Liberal Arts And Business – Continued

As a manager I am concerned with making poor decisions. Decision-making to a manager is critical to their success. Knowing when to make quick decisions and when to take your time is an important managerial skill. I also think that one of the worst decision-making errors a manager can make is the escalation of commitment error. Escalation of commitment is the continued commitment to a poor decision, and it includes the increasing expenditure of resources to try an make the decision work.

With all of the changes we are making to the business program at WPC, I am trying to find the balance between change and legacy. I don’t want to create something that slows down our development and advancement as a program. I don’t want to create change for change sake, and I don’t want to draw conclusions that are incorrect either. I don’t want to commit to something and ignore the facts, leading the department in the wrong direction.

However, there is one thing I know and it continues to be reinforced by what I am reading is the positive relationship between teaching business and liberal arts. The continue emphasis on teaching business within this setting is something our department needs to continue. Warren Bennis, in his book On Becoming a Leader, agrees with me.

The section that I read this morning starts with a glaring critique of higher ed. “Universities, unfortunately, are not always the best place to learn.” Ok, I kind of agree with him, but I think there is more to this that what appears in this first sentence. “Too many [speaking of the universities] produce narrow-minded specialists who may be wizards at making money, but who are unfinished as people.” Oh my, what an incredible comment. Even now I am thinking of students I have had in the past who fit this description. They are really good at making money, but totally lack humanity.

Bennis then makes another incredible comment. “These specialists have been taught how to do, but they have not learned how to be. Instead of studying philosophy, history, and literature – which are the experiences of human kind – they study specific technologies.” I don’t think Bennis is discounting those technologies, just the over emphasis on the said technologies. “In the long run narrow specialties may be more prone to obsolescence and may fail to deliver big salaries.” Hmm, not sure I agree about the big salaries.

It sounds to me that Bennis is arguing that the goal of business education is to create a well-rounded person first, and a business practitioner second. This is reinforced by two individuals from the past; Lynne Cheney, former chairman of the National Endowment for the Humanities and wife of former Vice President Dick Cheney, and Roger Smith, former chairman and CEO of GM.

Cheney stated that, “Students who follow their hearts in choosing majors will most likely end up laboring at what they love.” Interesting, and those are the ones who will never work a day in their lives (I don’t mean they will be unemployed, but that as they work they will be happy). Smith stated, “When students are trained to recognize recurring elements and common themes in art, literature, physics, and history, they are . . . learning about the kind of creativity that leads to visionary solutions to business problems . . . People trained in the liberal arts would be able to understand, function in and contribute to the loose-tight, entrepreneurial organization that so many businesses are striving to become.” Smith recognizes the critical thinking skills and problem-solving abilities that emerge from the humanities.

Liberal Arts training when associated with business will develop future leaders who can tolerate more ambiguity, critical in this modern age of complexity, while creating more innovative solutions. Once again, I am sold on teaching business within a liberal arts environment. It is a marriage made in heaven.

And that is my thought for the day!

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Is There A Tension Between Humanities and Professional Degrees?

I love teaching a profession within a liberal arts environment. As I have stated before it is a marriage made in heaven. Scott Samuelson, who teaches at Kirkwood Community College in Iowa, wrote an editorial in today’s paper about how “studying humanities may not be such a bad career move after all.” He was responding to findings released in January by the Association of American Colleges and Universities and the National Center for Higher Education Management Systems.

Samuelson stated that the report “found that at peak earnings ages (56-60 years) workers who majored as undergraduates in the humanities or social sciences earn annually on average about $2,000 more than those who majored as undergraduates in professional or pre-professional fields.” I won’t dispute this statement because I have not seen the analysis or the original census data. However, I am curious that when Samuelson says these individuals majored in these areas of studies, were there minors involved?

I do agree with Samuelson when he argues that companies are hiring graduates who can “think critically, communicate clearly, and solve complex problems.” And I do believe these are skills that are supported by humanities classes. However, if I were him, I would not assume that professional programs do not teach those skills. Strategic Management courses require business students to think critically and solve problems creatively.

