Leadership with a Difference

 

Leadership with a Difference

Arfah Salleh

Professor of Human Governance

Dean of the Graduate School of Management

Universiti Putra Malaysia[1]

In contemporary wisdom, leadership has been defined as the art of delivering results for the organisation.  Effective leadership should, therefore, ensure the continued success of the organisation and enlarge shareholders’ wealth.  Such contemporary notions of leadership have imposed heavy pressures upon leaders to perform for the bottom line.  Indeed, their own remuneration is dependent on how black the bottom line is!

Such has been - and still is - the pressure upon them that some leaders have succumbed to the lust of the lucre.  They have sacrificed their values and ethics on the altar of Mammon.  That compromise has taken its just toll.  Not only has it taken these leaders to the nadir of notoriety and brink of bankruptcy, their compromise of ethics and values has also brought down with them the organisations they had helmed.  Witness the shady practices of some Wall Street CEOs.   These leaders, who knew no shame and blame, brought down not only themselves and the companies that they had built but also the global economy in the late 2000s.  The world is still smarting from their misdeeds.

 

Witness too Kenneth Lay and Jeffry Skilling of Enron, Bernie Ebbers (Worldcom), John Rigas (Adelphia) and Dennis Kozlowski (Tyco).  These CEOs were so obsessed with short-term monetary success that they all ended up in the heap of scandalous legacies.  In contrast, Walt Disney, Lee Iacocca of Chrysler and Jack Welch of General Electric, for example, assiduously built their businesses on the solid foundation of universal values or human governance.  That won them kudos the world over.  It entrenched their leadership legacy in the hallway of fame.

   

Indeed, Jack Welch has dismissed the contention that the raison d’être of a leader is to maximise shareholders’ wealth.  Rather, shareholders’ wealth is a consequence of taking action to meeting customer needs, producing quality goods and services and serving the community.  Such an approach harks back to 1942 when General Johnson developed a credo for Johnson and Johnson.  There, Johnson outlined that the company’s first priority was its customers, employees, society and the environment.  Only then come shareholders.  He contended that if the company took care of the former, shareholders’ wealth maximisation will automatically ensue.

Human governance is about leading from inside out.  Such leadership is based on core religious or spiritual values that are immanent.  Actions are matters of the heart – not the kind that are ruled by emotions!  Rather, these are actions that emanate from a clean and clear conscience that is in sync with universal values of justice, integrity, transparency and accountability – to mention a few.  The action can be an individual action or a collective action of a group of individuals in an organisation.  Abiding by the law is a hallmark of human governance.  Ethical accounting in accordance with standard accounting practices – not the ‘creative’ kind indulged by crooked CEOs – is a hallmark of human governance in an organisational context. 

However, human governance should not be likened to corporate social responsibility.  Companies can be charitable to the community in many ways to demonstrate their corporate social responsibility.  However, they might still act in ways that do not conform to the standards of human governance.

Human governance postulates that when one carries out one’s responsibility true to one’s core values, the enhancement of community welfare will be the natural outcome.   Community benefit from governing from the heart and soul can take many forms. One of the forms is the concept of ‘shared value’ that Michael Porter – the strategy guru – espouses.  Porter considers that when organisations pursue activities that offer value to both shareholders and community, they promote economic growth while reclaiming societal respect for business.  Such a pursuit of shared value can only be possible if it is founded on human governance.

Activities that offer shared value include the adoption of green technology in manufacturing.  Green technology reduces the adverse impact of production on the environment through reduced carbon emission as, for example, from recycling and the use of renewable energy.  Safeguarding the environment promotes the common good as it conduces to better health of the community.  In turn, these eco-friendly companies will earn the goodwill of the community.  The community would then be predisposed, given their increasing predilection to eco-products and services, to buying the goods and services produced by the eco-friendly firm.  This increased demand for the company products will ensure its sustainability over the long haul.  

Eastern leadership, as epitomised by the Japanese leadership model, also advances the proposition that leadership should promote the common good.  The Japanese have been castigated for being diffident about increasing shareholder returns.  They have been accused of being more socialistic than capitalistic as they have been rather lethargic in laying off workers to contain cost, lackadaisical about quarterly earnings and nonchalant about offering performance pay to senior management to induce them to boost returns on equity.

However, if we observe the best Japanese companies such as, Toyota, Honda, Mitsui and Canon, we can see that their concern is not so much maximising shareholders’ wealth as  promoting the larger welfare of society.  They take a teleological view of their existence.  They believe that their moral purpose of their operations is to benefit society.   It is community benefit that offers meaning and the raison d’être for their existence.  Core values govern their operations.  These values control executive behaviour than the pure considerations of profit and quarterly earnings that possess Western corporations.    

