Humanistic Management in Practice: Volume II (Humanism in Business Series) 3030515443, 9783030515447

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HUMANISM IN BUSINESS SERIES

Humanistic Management in Practice Volume II Edited by Ernst von Kimakowitz · Hanna Schirovsky Carlos Largacha-Martínez · Claus Dierksmeier

Humanism in Business Series

Series Editors Ernst von Kimakowitz Humanistic Management Center Humanistic Management Network Geneva, Switzerland Wolfgang Amann HEC Paris in Qatar Doha, Qatar Pingping Fu Room 357, Trent Building University of Nottingham Ningbo China Ningbo, China Carlos Largacha-Martínez Fundación Universitaria del Área Andina School of Management Bogotá, Colombia Kemi Ogunyemi Lagos Business School Pan-Atlantic University Lagos, Nigeria Agata Stachowicz-Stanusch Canadian University of Dubai Dubai, United Arab Emirates Shiv S Tripathi IIHMR University Campus Jaipur, India

Since its inception in the year 2011, the Humanism in Business book Series is brought to you by a dedicated editorial board representing the Humanistic Management Network (www.humanisticmanagement.network). The Humanistic Management Network is a global network registered as a Swiss association that lives, works and acts through chapters and collaborations in many countries around the globe. Its purpose is to encourage, promote and support economic activities and business conduct that demonstrate unconditional respect for the dignity of life. * * * Following the purpose of the Humanistic Management Network this book series serves to enhance and consolidate the body of knowledge on Humanistic Management and surrounding topics such as business ethics, leadership, CSR, corporate citizenship, sustainability, executive education, impact investing or purpose driven organizations to name but a few. The books in this series all view Humanistic Management through their own lens, focusing on different aspects and highlighting different dimensions of humanism in business. What unites the books in this series is that they are all aligned to the three stepped approach which defines how we view Humanistic Management. It is based on the unconditional respect for the dignity of life, the integration of ethical reflection in managerial decision making and the active and ongoing engagement with stakeholders. Furthermore the volumes in the series are an open invitation to join our efforts to make impact towards a more equitable and a more sustainable planet. More information about this series at http://www.palgrave.com/gp/series/14862

Ernst von Kimakowitz Hanna Schirovsky Carlos Largacha-Martínez Claus Dierksmeier Editors

Humanistic Management in Practice Volume II

Editors Ernst von Kimakowitz Humanistic Management Center Humanistic Management Network Geneva, Switzerland

Hanna Schirovsky Weltethos-Institut University of Tübingen Tübingen, Baden-Württemberg, Germany

Carlos Largacha-Martínez Fundación Universitaria del Área Andina School of Management Bogotá, Colombia

Claus Dierksmeier Institute of Political Science University of Tübingen Tübingen, Germany

ISSN 2662-124X     ISSN 2662-1258 (electronic) Humanism in Business Series ISBN 978-3-030-51544-7    ISBN 978-3-030-51545-4 (eBook) https://doi.org/10.1007/978-3-030-51545-4 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and ­transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Contents

1 Introduction  1 Ernst von Kimakowitz, Carlos Largacha-Martínez, Hanna Schirovsky, and Claus Dierksmeier 2 Konosuke Matsushita’s Humanistic Management 11 Naoki Kuriyama 3 The Loccioni Model of “Humanistic Knowledge Enterprise” 31 Francesco De Stefano 4 Innovation Through Living Our Values at Energeticos-Colombia 65 Peter King and Carlos Largacha-Martínez 5 Vices, Virtues, and Values: A Business Case on Family Enterprise and Its Philosophical Implications Implementing Humanistic Management Practices 97 Friedrich Glauner

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6 Humanism’s Necessary Integration with Capitalism: Further Remarks on Brunello Cucinelli’s Philosophy of Clothes117 David LaRocca 7 Doing Ordinary Things Extraordinarily Well: Illustrating the Concept of Triple Bottom Line and Integrity on the Case of Faber-Castell137 Laura Böhler and Marie-Christin Platz 8 Integrating Simplification at Buurtzorg Nederland153 Sharda S. Nandram and Jos de Blok 9 FAVI, France-Picardy: A Managerial Innovation Built on Humanist Values171 Patrick Gilbert, Nathalie Raulet-Croset, and Ann-Charlotte Teglborg 10 ALLSAFE: Responsible Freedom in Action187 Claus Dierksmeier and Oliver Laasch 11 An Example of African Humanism: Ivory Couture203 Kemi Ogunyemi and Nneka Udeh 12 Humanistic Management with a Confucian Twist: The Case of FOTILE217 Matthias Niedenführ Index239

Notes on Contributors

Jos de Blok  is CEO Buurtzorg Nederland, pioneer of building organizations without managers. He is awardee of the Albert Medal 2014 van de Royal Society of Arts (RSA). He is winner of the Oman Business Forum Ideas Into Practice Award at the Thinkers50 in 2019, and was awarded the 2020 Peter Drucker purpose excellence award. Buurtzorg Nederland serves more than 100,000 clients with about 950 teams, turnover €450  million, and 14,500 employees, and is active internationally in more than 25 countries. Laura  Böhler  holds a master’s degree in General Management from Eberhard Karls University in Tübingen and a bachelor degree in International Business. After having studied in Germany and Singapore, she now works in human resources in the private sector. Claus  Dierksmeier  is Professor of Globalization Ethics, Institute of Political Science, University of Tübingen, Tübingen, Germany. His areas of expertise include political, economic, and religious philosophy with focus on the theories of freedom and responsibility in the age of globality. Recent book publications are Qualitative Freedom  – Autonomy in Cosmopolitan Responsibility and Reframing Economic Ethics. The Philosophical Foundations of Humanistic Management.

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Patrick Gilbert  is Professor at IAE Paris (Sorbonne Business School). He is a member of the board of Association Internationale de Psychologie du Travail de Langue Française. His research focuses on work transformations and their modes of regulation. Recently he has copublished Management Tools, Cambridge University Press. Friedrich  Glauner links interdisciplinary academic expertise at the intersection of philosophy, economy, and knowledge transfer with long-­ term business practice. He enjoyed research and teaching stints at the Technical and the Free University Berlin, at the European Business School, and at the University of California, Berkeley, and has worked for 18 years as an entrepreneur, CEO, and manager. He currently lectures future viable business models, strategy development, business management, business ethics, and leadership skills at the Weltethos-Institut/ Global Ethic Institute (University of Tübingen), at the Bundeswehr University Munich and at other Universities. Dr. Glauner majored in Philosophy with an emphasis on epistemology, linguistic philosophy, and philosophy of science with minors in economics, religious studies, history, and semiotics in Berlin, Cologne, and London and as a Fulbright Scholar at Berkeley. His work is dedicated to a new mental model for our economy and business management. This model, called ethicology, challenges the traditional approaches of modern economy, business education, and management. It replaces the economic focus on scarcity, competition, and growth with a focus on resource growth and added value creation cycles. In this model, corporations organize themselves according to the core principles of ecosystems, that is, the principles of locally decoupled cycles of mutual value creation. Ernst von Kimakowitz  is passionate about strengthening the positive impact of business towards a more equitable and sustainable planet. He is founder of the Humanistic Management Center and cofounder of the Humanistic Management Network. Ernst holds a research position at the University of Lucerne, Switzerland, and teaches at universities around the globe. Peter King , a management consultant, Edinburgh, UK, is a mechanical engineer by profession. He spent most of career in the oil industry with  

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BP, working in the UK, Middle East, Norway, and Colombia in various engineering and management roles. He was heavily influenced by the organizational and cultural changes made in BP during the early 1990s. After retiring from BP in 2003, he took up the post of general manager of Energéticos in Colombia. During the ten years that he was in charge of Energéticos, he transformed the company into a humanistic and selffunctioning organization with substantial growth. Naoki  Kuriyama  is Professor of Human Resources Management and Dean of Department of Business Administration of Soka University in Hachioji, Tokyo, Japan. Past academic career outside Japan includes being an expert on employment for ILO, Geneva (1988–1991) and visiting scholar at International Institute of Labour Studies and Modern Asia Research Centre, Geneva (1999–2000). These academic works led to several publications in English. His recent publication in English is Japanese Human Resource Management (2017), published by Palgrave Macmillan. Books in Japanese include Growing People and Organization, A Perspective from Humanistic Management (2018) and A Study of Globalization and “Labour” in the Context of Asia (2003). Oliver Laasch  is a senior lecturer of Entrepreneurship and Innovation, Alliance Manchester Business School, University of Manchester, and an adjunct associate professor of Strategy at the University of Nottingham’s Ningbo campus in China. Oliver’s research is focused on responsible management and alternative business models. Recent publications include the SAGE Handbook of Responsible Management Learning and Education and the Research Handbook of Responsible Management. Carlos  Largacha-Martínez is Research Professor at the Fundación Universitaria del Área Andina, School of Management, Bogotá, Colombia. He is focused on developing the soft skills needed in top management so human flourishing can happen at the workplace. Authenticity, thus, is the founding skill for a humanistic manager. He is also social inventor, quantum coach, and B-Corps’ Multiplier. Carlos holds a double doctorate in International Studies and Quantum Sociology from the University of Miami.

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David LaRocca  is the author, editor, or coeditor of ten books, including The Bloomsbury Anthology of Transcendental Thought: From Antiquity to the Anthropocene, The Philosophy of Documentary Film: Image, Sound, Fiction, Truth, and The Thought of Stanley Cavell and Cinema: Turning Anew to the Ontology of Film a Half-Century After the World Viewed. Among other published articles and chapters, he wrote “Brunello Cucinelli: A Humanistic Approach to Luxury, Philanthropy, and Stewardship” and “A New Philosophy of Clothes: Brunello Cucinelli’s Neohumanistic Business Ethics,” both published in the Journal of Religion and Business Ethics, vol. 3 (2014). He is also the director of the documentary film Brunello Cucinelli: A New Philosophy of Clothes (Fine Print Film, color, 38 min., 2013). A recipient of a Teaching Commendation from the dean of Harvard Extension School and a Teaching Innovation Award from the College at Cortland, he has served as a visiting assistant professor in the Cinema Department at Binghamton University, visiting assistant professor in the Department of Philosophy at the State University of New  York College at Cortland, visiting scholar in the Department of English at Cornell University, and lecturer in screen studies in the Department of Cinema, Photography, and Media Arts at the Roy H. Park School of Communications at Ithaca College. He has participated in a National Endowment for the Humanities Institute, a workshop with Abbas Kiarostami, Werner Herzog’s Rogue Film School, and The School of Criticism and Theory at Cornell University. www.DavidLaRocca.org, [email protected]. Sharda  S.  Nandram  is Professor at Vrije Universiteit Amsterdam and the Nyenrode Business University in the Netherlands and Adjunct Professor at Banasthali University India. She is a nonexecutive director at Buurtzorg Edugreen Neighbourhood care in India. She holds two bachelor’s and two master’s degrees (one in Psychology and the other in Economics), both from the Universiteit of Amsterdam. She also holds a PhD in Social Sciences from the Vrije Universiteit at Amsterdam. Matthias  Niedenführ is Assistant Professor of Chinese Studies and Business Ethics at the Department of Chinese Studies of University of Tübingen and Vice Director of the China Centre Tübingen (CCT). He was Managing Director of the European Centre of Chinese Studies

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(ECCS) at Peking University and lived in East Asia for a decade. His research interests include business culture, civil society development, and the political economy of communication in China. His current qualitative research project focuses on studying model cases of Chinese entrepreneurship that try to implement Chinese traditional values, the so-called “Confucian Entrepreneurs” (rushang). As its cofounder, Niedenführ has been supporting the academic discussion platform ThinkIN China in Beijing since 2010. Kemi  Ogunyemi  is an associate professor of business ethics and the director of the Christopher Kolade Centre for Research in Leadership and Ethics at Lagos Business School, Pan-Atlantic University, Nigeria. She holds an LLB degree from University of Ibadan, Nigeria; an LLM from University of Strathclyde, UK; and MBA and PhD degrees from Lagos Business School. She teaches business ethics, managerial anthropology, self-leadership, and sustainability management at Lagos Business School and is the academic director of the School’s Senior Management Programme. Her consulting and research interests include personal ethos and organizational culture, responsible leadership and sustainability, and work–life ethic. She has authored over 30 articles, case studies, and book chapters and the book Responsible Management: Understanding Human Nature, Ethics and Sustainability. She also edited a three-volume key resource for educators, “Teaching Ethics across the Management Curriculum” as well as the book African Virtue Ethics Traditions for Business and Management. Kemi worked as director, team lead, and mentor in projects of the Women’s Board (ECS) before joining LBS. Marie-Christin Platz  holds a master’s degree in International Business from the Eberhard Karls University Tübingen, Germany. During her studies, she studied in France, Republic of Korea, and Japan. She is working now in the private sector. Nathalie Raulet-Croset  is Professor in Management and Organization Theory at IAE-Paris (Sorbonne Business School). Her research focuses on new forms of organizations, and on the emergence of organizations which are the basis of collaborations between private, public, and nonprofit actors, who collectively take care of local social issues.

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Hanna  Schirovsky worked at the Weltethos-Institut, University of Tübingen (2016–2020) and currently works at the Landesar­ beitsgemeinschaft Offene Jugenbildung Baden-Württemberg (LAGO BW). She holds a Franco-German double master’s degree in International Relations. She is dedicated to the question of how the search for and implementation of common values can succeed across cultural and religious boundaries. Francesco De Stefano  holds a Ph.D. in Human Sciences, a bachelor’s degree in Philosophy, and a master’s degree in Philosophical Sciences from the University of Macerata. His main scientific interests are moral philosophy and business ethics. In 2012, he published his master thesis, entitled Individuo e Comunità in Nietzsche [Individual and Community in Nietzsche]. The doctorate he has attended originated from the “Eureka scholarship for innovation” promoted by Marche Region, a Ph.D. programme aimed at enhancing applied research projects focused on local enterprises reality. Indeed, he studied the knowledge-based enterprise model of Loccioni Group, a medium firm from Angeli di Rosora (Ancona), analyzing it as a concrete example of a virtuous entrepreneurial integration between knowledge, work, territory, and people. In 2013, he published the article entitled The Loccioni Model of ‘Responsible Enterprise’. Territory Culture and Social Innovation. From September 2014, he has been attending a six-month visiting period at the Weltethos Institut in Tübingen. He is currently working in Loccioni Group in the fields of internal communication and human resources management. Ann-Charlotte  Teglborg  is an associate professor at ESCP Business School, Paris. She is a member of the research Chair Factory of the future at ESCP. Her research focuses on work transformations and employee-­ driven innovation. Nneka Udeh  is a senior administrative officer with ten years’ experience in management and supervisory positions. She has worked as a supervisor in various sections in her organization and has had cause to deal with numerous ethical challenges in the course of her work. Also, as an effi-

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cient senior administrator she has had several opportunities to practice humanistic management within her organization. Nneka graduated from the University of Nigeria Nsukka with a bachelor’s degree in Combined Biological Sciences. Before her current position as a senior administrator, she worked as a research assistant with a DFID-­funded project PATHS2  in 2009  in Enugu State, Nigeria. In addition to her full-time job as a senior administrative staff of the Institute of Management and Technology [IMT], Enugu, where she is known for her high ethical and professional standards, Nneka is also a part-time English teacher and owns a small company that makes coconut oil. She also enjoys writing, editing, and transcribing academic and research documents or recordings.

List of Figures

Fig. 1.1 Fig. 2.1 Fig. 2.2 Fig. 2.3 Fig. 3.1 Fig. 3.2 Fig. 3.3 Fig. 3.4 Fig. 3.5 Fig. 3.6 Fig. 3.7 Fig. 3.8 Fig. 4.1 Fig. 4.2

Three-stepped approach to humanistic management 3 Net Sales Chart of Matsushita from 1951 to 1980. (Source: Matsushita Corp.) 20 Profit Chart of Matsushita from 1951 to 1980. (Source: Matsushita Corp.) 21 Employment growth of Matsushita from 1951 to 1980. (Source: Matsushita Corp.) 21 Loccioni employees (Social Balance 2018) 35 Loccioni training (Social Balance 2018) 36 Loccioni Bluzone, the talent incubator (Social Balance 2018) 37 Loccioni innovation (Social Balance 2018) 38 Loccioni networks (Social Balance 2018) 40 “Knowledge enterprise” and “knowledge player” features. (From Our knowledge company, Loccioni internal document) 42 Loccioni Organizational Chart (internal document) 49 Personal representation of Loccioni model of humanistic knowledge enterprise 58 Example of the company Manual related to organizational structure. (Source: Extract from Manual produced by Peter King)70 Turning priorities on its head. (Graphics produced by Peter King) 72

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Fig. 4.3 Fig. 4.4 Fig. 4.5 Fig. 4.6 Fig. 4.7 Fig. 4.8 Fig. 4.9 Fig. 4.10 Fig. 4.11 Fig. 4.12 Fig. 4.13 Fig. 12.1 Fig. 12.2 Fig. 12.3 Fig. 12.4

List of Figures

Eliminating working hours. (Source: Extract from Manual produced by Peter King) 73 Original organization chart. (Source: Produced by Peter King) 74 Floating teams structure. (Source: Produced by Peter King) 76 Pressure on employees. (Source: Graphics produced by Peter King) 82 Liberated employees. (Source: Graphics produced by Peter King) 83 No room to work. (Source: Graphics produced by Peter King) 85 Liberated work area. (Source: Graphics produced by Peter King) 86 Self-controlling processes. (Source: Graphics produced by Peter King) 86 Changing the culture. (Source: Graphics produced by Peter King) 87 Financial success. (Source: Graphics produced by Peter King) 88 People growth. (Source: Graphics produced by Peter King) 89 Four characteristics of a “great company” 224 The relationship between superior and subordinates in Confucian-style moral leadership 225 FOTILE’s notion of “trust” and “harmony” between fellow employees226 Employee types concerning acceptance and understanding of FOTILE culture 228

List of Tables

Table 1.1 List of contributions to Humanistic Management in Practice Vol. II Table 2.1 Overview of personnel management of Matsushita electronic Table 2.2 Voluntary early retirement allowance of Panasonic in 2001 to 2002 Table 3.1 Loccioni main features Table 3.2 First charter of values (Loccioni internal document) Table 3.3 Loccioni corporate values Table 3.4 Twelve rules of the winning team (Loccioni internal document)

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1 Introduction Ernst von Kimakowitz, Carlos Largacha-Martínez, Hanna Schirovsky, and Claus Dierksmeier

In 2011, Humanistic Management in Practice, the first book of our Humanism in Business series, came out. Since then, a rich and varied body of knowledge has emerged on humanistic management, compiled E. von Kimakowitz (*) Humanistic Management Center, Humanistic Management Network, Geneva, Switzerland e-mail: [email protected] C. Largacha-Martínez Fundación Universitaria del Área Andina, School of Management, Bogotá, Colombia e-mail: [email protected] H. Schirovsky Weltethos-Institut, University of Tübingen, Tübingen, Baden-Württemberg, Germany e-mail: [email protected] C. Dierksmeier Institute of Political Science, University of Tübingen, Tübingen, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_1

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in 16 books of the series to date. While these books cover a wide range of topics, one question that comes up time and again when talking to, for example, management practitioners, academics, policymakers or journalists alike is: These ideas of humanistic management all sound very well but can you give me some examples of real businesses that are practicing what you preach? Yes we can is our answer and you can find some of them in this second collection of case studies from our book series. With this book, the Humanistic Management Network invites you to tune in and explore examples for humanistic management in practice, thoroughly researched and generously offered by the authors of the cases in this book.

Context Making the requisite progress towards addressing the main challenges we face as a global community is contingent upon business playing a more active role than it does today. And taking up this more active role in turn depends on re-establishing a meaningful relationship between the means and ends of business. In essence, we need to depart from a one-dimensional goal set where maximizing profit is the singular aspiration of a business organization and shift towards the triple bottom line in assessing business success. Being profitable is a necessary condition of sustainability for any business organization, but it is not its raison d’être; profit is a means but not an end in itself. We want prospering businesses in our communities because they deliver goods and services that meet genuine human needs, because they provide livelihoods through employment opportunities, because they allow us to collaborate in creating value and finding innovative solutions to challenges we face. In short: the end of business is to serve society and healthy profits are a means to gain and maintain the capacity for doing so, not vice versa.

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 he Three-Stepped Approach T to Humanistic Management As a guiding framework to support the positive impact business can generate, we have developed the Three-Stepped Approach to Humanistic Management. Combining theoretical insight with empirical evidence has led us to define three main characteristics of companies that seek to do well as much as they do good. These are (1) the unconditional respect for the dignity of life, (2) the integration of ethical reflection in management decisions and (3) the active and ongoing engagement with stakeholders (Fig. 1.1).

Respect for the Dignity of Life The respect for human dignity may seem somewhat remote from business at first sight but it is central to a humanistic management paradigm. A precondition for fruitful human interaction is the mutual respect for one another. Business is human interaction and business leadership is first and foremost about being a human being. Our dignity lies in our capacity to define autonomously the purpose of our existence and business can promote as well as hamper our capacity for doing so. Paying living wages, ensuring safe working conditions or avoiding environmental damages that adversely affect people’s health or their ability to farm their own food are but a few examples of how business can be an agent

Fig. 1.1  Three-stepped approach to humanistic management

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for self-determination and a life in dignity. With humanistic management, businesses do not accept that people create value for the business under undignified conditions and they do not pose preventable limitations on their stakeholders’ ability to live a self-determined life.