I would also disagree with Samuelson when he stated, “How many parents are going to pay for their kids to take Ethical Theory so that they can perform better at Goldman Sachs.” I would argue that if there aren’t that many parents that want their children to study Kant, Bentham, or Macintyre then they need to change their minds. As we have seen in recent history, those individuals at Goldman Sachs need to perform at a higher ethical level.

I do agree with Samuelson when he said that “thinking of the value of the humanities predominantly in terms of earnings and employment is to miss the point.” Freedom, democracy, and innovation go hand in hand. The liberal arts make our students aware of the bigger issues of life than just making money. The various topics typically associated with the Humanities expose our students minds to the ideas of the past that have improved human life.

In recent history we have seen the problems that unethical business can unleash on society, thus I think it is critical that business students are required to study humanities, specifically philosophy and ethics. The typical business student needs to see the bigger picture. They need to be exposed to and study right and wrong, the various human actions and their impact on history, and the importance of scientific systems. To ignore these elements to pursue greater profit is a travesty.

In fact, if I were hiring people for important positions in an organization I would want them to have the technical skills required to do the job, but I would also want them to have character that comes from reading the Bible, Plato, and other philosophical writings, and I would want them to have a sense of humanity that comes from studying Psychology, Sociology, or other social science courses.

I want balanced human beings working for me, not some cocky individual who thinks they can make a million bucks by the time they turn 25. Maybe I am wrong, but I’d rather be wrong like this, than having the sense that studying humanities is counter productive to good business practices.

So in answer to Scott Samuelson’s question, “Would you hire Socrates?” I would say it depends. It he has the skill to do the job, and he can communicate, think, and solve complex problems, then yes I would hire him. To answer my question about a tension between humanities and professional studies; nope – there is no tension, just a marriage made in heaven.

And that is my thought for the day!

Civic Leadership And Business

I am a firm believer in the power of business to do good. Yesterday I had lunch with the Chairman of Burgerville. He is very involved with our business program at WPC, and he will be filling in for me in one of my classes next week while I am in Cincinnati with the ENACTUS group. We had lunch at Beaches, and I had the distinct pleasure to meet the owner of the establishment and hear about his passion for giving back to the community. By 2011 the Beaches Charity Fund raised $1,000,000 for various charities in Vancouver, and has a goal of $2,000,000 by 2016. The owner has personally been involved with providing breakfast for children in the Vancouver School District, among others, in Clark County.

This is an illustration of how business, with its ubiquitous nature, is a part of everyone’s life. Because of this it has the power to do good or bad. It is our choice, and I think both the men I mentioned in the paragraph above have made the right choice.

As I think about events that occurred yesterday, I reflect on what an Authentic Leader is. These leaders are individuals who understand their purpose, practice solid values, lead with their heart, establish connected relationships, and demonstrate self-discipline. These are characteristics identified by Bill George as being a part of Authentic Leadership. He stated, “Acquiring the five dimensions of an authentic leader is not a sequential process; rather, leaders are developing them continuously throughout their lives.” I would tend to agree with him theoretically and experientially.

These authentic leaders are emerging from all corners of our society. They are recognizing the need to accomplish things a little differently than has been done in the past. I would like to focus on one specific area of need in our society that, because of its criticality, needs work now. For the sake of this blog post, I am leaving off political titles because they get in the way. I am going to demonstrate how the power of business can make a difference.

If you ask yourself what is the most pressing need in the United States each of us may identify a plethora of items. I would like to focus on the diminishing middle class and increasing poverty. I would think that business, collectively, could be instrumental in turning this around. Taking steps to provide more opportunity for people to work and improve their lives is a noble endeavor.

Business is about work! Initiative! Opportunity! But I also think business is about developing a workforce that will help a company compete in the future. This means business has a stake in educational opportunities at elementary, secondary, and college institutions. Therefore, business needs to make sure that educational opportunities abound throughout our country.

Business is also about taxes. Business leadership involves ensuring that the tax system in this country is reformed to provide a fair tax rate for small and large businesses. This will ensure U.S. business can compete with the various tax havens throughout the world. Leadership within the area of tax reform is critical.