We have much to learn from this exemplary behaviour of top Japanese firms.  In living by core values, they showcase human governance.  (Perhaps, it was prescient of the government to institute the Look-East policy in the early 1980s!)

So, while corporate governance promotes the selfish interests of a company in merely ramping up shareholder wealth, human governance brings about a convergence of the interests of self and society.   It is in promoting the common good that we promote the self and enjoy the benefits from societal well-being.  This is the reverse of what Adam Smith postulated: that, through their self-interest, human beings activate the ‘invisible hand’ and, thereby, bring about the advancement of the common good.  

While in Adam Smith’s conception, the common good is a by-product of individualistic behaviour, human governance is systemic in approach.  It believes that all elements in the universe are interconnected.  Collectivism is all the stronger in human governance.  Given this integration, people have a fundamental duty towards others, that is, to promote the common benefit of society.  John Finnis, the Australian legal and political philosopher, also echoes a similar refrain: that right living comes from fostering the common good.

 So, while Western society puts greater emphasis on individual rights and the pursuit of individual goals – and, in the context that we are discussing, corporate profits - Eastern society, grounded in human governance, focuses greatly on societal benefit from one’s actions.

Nothing that is said here should be construed as decrying the pursuit of individual goals.  Rather, while celebrating individuality, human governance argues that individuality must be exercised for the larger good of society.  It is through such a societal investment that individuals reap their benefit.  Therefore, leaders should always have an eye for the consequences of their action upon society rather than being purely immersed in the issue how their actions can enrich both their coffers and that of their organisation. 

 

Back to where we started, we need to ask this fundamental question: Did the Wall Street CEOs, and the other errant CEOs that we mentioned at the outset, act the way they did to enrich themselves or society?

15 August 2011

Graduate School of Management

Universiti Putra Malaysia

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[1] Arfah Salleh is a professor of human governance and the Dean of the Graduate School of Management, Universiti Putra Malaysia. She can be contacted at: arfahsalleh@putra.upm.edu.my

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From Agriculture to Corporate Presence: Celebrating Malaysia’s Foremost Graduate School of Management

From Agriculture to Corporate Presence: Celebrating Malaysia’s Foremost Graduate School of Management

By

Prof. ArfahSalleh, Dean

Graduate School of Management, UPM

UPM has come a long wayfrom its humble beginning: from being an agricultural college set up in 1931 through becoming a full-fledged university in 1971 - offering an array of courses beyond the discipline of agriculture - to becoming renamed after the Malaysia’s first prime minister in 1997.  The rename from the eponymous UniversitiPertanian Malaysia to the regal Universiti Putra Malaysia marked the transition of UPM from being a venerable institution of higher learning to being a versatile institution that is at the cutting-edge of research and knowledge development for producing the requisite talent for national development.

UPM's Graduate School of Management (GSM) epitomises this strategic move towards making UPM a front-runner in science, technology and management education. Established in 1997, and restructured in 2001 as a specialist institution for post-graduate education and business management training, GSM has set its vision to become a world-class business school.As a dedicated and leading graduate school, GSM aims to mould future business leaders and build values in them through its offering of a variety of post-graduate. These include the Master of Business Administration (MBA), Master of Management (MM), Master of Science (MSc), and Doctor of Philosophy (PhD).   

Reflecting the mainstay disciplines at UPM, GSM’s MBA programme offersspecialisation in food services, environmental, agricultural and soilmanagement, food technology and entrepreneurship in biotechnology. These specialisations are in addition to the traditional specialisations in finance, maketing, human resource management, international business, corporate governance and general management. Currently, there are around 1000 post-graduate students enrolled at GSM. 

 

In addition to its academic programmes GSM also conducts for executive development programmes for the industry. 

  

Since its inception, over 4000 graduates have graced GSM’S learning hallways. They now serve society from eminent positions in government and the private sector.  GSM’sgraduates are considered a cut-above the rest, as the education they obtain at GSM grooms them to be well-rounded leaders.  Over half of its graduates are alumni members.  They continue to contribute to the advancement of GSM by serving as mentor figures to the current roster of students.  As a result, students are able to develop industry contracts from the outset of their studies and learn much about their chosen industry.

In addition to being listed as one of Asia’s ‘Best MBA Schools’ in Asiaweek magazine, GSM’s MBA programme was also consecutively ranked as the top business school in Malaysia in 2003 and 2004 by  Asia Inc. magazine.  As an added testimony of its dedication to management education excellence, GSM was ranked 7^th among the Best MBA Schools of South-East Asia for two straight years in 2003 and 2004.

