Management and good work
Benito Teehankee and Yolanda Sevilla
Introduction
What conditions at work would be considered just and good for human beings? What
working conditions would enable people to develop themselves properly as befits their nature as
human beings? What is the role of business leaders in designing organizations and instituting
management practices which bring such conditions about? What is the role of business schools
and management theory in addressing the call for just working conditions? These are important
questions for business education in general. They are even more important for Catholic business
schools, especially in today’s economic realities where poverty and profound inequalities exist
even when substantial amounts of wealth are being generated for a minority of the members of
societies. During the recent Davos conference, Pope Francis presented this challenge to the
assembled business leaders:
…the successes which have been achieved, even if they have reduced poverty for a great
number of people, often have led to a widespread social exclusion. Indeed, the majority
of the men and women of our time still continue to experience daily insecurity, often with
dramatic consequences. …Those working in these sectors have a precise responsibility
towards others, particularly those who are most frail, weak and vulnerable. It is
intolerable that thousands of people continue to die every day from hunger, even though
substantial quantities of food are available, and often simply wasted. … Without
ignoring, naturally, the specific scientific and professional requirements of every context,
I ask you to ensure that humanity is served by wealth and not ruled by it. (Vatican Radio,
2014)
In light of the Pope’s challenge, this paper addresses the questions posed above and aims
to:
1. Explain the normative basis for good work based on Catholic Social Thought and its
notions of human development,
2. Review relevant literature on management and related social sciences on organizing and
managerial practices which hinder and facilitate human development at work,
3. Draw implications for Catholic business education and management theory, and
4. Present the case experience and reflections of one of the authors (Sevilla), a practicing
manager and head of a Philippine firm, on how she endeavours to manage her firm based
on CST, and
Work and integral human development: The perspective of Catholic Social Thought
In the encyclical Centesimus Annus, Pope John Paul II asserted a core argument of
Catholic Social Thought (CST) with respect to the business organization: “the purpose of a
business firm is not simply to make a profit, but is to be found in its very existence as a
community of persons who in various ways are endeavouring to satisfy their basic needs, and
who form a particular group at the service of the whole of society” (John Paul II, 1991). While
the need for a firm to provide some value to society is immediately recognizable as a business
goal even in mainstream management literature, the assertion that such firms must also build
community and meet the basic needs of its human members is less obvious and comprise a
characteristic component of the Catholic vision for the firm.
With respect to poverty, on the other hand, traditional concern regarding the role of
business organizations has revolved around the importance of providing for people’s material
goods. The vision of Catholic Social Thought (CST) for the satisfaction of human needs is much
broader, however. In Mater et Magistra, Pope John XXIII argued that:
Justice is to be observed not only in the distribution of wealth, but also in regard to the
conditions in which men are engaged in producing this wealth. Every man has, of his
very nature, a need to express himself in his work and thereby to perfect his own being
(82).
Thus, those who manage business organizations need to be alert that persons may be
impoverished in many ways apart from materially if they are not able to develop to their full
potential as human beings. CST argues for the role of organizations in facilitating this multi-
dimensional aspect human development as a core goal of all organizational work. It is referred
to as the “subjective” dimension of work to distinguish it from the “objective” aspect which
refers to the production of output through work. The Vatican document, The Vocation of the
Business Leader (Pontifical Council for Justicee and Peace, 2012), further explains the role of
the subjective dimension of work as a critical element of not only productive but also good work:
The worker, the subject of work, is also greatly affected by his or her own work. Whether
we think about the executive, the farmer, the nurse, the janitor, the engineer, or
tradespeople, work changes both the world (objective dimension) and the worker
(subjective dimension). Because work changes the person, it can enhance or suppress that
person’s dignity; it can allow a person to develop or to be damaged.
The importance of work as a means for dignity emphasized by Pope John Paul II in
Laborem Exercens:
While work is not the source of human dignity, it is the means by which persons express
and develop both being and dignity. Persons are the subjects of work and are not to be
looked upon simply as a means of production or a human form of capital. Work must be
organized to serve the workers’ humanity, support their family life, and increase the
common good of the human community – the three purposes of work.
Employees are, therefore, not to be construed as merely means in a production process
but also as themselves the end of productive work. Sound work must be organized and managed
in ways that not only ensures productivity but also the promotion of human flourishing in all its
aspects – integral human development. Through the concepts of the objective and subjective
dimensions of work, CST effectively challenges managers to think beyond the traditional lens of
productivity and efficiency and to always consider the many impacts of work on the workers
themselves – including the managers.
Explicit references to good work in the CST sense has been slowly entering management
literature. In terms of specific action recommendations for managers, Alford and Naughton
(2001) elaborated on the various dimensions of human development at work that managers need
to give attention to (Table 1).
Table 1: Human Development at Work (Alford & Naughton, 2001, p. 75)
1. Bodily development – The physical structure of the workplace and the design
of work-processes and equipment are calculated to protect employee’s health and to
respect their overall, physical well-being.
2. Cognitive development – Employees’ expected contributions to the work-
process are made intelligible to them; jobs are kept “smart” to exercise and develop
employees’ talents and skills; overall, employees’ cognitive abilities are matched to
proportionately challenging work.
3. Emotional development – Through the freedom to take initiative without fear of
reprisal, employees exercise responsibility and accept accountability for their work.
4. Aesthetic development – Craftsmanship is encouraged, and within the limits
prescribed by their uses, products are designed and manufactured with an eye for
beauty, elegance and harmony with nature; services are conceived and delivered in
ways that honor the human dignity of both the provider and the receiver.
