A New Year Beckons!

A New Year Beckons!

Prof. Arfah Salleh

Dean, Graduate School of Management

UPM

Happy New Year! Despite the challenges, we did well last year.  Both the MBA and Ph.D. programmes saw a marked increase in student intake.   This has been as much due to the hard work of the faculty and staff as it is of the students who have spread the reputation of GSM   through their academic excellence. 

The quality of teaching, consulting and research has improved demonstrably.  We have brought industry experience into the classroom by opening our faculty to industry professionals.  With an energetic faculty, our efforts at greater autonomy, through the establishment of the Putra Business School, and at securing AACSB accreditation have gathered even greater momentum.  It is important that we accelerate this momentum to make these initiatives a reality this year.

I take this opportunity to express my heartfelt thanks to my faculty, staff, students, alumni, captains of industry and friends who are contributing to the development of the School as the premier business school in the country.  

Each new year comes with great expectations.  We need to maintain our status as the premier business school in the country. We need to continue to be relevant to the industry through our research and consultancy.  We want to make sure that our students understand the needs of the local industry and community as well as that of the global business. Only in that way can we maintain our relevance and purpose as a business school. 

As such, this year, the School has modified its course offerings to inject greater industry experience in classrooms.  Industry experts will be invited to expose students beyond the text books to the real world out there. 

However, such exposure will not compromise the student-based learning which will remain the mainstay of the pedagogy of this School.  Students will have to take responsibility for their learning and growth with the coaching and counsel of the faculty.

Our guiding philosophy of human governance will continue to be the bedrock of all our efforts in teaching and reaching out to the industry and community.   Indeed, human governance has been the lodestar for all that we do at the School. 

We have researched the developments in science and have discovered that, unlike classical Newtonian science that focuses on mechanics and empirical data, contemporary science elucidates the reality of consciousness. That reality parallels the doctrines of religion and Eastern traditions. And human governance mirrors these doctrines. 

We have a mission to ensure that in their learning and growth, students are imbued with the immanent and universal principles of human governance.  We seek to actualise virtues and ethical practices through human governance. 

As we embark on this journey to mainstream human governance as a way of life, and of doing business, we are encouraged to see a pattern, lately in the international scene – a pattern that lends credence to human governance.  We observe management gurus who espouse values and truth connecting with quantum physicists. Witness, for example, Peter Senge and Jaworski – two management experts – aligning their views with that of David Bohm, the quantum physicist who had this unquenchable quest for truth.  In turn, Western quantum physicists, like Bohm, have sought inspiration and insights from Eastern spiritual masters such as Krishnamurti. 

This interplay of management values, quantum physics and spiritual values mirrors the efforts of GSM in propagating, since 2007, human governance based on quantum physics, religion and native and Eastern traditions.

As we herald the new year, I exhort the faculty, staff, students and alumni to redouble our efforts at spreading this governing principle of business and everyday life beyond the classrooms to the industry and community as well.

As we celebrate the dawn of the new year, we need to profit from the experience of previous years to prepare for the journey ahead.  We call for a migration to a new MINDSIGHT where we not only just look but see.  As the old proverb goes, “There is none so blind as he who cannot see.”  And so, we call on everyone to reflect within to discover our purpose in life. May our respective faiths, encapsulated in our concept of human governance, illuminate our lives so that we may make this world a better place. 

We welcome the 2012 batch of students who will be starting their first semester this month. And I wish everyone, faculty, staff and students a good year ahead.

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Challenging existing business school paradigms

Challenging existing
business school paradigms

For a school to truly make a mark upon the broad arena of the business and management discipline, it has to maintain its relevance to the community that it is serving, cultivate the respect of not only other academics, but those in the corporate field and even your everyday Joe, as well as act as a focal point where questions pertaining to issues in business and management can be referred to in full confidence.

