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[part 2 of 2]

Mr. Artavia is correct that sustainability and CSR have not caught on as core business disciplines or crucial competencies for leadership development.  My counterparts at other business schools and I agree that these topics are hard sells to many executive education clients, and that their delivery may not be well received as that in accepted disciplines such as finance, accounting, strategy, and organizational behavior.

Nevertheless, I think the links between sustainability, CSR and management development are becoming clearer.  My argument is stated in more depth in an article I co-authored with Bruce Bullock, director of SMU Cox’s Maguire Energy Institute, on how “fourth dimension leadership” brings bottom line dividends to companies in the energy industry.  It appeared in the April 2012 issue of Offshore magazine (http://www.offshore-mag.com/articles/print/volume-72/issue-4/departments/beyond-the-horizon/fourth-dimension-leadership-brings-bottom-line-dividends-to-oil-and-gas.html).

Traditionally, at SMU Cox we teach leadership using an “inside out” process.  We start with self-awareness:  who are you, how do you appear to others in the workplace, and how does that impact your ability to fulfill your role in the organization?  We then move to the interpersonal level:  how discerning are you about styles and preferences of others and can you use that to motivate them and build effective teams?  Finally, we address organizational effeciveness:  can you work across boundaries, mobilize a group of people to get them moving in the same direction, and lead organizational change?

Now we are adding a “fourth dimension” that takes leadership outside the organization.  It requires managers at all levels to gain competence in areas that spotlight ethics and values, such as:

  • Establishing relationships based on reciprocity and reliability:  building trust.
  • Communicating with truth and transparency, particularly about business practices and results.
  • Acting with courage and commitment to uphold personal and organizational values and provide channels of communication to constructively question and challenge.
  • Understanding and articulating the organization’s larger purposes and how they align with the interests of multiple stakeholders—employees, customers, suppliers and communities—as well as shareholders.

Research is available that helps establish the business case for this fourth, externally focused, dimension of leadership.

  • Trust and integrity of leadership are key factors in moving employees to higher levels of engagement, and firms with higher levels of engagement perform better in terms of customer loyalty, employee retention, productivity, quality, and safety.
  • People and customers take positive action based on trust in a company, including recommending it to others and paying more for their products and services.
  • Firms managed to optimize multiple stakeholder value rather than shareholder value alone outperform the S&P 500 and Jim Collins’ “good to great” companies.

These externally focused competencies oriented to ethics and values underlie the practices of sustainability and CSR that Artavia described.  Tools are available to teach managers at all levels to build trust, make values based decisions, confront ethical dilemmas, and establish a climate of reliability and integrity needed to foster long term relationships with customers and suppliers to fuel business growth.  We are using some of them in our executive education programs at SMU Cox.

Business schools everywhere are working to include elements of ethics, values, sustainability and CSR in their curricula.  Partially this is because business school leadership has been challenged by their business community advisory boards to explain how their teaching may have contributed to the financial crisis and ensuing recession in 2007-9.  Students, too, are questioning the worth of involvement in businesses that are perceived to be driven solely by greed and self-interest.  Business schools have responded by proliferating social entrepreneurship courseware and curriculum revisions that emphasize ethical leadership.  Students have circulated voluntary MBA oaths that commit them to sustainable and ethical value creation.  The same trend can be observed in education and training for working managers and professionals.  Long standing and new approaches to ethical and purpose-driven leadership—Servant Leadership, True North, Speed of Trust, among others—are gaining popularity, and community service is used increasingly as a leadership development tool, superseding artificial “rocks and ropes” as an experiential learning activity.

All this activity reminds me of where “globalization” was fifteen or twenty years ago as a focus for management development.  At that time, most schools adopted one of two approaches to the emerging need to globalize their instruction:  “insertion” of stand-alone courses on globalization or “infusion” of global content into existing functional courses.  The former proved to be a recipe for isolation and the latter a recipe for invisibility.  Thus, new interlocking approaches were developed in which, for example, a globalization course provided a platform to guide integration of global content into functional courses.  (“Bridging the Globalization Gap at Top Business Schools: Curricular Challenges and a Response” by Pankaj Ghemawat in Jordi Canals, editor, Future of Leadership Development:  Corporate Needs and the Role of business Schools, Basingstoke, Hampshire, GBR: Palgrave Macmillan 2010).

Experience with globalization suggests that sustainability and CSR content should be included or inserted in existing programs.  Interlocking approaches can establish ethics and values based leadership practices as platforms to integrate content.  Discussion with experienced managers will reveal where the most relevant areas of application lie.  This will direct research to confirm the business case, refine the competencies, and guide the design of learning experiences to support sustainability and CSR.

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