All of us agree the affordable health care is important. Wellness actions, as well as affordable and accessible health care, are issues important to business. A healthy workforce is a productive workforce, therefore business has a huge stake in the current healthcare discussion.

However, a possible candidate for the biggest issue in businesses today just may be the skills of the available workforce? The way we work has changed, and there are many people who do not have the skills necessary to be successful in this new work world. Therefore, many of them are now long term unemployed people. The longer they are out of work the less liable they are to find work. They could be people in their 40’s or 50’s, which mean a lot of years of lost productivity.

Safety nets are necessary, but they need to be effective and efficient. However, what is even more important is the ability to work. As Dave, a character in a movie, used to say, “Everyone works today.” When people are working they can climb out of poverty. Maybe we do need to raise minimum wage, I am not convinced, however, I am convinced there needs to be more opportunities for people to develop the skills they need to take initiative for themselves to improve their lives.

Opportunity and access to the needed resources should be fair and equitable. This does not mean that all receive the same outcome, but if our society, and its stakeholders, are not providing the same possibilities for its citizens, then we are missing the point and what an authentic life is. Supporting job skills events seems like a natural fit for business.

So all you authentic leaders, roll up your sleeves and lets get to work. Lets create opportunities for people to be socially mobile through hard work. Lets provide opportunities to develop the needed job skills. I think the free market can provide opportunities for all, and this is what business is all about, and make some money along the way.

And that is my thought for the day!

Entrepreneurial Leadership In An Urban Context

The Social Entrepreneurship major at Warner Pacific is coming together. Next year is going to be amazing. Entrepreneurial Enterprise is complete and ready to go. Project Management is also done ad ready to go next year. I am now working on SE 311 Entrepreneurial Leadership in an Urban Context, and the Capstone Project. I am focusing on three books for this class, and several additional readings. The three books are A Theology As Big As The City; Authentic Leadership; and On Becoming a Leader. The question is why these three books?

“A Theology As Big As The City” is a book written by Ray Bakke. This particular book is not about a theology of the city, but about why serving the city is an important task. Bakke was called by God to serve Chicago, and he writes about the lessons God has taught him over the years as he accomplishes his call. Bakke writes, “I want to show the process of transformational thinking and acting that occurred along the way to developing a worldview that seeks biblical integrity and spiritual faithfulness.”

According to Bakke growing urbanization reflects a growing challenge for the Church. However, I also see growing urbanization as a challenge for entrepreneurs. Bakke defines urbanization as, “the development of cities as places where size, density, and heterogeneity are measured.” All three of these elements provide opportunity for entrepreneurs to make a difference. Bakke states, “by urbanism we mean the development of city as process – that is, the magnifier function of cities, spinning out urban values, products, and lifestyles into a world linked by media, even in rural and small town places.” The city is a place where there are many needs that emerge that can be met through social entrepreneurship. The city is a place where grace can be expressed. Social entrepreneurship can be a business as mission within the city. “Mission is no longer about crossing the oceans, jungles and desserts, but about crossing the streets of the world’s cities.”

The second book was written by a gentleman named Bill George, and has impacted how we look at leadership. Authentic Leadership has been around for several years, and has been very popular. He wrote the book in response to many ethical lapses in large companies. George stated, “As we begin to understand these same issues at a deeper level, we realize that the missing ingredients in corporations are leaders committed to building authentic organizations for the long term.“

One premise for George’s ideas involves the word trust. “Our system of capitalism is built on trust – trust that corporate leaders and boards of directors will be good stewards of their resources.” I totally agree with the concept. The fiduciary responsibility of managers is to lead their businesses in a manner that provides necessary returns to their stakeholders. But as George stated, “capitalism became the victim of its own success. Instead of traditional measures such as growth, cash flow, and return on investment, the criterion for success became meeting the expectations of the security analysts.” Running a long-term business was no longer important, but stock and earnings numbers were now the most important. Short-term values took over, and replacing long-term growth. Authentic characteristics were no longer important, and business leaders lost their true north.

