Leading Workplace Change™

There is much self-reflection occurring in the business community today as we try to understand the underlying reasons for today’s economic crisis.  A recent article in the New York Times traces the role business schools most likely played in creating the “short-term and personal gain” focus of many of our current set of business leaders.  Rakesh Khurana, a professor at Harvard Business School is quoted in the article as saying -

…in the 1970s, the idea took hold that a company’s stock price was the primary barometer of success, which changed business schools’ concept of proper management techniques.  Instead of being viewed as long-term economic stewards, managers came to be seen as mainly agents of the owners - the shareholders…The new logic of shareholder primacy absolved management of any responsibility for anything other than financial results.

My perspective is that it is not just the leaders and their training, but also the corporate cultures shaped by these leaders that pushed us into the economic crisis of today.  I was first alerted to the gathering strength of a “short-term and personal gain” focus in workplaces when conducting a culture assessment of an energy trading company in the late 1990’s.  I was surprised and concerned to find the following attitude common among employees at the company.

An ‘undiscussable’ here is that you don’t want to be at odds with the executive team.  This place is a gravy train and no one wants to do anything to upset this train for themselves.  This is a once in a career opportunity.

Thus from a development of culture perspective - business schools influenced their students’ beliefs about the primacy of short-term financial results.  These students became the leaders of companies and started applying these new beliefs in the workplace.  The boards of directors of these companies liked the results and started rewarding leaders for  their short-term financial focus; and gradually, the traditional belief of managers as long-term economic stewards of a business became weakened.  

Over time, the new financial focus of leaders helped to create a new set of shared “rules of behavior” or culture that trickled down to all employees.  And, employees started to act day-to-day with a focus on their own short-term personal gain and like their leaders not on the overall health of their company.

I am happy to learn that some business school leaders recognize the need for change and are making efforts to re-think the fundamentals that drive their curriculum and training.  The NYT article mentions a number of efforts underway at business schools to focus more on long-term thinking; on the social value of management; and, how to make management a profession with a code of conduct.

My sense is that not all business schools will become leaders in this change effort.  But, those institutions that take on this challenge will most likely dig deep and find their own “win-win” cultural belief that what is important for the common good can be good for their business of education.

Here is an example of another heroes quest that will need to be taken on by institutions across the world in order for us to successfully re-fashion the structure of our global economy.

Tags: Corporate Culture Observer, Learning from Articles //