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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