The last book was written by Bennis and is titled, On Becoming a Leader. When I searched for the best leadership book ever, this was the book that came up. This particular book was first published in 1989. I have to say that this book excites me the most. He uses phrases like “guiding vision, passion, and integrity.” He also supplies the following descriptors “curiosity and daring.” Billions of dollars are spent each year in an attempt to create better leaders. But as Bennis states, “Leadership courses can only teach skills. They can’t teach character or vision. Developing character and vision is the way leaders invent themselves.”

So there you have it, three books that will form the foundation of this course. I am excited about this course, and how it will emerge. Now for the articles and various assignments. I really like teaching and course development work.

And that is my thought for the day!

Lessons On Leadership From The Three Caballeros

I am finally beginning my work on a new course for next year. Entrepreneurial Leadership within an Urban Context will be a great course. I have chosen a couple of books and will be adding to the required reading list over the next couple of weeks. Leadership has been on my mind over the last couple of weeks. I am constantly looking for good and bad examples of leadership to demonstrate to my students what the results of good or bad leadership are and how these results are correlated to specific actions.

There are several specific topics under the heading of leadership that I find especially interesting. Contingency Leadership Theories, such as Path-Goal, STL, and Fiedler LPC, have a solid foundation in research. Leadership theorists are looking for the right formula to create or recognize good leaders.

The fact is most organizations are not well led. If we focus on management, we know that 82% of managers really do a poor job; this number coming from a Gallop poll. Company after company provides training for their leaders to improve their performance, but the numbers don’t indicate improvements? At least that is how it appears.

One of my favorite leadership theories is the LMX theory. The Leader-Member Exchange Theory describes a dyad that occurs between the leader and follower. The interesting part of this theory involve the intricacies of the Leader-Member Exchange as it occurs with several individuals as they interact with the leader. The result of the exchange is an in-group and/or an out-group. Because the leader likes to interact with certain types of people, which is normal, these folks will end up feeling connected to the leader and subsequently will be more engaged. This in turn will lead to more assignments and opportunities for success. This creates an in-group. The others, who the leader does not personally connect with for various reasons, are usually treated formally and professionally, are less engaged and therefore may end up being a bit more deviant in their organizational citizenship.

The leader needs to be careful with how they act because this in-group out-group dynamic can be devastating to the organization. If the out-group sours, a contagion can occur creating a negative work environment that will affect productivity. And if the leader decides to punish the out-group for their deviant behavior, out-group behavior will degenerate becoming even more passive aggressive. The members will see the leader’s behavior as retaliation.

Leaders sometimes just don’t get it though. They think their behavior is above reproach, and they think their reasons are hidden from their followers. These leaders think the members are stupid. My experience is the opposite. Members are smart and can see the motivation behind the leader’s actions. Let me give you an example right out of today’s paper.

I am a pretty conservative guy. I like small government, but I hate cronyism. Therefore, I really dislike the M&M Benton partnership in Clark County. Lou Brancaccio is an editorialist for the Columbian, our local newspaper, he does not like the M&M boys, and I would say he is on the left side of the political spectrum. So for me to say that I think he has the M&M Benton boy’s number is a big deal. The latest involves a new tax that Benton wants to push through.

I have to admit, when I read about this new tax in the paper earlier this week I immediately thought retaliation; Benton retaliating against the Columbian because of its continual attack on the M&M boys and Benton himself. Brancaccio is now calling these three the caballeros. The three caballeros is a great name for these men.

Lou said this, “So, what’s the latest goofball stuff they’ve been up to? Well, Benton – as the environmental services director – wants to design a new tax to help pay a huge fine the county owes for its earlier stupid stuff.” Benton wants to tax paper waste, but he has designed the tax in a way where it hits newspapers, and specifically the Columbian.

Eric Stahl, a first amendment lawyer, stated “Taxation that singles out the press is problematic under the First Amendment. When a tax targets a particular newspaper, or is imposed in retaliation for its viewpoints, its plainly unconstitutional.” I can see a paper tax that is charged to fast food restaurants because of the possible littering problem, but charging a newspaper a tax because of its litter affect, at least in this case, seems suspicious.

