Profs. Tanusree Jain, Trinity Business School, Trinity College Dublin, Haridimos Tsoukas, Warwick Business School, University of Warwick, and Adrian Zicari, ESSEC Business School, with a message on the launch of the latest CoBS publication “Leadership, Governance, and Crisis”.
Crises are not new to the Human Race. Through the turn of centuries and now well into the 21st, crisis may even be viewed as a normal state in a world characterized by competing economic and governance schools of thought, complex systems, rising standards of living amidst diversity of cultures and behaviours – not to mention our now full-grown awareness of the impact of this expanding human activity on our planet and beyond.
Despite our continuing attempts since the beginnings of society to understand the complexity of the inter-connected world around us – indeed creating some degree of restraint – and to maintain an element of control, it can well be deduced that crises are somewhat unavoidable given the fallibility of humankind. Each successive generation has seen its share of them but the current arguably faces one that could well spell the end of human civilization as we know it.
The large-scale upheavals of recent times have left people without a compass bearing which has created extremity of thought and of leadership, exacerbated fears and concerns over a ‘new unknown’, and challenged the very way in which business and society has been functioning for the last several decades. Here, we may think of the persistent economic and social misgivings of the Great Depression and the Global Financial Crisis, the surge of virtual currencies, the large-scale burden on energy consumption, and digital disruption that redefines many long-standing industrial relations. Add to this the now, indisputable evidence of humankind’s negative impact on the environment and the urgent need to now work with nature and not against it.
The Way Forward
Despite society’s growing distrust in governments and leaders, we believe that both our institutions and corporations are in a unique position to effectively and efficiently address the wicked problems of our times and those of the future. They have the resources necessary to create stability for billions of people and for our environment, and they have the capability to create purposeful living that integrates respect for both human and species diversity, while catalysing innovations for the common good through development of clean energies, virtuous supply chains and the circular economy.
In order to achieve this, we identify three essential areas of impact: Ethical leadership, responsible governance, and authenticity through social and environmental accounting.
Ethical leadership is a first priority. It involves the ability to influence others to take a moral stance on issues affecting or related to the organization. Insofar as an organization is a “moral system”, its members are driven by a common purpose, ideals and values, which leaders embody in their behavior. Even the most operational activities are underlain by a certain ethos, which leaders exemplify – keeping promises, caring for others, respecting differences, promoting fairness and equality; fostering trust. Ethical leaders feel an intense sense of responsibility to all stakeholders of the organization and to the broader system (ecological and institutional) that sustains their viability. Responsibility requires courage to discharge it – to speak up against inequality; to take a moral stand on matters of value to the community; to take initiatives that advance the common good (both at the organizational and societal level); to lead the way to establish new norms or refine current ones in the face of new challenges. Ethical leadership involves humility – one will never know everything; mistakes will be made; everyone has something to contribute to the conversation; we are all vulnerable beings, parts of a broader cosmic order. Responsible leaders know there is life outside their organizations and have created a life story in which they seem themselves as contributors to a better world for the future generations.
Responsible Governance: And importantly it emphasizes the decision-maker, and the need for responsible governance – a collective of diverse voices and viewpoints working through multi-stakeholder expectations, driven towards a purposeful long term vision. On too many occasions, it is by surrounding oneself with silent voices or similar voices that corporate misconduct occurs. The new model of governance has to be agile, gender diverse, collaborative, deliberative and discursive bound by values and inspired by its potentially positive impact on business, society and the planet.
The third pillar for this positive future is the necessity for social and environmental accounting. Because measuring is frequently the first step towards managing. As Kaplan and Norton famously said in their research-based article on the balanced scorecard, “What you measure is what you get”. Organisations can claim their commitment to social and environmental impact, but there is scant progress unless those impacts are measured, tracked, and eventually communicated to the public. In that sense, the increasingly frequent practice of publishing CSR / Sustainability reports is a step in the good direction. This kind of report backs up the organisation’s financial report – on the one hand providing a message of the necessary business performance of a firm, and on the other demonstrating that the firm contributes to society and the planet either directly or indirectly.
And this does not simply have to be the privilege of large organisations – for research and practice have shown that tools such as the Value Added Statement (VAS) allow even sole traders to identify where they have had positive impact on employees, the good of the state, local communities, and the environment. Haller and van Staden (2014) explain that the VAS can become a “practical and effective reporting instrument”, thus complementing other reporting standards. For instance, a mining firm in Mexico – one of the largest silver mines in the world – has been using VAS for more than a decade. By this doing, the company discloses how different stakeholders (particularly employees) maintained their share in value distributed over time. Comparable experiences exist in South Africa, Brazil and the UK, among other countries. The takeaway is that even small companies – whose aggregated impact in terms of employment, production and revenue can be significant – can, indeed should use this kind of reporting, as it is relatively simple to prepare and remains meaningful for stakeholders and managers alike.
Crisis is nothing new, though it can be addressed anew. Rather than return to old models of tackling crisis with cutbacks and austerity, tighter control over freedom of speech and attempts to muzzle difference be it voice or diversity, we call for leadership that offers positive vision and a world towards which people want to go and which is not imposed. Where innovation does not simply mean taking from the planet’s limited resources, or cynically exploiting human resources. And where leadership centres as much on generosity and respect towards others and the wider system as the generating of profit and wealth for the interested few.
Edited by Tom Gamble, Associate Director Council on Business & Society.
Download Leadership, Governance, and Crisis
This 100-page publication features 25 articles from 27 faculty, researcher and practitioner contributors from ESSEC Business School, FGV-EAESP, IE Business School, School of Management Fudan University, Keio Business School, Trinity Business School, Warwick Business School and guest institutions and companies. Each contribution is accompanied by key takeaways and food for thought sections on ethical leadership, stakeholder ecosystems, sustainable business practices, social and environmental reporting, and effective governance in times of crisis. Enjoy your reading!
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