Integration of Ethical Reflection in Management Decisions Second, ethical reflection forms an integrated part of business decisions in a humanistic management paradigm. Businesses that are serious about respecting human dignity examine management decisions in terms of their consequences and risks for all those affected. They do not wait for costly public outcry if and when misdemeanour makes the headlines before they respond with corrective action nor do they view CSR programmes only as a tool to manage reputational risks. With humanistic management, businesses think that protecting their integrity by adhering to self-imposed, strong values needs no further reasoning for it is the right thing to do.

Active and Ongoing Engagement with Stakeholders The third hallmark of a humanistic management paradigm is the active and ongoing engagement with stakeholders. Through stakeholder engagement, businesses learn about the interests and concerns of all those who are touched by their operations. Aiming for compromise where interests are in conflict and allowing for the power of the better argument to supersede factual power, they gain and maintain a high level of public legitimacy. With humanistic management, businesses are willing and able to make their decisions transparent and listen to and act upon concerns voiced by their stakeholders. Stakeholder engagement allows businesses to share responsibility and gain insights on public perceptions. This, in turn, provides business intelligence to refine value propositions and promote the ongoing success in the market place.

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In summary, humanistic management follows strategies and practices aimed at the creation of sustainable human welfare. A desire to generate value for society at large is part of the organizational DNA of businesses that embrace the three-stepped approach of humanistic management.

In This Book In this book, you will find 11 diverse examples of businesses that stand out in how they advocate, promote and live by humanistic management principles. Covering different industries, regions, sizes or ownership structures, we are presenting them in the alphabetical order in this introduction. Table 1.1 gives you an overview of the company’s name, industry and the country where it is headquartered. In a post-card-perfect scenery between the Black Forest and Lake Constance lies the town of Engen, home to premier automotive and aerospace supplier ALLSAFE. Everything in this town points towards a slow-moving conservative place, where tradition is valued more than innovation. But you couldn’t be more wrong when it comes to the management style practiced at ALLSAFE, which is taking the concepts of freedom and responsibility in the workplace to new heights. Bold is the statement with which the chapter on Buurtzorg opens when saying that “Buurtzorg Nederland is one of the most talked about and revolutionary cases in community care, and an inspiration for many Table 1.1  List of contributions to Humanistic Management in Practice Vol. II Allsafe Buurtzorg Cucinelli Energeticos Faber-Castell Favi Fotile Hipp Ivory Couture Loccioni Panasonic

Automotive and aerospace supplier Community care Fashion Engineering services Writing instruments Automotive supplier Kitchen appliances Baby food Fashion Engineering Consumer electronics

Germany Netherlands Italy Colombia Germany France China Germany Nigeria Italy Japan

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organizations active in both home care and other industries”. Overstating its case? No! By all means what Buurtzorg has achieved in organizational innovation is astounding and highly admirable. Translating ideas on being purpose driven, collaborative and innovative into a customer-­ centric organization that outperforms its peers in pretty much any measure one wants to apply is as revolutionary as it is inspiring. Brunello Cucinelli is the founder of a line of high-end, luxury fashion and one only needs to go to the company’s website to see the big-lettered claim he makes for his business. It reads: “My Idea of Humanistic Capitalism” and the corresponding text elaborates that it was “life in a farming family that taught me the values of defending life, respecting and helping others, and adopting a spiritual attitude towards nature”. So how does that match up with very luxurious, very exclusive, very pricy fashion items? Read the Brunello Cucinelli story to see how the teachings of Benedict of Norcia and Francis of Assisi inspire and inform this entrepreneur’s type of humanistic management. Engineering services company Energeticos is based in Bogotá, Colombia, and forms part of the Wood Group, an international energy services group, since its acquisition in 2001. Over a period of around seven years starting in the mid-2000s Energeticos developed an organizational culture that stands on two pillars—first, allowing employees to develop and contribute to their potential and, second, removing all barriers that restrict their effectiveness. The company has since grown more than tenfold in its both headcount and revenues, while, rather unusual for an engineering firm, 51% of its employees are female. A family business in the eighth generation is Faber-Castell, producing writing instruments ranging from simple wood-cased pencils to masterfully crafted fine writing pieces. Doing the ordinary extraordinarily well is the ethos that is foundational to this company and it must be working pretty well as this business is operating in the city of Stein in Germany since the year 1761, where it is still headquartered today. This kind of heritage, integrity and a strong sense of family legacy are truly ingrained in the DNA of the business so that at Faber-Castell managing towards the triple bottom line is a non-negotiable enabler of sustainable success in competitive markets.

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The Picardy region in the north of France is home to FAVI (Fonderie et Ateliers du Vimeu), an automotive supplier that is characterized by respect for human dignity, freedom, autonomy and the liberation of workers’ intelligence. FAVI is also engaged strongly with its stakeholders and is anchored in the communities in which it operates. But this has not always been the case. FAVI is a story of deep transformation that has started in the 1980s and has left no stone unturned to deliver an exceptional growth story in a fiercely competitive market. With FOTILE Company, we have a privately owned kitchen appliance maker based in Ningbo, China, in the Zhejiang province, not far from Shanghai. Recognized as the national leader in high-end kitchen appliances, they have also been awarded for implementing sustainable management practices across the whole organization. Unsurprisingly, their efforts are being rewarded. FOTILE was successively rated an ideal brand by Chinese consumers and is ranked first in their industry among the 500 most valued brands in China while it enjoys a market share of over 24% in the high-end segment of the kitchen appliance market. “Companies are living systems of values”, states the author of the case study on baby food producer HiPP.  But which values are driving this family business? Religious and spiritual beliefs are central to understanding how the owners of HiPP arrive at the virtues of ingenuity, equity, courage and temperance as guiding principles for the company. Read this case to learn about the links between “families’, entrepreneurs’, and companies’ values and their role for ethically sustainable business management”. Ivory Couture’s sole owner Mrs. Nneka Ikeyi describes Ivory Couture as a fashion brand offering ready-to-wear retail fashion and bespoke tailoring. Nneka is a fashion entrepreneur that thinks big as she dreams about building a fashion brand that cuts across West Africa. To the founder, development goals are set by both the private and public sectors. She leaves no doubt that as an entrepreneur she has responsibility for working towards achieving the Sustainable Development Goals (SDGs) that were developed by the United Nations in close consultation with members of the business community. Read the case on Ivory Couture to learn how Nneka assumes that responsibility.

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Labelled as a humanistic knowledge enterprise by the author of this case, Loccioni Group is a family business established in 1968 in Italy. The group develops and markets measurement and testing solutions improving the quality of products and processes in the manufacturing and service industry. Doing so is entirely contingent upon the knowledge that exists in the organization but knowledge is not primarily a tool for commercial success at Loccioni but it is seen as a way to promote the self-­ realization of its employees. And as the author found out in an interview with Loccioni’s founder and owner, profit is considered a means allowing the enterprise to thrive in order to realize its social mission of “leaving things better than how we have found them”. Not too many people outside of Japan will know Konosuke Matsushita, but the company he founded is one of the most recognized brands of consumer electronics in the world. It is Panasonic. During the post-war high-growth period of Japanese manufacturing, Panasonic rose to become an innovation leader gaining competitive advantages in international markets. In this case, we can see most clearly how the three-stepped approach to humanistic management can be observed, with Konosuke Matsushita establishing a corporate culture based on respect for human dignity, integrating ethical considerations in all business decisions and actively engaging with the stakeholders of the company.

Values Create Value Many business leaders know that sustaining business success over time depends on a value proposition to society at large. They have a deep sense of responsibility towards the communities in which they operate and act accordingly. Not only at home, but around the globe, not only within their own operations but also along their supply chains, they create shared value and share the value created. Others, however, lag behind and yet have to embrace ideas that establish a meaningful relationship between the means and ends of business. Making progress towards a more sustainable and more equitable planet is an imperative, not an option. We need to step up our efforts to preserve the natural capacity of our planet to

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support life and we need to find more equitable ways to distribute wealth and neither will be possible without the great innovative powers of business. With this book we provide evidence, insights and experiences from applying humanistic management principles towards these goals. With our approach to humanistic management, we provide stimulus, facilitate reflection and offer guidance to individuals and organizations that share our passion for enhancing the positive impact of business towards a more equitable and more sustainable planet.

2 Konosuke Matsushita’s Humanistic Management Naoki Kuriyama

Introduction Konosuke Matsushita (1894–89), the founder of Panasonic, a very successful and broadly representative business leader in the post-war Japan, was a role model to Japanese managers. He was referred to as ‘the god of management’. He founded the original company, Matsushita Electric Housewares Manufacturing Works, in 1918. The company was later incorporated as Matsushita Electric Industrial Company, Ltd. in 1935 (The company has often changed its name in the course of time. Hereafter, the company will be referred to as Matsushita Electronic to avoid confusion). The company’s corporate philosophy was based on human dignity and humanistic management. After the war, Matsushita was eager to develop his ideas through his business and contribute socially by creating new institutions.

N. Kuriyama (*) Faculty of Business Administration, Soka University, Hachioji, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_2

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This chapter will focus on Matsushita’s management philosophy and practices in regard to humanistic management. After reviewing his application of humanistic management with workers and other stakeholders, a bottom-up approach initiated and executed by Matsushita is identified as a typical Japanese method of humanistic management. Japanese employers like Matsushita have often described their management approach as humanistic management or human-centred management because they regarded the protection of employment, known as the lifetime employment system, as a management priority. The seniority-­ based wage system under the lifetime employment system secures a stable family life. According to this wage system, the salary is commensurate with the costs of life events such as marriage, housing, and subsequent costs associated with an increase in family size. Enterprise-based unions support harmonious labour-management relationships and attain high productivity enhancement in manufacturing industries. These features of Japanese management achieve both cultural and rational strategic outcomes. Human-centred management leads to an increase in employee commitment and process innovation, which is also an integral part of the cost leadership strategy, and competitive advantages in the international market (Kuriyama 2017, pp. 7–11). Matsushita established a new frontier for better working conditions, human resource development, and cohabitant networks with retailers, suppliers, and labour unions. His management practices cascaded into leading business sectors in Japanese industries during the high-growth period of the Japanese economy. His symbolic leadership style influenced several business leaders in Matsushita Electronic and other Japanese industries. Schein (1985) explained that symbolic leadership can promote corporate culture through a leader’s attention, messages, and behaviour. Matsushita passed away in 1989, and his successors tried to keep the business afloat in a challenging and dynamic business environment. The company underwent a huge employment restructuring, which seemed to be a move away from the humanistic management approach of Matsushita. The name of Matsushita Electronic was changed to Panasonic in 2008. However, the information on Panasonic’s website reveals that Matsushita’s

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values make up the core of Panasonic’s corporate philosophy and values. Although Panasonic has been restructuring its business, it has not altered its core value of humanistic management by Matsushita.

 anagement Philosophy and Practices M of Matsushita  atsushita and the Three Guiding Principles M of Humanistic Management Matsushita’s way of thinking and management practices fit with the three-stepped approach to humanistic management. First, respect to human dignity was the primary principle of his management approach. He often emphasized that respecting humanity and human beings is the most important aspect of management. In this context, the mission of the corporation was to overcome poverty and serve the society. Matsushita placed management priority on employment security because most of the general staff wanted to earn a regular income for leading a happy family life. As per Kant, ‘every human must always be seen as an end in itself, and never as a mere means’ (Kant 1785). The need to respect human dignity unconditionally is based on human rights laws, and Matsushita complied with this law by adopting a humanistic approach for managing the workers and unions of his company. Employees can decide to become instrumental in their respective organizations’ growth to enhance clarity and comprehensiveness and work autonomously with self-determination. Matsushita promoted employee autonomy to break the restraints of corporate governance. He promoted better working conditions and autonomous decision making by division of power delegation and responsibility. In his numerous essays, Matsushita believed in the unlimited potentials of human beings. He tried to realise human potential through intrinsic motivation, and he trusted the creative and innovative nature that resulted from such motivation. He respected human dignity not only by

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complying with human rights laws but also by promoting positive aspects of freedom through better working conditions. Second, Matsushita emphasized the ethical considerations of management decisions. He was a very humble decision-maker and trusted ‘collective wisdom’. Badaracco (2002) suggested that ‘many big problems can only be resolved by a long series of small efforts.’ The ‘quiet leaders’ make ethical decisions instantly and thereby enact changes through small efforts at workplaces with virtues of restraint, modesty, and tenacity (Badaracco 2009, p. 387). He established the PHP Institute in 1961 to conduct studies on diverse subjects focussed on human and society. PHP stands for ‘Peace and Happiness through Prosperity’. Last, he extended dialogic engagement with stakeholders. In particular, he was heavily engaged in dialogue with workers, labour unions, retailers, and suppliers. These relationships were not always interdependent but also very exclusive. Occasionally, they were in serious conflict with each other, but Matsushita treated them as equal partners. He sent several illustrative messages to various stakeholders, which symbolized ‘coexistence and mutual prosperity’ to the various stakeholders.

 he Original Philosophy and Practices T in the Pre-war Period The Great Recession occurred in 1929. General Motors in the US laid off nearly 50 per cent of its employees. Unemployment became a serious social problem in the US. This recession also had adverse impacts on Matsushita Electronic. Sales were down by more than half by December 1929. Matsushita did not agree with the proposal of his subordinate suggesting a large-scale dismissal of employees. He did not agree with employee dismissal but suggested reducing production to half of the working days without reducing wages. He requested employees to do their best to stock the backlog. He insisted on exercising patience and refraining from dismissing employees, as layoffs would jeopardize the corporate mission. This strengthened employees’

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motivation and commitment and solidified the corporate vision (Matsushita 1986, pp. 202–203). Kotter (1997, p. 94) indicated that ‘a no-layoff policy was adopted by major businesses in Japan only after World War II and has never been the norm among minor businesses. In 1929, there was no tradition of dealing with downturns by shifting manufacturing employees into sales’. In 1931, Matsushita experienced the first big loss in his business; he assessed the reasons behind this failure and identified three mistakes (Kino 2016). First, he delegated responsibilities to subordinates at their lowest points. Second, he wanted every product of Matsushita Electric to be a bestseller. Third, he solely concentrated on making quick profits. Matsushita referred to this management approach as low road (ja-do). He renewed the management approach in the following manner and order: providing useful products to customers, improving technology and using customer-friendly and error-free production systems, and selling products that are 30 per cent cheaper than the former products. In particular, he asserted that, in the past, the absence of founding principles was a grievous oversight. Matsushita declared the ‘mission of industrialists’ at the plenary meeting of the company in 1932. He insisted that the mission of an industrialist is poverty alleviation (Matsushita 1988). The purpose of business and production is to enrich the society and not to benefit an enterprise or factory. In this context, enterprises and factories must be developed along the lines of this purpose. Poverty can be alleviated by producing goods and providing them at the lowest possible prices (author’s summary and translation). Additionally, Matsushita presented a development plan for the next 250 years to the employees during the plenary meeting. Several employees were motivated by the plan, and many among them publicly announced their commitment towards achieving Matsushita’s vision during this meeting (Matsushita 1986). This far-reaching and humanitarian goal (Kotter 1997, p. 119) united all the employees under the same corporate mission. The ideas of this mission statement were hinged upon the exploration of unlimited human potential, which can be regarded as the ‘self-­ actualization’ model (Sakashita 1997, pp.  22–23). He established the

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PHP Institute in 1946 to conduct studies on diverse subjects focussed on man and society and disseminate his ideas to the post-war Japanese industry and society. Through this institute, Matsushita propagated the message that ‘humans are naturally endowed with the possibility for limitless prosperity, peace, and happiness’ (http://www.php.co.jp/en/message.php). This statement formed the basis of Matsushita’s popular ‘water-supply philosophy’. A business can alleviate poverty by producing goods abundantly and supplying them at very reasonable prices like water to the poor. In other words, the availability of abundant goods as ‘readily as running water’ can achieve the preconditions for material and spiritual prosperity (http://www.php.co.jp/en/think.php). Sakashita (1997) pointed out that the water-supply philosophy resulted in the setting of the subsequent corporate strategy of Matsushita Electronic. The supply of cheap and quality products comprise the prime focus of a ‘cost leadership strategy’, and they are manufactured using economies of scale and process innovation within the relational network of employees, suppliers, and retailers. Kotter (1997, p. 119) pointed out that Matsushita promoted employee ownership and psychological ownership among those in his distribution system. He developed a corporate pamphlet to communicate his ideas to the sales agents. The pamphlet said, ‘If you think of the manufacturer as being the factory of a sales agent, and the sales agent as being a branch office of a manufacturer, you will understand why it is necessary for both to exert great efforts to help each other…. I have gradually come to believe that we must cooperate with each other in order to attain mutual prosperity and to create lives filled with welfare’.

Empowerment Through the Division System Matsushita reorganized the firm by product lines to execute the corporate philosophy. The four major product groups comprising radio, lamps and battery, wires and resins, and heating appliances were established in 1933. Each division autonomously manages its factory and sales offices. To the

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best of our knowledge, this might be the first company to have adopted such a divisional structure. Matsushita clarified the following two goals of the division system: delegation of authority and responsibility will lead to the growth of an increasing number of employees in their jobs and this delegation equips managers and their successors with the requisite skills. A large company made up of smaller companies can take advantage of smaller business units having flexible specialization (Piore and Sable 1984). Matsushita noted that ‘it was possible through careful management to achieve the kind of mobile production activity that can respond immediately to market trends, one of the greatest strength of a small business’. He also emphasized that having more responsibilities can facilitate employee self-­ development (Konosuke Matsushita 1983). While the division system boosted the business of Matsushita, it strained the company’s human resources. Matsushita responded to this need to invest more on human resources development. Matsushita established a sales training institute in 1934 and a factory workers training facility in 1936. These institutes provided courses not only to develop job-related knowledge and skills but also to understand the company’s mission, its principles, its organizing methods, and its culture (Kotter 1997, pp. 131–132). The humble attitude of Matsushita promoted the division of the large corporation into smaller units. He said to the employees that ‘no matter how large Matsushita Electronic might become in the future, never forget to maintain the modest attitude of a merchant. Think of yourselves as being employed in a small store, and carry out your work with simplicity, frugality, and humility’. Kotter (1997, p. 174) pointed out that one of the most important lessons for Matsushita from World War II was regarding the perils of hubris. He was convinced that the best merchants are open to new ideas and have a modest attitude, whereas the military and government leaders are often rigid and dogmatic. Matsushita regarded the development and sharing of collective wisdom as an important mechanism to achieve the company’s mission (Kotter 1997, p. 185).

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 uilding Constructive Labour-Management Relations B in the Post-war High-Growth Period The economic and social situation was unstable and chaotic during the first five years of the post-war period. A confrontative labour movement culminated when the general headquarters of the allied forces (GHQ) ordered the suspension of the general strike in Japan in 1947. After the war, Matsushita was accused of war crime and assigned a list of purges from public status. The GHQ ordered the dissolution of Zaibatu (major industrial group), and Matsushita Electronic was accused of supporting the Japanese military forces. He tried to make a petition to the government and the GHQ for the removal of his name from the purge list. The accusation was turned down in 1947. The labour movement was started for ensuring labour rights and enabling employees to confront the employers. In January 1946, the Matsushita Union was inaugurated in Osaka, and the inauguration saw the attendance of around 6000 workers. The code of conduct for democratized union movement was adopted and several demands, including freedom of association and effective recognition of collective bargaining, were agreed. The union also demanded worker participation in management and the abolition of the worker status. Matsushita made an unexpected appearance at the event and after consultation with the company’s chairman, who was in disagreement with some union members, addressed the union workers. He congratulated the workers and welcomed the creation of a labour union because he regarded trade union as an important organ of the management that represents democracy. He agreed to all the demands of the union as he believed that such fair demands of the union coincide with management’s values. This decision reportedly won him tremendous appreciation. The Matsushita Union was actively involved in petitioning for the removal of Matsushita from purge lists. The union believed that it could neither sustain the company without Matsushita nor function without his leadership. In the beginning of 1947, the notice of exclusion of Matsushita from the purge list was released.

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Matsushita tried to keep his promise with the union. The monthly management consultation meeting comprising the top management and labour union has been held since July 1946. His integrity gained the trust of the members in the union. He called the principle of labour-­ management relations is ‘confrontation and harmony’ on the one hand, the union say ‘check and balance’ on the other. These two principles create shared value for both the workers and management (Takahata 1982, p. 28). The creation of shared value with the workers on this occasion was indicative of the humanistic management approach adopted by Matsushita. The freedom of association and the effective recognition of the right to collective bargaining is one of the most important conventions out of the core eight of the International Labour Organization (ILO), which were universally agreed as the basis of human rights and human dignity introduced in 1998.

 espective Decline and Growth in Employment R and Profits In 1949, the period before which Matsushita Electronic expanded its business, the Japanese economy witnessed a deflationary spiral; many customer companies in the electronic industry shut down during this period. Matsushita Electronic had difficulty paying employees. Subsequently, in 1950, it had to cutback employment and early retirement to willing employees; thus, out of 4438 employees, the employment of 567 employees was terminated during the period. This was the first time that Matsushita announced a layoff. Matsushita expressed his sorrow in the following words: ‘it was the most unwilling and desolate experience in my life’ (Matsushita, Nikkeishimbun, ‘Yumewosodateru watashino rirekisyo’ 2001). Employee dismissal was the last resort, and Matsushita avoided it to the maximum possible extent. However, he regretted the decision, which was driven by the unstable scenario in the post-war period (Matsushita (1988) Quest for prosperity, p. 253).