5. Social development – Internally, the organization encourages appropriate
expressions of collegiality; the organization exhibits a “social conscience,” encourages
the same in employees, and supports employees’ initiatives in the direction of service
to the wider community.
6. Moral development – The firm’s managerial practices and work-rules recognize
that human acts are as such moral acts; working relationships of every kind should
demonstrate respect for the human dignity of each party to them.
7. Spiritual development – Work is understood as a vocation, and valued as
collaboration, in the presence of God, for the good of one’s fellow human beings.
Alford and Naughton (2001) show that the promotion of good work by managers does
not have to be an abstract affair. In fact, for the most part, the various dimensions of human
development are influenced by very concrete managerial actions. Some of these dimensions
have been addressed in secular management literature for some time. For example, the field of
ergonomics promotes worker’s interactions with others and with the physical environment in
support of health and well-being (Wilson, 2000). The fields of organization development and
learning organizations (Argyris & Schon, 1978; Senge, 2006; Schein, 1999) have argued for
engaging the thinking and emotional commitment of workers through various modes of
participation and dialogue. What CST brings uniquely to the literature on work is that all the
various dimensions of human development constitute an integrated whole which cannot be dealt
with piece-meal – a complete vision of the human person which organizations are ethically
bound to respect and to nurture. Human beings have inherent worth as such but also because
they are, ultimately, spiritual beings created by God.
In the promotion of work that dignifies people and promotes their total development,
CST deploys a critical principle for good work – subsidiarity. The Vocation of the Business
Leader explains: “The principle of subsidiarity is rooted in the conviction that, as images of God,
the flourishing of human beings entails the best use of their intelligence and freedom. Human
dignity is never respected by unnecessarily constraining or suppressing that intelligence and
freedom.”
An implication is that managers are not to unduly impose their will or interpretation of
situations on their subordinates but instead must allow the latter to study, appreciate and exercise
judgment with respect to realities that they observe at their level of the organization – as long as
this always takes into account the common good or, specifically, the need for development of all
other affected parties. The appropriate application of subsidiarity in an organization promotes
almost all dimensions of human development at once. Employees who are trusted to make
decisions within the proper scope of their responsibility and enabled (through proper tools and
training) to make such decisions at their own levels are better able to develop confidence
(emotional development), prudence (moral development), attend to their health needs (bodily
development), think and reason (cognitive development), pursue their work as a craft (aesthetic
development), work with others and for others (social development) and align their work with
their own sense of transcendental purpose (spiritual development).
The following sections will review organizational and management literature which
provide a critique on the capacity of organizations to either hinder or support integral human
development.
The bureaucratic organization and human development
Max Weber (1864-1920), who many consider to have originated the scientific study of
organizations (Wren, 2005), was one of the earliest to analyze the modern formal organization
which derives legal authority from rational grounds, i.e., “resting on an established belief in the
‘legality’ of patterns of normative rules and the right of those elevated to authority under such
rules to issue commands” (Weber, 1947, p. 328). He referred to this ideal-type form of
organization as the monocratic type of bureaucratic administration. Referred today as simply the
bureaucratic organization or bureaucracy, it remains the dominant model of formal organization.
Weber identified six elements of a bureaucracy: (a) clearly defined division of labor and
authority, (b) hierarchical structure of offices, (c) written guidelines prescribing performance
criteria, (d) recruitment to offices based on specialization and expertise, (e) office holding as a
career or vocation, and (f) duties and authority attached to positions, not to persons.
Weber described the outstanding ability of a bureaucracy to establish control over people
in pursuit of technical goals in large scale organizations:
[The bureaucracy is], from a purely technical point of view, capable of attaining the
highest degree of efficiency, and is in this sense formally the most rational known means
of carrying out imperative control over human beings. It is superior to any other form in
precision, in stability, in the stringency of its discipline, and in its reliability. It thus
makes possible a particularly high degree of calculability of results for the heads of the
organization and for those acting in relation to it. (Weber, 1947, p. 337)
By its reliance on legitimate authority and formal rationality, a bureaucratic organization
avoids the potentially oppressive impacts of whimsical decisions by those in authority.
Unfortunately, a close study of Weber’s characterization of the technical virtues of the
bureaucracy also reveals its inadequacy as a source and setting for good work for human persons.
The bureaucracy achieves its vaunted efficiency and reliability by treating persons simply as
compliant parts of an instrumental machine. The bureaucratic model is, in fact, built on the
machine metaphor of organization (Gareth, 2006). Weber expressed his concerns about the
dehumanizing and oppressive aspects of the bureaucratic organization – which he referred to as
an “iron cage” (as cited in Selznick, 1992, p. 285) and the critical need to address these aspects:
It is horrible to think that the world could one day be filled with nothing but those little
cogs, little men clinging to little jobs and striving towards bigger ones …. This passion
for bureaucracy ... is enough to drive one to despair. It is as if in politics ... we were
deliberately to become men who need "order" and nothing but order, become nervous and
cowardly if for one moment this order wavers, and helpless if they are torn away from
their total incorporation in it. …[T]he great question is, therefore, not how we can
promote and hasten it, but what can we oppose to this machinery in order to keep a
portion of mankind free from this parcelling-out of the soul, from this supreme mastery
of the bureaucratic way of life. (as cited in Selznick, 1992, p. 285 and Wren, 2005, p.
229)
Weber’s concern is consistent with the good work perspective of CST. He worried about
the alienating nature of bureaucratic control which results when workers are so restricted as to be
stripped of their ability to exercise judgment over their work – a virtual loss of soul -- in order to
be positively evaluated and move up in the bureaucratic ladder.
