Preface
This book connects the topics of leadership, corporate social responsibility and business ethics/management ethics with the human centered paradigm. While there are many studies on how leadership, social responsibility and ethics impact corporate performance, the impact of leadership on people and society and the reciprocities therein have not been researched as thoroughly. The book aims to bridge this gap. It intends to answer questions about what motivates moral behavior, whether morality can be embedded in rules of the markets, how people-to-people relations are governed by leadership within and beyond organizational boundaries, how business ethics influence business processes, stakeholder relations and how knowledge is built and managed.
The author has chosen the term “management ethics” to be part of the book title and not “business ethics.” For one, the book is about “human centered” management, which connects to how people deal with each other and thus focuses on the issue of relations between persons, and second, it is not just businesses that need to be managed responsibly but other institutions as well. “Management ethics” occurs in the title of a book by Norman E. Bowie and Patricia H. Werhane (Bowie and Werhane 2004), and the book articulately emphasizes the unique ethical obligations that guide manager-level decision-making. Bowie has been an important voice in the ongoing debates over ethics in business, and even though the last title written by him reverts to “business ethics” (Bowie 2013), his reasoning is that a manager’s moral imagination anywhere should be stimulated beyond mere compliance. An alternative denomination would be “managerial ethics.” This term has as well been used for book titles, in particular for highlighting that ethics in business should be related to what has been called the psychology of morality, that is, the intrinsic personal reasoning that drives decision-making (see, e.g., Schminke 2010).
This book is carefully selecting a content that should attract the interest of executives at all levels in corporations and other institutions, of policymakers, and of people who design and organize executive education. They will greatly benefit from the insights offered by this book. The book will be useful to both an academic and a practitioner audience. It will help the practitioner to understand the philosophical foundation of ethics and morality. It is the opinion of the author, who has a business background of 30 years and then took up teaching 17 years ago, that management education very often leaves philosophical groundwork out of the curriculum. In addition, leaders in office rarely have the time to dig into the journals or papers that provide insights into this groundwork. The author believes that his book can fill the void. He also believes that managers who wish to deepen their conception of ethics will accept that they need to delve deeper into its philosophical foundation, because otherwise their knowledge on the subject will remain superficial and their actions will lack a proper underpinning.
The conception and the outline of the book are governed by the following ideas:
There may be organizational and philosophical differences in how institutions regard governance and ethics, but it is imperative for their managers to develop moral behavior that focuses on people inside and outside their organizations. Being pragmatic in management practices and decision-making, especially in light of the ongoing challenges in highly interconnected markets, is definitely compatible with social responsibility. There is no real dilemma of weighing ethics against effectiveness – on an individual or a communal level – because the criteria for decision-making are always contributed through interaction. For the practitioner, this explains why good ethics means good governance. It also means good cost control through minimizing risks, avoiding fines, court-imposed remedies and criminal charges, reducing operational costs by properly handling environmental and workplace issues, avoiding loss of business, and enjoying greater access to capital. Management ethics is the challenge of ensuring that the enormous entrepreneurial energies released by today’s free-market global economy end up by conserving society and not destroying it. This will only happen if people, not profits or share price or greed and selfishness, are at the heart of reasoning.
The author wishes to add a personal note on why he chose “human centered”/ “management ethics” and how this relates to what he experienced in 30 years of business life. Lessons on ethical leadership and humanistic management come from a large variety of sources, of which personal experience has the strongest effect. For a young manager, when leaders are examples of ethical behavior, the lessons are strong. In the author’s case, he was privileged to work in BASF, the German chemical multinational, for 30 years since 1970. He could then recognize the value of good leadership as a matter of fact. Early on in his career, he and his colleagues looked up at the CEO and the chairman as true mentors with a leadership spirit that encompassed charisma, participatory management, and exemplary behavior. Later on, the young managers developed a more critical view on the successors of those “giants.” But if it was not the same level of admiration, it was yet sincere respect.
By the time when the group of young colleagues were also becoming leaders, concern for people had to get into their focus. The author became an executive with leading responsibilities at an early age, when he had to supervise 180 persons in BASF’s subsidiary in Argentina. He then recalled Geert Hofstede, the first Dutch scholar who identified the differences in leadership among national cultures (Hofstede 1980). Hofstede clustered Argentina in a cohort of countries where Individualism, Power Distance, and Masculinity dimensions rank high. So, participatory management, collective decision-making, and caring for others (associated with “Femininity” by Hofstede) were highly uncommon. But the type of inclusive management practiced by the author worked quite well in this environment. This was a learning experience in effective leadership, the theory of which would now be called transformative and transactional.
After retiring from BASF, the author took up a teaching track. Then he realized that what he taught to his students was inspired from experiences he had gained in his business management career. One peak event in the author’s business of management training was a symposium on Peter F. Drucker’s 100th birthday. The event was held in Vienna, Drucker’s hometown, and the author’s as well, where he was invited to do a presentation. For this, he and his co-author delved deep into Drucker’s thoughts on ethics (Bardy and Rubens 2010) and realized that what they saw in Drucker’s writings has been standing practice in BASF all the time.
Another experience has added value to the author’s perception of what is ethics and how to teach it. A former CEO of BASF invited him to join the Wittenberg Center for Global Ethics, an American-German alliance founded, among others, by Andrew Young, a veteran civil leader, former US Ambassador to the United Nations, and Mayor of Atlanta; and Hans-Dietrich Genscher, Germany’s longest-serving foreign secretary (www.wcge.org). The Wittenberg Center pursues a philosophy that links ethics, entrepreneurship and economic principles under the conception that morality in the economic system offers the necessary conditions for business to operate freely and to the benefit of all who are in that system. For this to be attained, the Wittenberg Center postulates that rules be in place which define modes of action that are permitted in conducting business, and these rules require moral criteria and a system of incentives. Then any firm in this economic system can act and move within these rules, setting strategies for business performance and business goals. A complement to this is to assume that those who follow the rules are rewarded by the market forces and those who break them are punished. This “system-justifying assumption” has begun to become accepted, at least, by business school students (Jost et al. 2003). The Wittenberg Center hopes that this will shape future managers’ cognition and behavior.
One last personal note: the author has joined a working group of UN-PRME (the United Nations Principles for Responsible Management Education initiative), whereby he expects that he can contribute insights from his business and teaching experience. With more than 332 signatories, the PRME is probably the most solid initiative to inspire responsible business education globally. But, even though PRME has been around for 11 years as of 2018, some of the very renowned academic associations on business ethics, like the Society for Business Ethics (www.sbeonline.org), founded in 1980, have yet to get fully involved with this practitioner organization. This may be an indication of the ongoing need for amalgamating theoretical and practical viewpoints on the theme. This book intends to be a part of that effort.