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The Japanese businesses were restored from ashes. In particular, the first economic boom during the 1950s was triggered by the ‘special procurements’ of the US forces during the Korean War. Matsushita reinstituted the division system in 1950. Matsushita Electronics witnessed a rapid growth in net sales and profits due to this economic boom in Japan, as shown in Figs. 2.1 and 2.2. Dry battery, radio, and light bulb became the top sales items in the first ten years since the establishment of the company. In the subsequent decades, the company witnessed a growth in the sales of other electric appliances, such as television, washing machine, and refrigerator. In addition, prior to clocking a sales and profit growth, the company witnessed a steady employment growth, as indicated in Fig. 2.3. Matsushita pioneered the economic development of Japan for three decades; however, his contribution could not last until the oil crisis that occurred in 1973.

hundred million yen

25000

Net Sales

20000 15000 10000 5000 0

195119531955195719591961196319651967196919711973197519771979

years

Fig. 2.1  Net Sales Chart of Matsushita from 1951 to 1980. (Source: Matsushita Corp.)

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1600

21

Profit

hundred million yen

1400 1200 1000 800 600 400 200 0

1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979

Fig. 2.2  Profit Chart of Matsushita from 1951 to 1980. (Source: Matsushita Corp.)

80000

employees

70000 60000 50000 40000 30000 20000 10000 0

1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 employees

Fig. 2.3  Employment growth of Matsushita from 1951 to 1980. (Source: Matsushita Corp.)

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 dopting Japanese Humanistic Management A Approach: An Ethical Reflection Improving Quality for Improving Productivity at Low Cost Matsushita Electronic implemented the ‘30 per cent cheaper and better quality’ strategy, based on Matsushita’s water-supply philosophy. This strategy corresponded to the core value of the national productivity movement in Japan that started in 1955. The Japanese national employers’ organization and unions adhered to this value and supported this movement, which was financially subsidized by the government. The key provisions in the guiding principles of this movement are as follows: employment security, fair distribution of productivity gains, and information sharing between labour and management. The execution of these principles contributed towards increasing the commitment of workers and enhancing cooperation between co-workers (Kuriyama 2017). The Japanese employers often assert that they follow the ‘humanistic management’ approach, and this is reflected in the provision of Japanese management to secure the average Japanese workers’ demands, including job security, fair treatment, and information sharing. These provisions cover all the regular workers, including blue-collar workers. The high commitment of Japanese workers as a source of competitive advantage attracted the attention of the international business community, practitioners, and academics, especially in the late 1980s. Kotter (1997) summarized the philosophy of Matsushita as follows. First, Matsushita clarified the purpose of the private company. He never mentioned maximizing shareholder gains. The principal role of the company’s management is to respond to and fulfil the desire of human beings to improve the quality of their lives (Matsushita 1978). Second, he emphasized the importance of the human side of management. He pointed out the importance of long-term employment perspectives because skill, determination, and motivation of employees always play a key role in the long term. He asserted that human beings have the power of choice. Matsushita said that ‘people are free agents, responsible

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for their own destiny. They have a choice (PHP 1994, p. 3). If they have no choice, it would be crippling and disempowering’. Third, Matsushita emphasized the empowerment of employees and information sharing between them. He said that the most effective way of human resource development is to delegate real authority and responsibility because giving orders to employees consistently denies them the opportunity to learn and grow. In addition, employees fail to make intelligent decisions or assess the impact of those decisions without information.

Pioneering Advanced Working Conditions Matsushita led the most advanced policy on working conditions during working hours and stable working life. He provided healthy work environment to the employees, which indicated that he placed human welfare at the core of the management. Based on the concept of long-term employment until the retirement age, Matsushita Electronic planned lifelong benefits for employees according to their life events, as shown in Table 2.1. Table 2.1  Overview of personnel management of Matsushita electronic Life events Working time Wages Benefit Leaves Allowances Mutual aid Pension Welfare

Recruitment membership marriage maternity child-education transfer, disease & disasters, retirement A five-day work week Job-based wages Periodical bonus for summer and winter and retirement allowance Paid leave, menstrual leave, public leave, maternity leave, leaves for weddings and funerals Congratulatory and condolence money, consolation payment, absence payment Loan from company for wedding, maternity, education, funerals, and other special occasions Corporate pension system after retirement Matsushita Hospital, resort facilities, employee stock ownership

Source: Minoru Suzuki (1967) Matsushita Denki no Roumukanri (Personnel Management of Matsushita), p. 14

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Matsushita proposed 5 working days and 40 hours a week in 1960, and it was implemented in 1965. It was beyond the expectations of the union. The aim of this proposal was to promote employee welfare through healthy work conditions in a manner that it enables employees to improve their morale and productivity. With this proposal, he envisaged the enhancement of competitiveness in international market. In 1960, the union opposed the possible labour intensification that would occur because of the implementation of the proposal, but the opposition weakened during the five years to 1965. In 1962, Matsushita formed a joint study group comprising managers and union leaders to build consensus for implementation of the proposal; the meetings of this group were held during the five-day work week. The union gave its consensus on the condition of steady maintenance of production and wage levels. Matsushita Electronic was the first large-­ scale Japanese company to introduce a five-day work week system. Matsushita pioneered the introduction of several advanced systems that improved working conditions, including wages, leaves, and other fringe benefits, as shown in Table 2.1. The labour union of Matsushita electronic did not compromise on the provision of healthy work conditions, and the workers realized the mutual benefits under this provision according to the union’s guiding principle ‘revitalization of humanity’. After the war, the value of happiness for the average workers was based on having a happy family life. The union submitted a five-year programme for home ownership in 1964. Subsequently, the personnel department propagated the ‘Own your home at the age of 35’ campaign in the same year. The workers’ welfare foundation started providing housing loan during this period and developed the land for housing. This plan was updated in 1966 and 1967. Matsushita published a proposition titled ‘New Perspectives on Humans’ in 1972. He emphasized the supreme human nature and its inherent need for mutual respect. The human nature is embedded with enormous potential, intrinsic motivation, and behaviour. Owing to this human nature, he insisted placing people at the centre of management, and hence Matsushita’s management style was referred to as ‘humanistic management’ (Yoshida, p.  205). The commitment of the employer towards this management approach was evident in its dialogue with the employees, which consequently increased the commitment and satisfaction of workers.

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Active Stakeholder Engagement Through Dialogues Workers The joint consultation body comprising the labour union and managers was set up in 1956. The committee met once a month to share insights on topical issues for facilitating mutual understanding. Matsushita stressed that the purpose of union’s participation in management is to promote humanization at workplaces and stabilize employment. After the presentation by Matsushita on the corporate policy of respecting humanity, a policy for upgrading part-time workers to regular worker status (Teiji-syain system) was proposed in 1970. In 1978, workers’ participation in management was upgraded, which allowed the workers to participate in information sharing that took place across the board— from the top management level to the factory level. In particular, the operational committee at the workshop level communicated with the management on behalf of the rank-and-file workers.

R  etailers Matsushita sent many complimentary cards with his personal signature to the stakeholders with the message ‘Kyozon-Kyoei’, which means coexistence and mutual prosperity. Matsushita focussed on the rapid expansion of effective sales outlets. He expanded the external sales networks by partnering with small shops and retailers. There were 6000 such shops in 1949, which increased to more than 30,000 in 1950 and to 40,000 from 1956 to 1961. However, in the next five years, ineffective outlets were closed, leading to a decline in the number of outlets, from 32,000 to 34,000 (Shimotani 1998, p.  193). Matsushita awarded the high-­ performance shops. Frequent study meetings on technology and sales were organized. Matsushita provided support in various forms, such as shop reform, electrical signboards, and bonuses to shops that agreed exclusive sales to Matsushita (Shimotani, p.  196). Matsushita selected high-performing sales shops in 1957. Selective ratings were assigned to sales agents that worked exclusively for Matsushita. In addition,

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Matsushita established finance loan companies for the customers, which increased from 9 in 1951 to 30 in 1955. These networks embodied the spirit of ‘Kyozon-Kyoei’ (coexistence and mutual prosperity). In 1964, the sales of goods decreased because of the saturation of the black and white television sets and economic recession. Out of 170 stores, 20 stores had balance of payments surpluses. Matsushita conducted a three-day meeting in Japan; the meeting comprised 200 sales agents at a hotel of Atami, a resort city, for 3 days. During the meeting, he distributed his autobiography, which also focused on Kyozon-Kyoei, to the participants. Matsushita explained the reasons behind the decline in sales; furthermore, he apologized to the sales agents as he believed that the company’s management was responsible for this decline. First, he attributed the bad sales performance to the leadership gaps at Matsushita Electronic. As per Matsushita, Matsushita Electronic possessed the requisite capabilities for improving sales performances. Second, he stressed on the need for reflecting on the founding principles and training the managerial staff of Matsushita. Third, since the sales agents contributed to Matsushita Electronic, it was the duty of the company to contribute towards the mutual prosperity of the sales agents. His speech made a deep positive impact on the participants. They understood the integrity of Matsushita, which is an important factor for symbolic leadership. After the event, Matsushita took initiatives to implement his idea. His initiatives proved to be a turning point for the company; the company witnessed a recovery in net sales, which surged in 1966. Although the exclusive networks of sales agents were weakened due to the governmental measures on unfair business practices and an increase in the number of mass retailers, Matsushita’s idea of mutual prosperity materialized as a policy for sales agents.

Suppliers Matsushita established a suppliers’ association in 1970; the association comprised of around 6000 suppliers. These suppliers heavily depended on the production orders from Matsushita Electronic. For improving quality and productivity, Matsushita wanted the suppliers’ association to

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be proactive and autonomous like the suppliers’ association of Japan’s automobile industry. In 1971, the company selected 224 high-­ performance suppliers as Kyoei-kai (mutual prosperity association) members. This association aimed at upgrading production capacity, developing human resources, and sharing information and welfare benefits. The member suppliers were divided into nine groups according to the type of manufacturing, such as assembling, components processing, and moulding. In 1979, the association expanded its range of activities to include not only production and technology but also general management, personnel management, occupational health, and safety and corporate welfare. Matsushita strengthened the ratings of the suppliers; he also expected them to develop the entire management capability autonomously.

 ompany’s Management and Philosophy C of Succeeding Matsushita After the retirement of Matsushita, a series of successors were chosen, including Yamashita, Morishita, Nakamura, Otsubo, and Tsuga, who is the current CEO of the company, to manage the company (at least in 2019). These CEOs reportedly changed the management approach that was adopted by Matsushita. Kunio Nakamura took charge in the year 2000, during which Matsushita Electronic fell into financial loss several times. He executed reforms that were radically different from the traditional management approach. He referred to the change in the following words: ‘destruction and creation’ (Okumura 2012, p. 17). The media pointed out that the company had ceased to follow Matsushita’s approach, and this was evident in its announcement to lay off 13,000 employees in 2001. However, an analysis of the reason behind this layoff would reveal that the reduction was carried out in a calculated manner by taking into consideration employment security, which forms the core value of Matsushita Electronic (Itami et  al. 2007). A large-scale transfer was redeployed. Subsequently, the plan for a generous ‘voluntary early retirement allowance’ was released; there were more than 13,000 applications for the voluntary early

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Table 2.2  Voluntary early retirement allowance of Panasonic in 2001 to 2002 Coverage

Length of work

Period

Application: September 2001 to January 2002 Retirement: Until the end of March 2002 Additional special allowance for life plan Managers Age 50 Half of the annual income until to 58 60 years. Maximum: annual income covering 2.5 years or allowance equating to 45 months’ salary for the senior manager Less Equating to nine months’ to than 49 38 months’ wages Employees Age 45 Maximum: ‘annual income covering to 58 2.5 years or 40 months’ wages Less Fixed amount than 44

Addition to the fixed retirement allowance

Source: Itami (2004) Kigyo Senryaku Hakusyo (White Paper of Corporate Strategy, 2003), Toyokeizaishinnposya publication

retirement allowance plan (Itami et al. p. 22). As shown in Table 2.2, the usual benchmark of early retirement allowance provided by the large Japanese companies equated to 24 months’ salary in addition to the fixed retirement allowance. In Matsushita Electronic, this allowance equated to the salary for 40 months, 45 months, and 50 months for union members, section chief, and department chief, respectively. It was double the amount of allowance usually given by such companies. It was believed that managers received 50 million yen (450,000 USD at that time) as an additional allowance. Therefore, owing to the size of the allowance, the employees chose to retire wilfully, and hence it would be apt to state that employees’ retirement was not subject to any form of compulsion (Itami et al. 2007, p. 42). The core value of humanity is not to secure lifetime employment, but it means to grow as a human being and to develop potentials according to one’s strength (Itami et al. 2007, p. 266). Nakamura understood that the concept of ‘Kyozon-Kyoei’ (coexistence and mutual prosperity) by Matsushita applies to hard-working and independent employees (Itami et al. 2007, p. 268).

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Japanese industrial relations and human resource management after World War II suggest an effective way of creating shared value with stakeholders. Konosuke Matsushita, the founder of Panasonic, practiced symbolic leadership not only with workers but also with retailers and suppliers by embracing the principles of ‘collective wisdom’ and ‘coexistence and prosperity’. Matsushita’s management philosophy and practices fit with the three-­ stepped approach to humanistic management. His humanistic management is different from classical management in Western countries. Flexible application creating shared values with various stakeholders is different from top-down, standard-setting classical management. The bottom-up approach with stakeholders that Matsushita initiated and executed can be identified as a humanistic management method. This approach is useful to share with Asian and other cultures. The Panasonic Corporation could face several challenges in future. The leaders of Panasonic should execute innovative management measures, based on the corporate philosophy of the founder, as their core value.

References Badaracco, J. (2002). Leading Quietly. Harvard Business School Press. Badaracco, J. (2009). Quiet Leadership: A Way to Sustainable Positive Change. In Humanism in Business. Cambridge University Press. Itami, H. et  al. (2007). Matsushita Denki no Keiei Kaikaku [Management Revolution at Matsushita Electric Industrial]. Yuhikaku. Kant, I. (1785). Groundwork of the Metaphysic of Morals. Koenigsberg. Kino, C. (2016, December). The Noble Path of Humanistic Management Practiced by Konosuke Matsushita. The Review of Business Administration, 41(1). The Business Admiration Society of Soka University. Kotter, J. P. (1997). Matsushita Leadership; Lessons from the 20th Century’s Most Remarkable Entrepreneur. New York: The Free Press. Kuriyama, N. (2017). Japanese Human Resource Management; Labour-­ Management Relations and Supply Chain Management in Asia. Palgrave Macmillan Asian Business Series, Chapter 1 and Chapter 2. Matsushita, K. (1978). Jissen Keiei Tetsugaku (My Management Philosophy) (p. 9). PHP.

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Matsushita, K. (1983). His Life and Thoughts (p. 28). Hirakata, Japan: Overseas Training Center, Matsushita Electric. Matsushita, K. (1986). Watashi no Ikikata Kangaekata (My Way of Going and Thinking). Jitsugo no Nihon sya, pp. 254–261. Matsushita, K. (1988). Quest for Prosperity (pp. 202–203). PHP Institute. Matsushita, K. (2001). Yumewosodateru watashino rirekisyo. Nikkeishimbun. Matsushita’s Autobiography. (1988). Quest for Prosperity. PHP Institute, pp. 202, 203. Okumura, H. (2012). Panasonic wa Owarunoka (Does Panasonic Finish?). Tokyo: Toyo Keizai Shimpo-sya. Piore, M. J., & Sable, C. F. (1984). The Second Industrial Divide: Possibilities for Prosperity. New York: Basic Books. Sakashita, A. (1997). Matsushita Konosuke. In Nihonteki Keiei no Honryu (Main Stream of Japanese Management) (pp. 22–23). PHP Institute. Schein, E. (1985). Organizational Culture and Leadership. Jossey-Bass Inc. Shimotani, M. (1998). Matsushita Group no Rekishi to Kouzou (The History and Structure of Matsushita Group). Yuhikaku. Suzuki, M. (1967). Matsushita Denki no Roumukanri (Personnel Management of Matsushita), p. 14. Takahata, K. (1982). Ketsudan to Chosen (Decision and Challenges the Original Point of Thinking of Matsushita Labour Union) (p. 160). PHP Institute. The PHP Group. (1994) PHP, p. 3.

3 The Loccioni Model of “Humanistic Knowledge Enterprise” Francesco De Stefano

 he Humanistic Commitment T of Loccioni Group History and Evolution Loccioni Group is a family company situated in Marche Region (Ancona, Italy) and established in 1968 by Enrico Loccioni. The Group has been developing measure and test solutions to improve the quality of products and processes for the manufacturing and service industry (Table 3.1).1 The history of the Group2 is rooted in the cultural heritage of Benedictine monks and sharecrop farmers within St. Clemente valley, which Enrico Loccioni’s family belonged to. The deep relationship with such local farming tradition has had a strong influence on the Group business model and values development. In particular, from the

F. De Stefano (*) Department of Human Resources, Loccioni, Angeli di Rosora, Italy © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_3

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Table 3.1  Loccioni main features Owner

Loccioni family

Staff

394 direct employees 50% university degree Average age 34 Angeli di Rosora (Italy) | HQ and Engineering Facility Moie di Maiolati (Italy) | Engineering Facility Washington DC (USA) |Loccioni USA Inc Shanghai (China) |Loccioni China Ltd Calw (Germany) | Loccioni Deutschland GmbH €80 million Installations in over 45 countries worldwide > 5% of sales 5 laboratories for applied R&D 1 laboratory for basic research (R&I) All MIUR certified 5% of the direct staff cost

Sites

Sales R&D R&I

Training

agricultural community Enrico Loccioni inherited the habit of working in uncertainty of the seasons, the strength to restart again and again, the learning from imitation and the crop diversification to reduce the risk.3 Furthermore, traditional values like obstinacy, will, parsimony, sense of proportion, caution not to waste, saving and solidarity have established the basis of Loccioni Group corporate culture, guiding the entrepreneur’s view during the time. Another fundamental influence in the history of the enterprise was due to the figure of some entrepreneurs, which Enrico Loccioni considers as models to follow: Aristide Merloni,4 because of “his courage in establishing something new”, Enrico Mattei,5 for “his capacity of being a public man, going over mere profitable interests”, Werner Von Siemens, due to “his ability of integrating people and technology, building a sustainable approach in all activities and towards employees, customers and suppliers”, Robert Bosch, since “his enterprise model has been able to survive even after his death, showing the social orientation of its activities”.6 Furthermore, a particular place in the entrepreneur inspirational background is taken by Camillo and Adriano Olivetti, because of their capacity to build and develop a person-centred and value-oriented company and promote social responsibility towards the territory and its community.7

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For the first 20 years, Loccioni Group has been engaged in the field of industrial electric plant engineering, carrying on activities at the service of industry. From the beginning, the idea of focusing on the competence of “measure” has brought the company to face different market challenges at the aim of quality improvement, rather than developing repetitive manufacturing production. The increasing necessity of acquiring new knowledge to be integrated in the solutions requested by customers has been driving Loccioni Group to develop projects rather than products, creating a strong collaboration relationship with schools, universities and research centres, through which the Group had the possibility to acquire and practice new competences. In order to respond to various problems related to quality control, the enterprise started to apply the know-how of measurement to different business fields, diversifying its markets. In such a way, the Group reached soon the international leadership in home appliances and car components testing, developing competences in the productive processes of automation technologies. In the 1990s, the competence of measure began to be applied to telecommunications, ICT and environmental monitoring, defining even more clearly the organizational features of the Group. During this period, indeed, the company progressively assumed the traits of a “knowledge intensive organization” (Sveiby 1992), solving complex problems which require creativity and diversified competences, developing a diffused leadership and a horizontal structure, investing in research and development, and establishing collaborative networks to acquire, diffuse and share knowledge among stakeholders (Fig. 3.5). Within such a context, since 2000 new business challenges have been faced: the development of ICT measurement in the energy sector and the advancement of technological solution for healthcare, nutrition and wellness, led the Group to focus on sustainability, efficiency and energy self-­ sufficiency as one of the main fields to invest on. The realization of Leaf Community, an eco-sustainable completely integrated system of buildings and renewable energy sources,8 signed a crucial step in the making of innovation and design of the future as the Group key competitive advantage. The historical evolution of the Group suggests how the acquisition, application, enrichment and renovation of employees’ competences have been playing a crucial role for the enterprise success: “people knowledge,

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their know-how and intellectual skills are the real heritage of the enterprise”.9 This has implied the remarkable increase of Loccioni employees’ educational level in the time (Fig. 3.1), the development of people training (Fig. 3.2) and talent management projects (Fig. 3.3), the investments on R&D and innovation processes with consequent new knowledge generation, application and sharing (Fig. 3.4). The successful use of people knowledge as technological innovation and business development driving force has brought the Group to increment its turnover by two and a half times from the beginning of 2000 to 2012 (Varvelli 2014, p. 8). The idea of establishing its own activities on emerging quality measurement challenges, which evolve continuously, has been involving the necessity for the Group to maintain itself as a “young enterprise”.10 This means remaining always available to renew and update the Group business units, according to changing requests coming from markets. To this purpose, then, it is fundamental to aim for recently graduated young employees, who invest their just acquired knowledge within the enterprise, transforming it in specific competences to realize innovative technological solutions. For this reason, in the Loccioni model of “knowledge enterprise” the element of people—the ones to look for and how to get and train them—is the crucial point for the Group longevity and its sustainability in the time (Fig. 3.5).11

Corporate Culture While it is the most driving force of economical success, the employment of knowledge within Loccioni Group seems to go beyond the mere exploitation of it as an instrument for profit, since it is conceived primarily as a way to promote human realization through work. In this sense, the enterprise “growth”, according to Enrico Loccioni, has to be developed in “a qualitative sense, rather than a quantitative one”, that is to say in relation to the “improvement of people’s life”.12 Profit, in such a perspective, is considered as a “means” that allows the enterprise to thrive, in

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Fig. 3.1  Loccioni employees (Social Balance 2018)

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Fig. 3.2  Loccioni training (Social Balance 2018)

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Fig. 3.3  Loccioni Bluzone, the talent incubator (Social Balance 2018)

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Fig. 3.4  Loccioni innovation (Social Balance 2018)

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Fig. 3.4  (continued)

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Fig. 3.5  Loccioni networks (Social Balance 2018)

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order to realize the social mission of “leaving things better than how we have found them”.13 Such commitment seems to emerge starting from the Group business choices: the competences of measure, testing and automation are applied with the aim of solving urgent problems in relation to different human necessities and environmental risks (like safe transports, energy saving, pollution reduction, comfortable living, etc.), and so to improve human life through technological development and integration.14 Therefore, what Loccioni intends to do through business derives from considering human beings’ needs and well-being as the ultimate goal which profit-making has to be at the service of. In this sense, the mission of the Group, namely to “integrate ideas, people, technologies to transform data into values”,15 can be intended as an engagement towards society, by which the company develops and increases its know-­ how at the service of human life improvement. Such feature reveals a business model which lays its foundation on a humanistic-oriented commitment. In this sense, the necessity for the company to make profit is not ignored or underestimated but is subordinated to the higher value of contributing to human needs fulfilment. Profit, then, is an instrument for the enterprise “to do something else”.16 This becomes even more visible if we analyse those concepts of Loccioni corporate culture which specifically regard the relation among people, knowledge and work. In this sense, one of the most interesting aspect is the notion of “Play Factory”.17 It expresses a conception of entrepreneurship, which implies a particular way of designing, making and creating value, through the application of human capabilities in their “entirety”.18 In the dimension of “play”, indeed, multiple human dimensions harmoniously coexist, and if work is conceived as play, it can generate creativity, innovation and human growth. Such perspective displays the intention of developing work as a way to realize human intellectual potentialities and so to allow people capabilities to flourish. The “Play Factory” is described by Enrico Loccioni in these terms: The Play Factory does not offer jobs but a place where to work, express potentials and succeed personally and professionally. The Play Factory is our way of being enterprise of knowledge, where there are no employees

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Fig. 3.6  “Knowledge enterprise” and “knowledge player” features. (From Our knowledge company, Loccioni internal document)

but entrepreneur collaborators, work shareholders, who invest their knowledge in the enterprise and share its results. (Varvelli 2014, p. 48)

Such a vision is intrinsically connected with Loccioni Group promotion of its employees as “knowledge players”, that is to say, people who yearn for improving and realizing their know-how and intellectual capabilities through work (Fig. 3.6).