It is difficult to imagine human beings growing in any of the dimensions of integral
human development under bureaucratic conditions. It is more reasonable to expect that
employees’ sense of purpose, ability to reason and exercise prudential judgment, sense of
fellowship with co-workers, and pride in work would all tend to atrophy. Merton (1968)
observed that working in a bureaucracy induced timidity and rigidity. He explained these
dysfunctional personality effects using various concepts from earlier social scientists: Veblen's
concept of “trained incapacity”, Dewey’s notion of “occupational psychosis” and Warnotte’s
view of “professional deformation”:
… Actions based upon training and skills which have been successfully applied in the
past may result in inappropriate responses under changed conditions. An inadequate
flexibility in the application of skills will, in a changing milieu, result in more or less
serious maladjustments….
Adherence to the rules, originally conceived as a means, becomes transformed into an
end-in-itself; there occurs the familiar process of displacement of goals whereby “an
instrumental value becomes a terminal value”. …Formalism, even ritualism, ensues with
an unchallenged insistence upon punctilious adherence to formalized procedures. … An
extreme product of this process of displacement of goals is the bureaucratic virtuoso, who
never forgets a single rule binding his action and hence is unable to assist many of his
clients.
This tendency for diminished capacity among workers in highly structured organizations
has led to the much maligned and caricatured “bureaucrat” – the inflexible and unthinking
functionary who mechanically substitutes rules for reasoned judgment in order to achieve
consistency in decisions even if these are divorced from the espoused purpose or guiding values
of the organization or even the objective requirements of the situation.
While Weber and Merton both called for addressing the double-edged nature of
bureaucratic organizations – efficient and orderly yet dehumanizing and incapacitating – they left
the matter largely unresolved. To this day, the dysfunctions of bureaucratic organizations
present a major challenge to the promotion of integral human development through good work.
Human development and management control
As shown in the previous section, the main concerns arising from the modern formal
organization typified by the bureaucracy stem from its tendency to use top-down control in order
to achieve the predictable achievement of pre-identified goals. How can this be reconciled with
the needs of human development?
Today, most organizations use some variation of planning and control which harks back
to the functional roles of management as described by Fayol in his classic book General and
Industrial Management published in 1916 that:
The responsibility of general management is to conduct the enterprise toward its
objective by making optimum use of available resources. It is the executive authority; it
draws up the plan of action, selects personnel, determines performance, ensures and
controls the execution of all activities. (as cited in Wren, 2005, p. 225)
The mainly instrumental and compliant role of employees in Fayol’s century-old
description of the responsibility of management is quite striking. Indeed, present-day
organizations often use some form of top-down planning-control cycle involving (1) the setting
of objectives, (2) the assignment of the responsibility for the accomplishment of these objectives
to subordinates, and (3) a method of top management intervention to support objectives
accomplishment or to correct any serious deviation from such objectives.
The common approach to management control systems (MCS) has been systematically
described by Anthony who defined management control as the “process by which managers
assure that resources are obtained and used effectively and efficiently in the accomplishment of
the organization’s objectives” (as cited in Gurd & Byrne, 2010, p. 4). In this view of MCS, the
presumption is that managers do the assurance work for achieving organizational objectives.
Workers are absent in the definition, implying their passive role as recipients of managers’
control actions.
This model of planning and control, often loosely referred to as management by
objectives, can hardly develop the capacities of lower-level managers nor of subordinates.
However, Drucker, in his original formulation of management by objectives, emphasized the
need for lower managers to be completely and creatively involved in the setting of objectives and
not be mere compliers to orders from the top:
There must be a meeting of minds within the entire management of each unit. This can
be achieved only when all the contributing managers are required to think through what
the unit objectives are and are led to participate actively and responsibly in the work of
defining them. And only if lower managers participate in this way can higher managers
can the higher managers know what to expect of them and make exacting demands.
(Drucker, 1977, p. 345)
To the extent that lower managers are actively involved in planning and control activities,
their development in various dimensions will be facilitated. The challenge of CST and the
principle of subsidiarity is, of course, for this involvement to extend even lower in the
organization. Unfortunately, traditional management practice often limits how low in the
organization the involvement can go. In fact, subordinates often take organizational goals as
given and do not realistically expect to have a voice. But to deprive workers of meaningful voice
in the crafting of goals and plans (the accomplishments of which they will be accountable for)
would be disrespectful of their dignity and reasoning capacity. Such instrumentalization violates
subsidiarity and only tends to undermine commitment to the said goals. The limiting
instrumental treatment of employees in management control stems from the same machine-like
thinking that characterizes bureaucratic organizations.
Hofstede (1978) referred to this conception of MCS as a cybernetic model which should
only apply to so-called “closed-loop control systems” of limited complexity such as machines or
electronic circuits. Such systems employ negative (corrective) feedback about unwanted
variances to trigger control actions. Hofstede (as cited in Rosanas & Velilla, 2005) argues that
organizations are too complex to accommodate the cybernetic model because, in contrast to
machines, (a) objectives are ambiguous, (b) the measures of the outputs are by nature very
imperfect, (c) there is also imperfect knowledge of cause-effect relationships between
interventions and results; and (d) some activities are not repetitive.
Similar to the perspective of CST and good work, Hofstede critiques the cybernetic
model because it:
automatically considers people in the system … as if they were things – as means to be
used; the goals are supposed to be given. … In an organization, the individual is both
goal and means. … Using a cybernetic model … will be perceived rightly by most people
involved as an attempt by a technocratic coalition to impose their implicit goals on all
others. … people usually dislike being taken as robots, and they will resist an
organization built on such a … doctrine (Hofstede, 1978, p. 453).
