As the global crisis reached its nadir, a major culprit of the turmoil was deemed to be the species called ?manager?. But the issue is not so much about the management students, teachers or even B-schools, as with the philosophy (or the lack of it) of management. Manager is defined rather narrowly the world over, its scope being confined to enhancement of his company?s net worth. Since that?s what industry wants and B-school rating agencies and media endorse, management institutes design their curricula accordingly and even take pride in a pro-industry syllabus. Fair enough, but what industry wants may not be good for the nation. Time has come to redefine management ethos and extend manager?s role and scope far beyond the hitherto assumed one. The new manager must have wider intellectual horizon and a far higher level of ethicality. And this responsibility rests on the management education system.
The major management schools of thought ? namely, scientific management school, management process school, human relations school, behavioural science school, quantitative school and systems approach ? focused on ways of achieving the organisational goals. The latest ?contingency? approach makes a reference to ?environment?, but from the business perspective. Consideration of the effects of ?micro? decisions on the ?macro? system is conspicuous by its absence. Such a paradigm shift cannot be achieved by any single entity. Rating agencies must also include ?macro analysis, social awareness, philanthropy? as criteria in judging syllabi of best B-schools. Universities would then include these wider aspects in their curricula. Media must uphold this new thought process. Young management students will surely take such aspects seriously if delivered well. Thus, the stage seems to be set for the next step in the evolution of management thought and one might like to call it ?macro-perspective management?.
The need for ?macro-perspective? management is underlined by the subprime mortgage crisis in the US. Individual banks enjoyed giving loans to the subprime category of borrowers and then selling to hedge funds, maximising their own short-term gains. But when the defaults started taking place and enough loan recovery couldn?t be made due to the correction in real estate prices, the resulting liquidity crunch and subsequent crisis started tipping the whole US economy into a deep recession. Indeed, what was good for individual companies was not good for the nation. The villain here was the mismatch between individual pursuits and aggregate well-being. The manager?s functions as charted out today include maximising the company?s shareholder value, but they don?t include due consideration to its impact on the social economy. If this doesn?t change, the world will keep facing such crises time and again. The writing is on the wall.
A beginning towards this must be made at the educational level. Management courses are considered upmarket because they get their students fat salary packages. So, it?s natural that students pay huge fees to study in B-schools, and since school rankings are mainly based on these packages and pro-industry curriculum, management institutes and universities merrily oblige by giving the industry just what they want, and no more. There is no denying that management institutes must cater to the industry?s requirements, but must also give a much larger perspective which industry probably doesn?t realise it needs in the long run. Management education adds value, impacts everyone?s life and encompasses the whole society in some way or the other. Therefore, it?s imperative that it must include an anti-thesis describing the flip side of manager?s ?optimising? actions. Else, the unscrupulous pursuit of company objectives may ultimately work to the detriment of the very company itself.
?Management? may be redefined as ?making and implementing decisions to optimally utilise resources to meet the organisational goals while actively monitoring their impact on the nation?s economy, society, security and vice-versa?. Thus, the future manager must become an agent who, while furthering the cause of his organisation, ensures that his decisions or actions don?t directly conflict with the well-being of the society at large.
This understanding can and must be imparted to the young management students and embedded into their curriculum. Obviously, individual management decisions without any concern for their impact on the macroeconomy, are bound to be lopsided and boomerang on the originator some day. Also, ?inclusive growth? mission will remain in the Eleventh Plan documents.
All major universities and B-schools must take it upon themselves to adapt to this need of the hour, highlighted by the latest economic crisis. They may introduce one line at the end of each management syllabus to indicate ?The undesirable effects, if any, on the national economy, society, environment and/or security?. And this is the essence of ?macro-perspective management?. Only with a fuller understanding of issues will the managers deserve the fat salary packages they receive today. They must give back to the society. Duty must accompany their right. The duty of future managers will be to reckon the anti-thesis of material pursuit. And management education will have to endorse it.
The author is professor of economics, Sinhgad Business School, Pune