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of Business Sir Adrian Cadbury has never opted for the glitzy notoriety that ensnares many of today's high-profile busi- ness personalities, but his celebrity and achievements in the busi- ness world are indisputable. For 24 years he was chairman of Cadbury Schweppes PLC, the world's third-largest soft drinks company and the fourth-largest supplier of confectionery. He retired in 1989 and is now Chancellor at Aston University in Birmingham, England. One of Cadbury's most important enduring commercial con- tributions may lie in his steadfast efforts to improve the way busi- nesses are directed and controlled. Through his pioneering work on the Cadbury Code, the first in-depth statement on corporate governance and a model for sound practice worldwide, Cadbury has helped to spark reforms around the globe. Numerous financial markets have established their own codes those at Enron and WorldCom have made even the most uninformed layperson aware of the dangers of lax gov- ernance, they also have occasioned discussions about the prac- tices that sustain an organization. Cadbury spoke to BizEd about the current state of corporate governance and the role manage- ment educators can play. of best practice based on the Cadbury Code's 1992 recom- mendations. Cadbury also helped the Organisation for Economic Co-Operation and Development forge its own gover- nance principles while he was a member of OECD's Corporate Sector Advisory Group on Corporate Governance. While highly publicized financial scandals like You've traveled to more than 27 countries to discuss and promote sound governance. How is corporate governance evolving globally? We're beginning to see some real convergence of governance practice—not necessarily structure, which involves issues such as whether you have a one- or two-tier board—but of practice, meaning the actual processes and standards of governance. Two main forces are bringing about convergence. On the Are management students being educated in corpo- rate governance principles? Yes, I think they are, although I think governance education primarily comes in at the MBA level. Certainly that's the case here in the United Kingdom. What is the role of business schools in ensuring that students learn how org anizations appropriately gov- ern themselves? I think the important part is not to get bogged down with the details of corporate governance. It's really the basic issues that one needs to get across. For example, I would expect students at both the under- by Christy Chapman graduate and MBA levels to be getting their minds around two concepts. The first involves the relationship between the gov- erning body of an institution and its executive management. Any college, school, or church students have attended, as well as any not-for-profit organizations they may have encoun- tered, have all had some kind of governance body responsible for directing the organization, as well as a man- agement group that actually carried out opera- tions. Rather than discussing how boards of directors should be made up, what checks and balances there should be, and other such details, business schools should help students understand the difference between the basic organi- zational roles of directing and managing. I would also emphasize the concept of accountability. Knowing to whom organizations are accountable and why accountability is important seem to me to be absolutely fun- damental governance issues. one hand, we have the big institutional investors like CalPERS and TIAA-CREF. These groups have their own principles and their own governance codes, and they provide those to the companies in which they invest. If an organiza- tion wants investment by the biggest institutions, then it needs to come in line on governance standards. The second force is the capital markets of the world. If a business wants to borrow money at the best possible rate, it must meet the disciplines that the capital market imposes on financial reporting, on financial controls, and so on. So I think convergence is happening, and I think it is being brought about by those two forces, investors and capital markets. What about teaching students the appropriate way to manage so that corporate governance is ensured? For example, Enron whistleblower Sherron Watkins testi- fied that the culture at her company "led good people astray." What is the responsibility of educators to teach students to manage in a way that helps people do the right things? If we're not careful, we in management education can fall into a trap by teaching things in compartments. Saying in essence, "This is a finance problem, while this is a marketing prob- lem." Sort of putting everything in a nice, tidy little box and looking at it as a separate function of the business. The point is that the human side of a business cuts right across all those separate functions. Of course, we need to teach the basic functions of marketing and finance and pro- duction and so on; but we must also be sure to cover the human element of each of those. The questions about how BizEd SEPTEMBER/OCTOBER 2002 21