The subjective dimension of work tends to be ignored in the cybernetic model of MCS.
The system focus is on the achievement of output and not the engagement or development of the
workers as autonomous and reasoning agents.
Despite its pervasiveness in practice, the cybernetic model is too limited to be useful as a
mode of management control because it leads to the so-called “illusion of control” identified by
Dermer and Lucas (as cited in Rosanas & Velilla, 2005):
… the illusion [of control] fosters the belief among managers that conventional controls
such as operating standards, profit targets and budgetary criteria accurately and validly
measure, and thereby help determine, behavior. The illusion reflects a presumption that
management can intervene when necessary and successfully effect change. Further, the
illusion provides for the belief that, by changing a given mix of existing controls,
managers make necessary and sufficient functional responses to internal or external
change. To those managing with an illusion of control, negative consequences of
managerial action often signify the necessity for more controls (p. 87).
Developments in business regulations support the thesis of Dermer and Lucas about the
tendency for the multiplication of controls. Since the scandals involving Enron and others in the
early 2000s and the subprime mortgage crisis of 2008, governments have introduced more
stringent regulatory controls as well as mandating more internal controls. In sensitive industries
such as financial services, risk officers and compliance efforts have been mandated alongside
increased documentations and disclosures. Yet, it is doubtful whether the ever-increasing
controls will prevent the next wave of scandals. In fact, governments and organizations may
actually be creating a self-fulfilling prophesy and breeding the low trust environments that will
engender ever more daring ethical breaches. Paradoxically, excessive controls can tend to
weaken moral development as organizational members lose the ability to exercise judgment or
simply take advantage of loopholes in the rules which may turn out to be more damaging for
organizations.
An example of this corruption of moral judgment occurred at Enron. Andrew Fastow,
former CFO of the energy giant, admitted his tendency to ignore the principles behind the rules
and simply find ways to undermine these principles using the rules themselves. His creative, and
ultimately disastrous, use of capital structure was also encouraged by another feature of today’s
MCS – financial incentives.
Despite their common sense appeal, the dominant use of financial incentives and other
types of performance-related pay in MCS to motivate goal accomplishment is fraught with
problems. Osterloh and Frey (2004, p. 113) found that “piece rates, bonuses and other forms of
variable pay for performance undermine employees’ work ethics, especially in complex jobs
where intrinsic motivation is important and rewards are used in a controlling way.” Social
scientists have known for decades that external incentives weaken intrinsic motivation (Ryan &
Deci, 2000). This has been referred to as the “crowding out effect” in economics (Osterloh &
Frey, 2004) and as the “corruption effect of extrinsic motivation” in psychology by Deci (as cited
in Osterloh & Frey, 2004, p. 110).
The accumulated research has shown that people who are naturally motivated to do some
form of complex work at a high level slowly lose this intrinsic motivation when they receive
external incentives. Once the external incentives are removed, the level of performance drops
below pre-incentive levels. Significantly, Ryan and Deci (2000) explain that the negative effects
of external motivators are far more extensive: “research revealed that not only tangible rewards
but also threats, deadlines, directives, pressured evaluations, and imposed goals diminish
intrinsic motivation because, like tangible rewards, they conduce toward an external perceived
locus of causality” (p. 70).
What are the implications of MCS for human development and good work? Not very
good. If MCS substantially utilizes top-down controls and external incentives, workers are likely
to experience debilitating effects. Firstly, their sense of initiative and willingness to exercise
judgment are greatly reduced. Secondly, their sense of inner purpose (referred to as internal
locus of control by psychologists) and capacity for self-propelled behavior diminishes and gives
way to a desire for external rewards.
Managing for good work
As discussed above, many features of mainstream organizational and management
practice hinder the promotion of integral human development through good work. Not only do
these practices ignore the dignity and inner capacities of workers, at the extreme, they even
weaken character and corrupt motivations.
CST can be used to generate and explore alternative organizational and management
practices. The Vocation of the Business Leader provides two key principles in the organization
of good and productive work:
Businesses make a contribution to the community by fostering the special dignity of
human work.
Businesses that embrace subsidiarity provide opportunities for employees to exercise
appropriate authority as they contribute to the mission of the organization.
Based on these principles, managers will need to be patient guides and mentors, learning
facilitators and servant leaders – very different roles from what they play in the traditional
bureaucracy.
Adler (1999) has analyzed bureaucracies with a view of preserving the benefits of
bureaucratic structure -- reliability, orderliness and efficiency -- while addressing its
dehumanizing and corrupting features. Using case data from manufacturing plants which
empower workers to learn and solve problems together, he contrasted the features of what he
called “coercive” versus “enabling” bureaucracies (Table 2).
Coercive bureaucracies impose standards and point out non-compliance. Enabling
bureaucracies support performance standards with training and other helpful information on how
best to accomplish them. This builds worker confidence and promotes positive self-esteem.
Table 2: Coercive versus enabling features of structure (Note: Emphases added)
Source: Adler (1999, p. 44)
Coercive Enabling
Systems focus on performance standards so as
to highlight poor performance
Focus on best practice methods:
information on performance standards is
not much use without information on best
practices for achieving them
Standardize the systems to minimize
gameplaying and monitoring costs
Systems should allow customization to
different levels of skill/experience and
should guide flexible improvisation.