Hence, a business school is not merely a building where students come to study and then graduate from within a few years, but is instead a symbol of an organic ethos, a set of principles that form the backbone of both the school and its students, and permeate thinking and practices long after students have graduated and programmes have ended. In short, it shapes society at the core by nurturing future leaders through relevant curriculum as well as influencing business practices through meaningful consultancy and research work by faculties.

It is the concept of a business school that fuels Professor Arfah Salleh, dean of Universiti Putra Malaysia's Graduate School of Management, to strive for the evolution of GSM itself into an entity based on the tenets of human governance and ethical processes.

This transformation entails a holistic approach not only from the philosophical stand point but also the processes and methodology with which the school is managed, including the manner a faculty's performance is appraised, "explains Professor Arfah. "Benchmarking to the criteria of research universities may prove inappropriate since business schools do not share the same contextual teleology for existence with research universities. But many local business schools are part of the larger research universities setup and are subject to this dilemma."

Appreciating the need to provide the right signal to faculties in terms of the expectations that management has of them has made Professor Arfah resolute to resolve the matter and institutionalise it. To her, unless this impasse is addressed, GSM, like many other business schools can be trapped between aspiring to achieve prominence as a business school relevant to the community, yet having to comply with some of the requirements of research universities' criteria that are not congruent. " For instance, the focus of business schools to bridge theory and practice through having industry-experienced faculties will be difficult to materialise. While a doctorate is a beneficial tenure prerequisite for research universities, many business practitioners do not find such academic standing a must-have, "Professor Arfah points out.

"Likewise, research findings by business schools' faculties must transcend the realm of academic publications to reach the Malaysian business community too, and for that, these works must display business relevance. Evaluation criteria that give weightage to high impact journals as measured solely by academic peer references should be questioned. In addition to that, the focus of research also should be realigned to capture the needs of the country's community of business practitioners apart from advancing the theoretical aspect of the discipline."

It is with all these in mind that GSM is hopeful that a new governance structure can be set up - one that permits GSM to not only set its criteria for assessing its faculties' performance and for staff appointment but also to chart its overall direction and the manner of reaching it.

AN INDEPENDENT ENTITY
While the idea of being an independent entity within a university establishment may sound unconventional, GSM has fortunately received strong support and positive feedback from the university leadership and Senate members to move in this direction.

The vision of a business school that possesses the liberty to fully focus on providing scholars with quality education without the fumbling of impeding institutional performance indicators is what GSM is setting its sights on right now.

GSM hopes to be able to move to the next phase of governance structure in the form of a non-profit foundation governed by a board of trustees and governors," Professor Arfah elucidates on GSM's game plan. "This would allow GSM to operate as an autonomous entity in terms of direction and strategy."

Despite the intention for GSM to become an independent entity, it will still maintain its role as the sole entity for UPM to advance the business management discipline at the postgraduate level.

"We will certainly be continuing UPM's role in contributing to the country's human potential development, by nuturing human leaders to spearhead organisations from the prospective of Eastern traditions," assures Professor Arfah.

"This business school will be a realisation of the philosophies that we have been trying to push through - GSM's core of human governance and respect towards every human, no matter the position in an organisation."

LOOKING EAST
One of the misconceptions that Professor Arfah is eager to correct with the inception of GSM's new model of a business school is the low regard of eastern practices within the business field. "Currently the existing business school curriculum is drawn from a single Western-constructed worldview," maintains Professor Arfah. "Our eastern values are hardly considered in business practices, yet I believe that we should look at ourselves - our culture and our values - to rediscover the pathway to a more spiritually-based system, as opposed to the current system that ignores this in the pursuit of profit and material possessions."

Acknowledging that going against a pre-existing system is a daunting task, Professor Arfah nevertheless believes that GSM is up for the challenge with a teaching staff who is 100 per cent behind her efforts, and programmes that will introduce the new generation of students to holistic learning that includes experiential learning, human governance and a strong ethical component embedded within every subject. And in light of the never-ending list of corporate misdeeds including the more recent Olympus accounting  reporting fiasco, she has every reason to stick by her belief.

