Toward More Human Management
IESE'S 15th INTERNATIONAL SYMPOSIUM ON ETHICS

Companies can be people-oriented and profitable at the same time. Humanism and profits are not at odds. In fact, a holistic approach to people management helps organizations run smoothly and profitably. That was the message from the "15th International Symposium on Ethics, Business and Society" held at IESE’s Barcelona campus in May.

“A business cannot be considered only as a ‘society of capital goods’; it is also a ‘society of persons,’” said Mons. Javier Echevarría, Chancellor of the University of Navarra, quoting Pope John Paul II, in his inaugural speech (see page 10).

Consequently, Mons. Echevarría asked business leaders “to structure companies that respect and support people’s dignity and human rights.” The event's theme  was “Business and Management: Toward More Human Models and Practices.”

For Mons. Echevarría, companies have “a real, ethical obligation” to promote more human models that are in no way opposed to production efficiency. “Quite the contrary,” he said. “Many scholars assert that showing concern for people and their integral development is the key to the proper functioning of a company.”

Bottom-line benefits of humanism

Prof. Jeffrey Pfeffer of the Graduate School of Business at Stanford University agreed. The professor of organizational behavior highlighted the wealth of research supporting the positive correlation between humanism in business and profitability. For example, staff turnover drops when employees feel valued; a pool of talent builds up which ensures succession; workers choose to work harder without being forced; and monitoring costs drop due to increased trust.

“We’re all clear on the fact that profitability means making money, but what does it mean for a company to be human?” Prof. Pfeffer asked.  The Stanford professor said that a human organization provides opportunities for its staff to grow and express their feelings; it draws on ethical and social values and contributes to people’s growth.

The role of management education

For a company to have a humanistic focus, its managers must share these values, which should be enshrined in the firm’s mission statement. The study of ethics and humanism in management education plays a decisive role.

W. Michael Hoffmann, director of the Center for Business Ethics at Bentley College, reported that a survey by Bentley found that in a quarter of the top business schools, ethics is a mandatory class in their MBA programs, compared to just 5 percent two decades ago.

The report revealed that 39 percent of the schools had at least one research center related to ethics; 52 percent had a CSR institute; and 55 percent had a research center dedicated to sustainability. The majority of MBA programs require students to study one or more of these subjects.

An integrated approach

IESE Prof. Antonio Argandoña, holder of the “la Caixa” chair of corporate social responsibility and corporate governance, underlined management education’s role in promoting more humanistic models in business.

“Business schools should be able to influence new management paradigms,” he claimed. The profit-focused paradigm puts the company’s value as its number-one objective. This approach is not humanistic, he said, because its view of the employee’s worth is very limited. How then can an organization be humanized?

Prof. Argandoña proposed substituting the standard profit-focused model with a humanistic model: one that encompasses “a broad vision comprising financial and psychological factors.”

For Prof. Argandoña, this is why professors teaching ethics in business schools should work together with colleagues in other disciplines. Ethics should form an integral part of this model. “It cannot be an add-on,” he said.