Systems should be designed so as to keep
employees out of the control loop
Systems should help people control their
own work: Help them form mental models
of the system by glass box design.
Systems are instructions to be followed, not
challenged
Systems are best practice templates to be
improved.
Enabling bureaucracies allow room for adapting to specific situations through flexible
improvisation. This encourages the exercise of judgment and responsiveness to the specific
demands of a work or service situation. Not only does this improve service quality, it also
avoids the frustrating rigidity commonly observed in bureaucracies.
Coercive bureaucracies deliberately design systems to minimize and even avoid worker
judgment in order to achieve reliability in results. Enabling bureaucracies help workers exercise
better judgment through a deep understanding of the work process itself and how it delivers the
intended results.
Enabling bureaucracies present systems to workers as helpful performance templates
which are not fixed in stone but open to improvement. Workers are trusted and encouraged to
come up with suggestions for the continuous improvement of systems based on learning and
insight into the work.
Adler’s model of enabling structure remedies the problematic features of bureaucracy by
putting the manager as well as all systems in a position to support the competence and informed
judgment of the worker. This is an effective operationalization of subsidiarity at work. It moves
away from the command-and-control mode of management and into a personalistic mode that
promotes respectful and reasonable dialogue between managers and workers.
Crosby wrote in The Selfhood of the Human Person (as cited in Rosanas & Velilla,
2005):
It follows that the personalistic opposite of unjustified coercion is a certain kind of
persuasion. If I want to move another to act, and to move the other in such a way as to
respect his or her personhood, then I give the other reasons that can be understood; I
convey the point of the proposed action and help the other person to see it for himself. I
enable the other to go in a certain direction, not as an extension of my own willing, but
with a willing that is truly his own as mine is my own. All authentic education has to use
as much persuasion and as little coercion as possible, and has thus to aim at the greatest
possible independence of the educated from the educator....
What about the issue of financial incentives as a motivational strategy in MCS? Given
the extensive problems noted in the previous section, Osterloh and Frey (2004) strongly advised
against substantial variable pay for performance except for the simplest jobs. For most modern
jobs which by nature depend on knowledge and organizational learning, intrinsic motivation
toward the organization’s goal is essential and must not be crowded out. Thus, compensation
needs to be based on an overall evaluation of employees and may include bonuses or gain
sharing subject to perceived fairness by co-workers. Any financial rewards must be part of an
entire motivational package which includes detailed feedback from the manager that
communicates appreciation for the employee’s competence as well as his or her commitment to
organizational goals and institutional values.
The perceived fairness of compensation by co-workers is important for preserving social
harmony and trust in the workplace (Adler & Heckscher, 2006) which are critical component of
a good work. Constant communication with workers on their role and contribution in fulfilling
the broader goals of the organization facilitates their cognitive development and enables them to
make even more discerning decisions when confronted with work challenges. This contributes
to the building of an enabling values-centered culture (Schein, 1992 ; Selznick, 1992).
The inherent weaknesses of bureaucratic organizations can result in serious indignities
and even psychological harm for workers. They are not insurmountable, however, and can be
addressed in useful ways by prudent and caring management.
Implications for Catholic business education and management theory
Going back to the message of Pope Francis at the start of the paper, one is struck by the
gravity of the challenge facing business -- and by implication business education -- today in
addressing human suffering in a globalized economy. Even more striking is that almost exactly
the same challenge was posed by Pope Leo XIII in Rerum Novarum in 1891. Why have the
problems remained unresolved for so long? What is the special role of business education, in
general, and Catholic business schools, in particular, in making a difference in the 21st century?
Khurana (2007) has argued for addressing the unfulfilled promise of business education
in educating high-minded professionals. This has become increasingly urgent as graduates of
some of the most prominent business schools have figured in major corporate scandals in the last
two decades. Naughton and Bausch (1996) advocated for the strengthening of Catholic identity
in Catholic business schools, particularly in terms of promoting the following among students:
liberal learning, integration of faith and work, principle-based techniques, and a more engaged
role in the community.
The next generation of business leaders need to be equipped to make the critical decisions
about organization and work design that will honor human dignity in today’s workplace. But as
revealed in the exploration of bureaucratic organizations above, organizing and management
practices today still bear many of the same pathologies that were lamented by Weber a century
ago. Why is this the case? Could it be that management frameworks and tools being taught in
business schools have simply reinforced the malpractices of the past?
Ghoshal (2005) has argued that management frameworks with flawed assumptions about
human beings have tended to foster bad management practices. He particularly criticized agency
theory for its assumption that people are primarily individualistic, self-interested and
opportunistic. Such assumptions, he further argued, may lead to a self-fulfilling prophesy of
excessive controls, low trust and irresponsible behavior in organizations.
Much of what is taught in management education programs come from traditional
management control frameworks as previously discussed. A major re-examination of these
frameworks has long been called for and will need to be done with redoubled efforts within
Catholic business schools. The main challenge is shifting management control models from the
cybernetic-machine metaphor to more humanistic representations which recognize and capitalize
on positive human attributes.
Hamel (2009) reported the work of a group of scholars and business leaders who
assembled in May 2008 to lay out a road map for reinventing management in the twenty first
century. They agreed that the time had come to replace contemporary management theory —
‘‘Management 1.0’’— with “Management 2.0,” which responds to several grand challenges,
including: (1) To ensure that the work of management serves a higher purpose; (2) Fully embed
the ideas of community and citizenship in management systems; (3) Reconstruct management’s
philosophical foundations; (4) Eliminate the pathologies of formal hierarchy; (5) Reinvent the
means of control; (6) Redefine the work of leadership; (7) Reduce fear and increase trust; and (8)
Share the work of setting direction.