"It is important for us to maintain our relevance to the industry while slowly changing mindsets," says Professor Arfah. "We understand that change will not occur overnight." Professor Arfah knows that this change is necessary for the local business industry, and if she must forge forward as the pioneer, than it is more of a compliment rather than a burden. "We have received support from the industry players who have come to us for training programmes. It is uplifting to have the opportunity to begin spreading human governance. It is something that is exigent for our economy, and as potential students broaden their mindsets, we will stand as the business school with something fundamental to offer."

New Straits Times, | Tuesday | December 15, 2011

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The Power of Synchronicity

The Power of Synchronicity

By
Prof. Arfah Salleh
Dean, Graduate School of Management 
UPM

On June 10, 2000, the day the Millennium Bridge – a steel foot bridge for pedestrians to cross the Thames - opened, 90,000 people crossed the bridge with up to 2,000 on the bridge at any one time. To their surprise and dismay, as they crossed the bridge, these pedestrians felt a wobbly motion. After limiting access to it for a while, the authorities closed the bridge for two years to fix the wobble.

The swaying motion was diagnosed as a 'positive feedback' phenomenon, or, in engineering parlance, Synchronous Lateral Excitation. The natural swaying motion of people walking caused sideways oscillations in the bridge. When the people swayed in step in response to the wobble, they further aggravated the oscillations. And the oscillations reinforced one another to intensify their effect.

Pedestrian traffic beyond a critical mass has set off similar vibrations in other foot bridges.  The greater the number of people, the greater the intensity of the vibrations (Wikipedia on Millennium Bridge). 

The same effect that occurred at the Millenium Bridge, when a sufficient number of people walked and swayed in tandem, can also occur in the implementation of any management effort.  ‘Positive feedback’ or ‘synchronous lateral excitation’ can help understand how management principles and practices have secured wide appeal.

Malcolm Gladwell, in his book “The Tipping Point” illustrates this principle of synchronicity with good effect. He argues that once an idea or sale of a product (as was the case of Hush Puppies, an example he quotes in his book) assumes a critical mass, changes can occur or spread so quickly as though it was a social epidemic. Indeed, Gladwell draws inspiration from epidemiology (the study of epidemics) to illustrate how one child who brings a virus soon infects the whole class.  Witness for example, exhorts Gladwell, how Sesame Street – the TV show for children – ‘infected’ them with the learning habit and caused a literacy epidemic among them.  Similarly, he asks why crime fell so dramatically in New York in the mid-1990s when previously the Big Apple was riddled with a high crime rate.  The answer, he concludes, is the power of synchronicity among the critical mass of people who wanted to make New York safer. 

All it takes is one, and then a few, to get the change effort in motion. In no time, the idea catches on so quickly that the change becomes pervasive in an organisation. As Margaret Mead once said, “Never underestimate the power of a few committed people to change the world. Indeed, it is the only thing that ever has.” 

As human beings we are so conditioned to think that change can only occur slowly albeit steadily.  However, change can, and often does happen all too fast. And little changes can trigger a chain reaction leading to a transformation.

Ideas, therefore, can be contagious. It can enthuse anyone who comes into contact with it.  

Human governance is an idea born at the Graduate School of Management. It is how we govern ourselves during decision making and arriving at judgments throughout our professional and personal lives guided from the inside out. It is about living our lives by our untainted conscience.  Human governance can infect the local business world and beyond if we – students and faculty at the Graduate School of Management and others convicted of its philosophy - live by it and spread it by word of mouth and deed. 

If we can combine our thoughts and actions around human governance what great impact we can make to our world by the synchronicity of our thoughts and actions. We can start an epidemic of our own.  We can infect the world where human governance fortifies the spiritual beliefs of individuals to make this world a better place and where businesses focus on the triple bottom-line – profit, planet and people. 