The conferment of the Top Business School status by the Ministry of Higher Education further burnishes GSM’s reputation as a centre of excellence.With this awardhas come greater autonomy in itsoperations and an extra allocation of RM 13.5 million plus 25 acres of land to build a new state-of-art-school that is expected to become operational in 2012.    

Much of this accolade is attributed to GSM being in the forefront of industry-relevant research and publication.  Over its 14-year existence, GSM takes pride in publishing over 200 articles in journals of international repute. Its faculty has also authored over 20 books and over 40 case studies and book chapters. These publications have not only extended the frontiers of management knowledge but have also created an impact on government, industry and society. 

Its education philosophy

A sound education alone is insufficient for one to meet the challenges of a fast-paced global environment.  So, in keeping with the larger education philosophy of UPM, GSM seeks to impart to its students knowledge, skills and values that will equip them to handle real-life challenges.Lenin once said, “Theory without practice is pointless and practice without theory is mindless.”  Accordingly, GSM blends theory with practice in offering its courses to produce market-relevant industry leaders who will make a distinct contribution to the nation.  GSM propagates such a theory-practice blend in its teaching througha student- and problem-centred learning approach. This method requires students to apply what is taught in classrooms to resolve, or understand better, issues faced by businesses.  That way too, students develop critical thinking, managerial competency and analytical decision-making skills to enable them to succeed in their professional careers.

Ingraining a global mindset among our students is also part of GSM’s education philosophy made possible by the sizableoverseas student body (one-tenth of the total number of students) from over 50 countries. The comingling of local and international students produces a dynamic and synergistic learning environment that allows them to share and benefit from their varied experience and knowledge.

Inculcating ethical values is another mainstay of the GSM pedagogy.  Through the profound concept of human governance, students are made to realize that their long-term success and that of theorganisation they will work for are very much dependent on their positive beliefs and attitudes.  No external regulation can govern actions better for the common good than those beliefs and values within an individual.  

To promote healthy governance practices, GSM collaborates with other related institutions, especially, the Malaysian Institute of Chartered Secretaries and Administrators, in conducting the corporate governance specialisation of its MBA programme. UPM has the distinction as the only public institution of higher learning offering such a programme.  GSM’s MBA in corporate governance could not be timelier given the current backdrop of corporate governance practices taking centre stage in the economies of the world, especially after the recent global recession.  

The GSM education philosophy has been made largely possible through smaller class sizes.  It is also made possible by the wealth of knowledge and experience of a highly-professional faculty - local and overseas - with doctoral qualifications, vast teaching experiencein related fields and actual industry-work experience.

Future Direction

Over the last decade, GSM has achieved fame and momentous milestones in its journey of excellence.  Much of this triumph can be attributed to its teaching, research and professional services that are specifically tailored for the industry.

As they say, it is easier to reach the pinnacle of success than to retain it.  As such, GSM strives even harder to maintain its status as a centre of management education excellence in the Asia-Pacific region and beyond.

The commitment to promote excellence, especially, in research, is the cornerstone of GSM’s long-term success.  More particularly, GSM wants to be relevant to the industry.  It wants its research not only to extend the frontiers of knowledge but also to solve problems for the industry.  Accordingly, GSM will introduce this year (2011) the Doctorate in Business Administration (DBA).  Research under this programme will be heavily skewed to solving problems in the company from which the candidate hails. His or her graduation will partly depend on the acceptability by the company concerned of the solutions proposed.

To further strengthen its industry-relevant research function, GSM will attract faculty members who are active in research and those from the industry.GSM will also invite more companies to establish professional chairs in the faculty such as the Renong Distinguished Endowed Chair of Marketing as part of its strategy toforge greater industry linkages and collaboration.

To further pursue industry linkages and collaborations, GSM will set up an Industry Advisory Board to advise GSM on the development of its curricula so that these remain relevant to the industry.

To enhance its international reputation and to become a world-class institution, GSM became the first Malaysian graduate school to be a member of the Association to Advance Collegiate Schools of Business (AACSB).  This remarkable feat is the first step towards AACSB international accreditation, which represents the highest standard of achievement for business schools worldwide.  An internationalaccreditation will draw to GSM top faculty members worldwide while enhancing the global job prospects of its graduates.  As such, GSM is determined to obtain the coveted international accreditation.

GSM hopes that the human governance that it propagates across its programmes will catch on and become part of the curriculum across the university, so that human governance will become part of UPM’s brand and differentiate it from the rest of the institutions of higher learning in the country.  More importantly, this human governance will inculcate ethical values while reinforcing inherent morals and core spiritual principles to develop leaders who are so grounded in morality, ethics and a love for society that they will promote a 1 Malaysia that puts its citizens and the society above all else. 

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