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It is important to clarify that such features of “knowledge player” define Loccioni employees in a general sense, since they concern an overall approach to work that should be embodied by every worker. After that, it is clear that each Loccioni employee personifies those traits through different ways and grades, which depend on personal attitudes, aspirations and the role within the company (there is a difference, for example, between a business developer and an operator who assemblies a machine). Nevertheless, aside from individual and professional diversities, within Loccioni Group corporate culture the “knowledge worker” type is reinterpreted through the concept of “play”, and this implies rethinking the relation between the enterprise and all employees. Indeed, while the dominant conception of “knowledge worker” depicts the latter merely as an instrument to reach profitable outcomes for the company, Loccioni vision of “knowledge player” seems to primarily focus on the importance of people self-realization and growth through work, thanks to the development of their capabilities and the acquisition of new competences in a social-relational context. Furthermore, while the classical vision of knowledge worker refers to the narrow anthropological model of homo oeconomicus, the “knowledge player” character shows an anthropological richness where multidimensional aspects of playing are stimulated so as to be applied within work, as a way for human development. Furthermore, it should be added that the company advantage deriving from such perspective is not ignored by Loccioni Group. The fact that people are allowed to take challenges that they are passionate about, stimulating creativity and developing training-by-doing, tends to increase their personal satisfaction and engagement within the enterprise, with positive considerable effects on their performances results and retention rate. In such a framework, Loccioni Group is strongly committed to realize people aspirations, allowing them to express their intrinsic potential as human beings. Work, therefore, is conceived as a spontaneous activity by which each individual invests his knowledge to achieve common results within the organization, endorsing free initiative of knowledge generation and sharing. This is the reason why people who work in the Group are defined “collaborators” and “entrepreneurs”, rather than “employees”. This approach fundamentally derives from the will of spreading a

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“culture of competence”—instead of a “culture of dependence”—according to which collaborator is someone who needs to apply and realize his potentialities and capabilities through work, and the company has the responsibility of allowing him to achieve such result. Working dimension is then conceived by Loccioni Group as a place for collaborators’ realization, thanks to competences application, knowledge sharing, responsibility assumption, initiative, curiosity and passion stimulation: We are a knowledge company, employing entrepreneurial collaborators who invest their knowledge in the company, sharing its success. The knowledge company develops projects instead of products and enhances the attitude towards responsibility, autonomy, entrepreneurship, team working. It delivers knowledge internally and externally and invests in education. Because people are its most important legacy.19

It should be noticed that this conception does not eliminate the classical relation of “dependence” between workers and the employer that is intrinsic within every salaried work. Obviously, Loccioni collaborators have to guarantee certain performances and achieve specific objectives to satisfy company expectations, on which the business relationship typically depends. It is clear, then, that in a certain way people have to be “instrumental” in enterprise processes, in relation to the organization need to succeed. Nevertheless, the way by which Loccioni collaborators are assigned to a place in the organization tends to be much self-­determining as possible. In fact, the Group seeks to stimulate the capacity of individuals to assume freely their role within the organization, according to their personal desires and ideas. In such a commitment consists the collaborators’ responsibility, which is enhanced by giving them as much autonomy as possible regarding the management and development of business projects. Each collaborator, in this way, has the possibility to improve his initiative and intelligence through the achievement of expected results. Therefore, since people are primarily considered as human beings having needs and capacities to realize through work, they have to be allowed to become “part” of a context that they considered coherent with their personal aspirations and values. Human beings are then recognized as having an intrinsic value that comes before their “utilization” as instruments, and to

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which the enterprise has to be at the service of. Such a horizon seems me to be remarkably congruous with the humanistic management framework. Actually, even if the concepts of human dignity and flourishing do not appear explicitly within Loccioni Group corporate culture, the latter can be appropriately comprehended through referring to such humanistic principles. Indeed, the cultural aspects I have displayed before show how the Group considers human beings’ realization as the primary value to be respected and promoted. Therefore, work is conceived and developed as a means to let people capabilities flourish, in order to contribute to their satisfaction and well-being within the enterprise. We can say, then, that stimulating collaborators’ personal growth through work is a crucial element in order to respect their intrinsic value of human beings. The effort of integrating company success with the human development of its members is well expressed by Loccioni “values”. These, indeed, represent the way to be followed by all collaborators in order to achieve the company goals but at the same time can be intended as a list of human capabilities to be promoted within working context and by which personal and professional collaborators’ growth is advanced. Loccioni “values” are shown both by the First charter of values (Table 3.2), which is Table 3.2  First charter of values (Loccioni internal document) 1. Initiative and intelligence: that is to say, being “intra-entrepreneurs” and being able to choose the opportunities, while interiorizing corporate values, acting quickly and taking charge of actions. 2. Energy and will: everything is possible if daily actions are supported by hard work, constancy and tenacity; in other words, if we really want it. 3. Flexibility and adaptability: characteristic elements of an enterprise that is constantly oriented to change and does not impose solutions but constantly searches for them jointly with those who pose the issue. 4. Innovating oneself to innovate: this goes beyond the previous principle to the extent that, wanting to find new solutions, it is necessary to always question oneself and change one’s mind, attitudes and behaviour. 5. Transparency in communication: it means interacting with everybody, at all levels, with openness and intellectual rigour, devoting time and energy in order to understand and especially make the others understand. 6. Listening to anticipate: this is the essential peculiarity for those who are oriented to the customer, no matter whether internal or external, listening especially to weak noise, which becomes a destructive roar in time if not listened to.

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Table 3.3  Loccioni corporate values Energy is putting a great deal of enthusiasm, passion, initiative, courage and motivation in the things we do; energy is the highest expression of doing; it is the fundamental value at the base of every knowledge company where there are no products to realize but projects to imagine and dreams to fulfil. Imagination is having the ability to dream, watching with “big eyes”, asking ourselves useful questions to get to the realization of the dream imagined. Knowing how to dream is to be co-creators, participating to the construction of the future rather than being subjected to it. Capable of imagining is whoever has the right curiosity, openness, creativity to make his work and his life a coming of unique events, continuous occasions to grow even if still young. Responsibility is living the present with the awareness that every action we do has consequences on the future. It means respecting the environment and the people living on it, personally taking the trust offered upon ourselves (by clients, suppliers, collaborators). It is the ability to respond and therefore welcome with generosity, honesty, integrity. Tradinnovation combines the value of tradition, of the rural culture we come from, of the experience and innovation use and listening, of the incentive to be launched in the future and of continuously innovating. It is the arrow which, once strongly shot, can reach the furthest places. It is recovering the base cultural values, the ancient wisdom which leads to live innovation as behaviour, towards the territory, the people, the organization and the technology. http://www.loccioni.com/about-us/mission-and-values/?lang=en

the main reference frame to evaluate collaborators’ traits during recruiting, training and evaluation processes, and the four Corporate values (Table  3.3), which are primarily referred at the aim of spreading the Group corporate culture both internally and externally. Human qualities which are displayed and enhanced by Loccioni values, such as initiative, intelligence, energy, adaptability, self-innovation, transparency, listening, self-worth, self-respect, responsibility, collaboration, solidarity and spirit of sociality, should not be intended exclusively as instruments to reach the enterprise advantage and success, since they express multiple anthropological capacities which are worthy to be respected and developed in themselves. In this way, Loccioni corporate culture appears to be value-oriented in a way of promoting human capabilities flourishing within work dimension. This is the reason why the Group conceives “the work for the person”, rather than the “person for the

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work”.20 Certainly, human capabilities, which are taken into account by Loccioni Group, derive mainly from the entrepreneurs’ cultural background and his entrepreneurial vision; therefore, they are relative to a certain framework. This implies the focus on some specific capabilities, rather than other ones, so that human capacities which are pointed out by Loccioni values do not include all human capabilities which could be worthy to be enhanced but those ones who fit the Group vision and mission. Such a deep relationship between human development and company success depends on a strong connection between the individual and the collective side within the organizational context. Loccioni values previously showed, indeed, testify that a particular attention is paid to sociality, as a way by which individuals join together common objectives contributing to the company prosperity, realizing at the same time their personal growth. The participation to an organizational framework in which people recognize their values, aspirations and needs builds up a social context in which each individual finds his way for self-realization, working for shared goals in a climate of communal recognition and solidarity. This approach, which includes all the company stakeholders, is displayed furthermore by the “Twelve rules of the winning team” that are adopted by the Group (Table 3.4). Employees, customers, suppliers and partners emerge then as people who are worthy to be listened to and to build a long-term reciprocal trust relationship with, with the aim of achieving common results and “win” together. This expresses the Group commitment in promoting stakeholders dialogue within the business dimension, in order to limit selfish behaviour and enhance mutual help and collaboration. Such cultural aspect is crucial to respond to the Group necessity of acquiring and generating new knowledge, since it promotes transparency, sharing and dialogue among collaborators and other stakeholders, allowing the diffusion and application of knowledge within the company. Loccioni focus on social values like participation, sense of belonging and knowledge sharing is furthermore showed by the not-hierarchical and horizontal organization structure of the Group, in which a diffused

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Table 3.4  Twelve rules of the winning team (Loccioni internal document)   1. Companies are made by people, products and profit. Without people there is neither product nor profit.   2. Customers are our collaborators; meeting their expectations is our goal. Our profit is the customers’ profit.   3. We win or lose together. “Those who work alone…” have understood nothing.   4. The winning mentality is trust, respect, communication, willingness to sacrifice, concentration, qualification, determination, initiative and flexibility.   5. Everybody must know and develop their own skills to better use them for the benefit of the team. Being winners requires constant improvement.   6. The first solution is not (always) the best. The first solution is only the most obvious.   7. The result of the team is greater than the sum of individual performance. Two plus two makes five.   8. The winning mentality is being able to turn difficulties and threats into opportunities.   9. Searching for culprits do not help solve problems, it creates them: we must search for solutions. 10. All the people in charge are at the service of the team, respect the people, make them grow and defend them. 11. Trust is a means of conquest. Distrust is disappointed from the start. We enter the field to win. 12. In a winning team, roles and rules must be respected. Intelligence lies in changing them at the right time.

leadership is enhanced. This basically deals with two main factors, which are essentially interconnected: first, the specific Loccioni matrix organizational model (Fig. 3.7), which avoids pyramidal hierarchies and diffuse a widespread assumption of responsibility by collaborators, through which each one has the opportunity to express his capacities; second, the specific Loccioni “tailor’s shop” business approach.21 The latter aspect implies that each technological solution offered by the Group is made according to the customers’ requirements, so that every solution is different and is developed by a team as a customized project (rather than a standardized product).22 Therefore the individual “leadership” depends on collaborators’ distinctive competences and know-how, which are put at the service of the specific project to be realized time by time. This implies that each collaborator, even if with different grades, holds an individual responsibility in investing his competences to design and realize the solution

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Fig. 3.7  Loccioni Organizational Chart (internal document)

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Fig. 3.7  (continued)

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requested, integrating his knowledge with the one of other team members. In such a context, a progressive dialogue and cooperation among collaborators and customers are the necessary way to reach common satisfaction. The particular attention that the Group pays to knowledge exchanging and dialogue in business processes culturally derives from the concept of “openness”, which is assumed by the Group in conceiving itself as an “Open Company”: We are an Open company, open to young people and to long experienced ones, to customers, suppliers, competitors, to the scientific and public community. Openness nourishes the continuous longing for depth, new knowledge, will to change, innovation. Openness enhances the creation of new businesses, the development of new technologies, facilitating relations and the creation of international excellence networks, with whom to design future markets and technology applications.23

Openness, thus, not only facilitates innovation processes towards possible new market scenarios but it promotes even reciprocal relational enhancement among different stakeholders. The attitude of “openness”, then, is not intended exclusively as an instrument to reach competitive advantage for the company, but is recognized as a value to let people sociality flourish, contributing to their realization as human beings. Through participation and collaborative decision-making, indeed, each actor involved in business processes has the possibility of applying and improving his capabilities in a reciprocal collaborative way. As a consequence, the personal gratification of all stakeholders involved in business practices facilitates collaboration, knowledge creation and sharing, and consequently supports the overall company and stakeholders’ satisfaction through a climate of mutual respect and trust. It should be noticed, however, that Loccioni humanistic framework is still not diffused among all company departments with the same awareness. Indeed, while corporate culture is strongly embedded by Loccioni management at various levels (owners, managers, business units directors), those divisions which are more focused on operative and “material” processes show generally less attention and consciousness about Loccioni

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cultural elements. This represents a critical aspect which should not be underestimated. A homogeneous diffusion of humanistic culture among all collaborators is indeed a crucial element to guarantee the effective implementation of humanistic management within business practices. The practical application of the respect for human beings’ dignity and the promotion of human flourishing cannot be realized without sharing a common theoretical framework which expresses such a humanistic commitment. If the latter remains enclosed within a limited part of the company and not recognized and embraced by all its collaborators, it will run the risk of staying on a mere “theoretical” side, being only extrinsically communicated rather than effectively put into practice. In such a way, Loccioni humanistic-oriented approach would continue to be perceived “between the lines” of Loccioni culture and then not completely implemented and promoted within business practices and stakeholders dialogue. Effectively, the urgency of increasing corporate culture awareness among all collaborators has been recognized by Enrico Loccioni and the Group managers.24 For this reason, some projects of internal communication have been launched in order to promote collaborators’ reflection, participation and sharing about corporate culture. At the same time, on the side of people management, there are some specific practical activities which express the Group commitment to develop a knowledge enterprise oriented by humanistic principles.

L occioni Humanistic Management: Some Examples Internal Communication The overall project, which aims at disseminating the Loccioni model of “knowledge enterprise” both internally and externally, is named Our Knowledge Company, and started in 2013. The goal of such a project is to show why and how the Group, in relation to its history and culture, has been trying to integrate people, knowledge and work, building a knowledge enterprise which is made by “knowledge players”. During the past

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years, many initiatives have been taken in order to promote the Group cultural background but only recently, with Our Knowledge Company project, Loccioni corporate culture and its knowledge-oriented features have been deepened and diffused in a more systematic way among collaborators. Practical instruments used at this aim are books published by the Group,25 internal documents,26 house organ, intranet and website,27 training meeting, by which Loccioni vision of knowledge enterprise is proposed and made explicit, so as to facilitate collaborators’ awareness and engagement about its issues. An important means which permits Loccioni culture to be spread out among collaborators is given by IT technologies. These now constitute the essential way for the Group to keep all collaborators—event those who work in foreign headquarters—informed and aware about every content or initiative regarding corporate culture and knowledge enterprise matters. Nevertheless, despite the free fruition of articles, documents and events, information is essential to let knowledge circulate and then increase people awareness; it is not sufficient to stimulate collaborators’ active attitude in participating to corporate culture development. The main risk is indeed that collaborators take Loccioni culture passively, assuming it as something “imposed from the top” rather than feeling themselves as the real bearers of the company vision, mission and values. For this reason, according to the humanistic orientation of the Group which consists in rejecting the “culture of dependence” and fostering on the contrary collaborators’ initiative, involvement and sense of belonging, some knowledge-sharing activities have been started and promoted by Enrico Loccioni himself. These are moments of ideas exchange and dialogue, where all collaborators are invited to share personal contributions and opinions regarding Loccioni knowledge enterprise issues. An example of internal communication and dialogue within Loccioni is exemplified by the book Futuro. Le parole per dirlo [Future. Words to say it], published by the Group on December 2014. This project started from a letter that Enrico Loccioni sent to all collaborators in April, in which he praises the Group for recent successes and invites everyone to imagine and describe his personal future: “Can you help me to satisfy my biggest curiosity? Who has the ambition of becoming a manager of the Group? Who has the ambition of suspending his recognized progress within the

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Group, to start an own business?” (Gruppo Loccioni 2014, p.  13, my translation). After this communication, a series of individual meetings between Enrico Loccioni and interested collaborators have been undertaken, in order to comprehend their ideas, aspirations and needs regarding their professional growth. Furthermore, from all contributions written in response to Enrico Loccioni, a series of words and sentences have been chosen and collected in the book Futuro that constitute a collective framework expressing corporate culture and vision of the future, which derive directly from collaborators’ point of views. Such projects and activities of internal communication have the objective of giving space to collaborators’ beliefs and necessities and permitting them to offer personal insights for the Group development and improvement. This, in my understanding, represents an example of humanistic management in practice, which acknowledges human dignity and promotes human flourishing within business dimension. Furthermore, such an approach supports the enterprise success, since it fosters collaborators’ well-being within the company, increasing their involvement, sense of belonging and then improving their performances. All collaborators’ contributions collected in the cited books, indeed, show their passion, enthusiasm and satisfaction for a work that permits them to express their potentialities and competences, investing their knowledge within a reality in which their recognize their own values and personal inclinations.