Catholic business scholars and educators will need to rise to the challenge posed by
Ghoshal (2005) and Hamel (2009). The potential for promoting good work through improved
management frameworks is too important to ignore. Leading edge management works like
Alford and Naughton’s Managing as if Faith Mattered (2001) and Dyck’s Management and the
Gospel: Luke's Radical Message for the First and Twenty-First Centuries (2013) are important
contributions to this. However, such works will have to find their way into mainstream
textbooks, such as Dyck and Neubert’s Management: Current Practices and New Directions
(2008) if they are to influence management students in an extensive way. When the principles of
human dignity, the common good, and subsidiarity have become routinely included in
management textbooks around the world, then management theory and education would have
finally broken out of its iron cage -- laying the foundation for a truly humane management
profession.
Case in practice: The Leather Collection (by Yolanda Sevilla)
The Leather Collection (TLC) is a 22 year-old first-generation Filipino-owned small
enterprise engaged in the design, manufacture and distribution of genuine leather accessories to
the corporate gifts market. It is owned and managed by couple Federico Sevilla, Jr. and Maria
Yolanda Capistrano (aka Yoling Sevilla). The company flourished and experienced double digit
growth in its early years, after which it experienced challenges in the wake of the Asian crisis,
the influx of cheap goods from China, the global recession, the European recession and the ups
and downs of the Philippine economy.
Throughout its history, TLC has re-organized its workforce and re-engineered its systems
and processes in response to the times, seeking to survive and remain true to its mission and
values. Average tenure is in the vicinity of 20 years. The three longest-serving employees have
been with the company from its birth, our managing account officer has been with the company
21 years. Including owner-managers, the current headcount is 36 members referred to as
“TLCkers”.
Organizing Good and Productive Work at The Leather Collection
(Note: The rest of this section cites principles – numbered in sequence – from Vocation of the
Business Leader and narrates the author’s experience and reflections in relation to these
principles.)
44. “The way human work is designed and managed has a significant impact...on whether
people will flourish through their work”
“Hanap-buhay.” (Trans: The search for life – life in its fullness.)
We in The Leather Collection (TLC) perceive work as more than what one does to earn a
living, as a vehicle for experiencing life in its fullness, for actualizing one's full potential, for
developing the whole human being – mind, heart, body and spirit.
My husband and I started our first enterprise (grandmother to The Leather Collection)
when we wed, in response to the need to provide for our growing family, and our need to find
meaningful and fulfilling work where we could employ and develop our talents and skills.
In the course of time, we came to realize that we were in a position to provide the same
opportunity to those who worked with us.
“...today the decisive factor (for production) is increasingly man himself, that is, his
knowledge,...,his capacity for interrelated and compact organisation...” - Blessed John Paul II
“Magkabalikat sa hanap-buhay.” (Trans: Community of Workers)
We see ourselves as a community of co-workers with a common purpose – to build a
Filipino company that is a showcase of excellence in product quality and customer service.
We emerged from a company-wide visioning workshop held in our second year of
existence with the battlecry: “World class, gawang Pinoy!” (trans: made by Filipinos!) . We also
came up with our objectives, the first one of which was to foster mutually nurturing relationships
with all our stakeholders.
This was first advocated in the relationship between and among employers and
employees. Attendance is a core value. Attendance meaning not just physical presence in the
workplace, but each employee is expected to be attending to his work (his role and function)
during work hours. Tardiness and habitual absences are sanctioned.
The rationale behind this is the concept of being magkabalikat. We work in teams, and
each team's output is computed based on total man hours per work day. This being the case, each
member of the team must be attending to his work and generating the expected output for the
team to meet its daily target.
Values Reformation
This requires not just values formation but values re-formation. In most workers'
perspective, one fulfills the attendance requirement simply by clocking in the required number of
work hours per day. Through general assemblies, meetings with team leaders and one-on-one
counseling sessions, we explain that this does not fulfill the employment contract. One must be
working or at work during work hours, not timing in at the start of work hours and timing out at
its end. The same rule applies for break times. Habitual tardiness and absenteeism are sanctioned
and can be cause for termination.
Example #1
Worker JJA, while a competent worker with output that met both quality and quantity
standards, was habitually tardy and/or absent. Over a period of three months, he was either late
or absent for work 50% of the time during peak season when it was critical that all team
members be present to fulfill orders on time. Furthermore, he did not seek approval for
“vacation” leaves, but simply informed his supervisor by text in the morning that he was not
coming in that day for activities that could have been pre-planned (e.g. transferring the cremains
of his mother from one town to another). His other absences were for “sick” leaves when
“masama ang pakiramdam ko” (I’m not feeling well).
He was served a first notice asking him to explain why he should not be terminated for
habitual absenteeism and tardiness. In conference he admitted that he had neglected his duty due
to family problems (he was “not feeling well” because he felt rejected and ostracized by his
family). He also claimed he was “not fit to work” hence his frequent absences (he was previously
diagnosed with pulmonary tuberculosis for which he had received treatment and was given a “fit
to work” certificate).
After reviewing the case, the managers and team leaders agreed that there was cause to
terminate JJA.
In the course of making a final decision, the chairman assessed JJA's performance over
the length of his tenure with TLC. JJA's disposition was also examined – was he contrite, did he
seek to make amends and change his ways? The answer to this was yes. Chairman and CEO
decided, in consultation with team leaders to give JJA another chance – he would be put on
probation for three months with very clear expectations regarding changes in behavior,
particularly in his attendance.
