The Biggest B-School Scandal Stories Of 2017

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. Learn more about MBA rankings criticism

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.

Questions about this article? Email us or leave a comment below.