People Management The Group people management dimension presents interesting humanistic aspects as well, starting from the recent choice (2010) of naming “People” the respective department, rather than using the “Human Resources” classical denomination. This fact should not be intended simply as a matter of language, since it expresses the will of concentrating management on individuals intended as human beings to comprehend, rather than material “resources” to use.28 In this conception, people have to be considered not only for their capacities, abilities, knowledge and technical competences but even in relation to their thoughts, needs and aspirations. This ties in with a comprehensive anthropological view which

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inspires the Group organizational practices to take care of collaborators’ rather than merely managing them.29 As previously underlined, this approach derives from the will of spreading a “culture of competence”— instead of the “culture of dependence”—according to which a worker is someone who needs to apply and realize his competences within working dimensions, and the enterprise commits to allow him to achieve this result. Such an attitude, within the Group, involves three managerial dimensions: Before, During and After collaborators’ working experience (see Gabrielli 2010). The Before dimension (Bluzone)30 concerns recruiting and training projects in collaboration with schools and universities. These projects, aimed at creating a breeding ground in which identifying young talents to be selected as future collaborators, represent on the other hand an interesting orienteering and training investment that the Group makes within its territory. A wide range of opportunities are indeed given to students (from primary school to PhD level), to start keeping in touch with the dimension of work, thus integrating their school or university education which is often lacking such practical experiences.31 A recent initiative, started in 2015 and part of Bluzone, is “Bluzone Camp”, a summer training laboratory in which students of primary, middle and high schools get in touch with the enterprise as a place of “play and education”, “orienteering and design”, “experience of the future”.32 Another project belonging to Bluzone is “Open Knowledge”, the Loccioni PhD students community. This currently comprises 21 people who are developing applied research projects within the Group, in the framework of a scholarship programme joined with local universities (the same programme from which my research project derives). The creation of such a community of PhD students intends to foster, through periodical training meetings, their mutual knowledge exchange, contamination and diffusion in an interdisciplinary way, so that different research projects can benefit together joining a common path.33 This community represents a sort of internal “scientific network”, made by PhD students who exemplify the model of “knowledge players” and are then a crucial element of Loccioni knowledge enterprise, in terms of new competences acquisition, application and spreading.34

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Loccioni projects belonging to Bluzone can then be intended as a training path which contributes to young people growth in acquiring new knowledge and developing capacities for future work. In addition to constituting a social commitment towards students of the territory, the Before dimension represents a remarkable competitive advantage, since it allows the Group to cultivate young talents, following them already during the period of study. This permits to have a significant source of potential future collaborators, which are oriented even according to the Group specific competence necessities.35 The During dimension represents in a certain way the natural continuation of the Before one. Indeed, it consists in looking after collaborators during the whole working period within the Group, paying attention to their needs, ambitions and ideas and taking care of their professional growth. It is interesting to notice that Loccioni recruiting process is primarily focused on people’s aspirations and only secondary on the performances expectations of the Group. The first step of Loccioni recruiting interview consists indeed in giving a questionnaire to the candidate, in which he or she has to indicate what he or she would like to realize collaborating with the Group (see Il mio progetto in Loccioni [My project in Loccioni], Loccioni internal document). In this way, the core is the individual self-realization, which has to be integrated with the Group objectives. The During dimension constitutes properly the training path that allows collaborators to realize themselves by integrating their individual inclinations with the company aims. This means enhancing collaborators’ participation to decision-making processes regarding their professional development within the Group. Some activities in this sense are carried on by the president Enrico Loccioni himself, through periodical meeting with all the collaborators. These “Conversations with the entrepreneur” are aimed not only at celebrating and valorizing enterprise successes but mainly at taking into account collaborators’ thoughts and professional aspirations. In this way, people needs are constantly tested and evaluated, in order to promote their realization according to the enterprise evolution and transformation during time. Similar projects are particularly relevant from an ethical-anthropological point of view, since they help collaborators to increase their self-awareness, to comprehend what they would like to do, to critically reflect about their potentialities

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and limits. This dimension constitutes a fundamental path to develop self-knowledge, which should be not underestimated in relation to its contribution to human flourishing realization. Knowledge, in this sense, has a value not only because it is socially shared or diffused, but primarily due to its capacity of constituting a means for self-training and own inclinations development. As already outlined, such dialogue-based and “horizontal” approach derives from Loccioni stakeholders engagement, which is well exemplified by the Group “tailor’s shop” business approach. In this sense, the During dimension of people management does not regard only Loccioni collaborators but even the relationship with all stakeholders involved in the Group business activities. Since each project is personalized according to customers’ requirements and problems, a long-term relation with them has to be built up, at the aim of mutual successful collaboration.36 Stakeholders engagement is thus enhanced as a way of seeking legitimacy through dialogue and knowledge exchange: involving customers in decision-­making processes means considering them first of all as human beings who are worthy to be listened to, rather than merely business partners to “use” for profit. Such a spirit of collaboration and people flourishing enhancement are furthermore evident if we analyse the third component of Loccioni people management, the dimension of After, which is represented by three main projects. The first one concerns supporting collaborators in searching for an alternative job, whenever their employment within the Group does not satisfy either their or the enterprise needs and expectations. This testifies Loccioni commitment in taking care of people professional path, even after their collaboration within the Group. A further project is called “Avvia l’impresa” [Start an enterprise], dedicated to those collaborators who desire starting their own spin-off. In this case, the Group offers to collaborators all the necessary tools (such as administrative and managerial competences) to support them in the creation of their company. In this way, more than 80 spin-offs have been realized since the Group was born. This project, at a first sight, can appear strange and unusual. It is not common indeed to find an enterprise which allows and supports its talented collaborators to open an own free-­ standing business, rather than trying to retain them. Properly such

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particular character of “Avvia l’impresa” project displays Loccioni people management as humanistic oriented. People’s aspiration of self-­realization, indeed, is conceived as a primary value to be respected and promoted, to which the Group interests are in a certain way subordinated. It has to be added, on the other hand, that supporting the creation of many spin-offs has been constituting a remarkable competitive advantage for the Group. Most of such spin-offs have indeed Loccioni company as one of their main customers, partners or suppliers. This has permitted to keep a collaborative business relationship with former employees, without losing their key competences acquired during past years in the Group. The third project which belongs to the After dimension is named “Silverzone”. It is a “virtual” area in which experienced people—some of them are Loccioni former collaborators or partners and most of them are over 65—are involved into Loccioni innovation and development projects, basing the collaboration relationship on mutual esteem and confidence.37 “Silverzone” people offer their competences to younger collaborators through training sessions, meetings and project activities. A reciprocal knowledge exchange relation is then established, by which

HUMANISTIC COMMITMENT

Business at the service of people’s life improvement

Human dignity and human flourishing promotion through work

«Profit as a means to do other».

«Leaving things better than how we have found them».

«Work for people rather than people for work»

Cultural background

MISSION

Organizational features

Management practices

Integrating ideas, people, technologies to transform data into values

Knowledge Intensive Organization = PLAY FACTORY Knowledge Players Culture of Competence

Internal Communication

St. Clemente valley Benedectin monks Sharecrop farmers

People management

(Before, During, After)

Benchmark Entrepreneurs Merloni, Mattei, Olivetti, Siemens, Bosch

Fig. 3.8  Personal representation of Loccioni model of humanistic knowledge enterprise

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even the experienced people are intellectually enriched through the contact with young collaborators.38 Besides representing a strategic asset which permits to spread and apply knowledge within the Group, facilitating the competence transfer from older to younger generations, “Silverzone” exemplifies a humanistic management practice, since it fosters human capabilities development by means of intergenerational knowledge sharing and collaboration (Fig. 3.8).

Notes 1. Specifically, Loccioni business sectors are the following: Industry: measure, assembly and quality control for industrial processes, products and buildings; Mobility: assembly, testing and quality control systems for automotive components; Environment: integrated solutions for ­environmental monitoring; Energy: integrated energy efficiency solutions, solutions for energy production from renewable sources and green IT; Humancare: automating and quality control solutions for health care; Train and Transport: integrated solutions for transport and railways network; Aerospace: measure, automation and quality control solutions for aeronautic and aerospace processes, systems and components (http:// www.loccioni.com/what-we-do/?lang=en). 2. http://www.loccioni.com/about-us/hystory/?lang=en. 3. See From the “metalmezzadro” to the knowledge-based company, Loccioni internal document. 4. Aristide Merloni (1897–1970) was an Italian businessman, founder of Merloni industries. He started his entrepreneurial adventure with the production of scales. In the following decades, he developed a large range of products, from gas cylinders to water heaters, from bathtubs to household appliances and kitchen furniture. And from his name, Aristide, the company drew inspiration to create its historical, most famous trademark, Ariston. 5. Enrico Mattei (1906–1962) was an Italian public administrator. After World War II, he was given the task of dismantling the Italian Petroleum Agency Agip, a state enterprise established by the Fascist regime. On the other hand, Mattei enlarged and reorganized it into the National Fuel Trust Ente Nazionale Idrocarburi (ENI). 6. Meeting/interview with Enrico Loccioni, 07/04/2014 (my translation).

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7. See Gruppo Loccioni (Eds.) (2008–2012). Quaderni di cultura di impresa. Ancona: Edizioni Loccioni. See also Varvelli, 2014, pp. 9–14. Camillo Olivetti (1868–1943) was an Italian electrical engineer and founder of Olivetti & Co., SpA., the Italian manufacturer of computers, printers and other business machines. The company was later run by his son Adriano (1901–1960). The latter was an entrepreneur and innovator who transformed shop-like operations into a modern factory. In and out of the factory, he both practiced and preached the utopian system of “the community movement”. 8. See http://www.leafcommunity.com/. 9. Meeting/interview with Enrico Loccioni, 07/04/2014 (my translation). 10. Training meeting with Renzo Libenzi (General Manager at Loccioni Group), 12/03/2015, my translation. 11. See Dalla conoscenza alla competenza [From knowledge to competence], Loccioni internal document. This document was elaborated by me starting from some notes of Enrico Loccioni of July 2013. 12. Meeting/interview with Enrico Loccioni and Graziella Rebichini (Enrico Loccioni’s wife and co-owner of Loccioni Group), 26/06/2013, my translation. 13. Ibid. 14. Training meeting with Gino Romiti (Innovation Director at Loccioni Group), 18/06/2014, my translation. 15. Training meeting with Maria Paola Palermi (Communication Manager at Loccioni Group), my translation. See also http://www.loccioni.com/ about-us/mission-and-values/?lang=en. 16. Meeting/interview with Enrico Loccioni and Graziella Rebichini, 26/06/2013, my translation. It should be noticed that there was some tension between Enrico and Graziella as regards the importance of profit and the use of it. Indeed, while the former strongly affirms profit as something to reinvest in the company, the latter shows a major attention in reducing wastes and putting money aside. The research of a balance between these two perspectives has been characterizing the evolution of the Group, contributing to integrate the economical wealth of the enterprise with a social commitment which goes beyond mere profit-making. 17. http://www.play-factory.it/. See also Play Factory, Loccioni internal document.

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18. Such a vision is adopted by Friedrich Schiller’s Letters upon the aesthetic education of man, according to which “human being is really human only when he plays” (Schiller 2002, p. 48). 19. http://www.loccioni.com/about-us/?lang=en. 20. “Work has to be at the service of the people’s growth. For this reason it should be not repetitive and has to be a meaningful and social dimension” (Meeting/interview with Enrico Loccioni, 10/02/2014, my translation). Such a vision is developed and promoted also thanks to the collaboration between Loccioni Group and Fondazione Lavoroperlapersona, a no-profit organization placed in Offida (Italy) and involved in the educational implementation of a virtuous relation between human beings and work (http://www.lavoroperlapersona.it/). 21. http://www.loccioni.com/about-us/?lang=en. 22. Training meeting with Renzo Libenzi, 12/03/2015, my translation. 23. http://www.loccioni.com/about-us/?lang=en. 24. Meeting with Enrico Loccioni, Managers and Departments Directors, 29/10/2013. 25. See Gruppo Loccioni (Eds.) (2008–2012). Quaderni di cultura di impresa; Id. (2012) Al futuro per il passato. Ancona: Edizioni Loccioni. 26. For example, Our Knowledge Company, Loccioni internal document previously shown. 27. Specifically, the website section Our Knowledge Company is the space in which Loccioni way of conceiving and developing work, research and future emerges through confronting with external interlocutors. See http://www.loccioni.com/limpresa-della-conoscenza/?lang=en. 28. See Speech of Fabrizio Pieralisi (employer branding and recruiter at Loccioni Group), 16/04/2015: https://www.youtube.com/ watch?v=TrneT0GNxJ0. See also http://www.videodimpresa.com/ video_179_Human+Resources+No+People.html. 29. Meeting with Enrico Loccioni, Claudio Loccioni, Cristina Loccioni, Renzo Libenzi, Luca Marassi (Mobility business unit manager at Loccioni Group), Graziano Cucchi (recruiter at Loccioni Group), 28/10/2013. 30. See Bluzone, progetti per la scuola [Bluzone, projects for school], Loccioni internal document. 31. Meeting with Enrico Loccioni, Renzo Libenzi, Luca Varvelli (Loccioni Group consultant), 26/05/15. 32. Bluzone Camp, Loccioni internal document.

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33. See Open Knowledge. Loccioni Ph.D.  Community, Loccioni internal document. 34. Meeting with Riccardo Varvelli (Loccioni Group consultant), Enrico Loccioni, Renzo Libenzi, Maria Paola Palermi, Gino Romiti, Luca Marassi, 19/04/2013. 35. Meeting with Loccioni Renzo Libenzi, Tommaso Puerini (Business Development Manager at Loccioni Group), People Team, 04/05/2015. 36. Meeting with Enrico Loccioni, 10/02/2014. 37. See Silverzone, Loccioni internal document. 38. Meeting with Renzo Libenzi and Fabrizio Pieralisi, 08/10/2013.

References Gabrielli, G. (2010). People management. Teorie e pratiche per una gestione sostenibile delle persone. Milano: FrancoAngeli. Gruppo Loccioni (Ed.). (2008–2012). Quaderni di cultura di impresa. Ancona: Edizioni Loccioni. Gruppo Loccioni (Ed.). (2012). Al futuro per il passato. Ancona: Edizioni Loccioni. Gruppo Loccioni (Ed.). (2013). Our Knowledge Company. Aforismi di cultura d’impresa. Ancona: Edizioni Loccioni. Gruppo Loccioni (Ed.). (2014). Futuro. Le parole per dirlo. Ancona: Edizioni Loccioni. Schiller, F. (2002). Lettere sull’educazione estetica dell’uomo. Roma: Armando Editore. Sveiby, K. E. (1992). Strategy Formulation in Knowledge-Intensive Organization. In International Review of Strategic Management. (Vol. 3). John Wiley & Sons Ltd. Varvelli, M.  L., R. (2014). 2KM di Futuro. The enterprise to seed beauty. Milano: Gruppo 24 Ore

Sitography http://www.lavoroperlapersona.it/. http://www.leafcommunity.com/. http://loccioni.com/about-us/hystory/?lang=en. http://www.loccioni.com/about-us/mission-and-values/?lang=en.

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http://www.loccioni.com/limpresa-della-conoscenza/?lang=en. http://loccioni.com/what-we-do/?lang=en. http://www.play-factory.it/. http://www.videodimpresa.com/video_179_Human+Resources+No+ People.html. http://youngfoundation.org/wp-content/uploads/2012/10/Study-on-SocialInnovation-for-the-Bureau-of-European-Policy-Advisors-March-2010.pdf. https://www.youtube.com/watch?v=TrneT0GNxJ0. http://un-documents.net/our-common-future.pdf.

Loccioni Internal Documents Bluzone Camp. Bluzone, progetti per la scuola [Bluzone, Project for School]. Dalla conoscenza alla competenza [From Knowledge to Competence]. First Charter of Values. From the “metalmezzadro” to the Knowledge-Based Company. Il mio progetto in Loccioni [My project in Loccioni]. Organizational Chart. Open Knowledge. Loccioni Ph.D. Community. Our Knowledge Company. Our Knowledge Company. Spunti di miglioramento personale e organizzativo [Our Knowledge Company: Insights for Personal and Organizational Improvements]. Knowledge Players. Play Factory. Silverzone. Social Balance 2016. Twelve Rules of the Winning Team. 33 mq di opportunità [6000 mq of Opportunities].

4 Innovation Through Living Our Values at Energeticos-Colombia Peter King and Carlos Largacha-Martínez

Introduction You might think that things have changed in the workplace since the 1970s, and in some ways they have. Technology and modernization make it look as if changes have been bigger than they really are. Safety is much more in the forefront, and there is legislation in many countries that prohibit abusive actions and so it should. But the deep-seated reality of treating people like merchandise has not changed; it is just more subtle. We have all witnessed many examples of injustice, bullying, threatening behaviors and the constant “commodifying of labor” by managers who really should never have been there in the first place. In many cases,

P. King (*) Management Consultant, Edinburgh, UK C. Largacha-Martínez Fundación Universitaria del Área Andina, School of Management, Bogotá, Colombia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_4

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this behavior is a result of two forces: one, they are pushed into such practices by the requirements of shareholders for short-term gains, and, second, they feel highly vulnerable if they try alternative management practices, and they do not have the strength and authenticity to do it. However, it did do us some good as it formed a belief that if we were ever in the position of being able to influence the way a company was run and the way employees were treated, then we were determined to do something different. Looking back, the changes we made to the company would not have been so successful if we had not passed through those tortuous stages of our careers where you are afraid to speak out and forever trying to do a decent job in an environment where bureaucracy was rife. Or those many times when you are threatened with redundancy and that pain in the pit of your stomach at night thinking about how you are going to maintain your family if it does happen. Even within those stifling organizations, there are many employees who contribute with many innovative ideas and projects but, like so many in these organizations today, they are never heard or listened to or if their ideas are taken up, they rarely receive any recognition for their contributions. In a recent article by a renowned management consultant, she lists the ten things that workers want from a company, and at number 7 she lists “recognition of their efforts”. However, she talked about recognition as a bonus, a pat on the back and suggested that the reward could be such things as a trip to the cinema or a good meal. Her concept was right but we should not be cheapening the efforts of employees, grown up professionals, by offering them such rewards as a trip to the cinema or a meal. Employees are not adolescents; they are mature intelligent beings, all of them, and we should be promoting their contributions continuously as equal beings who are essential to the functioning and efficiency of any organization. We should be treating them as equals in a humanistic way, by dignifying them as much as possible in every activity that the company does. This chapter deals with the changes that were made to transform a small traditional engineering company in Bogota, Colombia, into a success story by transforming its culture and the way it was organized by

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believing in its employees and transferring much of the company decisions onto them.

Overview/Background Energeticos was an engineering services company based in Bogota, Colombia, and part of an international energy services group (Wood Group). When it was acquired in 2001, it was a small company and ranked about fifth in Colombia’s oil and gas services market. Beginning in 2006 and over a period of seven years, Energeticos developed a unique culture/working model which focused on allowing employees to contribute to their maximum potential and, at the same time, removing all the barriers that restricted its employees from working effectively. The development of this culture and unique organization was a prime factor in its growth from about 60 people in 2006 to over 1200 in 2013, and a ten-times growth in revenues, making it one of the fastest-­ growing companies of the group worldwide in terms of % growth over that period. Growth of a company within an expanding market is not uncommon, but in this case it was done in an innovative way and wholly based on ensuring that the employees were happy before anything else so that they were able to flourish every day. Energeticos was also unusual as it was a Colombian engineering niche company where 51% of its employees were women. The unrestricted confidence in the potential of all of its employees, unrestricted freedom to contribute, and unconditional trust were the prime factors in the company’s growth. The company gained from this contribution in many ways with its employees being highly innovative, participating in its development, and being highly respectful of the each other, which contributed to them finding novel solutions to many issues. As the engineering industry was new in Colombia, many of the engineers who were recruited were young. We thought about what a different generation of engineers would want from a company and how in fast-­ changing times we could make the company more flexible and responsive

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as well as provide our employees with the opportunities that they were looking for. Traditional companies restructure themselves about every five years to keep up with a changing world. In Energeticos we built an organization with a totally flexible structure that could change monthly or weekly depending on what the circumstances required. This allowed us to respond to our client needs very quickly. Our main strategy for achieving this was to hand over responsibility for delivery to the employees themselves. From 2006 to 2013, the employees took on responsibility for many aspects of the company including deciding their own working hours, holidays, recruitment, training, and, in some cases, their own salaries as well as many others. Below we outline how we did this and the thinking behind this approach.

Embracing Humanistic Management Principles In 2003, the company was not in a good place; it was making a loss and, as a consequence, in 2004 had to reduce staff to 60 people as there was little or no work on the horizon. During 2005 and early 2006, we could not seem to break through with regular work or grow in any real fashion. A traditional “command & control” approach to management was present and many problems existed: • • • • • • • • • •

It was making a loss. It was bogged down in dealing with employee problems. It was bogged down with calculating bonuses. Employees would leave without any advice. Work was not being delivered on time. Employees were demotivated. There were many disciplinary proceedings. There was difficulty recruiting people. There were constant arguments over holiday entitlement. The company procedures were lengthy and unintelligible.

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If we were to survive, we knew that we needed to change drastically what we were doing. After a lot of discussions related to organization and structure, we decided to concentrate on changing our internal behaviors as a start point. We had read Maverick by Ricardo Semler (1995),1 the story of Semco (Brazil), and it had made a great impression on us. Several of the management team who had come from large organizations had experienced similar failures when traditional solutions were tried, so we decided to use Semco’s experiences as a blueprint for our change process. Also, we were not happy with how our staff were behaving with our clients and also between themselves. There was a lack of teamwork, cooperation, consideration, understanding, and a culture and unwillingness to help anybody who was in trouble with their work. In the past, the solution to all this had been to write lengthy and detailed procedures for all aspects of the activities that helped no one and were even less helpful to solving the behavioral problems. So, in early 2006 we wrote the Energeticos Manual—a little book (5” × 3”) and only about ten pages—outlining what we wanted the company to be, how we should be behaving, and how we should treat ourselves and our clients. The Manual had a profound effect on the company. Just publishing a manual does not change the culture of an organization as once we had published, it we had to live it to the letter. We wanted our staff to begin to trust what we were saying, and the only way trust could be won was by working and behaving to the proposals of our manual. See Fig. 4.1 for an example of our Manual related to organizational structure. This Manual began the change process and was followed up by many actions taking place year after year to develop and enhance the freedom of the employees to manage themselves and deliver for our clients. In the following paragraphs, you will read how we changed from the list of abovementioned ten problems, to an organization with a totally flexible organization that would change itself depending on what the circumstances were or what our clients required and, as a consequence, gave us competitive advantages that put us as the leading company in Colombia in our sector.

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Organization We want everyone to know what they have to do, who they work with, who is their supervisor and their role in the organisation. We employ professional people, committed and responsible and we believe we do not need extensive documents to explain this. Our organization will change regularly depending on the nature of our work. these changes make it difficult to maintain a detailed organization chart and we do not want to. We will maintain a general structural diagram. If you do not know what to do, where to go, or who is your supervisor, just ask.

Fig. 4.1  Example of the company Manual related to organizational structure. (Source: Extract from Manual produced by Peter King)

Below are the ten principal actions that had the most effect on the behavior and culture. All of these actions were debated in the management meetings with many reluctant to agree to them. Our strategy with them was to suggest that we “give it a try for three months”. This became the trademark of our change process. Before the three months were up, we would make another outrageous suggestion for another three months and they would forget about the first one. Hence, exploration and experimentation became the best way, and still is, to change paradigms and make people believe in new management practices. This did not mean that the new initiatives were accepted fully during the three-month trial period. Our experience showed that it takes between two to three years for management to accept new initiatives fully, and there were always one or two managers that needed more coaching and direction than others. Here are the top ten actions we took.