I have never been to a County Commissioner meeting, but I intend to go. I want to see if Lou is telling the truth. Lou stated, “If you ever go to one of these meetings, you’ll figure out quickly that the M&M boys pretend they’re listening to you. But they’re really only waiting to open their pie holes again to tell you you’re wrong.”

Madore is supposedly this great businessman who runs a good company. I don’t doubt that one bit. Mielke has been a commissioner for a while now. Benton has had mixed reviews as a state senator. But these three caballeros are an excellent example of how leaders can create in-groups and out-groups if they are not careful. The fact that these three show no remorse for their actions, demonstrates the escalation of commitment error that managers with very large hubris experience.

The three caballeros think this will go away after time. But poor leadership will continue, with even dumber decisions, and the contagion will continue to grow. That is unless there is a change in direction. So, students of leadership, this is not what you want to do. Politics aside, there are good leadership practices and there are poor ones. Learn a lesson from the three caballeros.

And that is my thought for the day!

Crony Capitalism Revisited

I love to read! I also love talking to people. I love watching people. I love these things because I learn from them. Yesterday we had an ADP-Faculty meeting, and watching the presenters gave me new perspectives on things. It was a good meeting, and I enjoyed every minute.

I also learn new things through interacting with my wife. I love my wife because of the various lessons she has inflicted upon me. All of which have made me a better person. However, I am a reader, and much of my learning comes from the various books, articles and journals I read.

Today’s lesson comes from an article in the Economist. “The new age of crony capitalism” was an excellent description of how crony capitalism is losing prominence due to the growing middle class. “The new middle class is flexing its muscles, this time on a global scale. People want politicians who don’t line their pockets, and tycoons who compete without favors.” Once again this illustrates how important the middle class is to the economic health of society.

A common phrase is used through out this article. The phrase is rent-seeking. David Ricardo was the first to use the word rent in relation to economics. Ricardo used rent as illustrating when a factor of production is paid more than is necessary to keep the factor working efficiently. We could say it is a choice to pay more for something than what is necessary.

The phrase rent-seeking “is what economists call a special type of money-making: the sort made possible by political connections.” Some would say the idea of rent-seeking is the most important economic insights over the last 50 years. Gordon Tullick originated the idea in 1967, and Anne Krueger introduced the concept in 1974. This rent-seeking involves getting a benefit while producing a good or service that will also limit a competitors opportunity to receive the same.

To receive this rent-seeking benefit a person needs to be well connected with government officials, thus crony capitalism. In the United States this process was prevalent in the 19th century. Robber barons were “well-place individuals who made their fortunes” through the power of profitable licenses granted by the government. However, “antitrust rules broke monopolies such as John D. Rockefeller’s Standard Oil. The flow of bribes to senators shrank.”

However, as the Economist wrote rent-seeking is still an issue in emerging economies. Family members in Africa, Oligarchs in Russia and the Ukraine, and well-connected Mexican businesses have profited from rent-seeking. This is not healthy for these emerging economies, and is bad for growth. “Dynamic new firms are stifled by better-connected incumbents. And if linked to the the financing of politics, rent-heavy capitalism sets a tone at the top that can let petty graft flourish.”

If senior government officials are on the take it is bad enough. But eventually junior officials will say why not us? And if the police are on the take then the corruption evolves into a less than stellar economic system. A classic example is what I saw in Honduras. A woman was charging protection to venders within the public market. The police were getting a kickback, and left the corruption alone, until she murdered someone. This is what usually happens in a corrupted system, it just gets worse.

However, according to the Economist this worldwide system of graft is changing. I happen to agree with the Economist that this is due to the growing middle class. Governments throughout the world are not as willing to ignore rent-seeking as much as they used to because they recognize how corruption impacts economic growth. The result of this is falling wealth due to “rent-rich industries.” However, it just may be the economic slowdown throughout emerging economies that is slowing the love for crony capitalism. Governments that were once cronyistic are now changing because of the recognition of needed reforms.

