Stanford Confidential: Sex, Lies And Loathing At The World’s No. 1 B-School


Etchemendy says he had surveyed staff in November 2013 before deciding to give Saloner another term, and found only two faculty members beside Phills who expressed unfavorable views on Saloner. “One was pretty negative and, and one said it was time to move on,” Etchemendy says in the deposition. After receiving the letter, Etchemendy met with representatives from the 46 signatories, he says. However, during Etchemendy’s deposition, a lawyer for Saloner and Stanford prevented him from answering any questions about what Etchemendy had discussed with the signatories’ representatives beyond Phills, and Etchemendy said they hadn’t talked about Phills. Etchemendy says in his deposition that he shared the letter with Stanford president John Hennessy, but the lawyer stopped Etchemendy from answering when Etchemendy was asked if Hennessy gave any instructions or guidance in the matter.


Stanford administration “took a number of steps” in response to the “Group of 46” letter, including inviting members of the group “to submit fuller details of their individual situations and experiences,” says Stanford spokesman Brad Hayward. “The University then initiated an outside review of those cases. The review did not find age or gender discrimination.” The issues raised in the letter “arose largely out of a restructuring of the GSB’s centers,” Hayward says. “The review did identify some areas where the school could make improvements, and those findings were communicated back to the school, which has been following up on them.”

Asked whether he had followed up on allegations that Saloner exercised bad judgment, Etchemendy said, “This is an allegation of poor judgment because he has entered into a relationship with a faculty member who is separated from her husband, and I think that that’s, that’s their, their judgment . . . What would there be to investigate?”

Stanford President Hennessy announced June 11 that he’ll step down in the summer of 2016. In his announcement, he also gave notice of Provost Etchemendy’s departure. “To ensure a smooth transition to new leadership, the provost has graciously agreed to stay on for up to one year with my successor, but he will not be a candidate for the position of president,” Hennessy said.


Gruenfeld and Phills declined interviews for this article. Saloner lawyer Michael Lucey said his client could not be interviewed because of the litigation.  Hayward says allegations in Phills’ lawsuit “inaccurately and unfairly characterize the actions of people at Stanford and are without merit.

“Under the dean’s leadership, the Graduate School of Business continues to perform at exceptionally high levels, drawing extraordinary faculty from around the globe, generating excellent support from its alumni, and providing an unparalleled academic experience for its students,” Hayward says. 

A press release from the university says: “Saloner has also focused on programs to expand diversity at the GSB. Women comprise 42% of the new MBA class entering this fall. Women make up 54% of the new faculty members hired in the past two years. Four of the five GSB volunteer boards are led by women and 30% or more of their members are women.”


Before he was named dean, Saloner had become instrumental to the ascendancy of the GSB led by his predecessor, Robert Joss. In 2006, Joss netted what was at the time the largest gift ever made to a business school, $105 million from Nike founder and 1962 Stanford MBA Phil Knight. Almost the whole donation, $100 million, went toward construction of a new $350 million GSB campus, the Knight Management Center.  Joss initiated the creation of a new MBA core curriculum, and Saloner led the faculty team tasked with developing it. Launched in 2007, the new core included classes at multiple levels to account for students’ differing backgrounds; increased leadership content; and imposition of a global-experience requirement. At the time, Pfeffer, the GSB professor and an outspoken critic of management education, called the new curriculum “a complete restructuring of the educational process” and “the most important thing that has happened at Stanford in my 27 years.” After Saloner was named dean in 2009, Leo Linbeck, a ’94 GSB MBA who served on the curriculum committee, described Saloner’s work on the curriculum transformation as “a classic example of great organizational leadership.”

However, by the time Saloner became dean, students were complaining that new curriculum’s percentage of required courses, increased to add rigor, took away flexibility. The school cut the required courses from 65% of the curriculum to less than 45%. One faculty member, who did not want to be named, said, “Garth came in and really tried to change the culture and when the students pushed back, he caved.”

Saloner has also been a rainmaker to be reckoned with: Under his leadership, the school in 2011 brought in a donation eclipsing Knight’s when 1960 Stanford MBA Robert King and his wife Dorothy gave $150 million for the Stanford Institute for Innovation in Developing Economies. Since Saloner became dean, the business school has raised more than $500 million in “private support,” according to the university. Over the past five years, Saloner has been reporting to faculty that the GSB wins 75% to 80% of candidates admitted there and at Harvard Business School.

That’s an impressive statistic that speaks to Stanford’s place in the B-school universe and, by extension, Silicon Valley, Wall Street and Corporate America. Whether the GSB’s image will be permanently sullied by an unseemly affair and internal rancor remains to be seen, but perhaps there is a lesson here for the powerful-in-training.

In her GSB profile, Gruenfeld, a social psychologist whose research focuses on the psychology of power, suggests that “when power corrupts, it can be without conscious awareness.” Power, she says, erodes concern for the social consequences of one’s actions and strengthens the connection between “personal desires and the acts that satisfy them.”


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