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Trust in Our Employees A work environment that lacks trust, compassion, that thrives on rumors and gossip, where power and position is the goal of many and people only respond to fear, has really lost its way and is never going to function successfully. It can be profitable in the short term but with huge human costs and is unlikely to be sustainable (see Gary Hamel & Bill Breen, 2007).2 It becomes a never ending vicious circle where discipline actions take priority over understanding issues or solving problems and create more fear till the organization ceases to function. Liberating an organization so that it functions at the highest possible level without fear, has to start with trust. It is the manager, who selects the people who work for them, it is the manager who organizes them, sets their priorities and understands their different individual capabilities as well as creating the environment where people can motivate themselves. If the organization does not function there is no one else to blame but the management team. In many organizations, the treatment of employees is totally at variance with the way they themselves run their daily lives and the responsibilities that they take on and manage at a personal level. The majority of employees are mature, responsible people, yet they are treated as if they are at school, bells, clocks and hooters to control their work hours, disciplinary procedures, work targets set by arbitrary departments, conditions and rules which are more suited to an institution or a kindergarten and a parent-child relationship forced on them by their managers. In their personal lives, the majority of them manage budgets, raise children, direct, organize, invest, and negotiate purchases of cars and property, so why could we not trust them to act in the same way at work? Traditional management tells us that we should consider first our shareholders, second our clients, and third the employees (people). We turned this on its head and decided that our people should come first (see Fig. 4.2); they would deliver what the clients wanted and hence deliver value to the shareholders. Our strategy to gain the trust of our staff was simply to treat them like adults. We began by trusting them with information, delegating a lot of

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Before

After

Shareholders

Employees

Clients

Clients

Employees

Shareholders

Fig. 4.2  Turning priorities on its head. (Graphics produced by Peter King)

decisions, and, more importantly, removing all the bureaucratic barriers that had been growing over the years which prevented them from doing their jobs in an efficient way. Trust cannot be given conditionally. You cannot say to someone, “I will trust you as long as you show me that you will do this or that.” We decided to trust everyone in the company without conditions. Below are some of the actions we took to begin to show our employees that we trusted everyone. The biggest trust we placed on our staff was to let them decide when to come to work. We outlined this in our Manual (see Fig. 4.3). Another example of trust was the handling of travel expenses. Before our change program, we had a complicated policy with procedures detailing how much an employee could spend when traveling on company business. We changed this with a statement that simply said: When travelling on company business, we want you to spend what you need to ensure that you are comfortable and safe.

Once again we proved our critics, who said that our expense budget would be grossly exceeded, wrong, and the travel budget was reduced by nearly 30% in the first six months. In addition, we set up a process of debating any proposed dismissals at management meetings and set a condition that no one could be dismissed unless the decision was unanimous. Over the years that we ran this process, only two people were dismissed. In most cases, some other manager

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Working hours There are people who work better in the mornings and others who work better at night. We want you to work the hours that are most convient and efficient for you and for that reason there are no set working hours. The important thing is to deliver your work on time. We don’t pay overtime We pay monthly salaries and benefits to everyone in line with or better than normal in Colombia and we expect commitment to deliver work on time. If you work weekends, you can take days off as compensation. Those days you will manage yourselves as we do not monitor or register compensation days. We trust you.

Fig. 4.3  Eliminating working hours. (Source: Extract from Manual produced by Peter King)

would support the individual who was being proposed for dismissal and would take him or her to work for them. This prevented managers dismissing people just because they did not like them and enhanced the employees trust in the company.

Removing the Organization Chart Organization charts were created around 1860 to allocate blame. Their principal failure is that they put people in boxes with predefined expectations and roles. One person leaves and you try and fill the box with a similar person. Human beings are not like that; we are all different and all bring something different to an organization, and boxes do not allow people to use their abilities beyond what is specified. Our original organization (see similar typical organization chart, in Fig.  4.4) was traditional, and even though it was small it still tried to identify everyone in the company in a box. This was already difficult and

SANDRA

HUMBERTO

EDGAR

DANIEL

ALVARO

OSCAR LUIS CARLOS

GONZALO

MARIO

RICARDO A

MECHANICAL ENGINEERING

Donald

Miguel

Javier

HSE

GABRIEL

RICARDO

CARLOS

MARCO

FINANCE

GUSTAVO

FRANCISC

ANTONIO

JUAN PABLO

PIPING

YOHANA

Peter

GENERL SERVICES

HUMAN RESOURCES

ELECTRICAL ENGINEERING

SYSTEMS

CONTROL ENGINEERING

PROJECT 2

PROJECT 1

Project Directors

QA

Fig. 4.4  Original organization chart. (Source: Produced by Peter King)

CARLOS

JAIME

PROCESS ENGINEERING

ERNESTO

PURCHASING

Nathan

Albert

Mike

DOCUMENTATION CONTROL

GENERAL MANAGER

SANDRA

SANDRA

OMAR )

RAFAEL

RICARDO

CIVIL ENGINEERING

Lena

Jamie

ACCOUNTING

PURCHASES

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time consuming for an organization of 100 people. Organizations with thousands of people try to do this and invariably fail as it takes so long to develop and maintain that it is out of date by the time it’s published. What we developed in its place was a structure of floating teams where the projects took priority (see Fig. 4.5). It was these projects that produced what was being sold, so it was essential that the rest of the company, including management, supported the projects. We convinced the administrative part of the company to stop producing procedures and rules that prevented the project teams from doing their jobs effectively and their role was now to support the project teams so that they could easily deliver to our clients. Our floating team circles were all we had for an organization with 1200 employees. Under this structure, people regularly changed between projects and teams. Trying to monitor these changes was impossible so we put the responsibility on the individuals to tell everyone where they were working. The project managers would decide between themselves who they needed and where. Everyone was very mobile, and it was rare that one person would spend more than six months in the same location or building. After a few years, everyone seemed so comfortable with this that when other companies were talking about organizational charts it seemed strange to us. We had created a structure with the following: No hierarchies No boxes No formal structure No bureaucracy

•  Managers became accustomed to being leaders. •  Individuals were part of a team. •  Flexibility was created. •  Common sense predominated.

The project teams, which were at the front line, met, communicated, negotiated, and produced what the clients wanted. Everyone else were there to ensure that they had what they needed to do their work. We made sure that the administration teams were dedicated to this support function and ensured that they were not creating bottlenecks or bureaucratic processes that delayed or prevented the projects from delivering on time.

Commitment & Diversity

Document control

Estimating

Engineering disciplines

Strategy y Technology

HSE

Work Sharing

SCM

Project Management

Fig. 4.5  Floating teams structure. (Source: Produced by Peter King)

Legal

Marketing

Comercial

GROWTH & EXPANSION

ENGINEERING

OPERATIONS

Steering Team

IT

Purchasing

Administration

Talent

SUPPORT

Framework assurance

2012 Organization structure

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Accounting

Treasury

Finance

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 llowing Everyone to Decide Their Own A Working Hours This was the change that had the most impact on the behavior of the employees and in particular reinforcing the culture we wanted in the organization. It released people to be responsible for their own time and be able to organize their lives around what they needed instead of trying to force fit it around the company’s “traditional” way of working. We were being asked by our clients to deliver projects in timescales that were impossible under our previous working conditions. At a meeting with the management team to discuss how we could deliver on time, there were the usual suggestions: “Increase overtime hours.” “Increase bonuses.” “Discipline employees if they don’t deliver on time.”

We knew this would not work as it had been tried before and failed. So we suggested that we do away with working hours and let our employees come to work when they wanted to. This was greeted with comments such as the following: “They will only abuse it.” “We are going in the wrong direction.” “Nobody will come to work!”

But somehow we convinced everyone to give it a try for three months, and after this period most people did not even think about working hours any more. Other companies and organizations could not believe that we had no working hours but it worked. Within a month we started to deliver on time. Groups worked through the night and even at weekends to deliver urgent projects. However, as now we were not registering any working hours, we had no way of knowing the time that people spent in the offices. This meant doing away with several other aspects of administration such as overtime

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payments so we put everyone on monthly salaries, even those employees who were being paid by the hour such as the office cleaners. The change was dramatic and everyone was happy. We had put our trust in them and they were able to organize their own life around work needs. Parents came in later in the morning after they had taken their children to school; they could take them to the doctors without having to take time off and be at their key school activities to support them. Many did not have to pay for early morning childcare so that they could get to work at unreasonable hours and even more of an impact was on employees commuting time. Many made up the work at weekends or night time, and the focus changed from counting the hours spent at work to ensuring the work was delivered on time. It took time for everyone to understand and be comfortable with organizing their own working hours, and for human resources (HR) it was difficult. At one Friday meeting before Christmas weekend, we had a request from the HR manager: ‘Normally at Christmas we let everyone go home early’ she said. ‘Can we do the same this year?’ ‘No’, we said. There was a silence and she gingerly asked why? ‘Because everyone can go home when they like as there are no working hours’.

This was six months after we had implemented the no working hours and the implications were still not sinking in. Did anyone abuse it? Yes, of course they did, but they were only one or two and they were all sorted out by their colleagues without us having to do anything.

Allowing Everyone to Manage Their Own Holidays Several of us had done this in other companies and it had never occurred to us to abuse the system or take more holidays that we were entitled to, so we decided to let everyone in the company do the same.

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In our open plan office, we were invariably treated to heated discussions between an employee and HR about how many days leave the person had outstanding. Some of these discussions went on for hours and we knew it was a waste of time for two people to spend so much time trying to resolve an issue that really was not that important. The cost of the time they spent, as well as the cost of the offices and with all the administration that this incurred, we were sure the employee could have taken two days leave and it would have been cheaper. So we let everyone track and manage their own holidays. We took it a step further than most organizations as we stopped maintaining a register of how many days’ holiday people took so the only person that knew how much leave they had and what they had taken were the individuals themselves. If someone told us they were taking 13 days leave, then they took 13 days leave and no one would query it. People asked us if the employees abused it, and we told them that we just didn’t know and we honestly didn’t care. We were sure that the number of abusers were minimum and our costs had already gone down. It took several years for everyone to understand that they themselves were responsible for tracking their holidays but in the end it became the normal way of working. New entrants needed help because they had never done this before so we helped them set up a simple table in Excel and showed them how to track the days they had outstanding and so on. We also took it a step further and told everyone that they could not ask if they could go on holiday but they only had to tell their supervisor they were going and explain how they had organized their work to be covered during the period that they would be away. This was important as we wanted the employees themselves to take responsibility to find someone to cover for them and not their supervisor. It took some time but after a few years people just informed their leader that they were taking holidays and it was taken that they had organized their work to be done by someone else.

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Eliminating Annual Evaluations We had all gone through the torturous annual event of evaluating people with previous companies. Every year you sit down with your manager to have your annual evaluation. Many were extremely complicated and had mathematical calculations to assess performance which had little relationship to reality. Yet these evaluations, most of them lacking objectivity, determined the careers and salaries of most employees. Several of past evaluation forms we had come across were five or six pages long and covered objectives, roles, and many other things, most of which the poor individual being evaluated had little control over. The conclusion from all those years of suffering was that annual evaluations do not work. So we just stopped doing them. We did have an annual review of everyone where all the managers sat down and reviewed everyone to determine whether they needed training and to pick out star prospects. But it was done in discussion and consensus, not one individual making a judgment.

Removing All Policies and Procedures We were no different from other companies. We had a huge set of policies that had been developed over the years to cover most eventualities and problems. Policies are normally created after an incident or a problem to ensure that it does not happen again. Many of these Policies are created so that managers do not have to make decisions or, in most cases, to defend the company from any employee errors or failures. However, as they are created, they continually restrict the employee’s ability to work in a flexible and creative manner. It is easy for management to just say, “but the company policy says this….”. Policies restrict the freedom to evaluate particular circumstances or allow decisions to be made related to those circumstances so we decided to remove all policies and evaluate any failures on a case-by-case basis. In 2003, the company had a mass of “procedures”, lengthy documents that were unintelligible, written by a quality assurance (QA) department that had not managed to get ISO9000 certified. (International Standard

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for Quality Management and Assurance). We set them the task of rewriting all these procedures but with a new emphasis. The procedures could not be more than two pages long including the title page. Even though they thought this was impossible, at first they did achieve it and the same year got certified to ISO9000. Shortly afterward, we realized that even these procedures were restricting the ability of our employees to develop their own methods of working as, by their nature, procedures are taken to be mandatory. This was when we decided to eliminate all the procedures as well. We replaced them with guidelines that were nonmandatory. The guidelines were developed by the employees themselves if they thought the work process that they themselves had developed was worth recording. However, everyone was free to change them or not apply them if they thought there was a better way of doing the work. Many people believe that ISO9000 requires every activity to be documented and detailed in procedures. We worked strictly to the ISO standards in the development of our quality assurance system and were delighted when our certifiers thought this was a wonderful and efficient system. Several of them often brought their colleagues to our offices to show them how we worked.

Removing Roles and Responsibilities When we hire new employees, they normally arrive the first day full of enthusiasm. They have a new job, they want to do the best they can, and, yet, the first thing most companies do is to cascade them with a multitude of rules, defining their roles and responsibilities, and within a short time you have disappointed them by deluging them with constraints where they become resigned to do what is asked of them and little else. The diagram below illustrates some of the many documents that are produced in order to direct employees as to how to do their job. Figure 4.6 illustrates the confusing pressure put on employees through these rules. We did not want this, instead we wanted everyone to use their full capability and not just those that we had contracted them for. There was much discussion about modifying the roles and responsibilities to match our flexibility but in the end we just decided to throw them away. This

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We employ professional people and then put them In boxes and tell them how to do their work

Rules Objectives

Authority levels Roles & Responsibilities

Specifications

Evaluations

Organigrams

Policies

Directives

Procedures

Guidelines

Fig. 4.6  Pressure on employees. (Source: Graphics produced by Peter King)

worked exceptionally well, and we had people who surprised us with other skills that we did not know they had. If we needed someone to do a particular job that we thought we did not have the skills in the company, we sent an e-mail out to everyone to see if anyone had the skills. Without exception we always found someone with those skills. The diagram below illustrates how we liberated employees by eliminating their roles and responsibilities and allowing themselves to decide the scope of their job (Fig. 4.7).

Employees Interview and Select New Recruits Our recruitment methods started out being similar to, if not exactly like, other companies. A post would become vacant and HR would begin the process to fill it through advertisement or match it to past CVs that had

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Fig. 4.7  Liberated employees. (Source: Graphics produced by Peter King)

been sent in. The process quickly became obsolete when we did away with the organization chart as we then did not have any vacant “boxes” to fill, and by then we had done away with job descriptions. How did we know when we needed more people? It was simply a case of a manager saying that he needed more staff and he organized it. We were quickly handing over a lot of responsibilities to the employees, and one day the purchasing department manager came to us to say that his staff wanted to start recruiting their own people rather than HR.  It seemed the right step to take and more so that the employees themselves asked to do it. It soon took off and most groups ended up doing their own recruitment. The first candidates who came to be interviewed were somewhat puzzled as they would look around and ask if they were going to see the manager also and were more surprised when they were told that it was these potential colleagues that would make the decision. Within a few months most teams were doing their own recruiting.

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Employees Select Design and Organize New Offices As we had grown so much over the previous years, we got to the point where we needed new offices. We had reached a level of employee participation where the decision to let the employees themselves negotiate, select, design, and manage the new offices was easy. We set up a group consisting of two representatives from each of the teams to form a project team for the new offices. They were somewhat surprised when we told them that it was their project to develop and run. We gave them the budget and they found the offices, contracted the design company, decided on the layout, and delivered it on time and within the budget. We made sure that no managers were involved and that they had full responsibility. The final product was amazing and was the envy of many other companies.

 evelopment of Operating Standards: D Framework Assurance All companies in the world have to work within a framework defined by many factors such as laws of the country, corporate policies, local rules and regulations and so on. However, most companies add to these rules by producing their own policies, rules, procedures, directives, and hundreds of other controls which we believe stifle the liberty to work and the creation of innovation. Most of these rules accumulate over the years as they are produced to cover some crisis. The accumulation of these rules and the continuous focus on internal control begin to restrict the ability of individuals to do their work and also restrict the space and freedom that employees have to innovate or resolve problems. Figure  4.8 illustrates this. We set ourselves the task of reducing and eliminating the majority of these rules and restrictions to be able to open up the environment that people need in which to work and deliver. We needed to ensure that we were operating in accordance with rules and regulations that could not be

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Fig. 4.8  No room to work. (Source: Graphics produced by Peter King)

changed such as the laws of the country that we were operating in. We then asked ourselves what else we needed as an operating framework for the company. This led us to developing a simple model without the constraints of all the bureaucratic administration bottlenecks (see Fig. 4.9). We had already developed the nonmandatory guidelines when we eliminated the company procedures. However, we needed each team to determine the quality standard of the work that they were to produce. Each team developed a set of operating standards that documented what they would produce and to what quality standard. They could each then measure how they were performing. As the diagram now looked like a thin picture frame, we changed the role of Quality Assurance (QA) department to Framework Assurance. Their role then changed to helping each team in the self-measurement of their performance against their own operating standards and guidelines that they themselves had developed to ensure that they are working within the framework. Our quality assurance system against which we were ISO9000 certified ended up similar to this (see Fig. 4.10).

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Fig. 4.9  Liberated work area. (Source: Graphics produced by Peter King)

Country Laws Assurance process

Operating Standards Define WHAT needs doing & the QUALITY

Guidelines Define HOW to do the work

Lessons

Non-mandatory Guidelines

WORK AREAS

Self assessment

Framework Assurance

Lessons

Operating Standards

Fig. 4.10  Self-controlling processes. (Source: Graphics produced by Peter King)

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Maintaining the Humanistic Environment As we were growing, we were concerned that the large influx of new employees would dilute the culture that we had developed. We looked for and found a psychologist with similar views, and she set up the Diversity and Commitment group. She initiated lunchtime sessions to spread the “trust” culture. From these work groups we would identify individuals who related well to our culture and understood what we were doing. We convinced many to hold their own meetings with colleagues and gave them material to present and how to present it. We called them “multipliers”, and after a while there were many groups throughout the company doing this and giving us feedback (Fig. 4.11). We found that people were losing their fear and also putting pressure on unconvinced managers to change their style. We were still busy holding meetings and workshops with the managers to further convince them of the benefits of our philosophy and they were also getting pressured from below.

Fig. 4.11  Changing the culture. (Source: Graphics produced by Peter King)

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Conclusion, Lessons Learned, Results Achieved Being humanistic in the workplace does not mean ignoring the realities of a business and the need to be a financially viable entity for investors. The main impact for us was the growth of sales and profit. Colombia was going through a growth period but we also drove through growth during the 2008 economic collapse. Our growth curve during this period looked as shown in Figs. 4.12 and 4.13. Along with this growth in sales and profit was a corresponding growth in the number of employees.

Social and Human Benefits There were changes that were not measured but surprised us when they occurred: Financial performance 90,000,000,000

14,000,000,000

80,000,000,000

12,000,000,000

70,000,000,000 10,000,000,000

60,000,000,000 50,000,000,000

8,000,000,000

40,000,000,000

6,000,000,000

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4,000,000,000

Profit

Sales

20,000,000,000

2,000,000,000

10,000,000,000 0

0 2004

2005

2006

2007

2008

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2011

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Fig. 4.12  Financial success. (Source: Graphics produced by Peter King)

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Fig. 4.13  People growth. (Source: Graphics produced by Peter King)

• We had spouses coming into the office to find out what was happening as the family relationship had improved considerably. ‘What was going on’, they asked? ‘How come he/she comes home before the kids are in bed?’ ‘Why is he/she now so caring?’ • Clients began to realize that we were producing work with few errors and on time and the orders increased. They also commented on the fact that if they sent a request to several contractors, Energeticos responded in hours while other contractors took a week. • We had a visit from two managers from France for whom we were designing a project. At the end of the week we took them out to lunch. After a time they looked at each other and we thought they were going to complain. Instead, they said that they had never been in any company’s office like ours. There seemed to be no bosses or supervisors but everyone knew what they were doing.

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For us, what seemed strange was the way that our new company structure, behavior, and methods turned into the normal way of thinking and working. The structure, controls, rules and procedures that we had were now a thing of the past. No one missed them or talked about them or wished their return. When there was something to fix, organize, or develop, someone would do it. It was not necessary for a department or manager to organize it or plan it; it just got done.

Critical Success Factors Thinking back to what we had achieved, we believe that there needs to be a convergence of circumstances for such changes, firstly to occur and, secondly, to be successful. These are some of those circumstances that happened for us: • The process needs to be led by a person or a group of people who believe that change has to happen and are committed to lead the change. • The change process needs to be allowed to happen. Many organizations are shackled by conditions and rules from a remote “head office”. In our situation, during the change period, head office set the criteria for WHAT had to be delivered but left the HOW to us. They were happy with the results even though slightly bewildered with HOW we were achieving it. • We were fortunate to have an extraordinary, talented, and educated workforce. Close to 60% of our workforce were university graduates. • There needs to be a latent energy to want change. The average age in Energeticos during the change period was 36. This created an enormous amount of desire to develop new ways of working as well as living. There were difficulties along the way. The biggest one being convincing the managers that change of behavior and the work processes was required. Several had a lot of difficulty in ‘letting go’ the old authoritarian attitudes and several left because of this. On average, the acceptance of new ways of working took up to two years. Even then, without constant monitoring and help, many would revert back into old habits. We set up

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monitoring systems such as polling all teams every month to get an idea of the manager’s behaviors. The results would be discussed in private with each manager as well as organizing many communication and behavioral workshops.

