasury secretary, is a graduate of HBS, as are former US president George W. Bush and JPMorgan Chase and Co. chairman and chief executive officer Jamie Dimon.

“This appointment of enormous importance for Harvard," Faust said. “I felt that the new dean of Harvard Business School would need to address these questions in a way that would be worthy of these very important times."

Faust spent hours talking to Harvard’s students, faculty, and alumni, as well as business leaders outside the school, who echoed Nohria’s concerns about the challenges facing business, as well as the role they hoped HBS would play in addressing them, she said in an interview.

The school’s longstanding identity and approach need adaptation to a changing era in which questions about business are arising, she said. Students are focused on ethics, Faust said.

In Congressional hearings last week, US lawmakers accused Goldman Sachs bankers of betting against investments they had sold to customers. Bernard Madoff, the New York money manager alleged to have lost around $50 billion of clients’ money in a decades-long fraud, has also concentrated public attention on corporate behaviour.

“Students are very concerned about the image of business and its place in American life and the world in general," Faust said.

Harvard has a tradition of selecting deans from within the faculty. Nohria, the Richard P. Chapman professor of business administration and a former senior associate dean and director of faculty development at the business school, is a naturalized US citizen, born in Mumbai. He is married and has two daughters.

Nohria earned his bachelor’s degree in chemical engineering from the Indian Institute of Technology, Bombay, in 1984, and his Ph.D. in management from the Massachusetts Institute of Technology Sloan School of Management, also in Cambridge, in 1988.

Business leaders are needed around the world, and Nohria’s background is crucial to helping Harvard develop them, Light said. “His perspective has always been innately global," Light said in a phone conference with reporters.

Nohria has co-written 12 books, most recently the Handbook of Leadership Theory and Practice (HBS Press, 2010), which he wrote with Rakesh Khurana, a colleague at the school.

Nohria was one of the earliest management professors to suggest that students take a professional oath of conduct. He first began thinking about it during a year of teaching at the London Business School, in 1996, he said in the interview. His sister, a physician, had taken the Hippocratic Oath, and he asked students what a similar code for managers would contain.

Nohria continued to build this question into his courses after returning to Harvard. In an October 2008 Harvard Business Review article, Nohria and Khurana said that managers had lost legitimacy during the past decade, which saw the collapse of Enron Corp. and widespread losses in technology stocks. Management needed a code of ethics, similar to those used in law and medicine, to become a true profession, Nohria and Khurana said.

“Through these codes, professional institutions forge an implicit social contract with other members of society: Trust us to control and exercise jurisdiction over this important occupational category," Nohria? and Khurana wrote.

Leadership in business is built on trust that comes from the benefits of trade, along with an expectation of ethical behaviour, Nohria said in the interview. While that leadership bond with employees and the public has been lost as business scandals and bubbles have multiplied, it can be re-established, he said.

“Throughout history, there has been this notion of the honourable business person," Nohria said. “Business people have taken pride that they can do business on a handshake. I don’t know where we lost that, and I don’t see why it isn’t recoverable. I still think business can be done with honour."

“Business students need new approaches to instruction to promote ethical behaviour and restore the financial world’s relationship with the public," he said. Nohria promised new approaches to business education that he said would complement the so-called case method, pioneered by Harvard, that has spread around the world. In case studies, students immerse themselves in facts that were faced by decisionmakers and reach their own conclusions.

“The school is experimenting with immersion programmes and small learning teams, and looking to add more instruction initiatives," Nohria said.

“What we have to do as a school is usher in what I think of as a new century of innovation, to really remake business education," Nohria said. “To restore confidence that we can continue to educate leaders with the competence and character to fulfil their positions of power and privilege."

“The business school shouldn’t rest because of the success of the case method," Nohria said. “We’re in a period of very active experimentation with other approaches that we think could have as much power and be important complements to the case method," he said. “The case method will always be part of our distinctive identity. My hope is that in the years to come we will develop another method that will be a complement to the case method that will have just as much power and be embraced just as widely."

PTI contributed to this story