A general assembly of all TLCkers was called by the CEO to discuss the case and how it
was handled and how management proposed to resolve it. It was made clear that this decision
implied that all TLCkers were expected not only to respect and accept “Management”'s decision,
but were duty-bound, as “kabalikat” to enable JJA to reform and meet the conditions of his
probation. The entire work community felt it was a good decision and congruent with our
corporate values.
Advocating mutually nurturing relationships with other stakeholders.
Putting this value into practice is most challenging in the relationship with our customers,
many of which are large and/or multinational corporations with purchasing and payment SOPs
(Standard Operating Procedures) that are designed to optimize their profit and increase their
internal efficiencies at the expense (hopefully not deliberate) of their suppliers and/or service
providers.
Example #2
Customers dictate terms of payment (30/60/90/120 days from “good receipt” of
deliveries) yet negotiate prices down to exclude cost of money. There are designated check
release days, and should that day be a holiday, checks are released the following week.
How have we addressed this? We make the effort to include terms of payment in the
negotiation process, with prices calculated based not just on order quantity but also on terms of
payment.
Some customers are sneaky. They request a quote for 12,000 units say at 15 days
payment term. Then will issue a purchase order for 3,000 units at the price of 12,000 units
reasoning that they will order a total of 12,000 units within the year, that this is just the first of
several purchase orders. We make the effort to explain that the price at 12,000 units assumes the
efficiencies of scale gained when one has a “long-run” vs. a “short-run” job, to no avail.
We recently did not accept such an order, and held our ground – either they ordered
12,000 units in one lot at the price quoted, or 3,000 units at the recalculated price for the lower
quantity. Our reason? We need to have win-win contracts for our relationship to be sustainable.
Their response, after several phone calls and threats of losing the business, was to issue a
new purchase order for 3,000 units at the recalculated price.
We still have to see if they will adhere to the 15-day payment term. In the past they have
calculated the 15 days (work, not calendar days) based on the date the “Good Receipt” is
received by Purchasing from their Warehouse (which has taken as long as a week). In the price
negotiations with the buyer, we categorically stated that this kind of “abuse” was no longer
acceptable to us since it was costing us and had gone on long enough.
We hope that in advocating mutually nurturing relationships with our other stakeholders,
particularly our customers, we are also promoting “good work” in their companies.
45. Foster dignified work:...“The grandeur of one's work not only leads to improved products
and services but develops the worker himself... work changes both the world and the
worker...Because work changes the person, it can enhance or suppress the person's dignity. It
can allow the person to develop or to be damaged.”
46. “Work is 'for man” and not man 'for work'....Good work...'s context promotes social
relationships and real collaboration...This requires from leaders the ability to develop the right
person in the right job and the freedom and responsibility to do just that....Moreover reward
structures should make sure that those workers who do engage their labour in a sincere way also
receive the necessary esteem and compensation from their companies.”
Our recruitment, hiring and assessment process includes a four-fold assessment of the
applicant's profile to ensure a job and organizational fit: skills, personality, inclination and
character (spic). Skills are based on previous training, experience and previous job descriptions.
Personality identifies the applicant's presenting persona. Inclination surfaces her interests,
dreams, plans, preferred work and learning style. Character reveals the person's value set.
While the job description for similar functions would be the same, each worker would be
assigned to a task that would best fit his unique “spic” profile, and would be given special
assignments that would allow him to employ his other talents.
Together with the employee, we also assess whether s/he is assigned to a function where
s/he is rendering his/her “highest value added” to the work community. When this level is
reached, and s/he has found his/her niche, s/he is allowed to flourish there.
Example #3
GFJ started out as our security guard. His skill set was appropriate for his function.
However, when drawing up his spic profile we found that he was technically inclined, that he
had a pleasant personality, was a good team player, and had analytical skills and leadership
potential. We started training him on-the-job to do minor repairs and maintenance until he
reached mastery level. He rose to the challenge and is now head of repairs and maintenance.
Skills Training
One becomes a member of Team TLC with a set of skills needed for the enterprise to
fulfill its objective. In the course of his work, the TLCker (from “seeker for excellence”, another
core value)'s skills are developed and enhanced. She starts off usually with a single skill at the
acceptable level of mastery, and graduates to become a master at that particular task. She is also
cross-trained, and becomes multi-skilled.
Continuous Learning & Improvement
Core values – fostering mutually nurturing relationships, team work (“magkabalikat sa
hanap-buhay”), searching for excellence (“hindi puede ang puede na”), responsibility and
accountability, transparency, integrity – were promoted, advocated and ingrained intially in
general assemblies, team building activities and in “walking our talk”.
Example #4
Sometime in 2000, a multinational corporate customer rejected our delivery (the first
time this had happened) claiming that the material used was substandard. We immediately pulled
out the delivery to their claim. To our chagrin, we found out that he was right! Despite our
quality assurance on-line and sign-off sign-on protocols the substandard material went unnoticed
by the entire production line from materials preparation to assembly, finishing and packaging!
What did we do? We replaced the customer's order, tightened protocols and – most important of
all – invited all our craftsmen and women to destroy the substandard products with stripping
knives. This is a lesson no one has forgotten, and was the first and last time an order has been
rejected.
Justice with Mercy
While we have rules and regulations, policies and practices, workers who violate / breach such at
the expense of the company (understood as Team TLC) are treated with justice tempered by
mercy.