Nothing will slow down economic prosperity faster than corruption and cronyism. Free and fair markets will lead countries down the road of opportunity quicker than rewarding friends and family. I hope our country doesn’t forget that lesson.

And that is my thought for the day!

What Does A Good Manager/Leader Do?

Once again I find myself thinking about what constitutes a good manager/leader. Often I think back to those days when I was a manager, and now as a Department Chair, and wonder if I am a good manager. Am I someone who people trust? Am I someone who helps people engage in the necessary activities that will drive the organization to higher levels of performance? I hope I am, and I think I am ok at the job, but ultimately I am not the one who decides this. It is the other that makes that decision, not me.

I ran across a blog this morning that had some startling statistics associated with managerial performance. The blog uses Gallup poll data to demonstrate that most organizations are losing billions of dollars because of poor management. Gallop states that according to its research companies will choose the wrong person to manage 82% of the time.

If that number doesn’t knock your socks off try this one. “Bad managers cost businesses billions of dollars each year.” Billions, wow that is a big number. According to the HBR blog I was reading, in 2012 Gallup reported that “30% of U.S. employees are engaged at work, and a staggeringly low 13% worldwide are engaged.” Oh my gosh, that is horrible, and these numbers have not changed over the last decade.

Why does this happen? Its not like companies don’t see this as a problem, and its not like money isn’t being spent on the problem. So why doesn’t this change? Why doesn’t management performance improve?

Some would say it is a measurement problem. The old saying “what gets measured gets done” has a ring of truth to it. It could be that organizations are not measuring the right thing to ensure employee engagement happens. But, does the organization really see this as important? That truly is the question.

Employee engagement is correlated with higher organizational performance. The results are clear. Employees who are engaged in the day-to-day activities within the organization provide better customer service, which in turn creates higher profitability. Employees who show up for work and are mentally present produce higher quality results, and will stay at a particular company for longer periods of time. This means lower training costs due to less turnover.

If the result of employee engagement is so dynamic, and employee engagement is connected with good management, then what skills do managers need to encourage employees to be engaged? Gallop has identified these necessary skills as the following:

  1. They motivate every single employee and engage them with a compelling mission and vision.
  2. They have the assertiveness to drive outcomes and the ability to overcome adversity and resistance.
  3. They create a culture of clear accountability.
  4. They build relationships that create trust, open dialogue, and full transparency.
  5. They make decisions that are based on productivity, not politics.

Sounds like this is similar to what Collins calls a level five leader. Or what Clawsen calls a level three leader who is uses VABES to encourage employee engagement.

HBR says this about the current crop of managers. “In studying management talent in supervisory roles compared with the general population, we find that organizations have learned ways to slightly improve the odds of finding talented managers. Nearly one in five (18%) of those currently in management roles demonstrate a high level of talent for managing others, while another two in ten show a basic talent for it. Still, this means that companies miss the mark on high managerial talent in 82% of their hiring decisions.” So HBR’s research supports Gallop’s research.

On Tuesday of this week I shared with one of my classes various leadership theories that I think are important. Contingency Theory, House’s Path-Goal Theory, LMX Theory, among several others all demonstrate the importance of recognizing individual differences as one manages and leads an organization. This is a very important skill.

A Good manager/leader needs to be relational, know his or her people, and lead accordingly. If the manager/leader can demonstrate how each employee can meet his or her own personal goals in pursuit of organizational goals then you have an engaged workforce. This means the manager needs to be able to create a clear vision associated with the mission, or cause, of the organization. Then they need to support and remove roadblocks for their employees to be successful.

Is it that simple? Hmm, there is so much more to good management than just relationships. Each manager needs to be a systems thinker. They need to see all of the different variables associated with their people and the organization. They need to develop within themselves the skills mentioned above, and then use those skills consistently to prove to their employees that they mean business. This will break down the cynicism of the workforce, resulting in a more engaged employee. The result will be a balance high performing work ethic that provides better customer service and profitability. This is why they get the big bucks.

And that is my thought for the day!