To start that epidemic, it only requires a little effort from all of us.  If we could spread the principles of human governance and the impact that human governance can make in our professional and personal lives by word of mouth, or through print, and walk the talk, we can be sure that the message of human governance will spread like wild fire. And, as the message gathers momentum, and the critical mass or the tipping point or the boiling point is reached,  human governance would touch as many as would care to reflect on its principles and consider them worthy of emulation. We would then have moved the world with just that little effort on everyone’s part. Shall we?

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Moving towards a full-fledged business school

Moving towards
a full-fledged business school

Like a caterpillar preparing to emerge into the world as a radiant butterfly, Universiti Putra Malaysia’s Graduate School of Management is preparing to commence its transformation into an entity that not only propagates but also actualises human governance on the education and industry stage. The need to fulfill a niche in the world of business education has created emergent qualities within GSM under the direction of Professor Arfah Salleh, the dean. “We hope to run our business school as a not-for-proit foundation,” reveals Professor Arfah. “We intend for this foundation to have autonomy within UPM, similar to the Harvard Business School that exists within its own grounds and serves its own student community directly while still operating under the Harvard University banner.”

The idea for a business school unfettered by the direction and other strategic issues that are meant for the university as a whole, allowing it to focus primarily on its object — the provision of world quality business education steeped in ethics and spiritual principles objective is a worthy one, and one that Professsor Arfah hopes to pursue with the re-creation of GSM.

“We will still be the provider for postgraduate business education in UPM,” Professor Arfah assures. “But this transformation will allow us to do away with several restrictions that have been constraints on performance. Our directors, both university academics and industry players, have provided us with well rounded input for the creation of the ideal business school.”

Ongoing plans

“What this business school will be is an actualisation of our philosophies — the focus on human governance and treating people as human beings rather than resources,” emphasises Professor Arfah. “We are fully dedicated to giving our best to this endeavour, and we realise that charting new territories in

Malaysian business education will not be a simple task.”

As the dean, Professor Arfah has faced several challenges in implementing a holistic and ethical idea of business education. Nevertheless, she has overcome many of them, as her team is completely behind her in reaching out to students with this concept. At first, the dean says, they felt alone with their ideas. “ But eventually we earned respect and now we have supporters in companies like TNB and UEM, whilst also preparing to sign MOUs with other companies who have recognised the value of what we have to offer,” maintains Professor Arfah. Corporations have approached GSM to carry out executive development programmes and leadership training based on their principles, giving it a chance to make its presence felt in the industry. “Changing mindsets to favour human governance over corporate governance will not occur overnight,” Professor Arfah concedes. “But over the years, we hope to be able to train and educate enough managers and executives to effect a positive change. We hope the time will come when business leaders realise that with human governance, corporate governance will ensue.” The current curriculum is also being looked into, to ensure that it best serves the principles that Professor Arfah wishes to impart to postgraduate students. Even the MBA and DBA will be reviewed and streamlined for better effectiveness. What is most important for a business school, especially one that provides postgraduate education, is to remain relevant to the business community that it serves. This aspect is not about divorcing the school wholly from academia, but instead about retuning the focus of the school. Professor Arfah intends for the school to be closely linked to the industry, establishing itself as trusted and competent in providing what the corporations need. The programmes offered are to be constantly evolving with the times, and reviewed regularly for relevance.