Example #5
Manager MTM went on sudden and emergency leave in the middle of peak season after
an altercation with her husband. It was found that she had been having an affair with the
company driver, and that the entire organization, except for the Chairman and CEO were aware
of this. All were scandalized but did not know how to address their concern about the
appropriateness of the relationship and its impact on company operations. No one thought to
bring it up to the owners and general managers.
This threw company operations into disarray. MTM was a key person – she was in charge
of manufacturing operations. However, she could not discharge her duties due to her psycho
emotional state. She filed an emergency leave. Knee jerk reaction was to ask her to resign for
causing “moral scandal”.
The Chairman and Manufacturing Director, her direct supervisor, met her regularly,
counseling her and accompanying her through her crisis. She was thrown out of her home, and
her husband threatened to keep her children away from her.
The Chairman and CEO prayed over her case and discerned what might be the right
response to the situation. Consultations with key personnel were held. All the employees filed a
request for clemency. After several counseling sessions with MTM, and in the interest of giving
her a chance to pick up the pieces of her life (her work was very important to her – in the midst
of a troubled marriage it was one area of her life that gave her fulfillment) she was reintegrated
with very clear objectives: to help her start over, to accompany her and help her fulfill her
resolve to move forward.
MTM is back at work, and is more effective and efficient than she was in the past. She
has found inner peace and calm. She lives apart from her family, but talks to her children (a boy
and a girl, aged 5 & 7 years) daily, monitors their activities, attends their school functions and
has them sleep over on weekends (whenever their father allows them to). She has turned to God,
goes to mass and spends time in the Adoration Chapel as often as she can. She offers all her trials
and tribulations to God, and thanks him for what consolations she now enjoys – the embrace of
her “kabalikat sa hanapbuhay”, the support of her family of origin, the love of her children. She
also values her role and function as their mother more now than she did before. They are now her
top priority, not work nor her personal “happiness”.
47. Create subsidiary structures.
“The principle of subsidiarity recognises that in human societies, smaller communities exist
within larger ones.”
The Leather Collection's organisation is made up of work units or cells. The
Manufacturing Department is made up of the following work units: Product Research &
Development, Materials Preparation, Assembly (composed of several lines or cells whose size
and composition varies according to work-in-process), Finishing, Packaging & Packing, and
Dispatching. Each work unit acts as a team and is responsible for contributing their share to
meeting the Department's targets.
48. “The principle of subsidiarity applies to the structure of...business organisations...We
develop in our work best when we use our intelligence and freedom to achieve shared goals and
to create and sustain right relationships with one another and with those served by the
organisation....This fosters initiative, innovation, creativity and a sense of shared
responsibility.”
Production Planning is done by the Operations Manager together with the Work Unit and
Line Leaders to determine output per man hour for each step in the production process of a
particular product model and plan work schedules and work unit composition to to optimize
productivity and efficiency.
Quality assurance is every craftsman's responsibility. Following the kanban principle of
“sign off, sign on” worker A passes on his “finished product” to worker B after ensuring that it is
of good quality; worker B checks the product before accepting it to verify that it is of good
quality and is ready for the next step in the production process.
49. “..subsidiarity provides business leaders with three practical steps:
Clearly define the realm of autonomy and decision rights to be made at every level of the
company...”
Teach and equip employees, making sure that they have the right tools, training, and
experience to carry out their tasks.
Accept that the persons to whom tasks and responsibilities have been given will make
their decisions in freedom and, thereby in full trust, the risks of their decisions...nurture
mutual respect and responsibility...”
50. “ Under the principle of subsidiarity...are indeed “co-entrepreneurs”.”
Each kabalikat (community-mate) or TLCker is expected to ensure costs are kept
reasonable and profit optimized.
Sales Officers are provided with order quantity-based price guides and are expected to
negotiate the best prices and terms of payment for the company, and to resist the temptation to
sell at the lowest possible price just to bag the order. Commissions are a percentage of
transaction value, so desired performance is rewarded commensurately.
To optimize operating profit,
Materials Control ensures leather hides ordered and delivered are of the optimum size
and quality to ensure maximum yield and reduce spoilage;
Materials Preparation cuts components with the end in view of maximizing yield and
minimizing spoilage further;
Assembly organises its work teams for each step in the process to ensure maximum
productivity, assigning the right craftsman for the right process, and re-engineering
process to increase productivity.
After-action reviews are conducted after each major project is completed to analyze best
practice for each step in the business process (from inquiry to order fulfillment) the objective of
which is to increase productivity and efficiency while ensuring product and service quality. This
fosters continuous learning and improvement with a focus on our multiple bottom lines.
Concluding Reflections
As we continue managing our enterprise, leading our kabalikat in the search for life in its
fullness (hanapbuhay), advocating sustainable (mutually nurturing) relationships with all our
stakeholders, we are growing more convinced that work is a vehicle for salvation
(transformation, conversion).
Before our involvement with De La Salle University's Management and Organization
Department (MOD) and its advocacy for the practice of Catholic Social Teaching in the
workplace, we were not aware that this was in fact the framework for our leadership style. While
both my husband and I were born into Catholic families and studied in Catholic schools, we did
not consciously strive to practice Catholic Social Teaching as business leaders. We simply
practiced what we believed was right, guided by the Christian principles we had imbibed as we
were growing up. We were very vocal about our values, and one of the gifts of being
entrepreneurs is being able to “walk our talk”, and advocate our deepest held values.
Our involvement with De La Salle's MOD has resulted in our active engagement in
training business students to make socially responsible decisions, telling our story and sharing
our experiences in the hope of contributing towards building God's kingdom in the world of
business.
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