Lessons Learned We list below a summary of many of the actions we took to be able to reach our goal of a liberated and humanistic organization. The top ten we covered above are included but there were other actions we took that also contributed to our success and they are worth noting even though we have not gone into detail on them. No working hours

Allowing everyone to come to work when it was convenient for them without monitoring the time they arrived, left, or spent in the office. Removing the Organization charts stifle people by confining them to organization chart boxes. We wanted them to be free and concentrate on the work. Eliminating overtime With no working hours, it was not possible to monitor payments or calculate overtime so everyone was put on monthly salaries. Time off for We let everyone monitor and decide themselves how weekend work much time off to take and when. No one in the company monitored them. Holidays We let everyone monitor and decide themselves how much holiday time they had and when to take them. No one in the company monitored them. Eliminating annual We eliminated annual evaluations. They never work and evaluations are more abused than do any good. We jointly decided at a management meeting everyone’s assessment once a year. Removed all policies and procedures

Removed roles and responsibilities

Procedures restrict employees in the use of their imagination and in finding better ways to work. We allowed everyone to develop nonmandatory guidelines if they needed them. R&R restrict the potential of employees to use their full capabilities and confines them to a predefined activity, so we eliminated them. (continued)

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Eliminated job descriptions

Similarly to R&R above, Job Descriptions put people in boxes and restrict their full capacity, so they were eliminated. Dismissals Any dismissal had to be unanimously approved by the management team. This prevented individual managers sacking anyone unfairly. Downturns, staff Employee teams were consulted if staff reductions were reductions necessary. Recruitment The various teams began interviewing and recruiting themselves, not the managers or HR. Language Each year we worked on a theme. One year it was the language that was used every day in order to change the behavior of everyone to a language that was positive. Help in leaving the We began to provide consultancy service to anyone company wanting to leave the company by mentoring them on whether it was a good career move or not. Employees could If anyone left the company, we assured them they could return if they left return whenever they wanted if they did not like their new job and several did return. Dress code We told everyone they could come to work dressed as they wished. We wanted them to be comfortable and relaxed at work. Simple financial We simplified financial reports so that everyone could reports understand them, and so everyone knew the financial status of the company. As we employed professional and educated people, we Removing silly believed we did not have to teach them basic notices in corridors standards of human behaviors. and toilets Company purchases We issued credit cards to anyone who had to purchase items for the company. This released our purchasing department to concentrate on the big things. Values—ethics We did not accept or tolerate any dubious or direct unethical behavior even from our clients. We regularly reported clients for corrupt requests. Valuesbeing green As we published we were a “Green” company, we acted green: •  Ensured recycling contractors actually recycled. • Refused to work on projects that were clearly un-green. • Educated employee’s children in green ways as we considered their parents a lost cause. (continued)

4  Innovation Through Living Our Values at Energeticos-Colombia  Internet access

Did away with job titles

Companywide presentations

Measuring communication

Advertising jobs

Participation of employees Training

Offices

Software

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Allowed full Internet access for everyone; again, on the basis that we employed responsible adults, there was no need to use school-type restrictions. As we had no organization chart, job titles became redundant, so we allowed everyone to choose whatever job title they wanted. Surprisingly, this did not create any problems. Every six months we would have a full morning presentation with everyone in the company there covering the state of the company and our plans for the future. Every month we measured the effectiveness of the management team communication with their teams. It was not published but just given to each manager so that he could reflect on the results. When we advertised for jobs, we concentrated on the behaviors we wanted and not the skills.

We encouraged participation in everything. Here are some of the things employees got involved with: • Employees set up their own out of hour’s school without management knowing about it. • Employees took over the running of all training including the training budget. • Employees designed, contracted, and managed the new offices, as well as where everyone sat including management. All offices were open plan. • There were several times when we needed some software but could not afford it. Surprisingly, every time this happened the engineers would develop their own without us asking them to.

Maintaining such an organization requires commitment and belief. Educating and convincing everyone that this is the right way to go after generations of autocratic management (which is still being taught today) is very difficult but the benefits of having a dedicated and motivated workforce on your side far outweigh the challenges. The main difference

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we think was that everyone looked forward to going to work, something that is extremely rare in many organizations.

Endnote During the design and construction of the new offices ,which, as mentioned above, was carried out by the employees themselves, they decided that the Diversity Team needed a place where the psychologists could sit quietly with anyone who wished to talk in confidence with them. As the offices were open plan design, they came up with an eyesore of a circular structure in the middle of one of the office floors. They painted it gaudy colors and the only way in and out was a small entrance that you had to duck to get into it. Inside it was decked out with comfortable chairs and big cushions with hardly any light. It was given the name of the “Igloo”. It became famous throughout the company and was used frequently. At the beginning of 2013, a directive was issued from the now head office in Houston to remove it and it was taken down. Shock waves reverberated around the company. Someone had taken down their Igloo! It had been built by the employees for them to use and was a symbol of the culture. This was the start of the dismantling of the culture we had built, and over the next year most of the old procedures for monitoring employees returned, even fixed working hours. Even though what we developed has been dismantled, we look at it as a process of education Many of the employees who lived through our culture change left the company and have started their own businesses and others are now in positions of authority in other organizations. In our contacts with them, we are delighted to note that they have all embraced this open, liberated, and humanistic culture and apply it constantly.

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Notes 1. Ricardo Semler. 1995. Maverick. Business Plus, USA. 2. Gary Hamel & Bill Breen, 2007. The Future of Management. Harvard Business Review Press.

References Hamel, G., & Breen, B. (2007). The Future of Management. Harvard Business Review Press. Semler, R. (1995). Maverick. Norfolk, NE: Business Plus.

5 Vices, Virtues, and Values: A Business Case on Family Enterprise and Its Philosophical Implications Implementing Humanistic Management Practices Friedrich Glauner

People found companies to create added value with people and for people that they could not create by themselves. Companies are, first and foremost, cooperative systems. They are made to solve a complex task, that is, satisfy a need or alleviate a want that can only be achieved by multiple people working together. To do so, they need an organizational form that is aligned with their intended value proposition. The essential principle of successful compansssies can be expressed as a chemical formula: H3O. The three Hs stand for the cooperative essence of “humans with humans for humans” and the O for the organization designed carefully to match the company’s purpose. However, if we consider the practical reality in business with the many voices of the choir of “values-oriented management” ringing in our ears (e.g. Collins 2001; Dierksmeier 2016; Drucker 1977; Hemel 2013; Meyer 2016; Pirson 2017; Senge 1990), we need to state that many or even most F. Glauner (*) Weltethos-Institut/Global Ethic Institute, Eberhard Karls Universität, Tübingen, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_5

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corporations are quite far removed from a values-oriented form of management that would fulfil the standards of truly cooperative systems. This becomes particularly plain when we consider the annual results of the Gallup survey of employee engagement, covering individual countries around the world like Germany, the United Kingdom, or the United States. The study’s stark—and depressingly regular—results are that trust and the will to cooperate and work hard for the company resulting from aspects of culture are the exception, rather than the norm. If we take Germany as pars pro toto and a representative example for other countries, little has changed over the past decade: around 15% of all employees of all companies have already resigned in their minds, and 70% only work “by the book”. This leaves a mere 15% fully and actively committed to their employers (Gallup 2015). What deeper cause is at work here? Put concisely, it is the all-too-often dysfunctional relationship between the values held by the stakeholders and executives in charge and the values publicly championed by the companies in question. Applied to family companies, the mismatch can be found between the values of the company and those of the entrepreneurs and their families. For a correct assessment of the importance and impact of this too-­ often dysfunctional relationship between the family’s values, the entrepreneur’s values, and the values of the company itself, we need to address three aspects concerning commercial factors and the terminology of the family’s, entrepreneur’s, and company’s values. First: The lion’s share of all companies is made up by small and medium-­ sized enterprises. Taking Germany as an archetypal economy, the data for 2013 suggests that 99.6% of companies are SMEs or even smaller, proverbial mom-and-pop businesses. They constitute the backbone of Germany’s economy. With 16.15  million employees, they account for 59.2% of all regular employment, and their €2159.8 billion in revenues make up 35.5% of Germany’s annual economic output.1 At the same time, they are experiencing massive economic pressure of a completely different type when compared to their larger peers. Their size implies a simple lack of opportunity for automation, for the integration of new IT capabilities, or for global supply chains and networks that can seize true economies of scale or novel value creation opportunities. This can be found expressed when we look at revenues and gross value creation per

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employee. While the larger SMEs and large enterprises turn over €354,000 or €169,000 per person and year and create gross added value of €70,000 or €51,000, the companies at the smaller end of the scale enjoy annual revenues of €110,000 or €74,000 and value creation per employee and year at €40,000 and €33,000. In the tough environment of global competition, it is the smaller SMEs and the smallest businesses that are feeling the squeeze and are seeing their very existence threatened by the globalized economy. Second: If we speak of values as the essential drivers of social systems and try to understand them in terms of this fundamental role, we need to distinguish between the normative and the functional perspectives. For business ethics and CSR purposes, values are usually seen only from the normative vantage point. We can see this in how language has shifted from the “How it is” to the “Thou shalt”. The implied assumption is that there is a clearly definable good that should be translated into the right goals and practices for companies. The principles for morally organized competition proposed by Otto et al. (2007) are a good example of this type of normative argumentation: “Competition should not intend or achieve the actual destruction of the other party… it should not be violent, but rather non-violent… it should not be aggressive, but—wherever possible—conducted with a cool head… it should not be degrading… it should be transparent and not obscured” (l.c. 43; translation and emphasis by the author). This intensive emphasis on the normative precept only serves to reveal that companies tend to do the very opposite of what the proponents of ethical management practices are calling for. This takes us back to the functional perspective of values in business. Irrespective of the questions—in themselves heavily debated and debatable—of what is correctly considered good in business and management and which criteria are used to make that decision, our emphasis on the normative precepts of “Thou shalt” entails a risk of losing sight of the systemic, functional purpose of values in business. We often mistake the essential drivers and causes of the values whose dynamics shape practice in business before any normative classifications. Third: When we analyse the dynamics of values in a company from a functional point of view, we come to realize that the vast majority of companies in the economy are managed by their owners.2 This means that the

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owners and entrepreneurs are usually the strongest and most dominant elements in the system and that they imbue their companies with their values. Put more concretely, it means that the character and upbringing of the people in charge not only determine the phrasing of the publicly advocated values, but also influence which values and which cultures are actually developed at their companies. When a chasm opens up between the publicly advocated and the actually applied values, the result—before any ethical or normative considerations—will be a weakening of the system. If both sides stay aligned, the entrepreneur’s values will give the company its focus, momentum, and impact. They then form up to become the double helix of corporate culture (Glauner 2017, p. 57), giving the organization a lasting sense of purpose, stability, and direction and creating a resonance space in which the values can express themselves constructively and effectively. The third aspect is extremely ambivalent. Speaking systemically, the relationships apply to both positive and negative business models and corporate cultures. The latter case can be found in the form of Carsten Maschmeyer’s financial services enterprise AWD, whose sales model revolved—like any structured sales business—around channelling profits up the ladder to the top management tier. Carsten Maschmeyer did not tire to remind his AWD people that poverty is due to a character flaw, namely to poverty of courage (Ritter 2011). Drawing back the curtains at the companies whose business models might be very successful indeed, but far from a paragon of ethical management, the double-faced nature of values in business is revealed. When the propagated and applied entrepreneurial values and corporate values are well-aligned, the enterprises can be exceptionally successful, even though or specifically because these companies use people only as raw material that is shaped, manipulated, and indoctrinated for its purposes with the means of values-oriented management. Taken to the extreme, even the Mafia or other criminal or otherwise unethical social systems can be very effective, as long as the “right” godfather brings the “right” values to shape the system to his image.

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 orals and Sustainability: The Values of HiPP M GmbH & Co.KG When we consolidate all of these findings concerning the dynamics of values in businesses, we arrive at the key question about the whole issue of values and corporate cultures: What influences the formation of a positively functional culture that holds up to the expectations of business ethics? We can look for an answer by looking at a specific case of a family’s values applied to business: Claus Hipp and the HiPP GmbH & Co.KG from Pfaffenhofen. Analysing the family and company system of HiPP, the values system of HiPP appears as follows. Brought up in the traditions of a family committed to the Christian religious values and the Catholic social theory, the Hipp family follows the creed that Christian responsibility should determine one’s actions. From these values of his family, Claus Hipp has drawn his own personal values as a human being and as a man of business: fairness towards others; responsibility in practice; and learning, working, helping as the triad of the active life informed by the Ten Commandments and the cardinal virtues of the Western hemisphere—ingenuity, equity, courage, and temperance.3 Based on this set of values, grounded in family traditions and implemented in the entrepreneur’s own life, HiPP has spent the last six decades implementing an inimitable and unique value proposition, long before the rise of ecological or sustainable business thinking: “Top quality in balance with nature”. Based on a dedicated ethics charter,4 HiPP realizes this value proposition with the means of consistent values management in its organization,5 using the following principal values6 to manage the formation of HiPP’s core competences: the claim “Creating sustainable added value in balance with nature” is aligned with the following values—the greater good before self-interest; quality ↔ efficiency ↔ sustainability; protection of nature and a careful use of the good given to us; entrepreneurship as the basis for economic and social value (and values) creation. These principal values are developed through the constant and careful maintenance of the company’s culture, which holds all interactions within the company and with all of its stakeholders up to the claim of

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Christian responsibility as the precept of all actions. For the dimensions of the company’s relations in its market, its relations with its employees, and the relations of its people among each other, the company’s relations with the state and society, and its relations with environment, the following procedural values7 become the practical guidelines: 1. Values governing behaviour in the market: Fairness and loyalty, trust and reliability, and mutuality. 2. Behaviour towards employees: Care, justice, empathy, open communication, and motivation. 3. Behaviour in the workforce: Politeness, appreciation and respect, understanding and empathy for the other person’s needs, loyalty, and constructive work for the good of the company, entrepreneurship, and engagement. 4. Behaviour towards the state: Compliance with regulations and an awareness for the company’s social responsibility 5. Behaviour towards the environment: Commitment to environmental protection as an essential value. The values landscape of the family’s, entrepreneur’s, and company’s values at HiPP reveal two interesting facets: First, there is consistency between the values of the business model, the entrepreneur’s values, and the values of the company’s culture. Even if it might appear that the normative dimension of the values is paramount at HiPP, we need to see this consistency and state that the normative values of HiPP have a functional purpose first and foremost. They help align the company to realize its value proposition with operational and strategic purpose. For this value proposition, the ethical or normative dimension of the values has only a subsidiary function, as it helps coordinate all interactions in the company and with its stakeholders in such a way that the value proposition can be fulfilled in the best-possible way. Compared to the primary values of the value proposition, the ethical, normative values of the corporate culture fulfil a secondary role. Even on this secondary level, they do not have the importance that we would, for example, attribute to the divine laws in a religious community. The opposite is true: they are the procedural rules of interaction, primarily functional parameters that fulfil the

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role of secondary values for the company’s value proposition. This secondary or subsidiary role of ethical or moral values in the concert of value-adding corporate values again reveals that companies are not churches and that the ethical values can indeed become dysfunctional drivers for a poor corporate culture when companies indeed act like churches and weaken their essence through dogmatic preaching. (This happens at the very least in cases in which slavish dogmatism stops companies from evolving and changing, makes the culture of values fall out of step with the surrounding systems, or turns the company into a closed, sect-like community.) Second, the family and company values of Hipp and the normative secondary values of the HiPP’s company culture have one abstract common denominator. This can also be seen at other companies that have also developed a consciously managed and inimitable corporate culture.8 This is the canon of Global Ethos values proposed by Hans Küng (2012).9 This canon has genuine effectiveness in practice that goes far beyond that offered by the philosophically abstract underpinnings of other ethical approaches. As will still be discussed, the Global Ethos values have a subsidiary purpose when functionally positive corporate cultures are concerned. As functional secondary values of the corporate culture, they can help make companies more competitive (e.g. by helping form high performance teams) without needing ethical justification or other reasons. This becomes possible as these values have no, in semantic terms, clear intension or extension. By difference from a culturally specific ethos, they have no single, conceptually concrete, and unambiguously determined meaning. As abstract denominators of a plethora of different religious and secular rules for human interaction, they are only regulatory guidelines that can be used to organize even very unique ways of living or doing business, without giving preference to or discriminating against any one of those practices. Following Immanuel Kant’s distinction between determinative and reflective judgement, the Global Ethos values are reflective values (Kant 1799, XXVf ): they do not offer a perfect instruction of what constitutes fairness and partnership in a given business situation or how a given problem ought to be solved. Instead, they help assess whether a specific rule or set of actions can be fair and inclusive from the viewpoints of the people—all the people (!)—involved.

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As the universal principles of human interaction, the Global Ethos values stand securely between the many historically evolved, material morals on the one side and the abstractly philosophical search for universally valid ethics. They must not be interpreted in purely material terms— that is, materially determinative—but as functional rules that can enable the resolution of conflicts within and between the many value systems to be found in the experienced world. Translated into the language of philosophy, they represent regulatory ideas that add more meanings and connotations without determining any concrete contents. By analogy to Kant’s distinction between an imagined “noumenal world” and the many ways to describe it (cf. Glauner 1997, 156f ), the abstract values of the Global Ethos are the footings for critical judgement. This does not imply a perfect match with the specific contingent life practices. We need this distinction of the abstract footings and the concrete, contingent practice of life to maintain both: the ideal of a universal canon of values that holds true in all cultures and all of the accidents and incidents of life, and the diversity of concrete cultures, which are given the individual space they need by the Global Ethos canon. Breaking with Kant’s rationally necessary understanding of theoretical reason, the Global Ethos values are concepts with effect in contingent practice. Let us return from this brief hint at the meaning, role, and function of the Global Ethos for human relations to our analysis of the subsidiary function of ethical values in business. What guides a functionally positive corporate culture? Values that reconcile the substantial value proposition of the company with the social practices required to fulfil that value proposition. This is where the humanistic canon of the Global Ethos comes into its own. It provides a meaningful yardstick for measuring whether the values espoused at the company have a functional or a dysfunctional role. This is most obvious when looking at the question of leadership and leadership values. In a sense in parallel to the debate about which leadership values and which leadership styles should be accepted, the Global Ethos values can be used to assess any leadership system to understand whether it is situationally appropriate and humanistic and, in essence, ethically sustainable. We should consider that leadership is a field function10 that consolidates six factors: environmental complexity, systemic complexity,

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systemic capacity, balance of knowledge, spatial scope, and the pace of change. Environmental complexity means the conditions for practice, which includes the competitive environment, the complexity of the activities, and the complexity of other external forces, such as political or economic upheavals or any other social or natural transformations that need to be considered when making decisions as a leader. Systemic complexity refers to the complexity of the organization that is to be led or whose members are to be led. Systemic capacity and balance of knowledge refer to the amount and the distribution of competences and capabilities that are organized in the leadership system. The factors spatial scope and pace of change finally circumscribe the reach of the leadership system and the dynamics of the system’s environment that the leadership system needs to be able to respond to. The specific interplay of these six factors determines the situational fit of the leadership style. Patriarchal and traditional or democratic and laissez-faire styles will struggle when it comes to navigating a large organization with a substantial workforce holding a relatively homogeneous store of information and competences through the choppy waters of a fast-evolving business environment. In such cases, bureaucratic or cooperative styles might prove more effective. If, all else being equal, we are dealing with smaller organizational units, democratic and laissez-faire leadership can be the ideal. By contrast, a situation with a major disparity in knowledge and information can make even authoritarian, patriarchal, or traditional styles extremely effective and appropriate. Finally, a major mismatch in access to knowledge and authority combined with a radical need for change can make even autocratic styles a reasonable and acceptable choice, as demonstrated in the secular revolution introduced in Ataturk’s Turkey. The situational fit and effectiveness of a leadership system are not the same as its ethical appropriateness. Other criteria are needed to make that judgement, taking three dimensions into account: the factual level, the social level, and the organizational level of the system in question (Glauner 2017). The factual level concerns the continuum of leadership decisions between the poles of personal power and professional fact; the social level concerns the continuum between care and self-interest in decisions; and the organizational level covers the continuum between inclusion and exclusion of the people being led. Factual, caring, and inclusive

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leadership systems would have their decision-making processes sustained by ten leadership virtues: on the factual level, these are the factual virtues of fairness, dependability, appreciation, and respect; on the social level, the people-centric virtues of responsibility, trust, and commitment; and on the organizational level, the functional virtues of openness, transparency, and consistency. If a leadership system is both suited to the given situation and professional, nurturing, and inclusive to the extent allowed by the conditions, the people, and the organizational forms involved, it can be both extremely effective and ethically sustainable. This removes the need for a debate about whether any specific leadership style, be it autocratic, authoritarian, patriarchal, or traditional, is in itself ethically untenable. Far from it! All leadership styles, including democratic, liberal, and cooperative ones, can be unethical if they serve power and self-interest only. Something else matters more: the ten leadership virtues that can make a leadership style ethically sustainable are not, in the strict sense, ethical values. Rather, they are functional values that serve to align the function “leadership” in such a way that the system can achieve its goals. For them to be able to do so, the organization, its people, and its tasks need to be orchestrated correctly for the given situation. What determines the right fit? Here, the Global Ethos values again come into the picture. When we compare the ten leadership virtues with the Global Ethos, they appear as nothing other than a material expression of the Global Ethos values in the specific arena of “leadership”. For the role of the Global Ethos values, this means that they can provide a guideline for developing material criteria to align specific fields of action—such as, in this case, “leadership”—to become situationally appropriate, humanistic, and highly effective. This again shows that the Global Ethos values play a subsidiary and, in this sense, primarily functional role for the corporate organization and the organization of “leadership”. The advantage of the Global Ethos values then lies in their utility for developing custom catalogues of material principal and procedural values for any given aspect of life that can be used to steer and manage the everyday practice in that specific area. This again underlines that the ethical dimension of the Global Ethos values is of a subsidiary or secondary nature when it comes to forming specific material values, in this case, functionally positive leadership