A novel approach

“Subscribing to the principle of human governance also means that GSM needs to ensure that what is being taught in the programmes is useful to the graduates when they leave for the work place. And for that, we want corporations to tell us what they want, defne it down to the very core of what they need,” says Professor Arfah. “There would be the technical skills, which would work together with human governance — the ethics and leadership in humans. We intend to work the core human skills and the technical skills in tandem.” Core skills are what is currently known as soft skills, communication and the like, which is unusual because these skills are core to the individual human rather than as over-and above soft additions. It is these skills that are the driving force behind any business in linking the human relationships to keep the company a float and enable people to use their technical skills effectively. Qualities such as accountability, leadership, ethical principles and communication skills all form the core of a good business practitioner. These qualities are ones that Professor Arfah hopes will be integrated into students of the business school. One day, she says, they hope businesses no longer need CSR, because by then leaders would understand that it is not about taking too much and then attempting to compensate, but taking only what you need in the first place and being conscious of the need to look after the wellbeing of human throughout the business’ life-cycle rather than only after making profit.

Realising the principles of human governance

The school is not intended to be governed based solely on the criteria for achieving high rank amongst universities in terms of research output and number of publications. Rather, the wholesome aspect of the school and its dedication to its principles is expected to cultivate a reputation within the industry, where most of the students will originate from. “There will always be a place for research, because we need the findings to evolve,” Professor Arfah accurately points out. “For us, there has to be a synergy between research that is used for solving problems and the relevance that it has to the industry.” Professor Arfah is not alone in her method of thinking. Recently a couple of international academic institutions and consultants had exchanged communication with GSM discussing aspects of human governance and industrial relevance as the mainstays of a competent business school. “Right now we are imploring people in the industry, Look, we are here, and we want to be relevant,” Professor Arfah says. “It is up to them to accept our offer. If they do not open the door, then Malaysia will be as it is now, with a wall separating the academia and the corporate world. The industry calls in consultants to fix immediate problems, but what we are offering is the potential for long-term solutions through training and research capabilities. What we want in the end is for the culture of human governance to be alive in organisations.” And as manifestation of that desire, GSM has recently signed an MoU with MAICSA to reinforce their current cooperation in championing good governance practices among Malaysia’s corporate professionals. According to Professor Arfah, with human governance made the underpinning philosophy, the unique proposition of the GSM Corporate Governance MBA is that the programme helps develop a more teleological and holistic mind-set of students as future cosecs. Through this collaboration, the graduates will be automatically eligible to be admitted as Graduates MAICSA, paving the way forward for them to become Associate and Fellow members of MAICSA.

New Straits Times, | Saturday | October 15, 2011

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Human Governance: To thy own self be true…

Human Governance: To thy own self be true…

Prof. Arfah Salleh

Dean, Graduate School of Management

UPM

In his play “Hamlet”, as in his other plays, Shakespeare interjects his wise pronouncements on living a proper life. "To thine own self be true" is one of his kernels of wisdom.  It comes from the character in “Hamlet” – Polonius. It is Polonius's last advice to his son Laertes, as he prepares the latter for life abroad in Paris.  Polonius’s full exhortation is:

This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.

As Shakespeare - through the character of Polonius - sees it, being true to one’s conscience and not indulging in dubious and other intemperate practices such as ‘cooking the books’ and cheating (in the context of business)  are  "false" to the self.  By "true" Shakespeare means "loyal to your own conscience and spiritual values." Be honest and safeguard your integrity first, he warns, and that way, we shall be in a position to safeguard the interests others.

There is wisdom in Polonius’s advice.  That wisdom also is reflected in the concept of human governance that this School nurtures among its students and industry.  Human governance is about leading from the inside out.  It requires one to be true to one’s upbringing and spiritual values. Only then can we be in a position to have the locus to influence the lives of others and cause them no harm.  This is all about walking the talk and leadership by example. 

Integrity is everything. As a former US senator, Alan Simpson once said, “If you have integrity, nothing else matters; if you don’t have integrity nothing else matters.” Integrity is sacrosanct. It is very much a part of human governance as it is being true to oneself.  Integrity is about doing things right even when no one is watching.

That reminds me of a friend who lately knocked his car into someone else’s car – an Alphard. While seeking to maneouver his car into a parking lot, he had knocked the car parked adjacent. He would not have knocked it if he had not been in a hurry to park. As always considerate of others, he wanted to park quickly after the car that was parked there, was vacating the lot so that he would not hold up the traffic behind him; which he would if he had taken his time to carefully park.

And so, the unfortunate thing happened. He had knocked the back bumper of the car parked adjacent. What would he do now? What would we do in such a spot? The car owner was not there to witness the accident. They were a few who came out of the shops along the road upon hearing the thud from the knock on the bumper. But they quickly lost interest and went back to doing whatever they were doing.  They did not want to get involved.

This friend of mine is a God-fearing man who is ever conscious of God watching our every thought, word and action (not from a distance as one song would have us believe).   He did the decent thing that one who is ruled by human governance would do. He left a note under the wiper of the car with his name and mobile number for the car owner to call him. And he settled the matter with the car owner subsequently. What he did was true to his conscience: to thy own self be true and, it must follow as night the day, thou canst not be false to any man. 

Human governance reflects that principle as it exhorts us to live true to our conscience and spiritual beliefs, even when no one is watching us. Of course, God is watching us.  And God’s retribution can sometimes be swift.    

There is a Malay saying: Apa yang ditanam itulah yang dituai; apa yang disemai itulah yang dipetik.  The English equivalent will be: What you sow is what you will reap.  If you sow goodness, goodness will come back to you in good measure, pressed down and well shaken, and flowing over!  Likewise, evil recoils unto the evil doer. For, with the same measure that we mete out to others, by that same measure will it be meted out to us again.

So, in our professional lives, as in our personal lives, let us sow the seeds of good governance so that we shall be true to ourselves and shall not do harm to others.

19^th October 2011

GSM-UPM

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The Mind of the Future

 

The Mind of the Future

Arfah Salleh

Professor of Human Governance

Dean of the Graduate School of Management

Universiti Putra Malaysia

Howard Gardner in his book “Five Minds of the Future” (Harvard Business School Press, 2006) talks of the five minds that are essential for anyone to measure up to what is expected of him or her, as well as to deal with what cannot be anticipated.  Without these minds, Gardner considers a person would be at the mercy of forces that he or she could not understand, let alone control.  “Our survival as a planet,” he writes, “may depend on the cultivation of this pentad of mental dispositions.”

His list of the five minds of the future is an important one to help us face the issues of the day.  And, I consider that the fifth mind – the ethical mind – is indispensible for a leader, in a world where leaders have succumbed to the pursuit of the bottom-line regardless of its impact on man, society and the environment.

The five minds Gardner believes that we need are:

1.      The disciplined mind is schooled in subjects such as history, science and arts. Notwithstanding, rather than being a jack of all trades, it is crucial to become an expert at one profession to become a productive worker in society or master a scholarly disciple.  Disciplines such as science, management, economics or law provide a decent livelihood for those who have mastered them. They provide a frame wherein which thinking is done. The problem arises when you only use your disciplined mind to think about the whole world. Gardner gives an example of a lawyer using his legal discipline and legal arguments in situations involving the family, classroom, basketball court, boardroom or even the bedroom!

2.      The synthesising mind collects and puts together information from varied sources. It melds all the information collected to solve a problem.  Without synthesising capabilities, an individual would be overwhelmed by the sheer volume of information that he or she would be unable to make the right decisions. We desperately need this kind of mind especially when there is so much information available today.  Indeed, Gardner considers this mind to be the most important mind for the 21^st century.  

3.      The creating mind generates new ideas. It asks questions to arrive at new solutions for a problem.  The synthesis of the disparate information done by the mind informs the creating mind in generating these new answers.  The creating mind goes beyond what is known. Its ‘out of the box’ thinking is one step ahead of the ‘in the box’ thinking of computers. This mind focuses on new questions, new methods, new combinations of information.  The creating mind’s ability to think beyond rules enables it offer fresh ideas and insights. Like Thomas Elva Edison who invented the light bulb after 9,999 attempts or Einstein’s questioning that resulted in the development of the theory of relativity, the creating mind is never satisfied. It does not quit until an answer is obtained. 

The future beckons for people who can do things that machines cannot yet do. Individuals without creating capacities stand at risk of being replaced by computers. So, the capacity to ask a good question, rather than getting the right answer from a machine, is of greater premium.

4.      The respectful mind honours diversity. It celebrates differences among people. It tries to understand others so that it can work effectively with them.  The response to differences is, at the very minimum, tolerance. Respect is the ultimate response. People can tell quickly if they are in an organisation in which genuine respect is practised. 

Don Juan once said, “No man is an island.” Man is a gregarious being. As a social creature, he or she has to interact daily with those who come into his or her life.  As such, to live peaceably with one another, this mind is essential.   As they say, we give respect to take respect and that respect must be earned, not demanded. We earn this respect by treating others with the same measure of respect that we want others to accord us.  Individuals without respect will not be worthy of respect by others and this would make the workplace intolerable.

5.      The ethical mind thinks about justice: distributive justice in the distribution of wealth and rewards according to one’s just desert.  It goes beyond self-interest and seeks to improve the interest of all.  It is about procedural justice which offers a level playing field for all to be heard and fair procedures in place in the allocation of distributive justice

Of these five minds, what resonates the most in me is the ethical mind and its close companion - the respecting mind. The ethical mind is so in tune with the philosophy of human governance that the Graduate School advocates as the cornerstone for nurturing leaders. Ethics and morality, the components of human governance, are particularly at a premium in the world today. It would be even more so in the future as leaders face complex issues that impinge on the legality and ethics of their courses of action.  Individuals without ethics would result in a world without decent workers and responsible citizens.  Surely, none of us would want to live in such a wretched world!

Human governance - as is the ethical mind - is about good work ethics. It is about going the extra mile even though we do not have an accountability to do so; only comforted in the belief that God is watching us.  The ethical mind better serves the individual through the inculcation of ethics, integrity and universal core values that govern human behaviour.  With the proper mindset and behaviour that are underpinned by core human values many of the mismanagement that takes place in businesses today can be averted. 

Human leaders, like the ethical mind, are critical to inspiring and energizing others.  It is about leading from the inside out.  Such leadership is based on core religious or spiritual values that are universal.  Human leaders are those who lead and facilitate problem-solving in such manner that opportunities and solutions emerge quickly thereafter or are quickly seized upon emergence.  Human leaders make things happen. Human leaders are equally important in growing other leaders with the same mindset and philosophy. It is akin developing a leadership brand founded upon the philosophy of human governance.     

Human governance is about ethics in action.  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.  Abiding by the law is another hallmark of human governance.  Ethical accounting in accordance with standard accounting practices – not the ‘creative’ kind indulged by crooked CEOs – is a characteristic of human governance as it is a manifestation of Gardner’s ethical mind. 

Disciplines, syntheses and creativity can be put to all kinds of ends, including wicked ones.  However, such perversions are much less likely if we had also cultivated a sense of respect and an ethical orientation in all that we do. 

According to Gardner, ethics involves an additional step of abstraction. The ethical mind works in a more abstract way, contemplating how it can contribute to improving society.  Human governance too is about working for the common good of society. In the context of business, it is about promoting sustainable businesses that do not harm the environment while not forgetting the long-term success of the business. Apart from the immediate concerns of profit maximization and increasing shareholder wealth, the true purpose of business is to promote the welfare of society – a cornerstone of human governance.  The ethical mind for businesses therefore is that they foster the common good and promote shared value where both the business and society benefit from business operations.    Financial considerations must not override the principles of human governance. 

We need to fashion an education that will produce individuals who are disciplined, able to synthesise, are creative, respectful and, more importantly, behave ethically according to the dictates of human governance.

The Graduate School of Management dedicates itself to making a contribution in this regard.

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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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