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values. This goes even further: when we refocus on the crucial importance of the applied entrepreneur’s values, another value comes into play that also has a seemingly pre-ethical character. Even the most worthwhile ethical convictions will be undermined, as the Russian saying goes, “When the flags are unfurled, all reason goes into the trumpet” that is, when zeal and dogma take over. A functionally positive set of values for an ethically sustainable culture needs not just situationally appropriate values of the entrepreneur that are in line with the stated purpose of the company, but also certain forms of interaction and a view of oneself and one’s fellow humans characterized by the pleasantly outmoded terms of humility and modesty. These virtues are again less ethical or moral categories than typically pre-cognitive expressions of wisdom that come from the same source as the Global Ethos values with their similarly pre-­ cognitive roots in practical reality. A Rhenish saying states that “Pride and stupidity bloom on the same stock”; modesty and humility can free us from the blinkers of selfishness, arrogance, and greed. As the values of self-restraint, they are the key virtues and primary values for leading oneself. The pre-rational virtues of humility and modesty lead us back to the example of Claus Hipp, the HiPP GmbH, and the relationship between family’s, entrepreneur’s, and company values. What is most striking about HiPP is the fact that the corporate values of HiPP GmbH & Co.KG mirror and reflect the humanistic values that are grounded in the values of the Hipp family and that are represented so actively, transparently, and consistently by Claus Hipp. He and the HiPP company are living proof of Jim Collins’s belief that excellent companies are typically led by people who make modesty and humility the source of the humanistic culture that makes real and exceptional success possible in the first place (Collins 2001). This is a key fact for ethically sustainable cultures, but there is another factor to consider, which seems even more significant. As HiPP shows so vividly, the applied family’s, entrepreneur’s, and company values form a resonance chamber in which the family values resound as the basso continuo and the entrepreneur’s values both keep a steady beat and rise up as the tenor voice—with the weightiness of the heldentenor or the easy charm of the tenor buffo. The company values then add a rich choir of

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voices that gives the piece more body and brings the composition together. With the inherent dynamics of values in social systems and with the fact that the most flexible dominant element will have most impact on the system it is part of, the conclusion for business has to be that the applied family’s and entrepreneur’s values will determine whether the resulting corporate culture is functional or dysfunctional. The implications for the many debates about CSR and business ethics are obvious: if the morals and ethics behind the family’s and entrepreneur’s values and not the values developed from CSR or business ethical theory are paramount for how businesses and people in business behave, the question of how a company needs to be structured and aligned to enable ethical practice needs to be replaced with the question of how educational and upbringing in families ought to be approached and how entrepreneurs’ values can be established that will eventually lead to their companies forming a functionally positive set of values that is ethically sustainable. Put more drastically: however important and worthwhile their purpose, CSR and business ethics might be missing their mark in two ways—they mistake the relevant audience for their claims. It is not a single company or the economy at large, but people, more specifically, the people that can imbue the company with their values. To reach these people, we need no business ethical, but general ethical arguments, arguments that concern the human being and not the economic, social, or corporate system. This takes us back to philosophy and the mentioned problem that all abstract philosophical thinking, however coherent it might be, will by its very nature miss the experienced reality of most people. They will also miss the simple fact that there is no need for business ethical arguments to give companies a functionally positive culture that is ethically sustainable. Before any discussion of whether ethical or economic considerations ought to rule in business, it can be shown that even purely commercial ends and goals can be pursued much more easily, efficiently, and effectively if, for instance, the leadership system is sustained by the mentioned leadership virtues, and what goes for leadership also goes for other aspects of business, be it the brand promise or value proposition, organizational development, procurement practice, or customer management. All that is needed is a new focus on the functional effect of values in companies without giving this new perspective too much ethical weight or reasoning. In essence, the

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value of values for companies does not come from their ethical potential or the primacy of ethics, but from their practically functional potential for making business practice more effective. The old adage holds true: practice eats theory for breakfast.

Lessons Learned If we recapitulate the arguments outlined here, we arrive at the following findings concerning the links between families’, entrepreneurs’, and companies’ values and their role for ethically sustainable business management: 1. The vast majority of the business landscape is made up by owner-­ managed or family-owned businesses. For them, the family’s, entrepreneur’s, or company values constitute a resonance chamber in which the applied family’s and entrepreneur’s values resound loudest. They determine whether the company in question will develop a working or dysfunctional culture. 2. If the applied family’s and entrepreneur’s values match the company’s purpose, the values system of the company will form a double helix that gives the company’s value proposition durability, stability, direction, momentum, and impact. If they do not, the company will lose its proverbial punch and focus. 3. If the material values system of the company is also aligned with the secondary or subsidiary values of the Global Ethos and represented with modesty and humility, entrepreneurial excellence can be expected. If, on the other hand, it is marked by egotism, the pursuit of power, and greed, as in the case of VW and Ferdinand Piech, the corporate culture will devolve into a dysfunctional system of intrigue, fear, the abuse of power, and an economy of signals of dominance and submission. 4. As long as the family’s and entrepreneur’s values set the direction for practice at the company, the question of business ethics, that is, how and which normative precepts need to be implemented to enable ethical practice, shifts to become a question of moral education in the family that has formed and shaped the future entrepreneur.

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5. This question of education moves business ethics over to the general philosophical question of what makes people choose righteous actions and how such virtues can be embedded and activated in each individual case. 6. Returning business ethics to the ethical question of the foundations, conditions, and opportunities of virtuous action by individual actors adds a triple qualification to our material reasoning coming from specific virtue ethics: first, all material virtue ethics are grounded in specific cultural conditions and ways of living that are all too often diametrically opposed in their specific precepts and injunctions. Second, all abstract philosophizing either does not engage with the practical problems of the supposed precepts at all or, if it does engage with them, it has little pragmatic value, as they are being debated and negotiated on a plain happily navigated by philosophers, but rarely trodden upon by all other people caught up in the cares and concerns of real life. Third, on the abstract philosophical level, more than five millennia of debate and discussion have not yet produced a consensus about the arguments, rationale, and implementation of a universally applicable canon of values that can be shared and observed by all of humanity. 7. If the concerns of business ethics relate back to the key questions of general ethics and if they have no solutions to offer that individual companies can feasibly employ in their everyday practice, we need to reiterate that the question of whether ethically sustainable family, entrepreneurs’, or business values govern is determined by pre-­ rational attitudes. As the torchbearers of truly ethical business management—such as Claus Hipp—show, rationally explained ethical precepts are always preceded by responsible and practised ethical will. 8. If practical will and not ethical precepts determine how people act in business, the ethical question of how companies should be managed to make ethical behaviour not just possible, but actual practice is replaced by the more functional question of which incentives can be used to steer people’s practical will to make their behaviour in business sustainable on the ethical level. 9. If we ignore some of the inherent motivators of human behaviour, that is, the psychological dispositions underlying such vices as greed,

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jealousy, envy, greed, vanity, or the lust for power, the strongest incentives we can find for people’s practical will in business seem to lie in the economic logics of management: the foremost purpose here is to ensure a healthy revenue stream and increased competitiveness, to stop the company from being forced from its markets by bankruptcy, take-over, poor sales, or any other forced termination of the business resulting from such factors. 10. Protecting increased competitiveness and healthy profits demands a humanist corporate culture that forges the company into a high performance unit that can deliver on its value proposition with both great flexibility and an unmistakable identity. 11. In the tough world of globalized markets, more and more companies and their value propositions will fall by the wayside, be it because their USPs are lost or because they are simply made obsolete by technological progress and the advent of disruptive business models. Small to medium-sized enterprises, often genuinely tiny family companies, usually feel the brunt of this and do not have access to the technological capabilities to counter this with their own disruptive business models. If they want to remain viable far into the future, they need a different sense for how and why they are in business. 12. This different sense is, at heart, a question of values that can show us that humanist, you-centred thinking and action is the best recipe for lasting success. It not only understands that every company, of whatever size, is a cooperative system that can only produce top performance if it is sustained by a functional and positive culture; it also knows that its corporate purpose needs to follow a creed that is genuinely grounded in values. 13. If the creed of these companies remains beholden to today’s routine commercial logics, they will remain caught up in a reality of “winner-­ takes-­all” markets that will continue to eat away at the corporate landscape of today and, on the local, regional, and global level, our society and the natural world. 14. If, on the other hand, their creed is committed to adding new value at all links in their supply chain, processes, and cycles of consumption that enriches our human, natural, and economic resources, rather than exploiting them, companies can become viable actors in

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a civil society that overcomes the apparent contradiction between ethics and economy that seems to exist in the very essence of commercial value creation. 15. This deceptive contradiction between ethics and economy at the heart of commercial value creation processes is not resolved by ethical argument, but by simple functional considerations. The point of this is to show ways for every company to stay viable and fit for the future. 16. Companies will only attain this viability if their values sets, including their family values, entrepreneurs’ values, and company values, combined with their purpose, that is, their substantial value proposition, stand up to scrutiny with the functional subsidiary values of the Global Ethos. Where greed, vanity, and egotism rule, there can be no basis for true viability. 17. Whether a company indeed manages to remain viable for the long term is then a question of the personal values of the actors within it and a question of the systems and mental models with which the company is seen and managed. This again points us to the need to choose another forum for our business ethical debates: not ethical considerations will decide the future viability of our current economic practices and management customs, but psychological factors like our impulses, needs, and beliefs, cognitive factors, such as our mental models and belief systems, the man-made constructs that colour our perception of and activities in our world, and, last, but not least, the (dys-) functional interaction of our company, entrepreneurial, and company values. One rule applies to all of them: practice eats theory for breakfast. The creed for lastingly viable business management has to be: practice is theory for grown-ups.

Notes 1. http://www.ifm-bonn.org/statistiken/unternehmensbestand. 2. Family firms account for roughly two-thirds of all businesses around the world, create an estimated 70–90% of global GDP and between 50–80%

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of jobs in the majority of countries worldwide ­(http://www.ffi.org/page/ globaldatapoints). In Germany these numbers are even higher. The Family Business Foundation (Stiftung Familienunternehmen) suggests that family-­owned companies make up 91% of enterprises in Germany and owner-managed companies constitute 87% of all active companies (excluding the public sector). They give jobs to 57% or 50% of all workers and contribute approx. 55% or 47% to the total economic output (http://www.familienunternehmen.de/de/daten-fakten-zahlen). 3. Glauner (2017, 128); Hipp (2008, 2012). 4. Cf. http://www.hipp.de/uploads/media/Ethik_Charta.pdf. 5. Cf. H. 6. Principal values are all those values that express how and why a person or a company creates new value. The value proposition expressed in them should have a pull effect and create a want. People are attracted by the principal values by being attracted by the value proposition expressed through them. 7. Procedural values, that is, the operational values guiding the behavioural conduct and corporate culture are those values that govern practice and interactions at a company. They are the norms with which the people in companies regulate their behaviour towards each other and all other stakeholders and managing and shape the interactions between different areas and processes of the business. The applied procedural values form the backbone of the corporate culture. 8. We can also name Hilti AG, dm drogerie-markt GmbH  +  Co.KG, Trumpf GmbH + Co.KG, Brauerei Gebrüder Maisel KG, or Interface Inc., Schamel Meerrettich GmbH + Co.KG and Icebreaker New Zealad Ltd. (cf. Glauner 2016, 2017). 9. The Global Ethos canon consists of the two principles and four basic dimensions of human action. The first is the principle of humanity that states that every human being has absolute and inviolable dignity and deserves to be treated humanely. The second principle of reciprocity follows the golden rule or, on a more philosophical level, Kant’s categorical imperative to express the idea of mutuality: “Do unto others as you would have them do unto you.” These two basic principles are translated into the four basic dimensions of the Global Ethos: first, the values of nonviolence and respect for all life; second, the values of justice and solidarity; third, the values of honesty and tolerance; and fourth, the values of mutual respect and partnership.

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10. The following definitions reveal leadership as a field function: Leading means taking decisions in situations without full access to information. It is a process of using a choice of means and ends (factual focus) and organizing and motivating people (people focus) to structure complex circumstances in such a way that the intended solutions are pursued by the actors involved out of their own will. Leadership means the ability to inspire people for a cause in such a way as to make them pursue it out of their own volition. Good leadership aims for voluntary commitment and an active handling of the assignments, not the blind and obedient execution of orders. Leadership works by activating shared values on the interpersonal level. It assumes that people are driven by meaning. Leadership styles are concrete approaches for activating the inherent motivation of the people being led to find, coordinate and implement solutions for the given complex conditions. Leadership systems are systems of values that organize the situational interplay between leading and following. They are an expression of the socio-culturally specific assumptions and belief systems that inform the understanding of people and the different roles of leaders and followers. Leadership responsibility means the complete responsibility the leader has for the people being led (note: the follower’s mistakes are the mistakes of the leader).

References Collins, J. (2001). Good to Great. Why Some Companies Make the Leap… and Others Don’t. New York: HarperCollins. Dierksmeier, C. (2016). Reframing Economic Ethics. The Philosophical Foundations of Humanistic Management. New York: Palgrave Macmillan/Springer. Drucker, P.  F. (1977). People and Performance: The Best of Peter Drucker on Management. London/New York: Routledge, 2011. Gallup. (2015). Press Release Engagement Index 2014. Retrieved from http:// www.gallup.com/de-de/181871/engagement-index-deutschland.aspx. Glauner, F. (1997). Sprache und Weltbezug. (Alber) Freiburg … 2nd ed. 1998. Glauner, F. (2016). Future Viability, Business Models, and Values. Strategy, Business Management and Economy in Disruptive Markets. Berlin/Heidelberg: Springer.

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Glauner, F. (2017). Values Cockpits. Measuring and Steering Corporate Cultures. Heidelberg/Berlin: Springer. Hemel, U. (2013). Dpie Wirtschaft ist für den Menschen da. Vom Sinn und der Seele des Kapitals. Ostfildern: Patmos. Hipp, C. (2008). Die Freiheit, es anders zu machen. Mein Leben, meine Werte, mein Denken. Munich: Pattloch. Hipp, C. (2012). Das HIPP Prinzip. Wie wir können, was wir wollen. Freiburg/ Basel/Vienna: Herder. Kant, I. (1799). Kritik der Urteilskraft. Hamburg: Meiner, 1974. Küng, H. (2012). Handbuch Weltethos. Eine Vision und ihre Umsetzung. Munich, Zurich: Piper. Meyer, M. (2016). The Evolution and Challenges of the Concept of Organizational Virtuousness in Positive Organizational Scholarship. Journal of Business Ethics. Published Online: 30 November 2016. https://doi. org/10.1007/s10551-016-3388-z. Otto, K.-S., Nolting, U., & Bässler, C. (2007). Evolutionsmangagement. Von der Natur lernen: Unternehmen entwicklen und langfristig steuern. Munich/ Vienna: Hanser. Pirson, M. A. (2017). Humanistic Management: Protecting Dignity and Promoting Well-Being. Cambridge/New York: Cambridge University Press. Ritter, J. (2011). Der großzügige Freund. Portrait Carsten Maschmeyer. Frankfurter Allgemeine Zeitung, Frankfurt/Main 21.12.2001. Retrieved from http://www.faz.net/aktuell/wirtschaft/portraet-carsten-maschmeyer-dergrosszuegige-freund-11575170.html. Senge, P. M. (1990). The Fifth Discipline. The Art and Practice of the Learning Organization (5th ed., 1993). London: Century/Random House.

6 Humanism’s Necessary Integration with Capitalism: Further Remarks on Brunello Cucinelli’s Philosophy of Clothes David LaRocca

Humanism is, in some sense, traceable to any community of homo sapiens that has regarded itself, its values, its virtues as paramount, even sacrosanct. In the West, humanism has ebbed and flowed in relation to culture, religion, politics, technology, and economics; today, this remains very much the case. If we can spot moments of peerless intensity—the ancient Greece that was home to Socrates and Plato, the Rome of antiquity that produced Cicero and Seneca, the Italian Renaissance that found company with Giovanni Pico della Mirandola, and, in the modern era, various strains of Protestantism and liberalism, with the likes of Immanuel Kant and John Stuart Mill—we can also take stock of the particular moment in the history of humanism that we currently inhabit.

D. LaRocca (*) Cornell University, Ithaca, NY, USA © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_6

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Cultural historian, Yuval Noah Harari, in works such as Sapiens and Homo Deus, has provided a broad context in which to think our humanness—what makes us what we are, at once different from other species and like one another within a species. As Harari shifts his scale of interest from ontogeny to phylogeny—and across vast swaths of time—he offers an especially useful heuristic for thinking about our appointed topic, humanistic management, since Harari, in part, traces the abiding relationship between capitalism and humanism. I can briefly gloss one of his illuminating points on this perhaps unexpected intermingling by saying that where we have for centuries perceived capitalism’s willingness to tolerate, support, and even at times celebrate humanism (e.g., with attention to factors such as improved working conditions; labor laws that prohibit children from service; retraining and re-education; supplying a living wage, health and social benefits, retirement and pension planning, and the like), Harari announces, and perhaps also admonishes, that now “humanism with capitalism is a relic.”1 Moreover, the distance between capitalism and humanism is widening with each passing season as the impact of post-human technologies—for example, artificial intelligence, machine learning, and algorithmic-based systems—become the standard operating procedures for doing the business of capitalism (from banks to boardrooms, from pensions to personal financial decision-making). Despite the increase of the human population on earth—and the attendant human impact on the climate, as framed, for example, in terms of the Anthropocene—the uncanny fact remains that we are, concurrently, heading for an age of the post-human; this notion is most tersely and evocatively expressed as the separation of intelligence from consciousness. While humans may remain for some time the most conscious of animate creatures, our intelligence may, and likely will, fade from preeminence. If this is the case, and evidence suggests that we are already deeply immersed in this twofold transformation—viz., (1) capitalism’s separation from humanism and (2) the separation of intelligence from consciousness—humanism needs not only new explicators and defenders, but also new models for study and reflection, and, when possible, emulation. In what follows here, I aim to articulate some of the ways in which a concrete illustration of humanistic management in business practice at Brunello Cucinelli may provide some indication of how

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humanism can retain its vital alignment with—and integration within— capitalism’s onward development, and even account, in its own way, for the increasing nonhuman basis of intelligence.

Part I Brunello Cucinelli is the founder of an eponymous line of high-end, luxury fashion  apparel and accessories. As surprising as it sounds at first blush (and perhaps surprisingly incongruous), Cucinelli, who I will address by surname in what follows to help distinguish him from the name of his closely-held publically-traded corporate entity, has a long-­ standing interest in and devotion to humanistic strains of thinking as they are found globally, but especially in the West, and more specifically emerging out of Italy and the native regions familiar to his birthplace, Umbria. Thus, Benedict of Norcia (c.480-547)  and Francis of Assisi (c.1181-1226)  can be singled out both for their physical proximity to Solomeo (and Cucinelli’s hometown, Castel Rigone) and for their intellectual support of his cultivated application of their teaching to his type of humanistic management. The epicenter of the Italian Renaissance, Florence, is fewer than a hundred miles away, while conceptually its contributions to global humanistic thought are immanent in Cucinelli’s small Italian hill town and the international clothing empire he runs from its parapets. I will not rehearse here my earlier research on Brunello Cucinelli— most perspicuously in two journal articles (one addressed to the essential role of literary and philosophical humanism in Cucinelli’s business practice and a second devoted to the company’s philanthropic and stewardship activities—issues that lie beyond the appointed purview of the present volume) and also in a documentary film I directed, Brunello Cucinelli: A New Philosophy of Clothes (Fine Print Film, 2013).2 In these articles, in this film, and in interviews, I have articulated the rich and rigorous philosophical grounding of Cucinelli’s enterprise in the world of business.3 In what follows, then, I want to supplement, extend, and update my existing research by doing two things:

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First, take up the mandate of the volume by focusing on the management practices of the company Brunello Cucinelli, which has been helmed since its inception forty years ago, in 1978, by the man who gave the company his name, Brunello Cucinelli. I will avoid, then, allusion to and engagement with Cucinelli’s philanthropic initiatives, which are at once inventive, generous, and pronounced (again, these projects are discussed in my prior work4). As our editors usefully define it: “humanistic management is about how a business earns its money, not how it spends its money.” The following notes will be attuned, then, to the way Cucinelli’s management style, principles, and practices enact humanism and illuminate humanistic traits—especially in relation to his employees, the running of his factories, engagement with suppliers, approach to retail operations and the products they purvey, and like enterprises devoted to improving the bottom line. In the case of Brunello Cucinelli, we glean a first lesson in his humanistic management style: the allocation of the company’s profits to initiatives beneficial to his employees, their work environment, and the continual improvement of the production process and its products, is at the core of his sense of “how a business earns its money.”

The Dignity of Labor A major, founding touchstone for thinking with Cucinelli about how to run a business so that it can make money is the notion of the dignity of labor. There are many valences to this notion, among them that an employee feels respected by his employer; that she feels she is well-trained and capable of doing her assigned tasks with finesse and competence; that she feels sufficiently remunerated for her time, effort, and output; and lastly, that she feels part of a community of laborers and managers who respect her and one another. These four axes are elemental to Cucinelli’s vision for creating the conditions for a corporate environment in which even the prospects of profits can be imagined; for example, Cucinelli’s abiding concern with worker dignity would forestall any attempt, especially consciously, to put corporate profits ahead of it. If one doesn’t have

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contented, motivated employees—people who feel genuinely valued by the company—there is no reason to undertake a capitalist initiative.

From Dignity Follows Quality Managers are often charged with monitoring “quality control,” a broad enough category to include the quality of the workforce (are they well-­ trained? are they efficient? are they making what they are supposed to make? and so on) and also, more familiarly, the quality of the products. For Cucinelli, there is a through-line between quality of workers and quality of products; if you focus on the care of the worker as, say, a Benedictine abbot might for his brothers at the abbey, then you can rest easy that the fruits of their labors will be the best they can be.5

Capitalism Must Be a Humanistic Endeavor As we are building precepts—dignity, quality—we find time and again that Cucinelli regards humanism as absolutely necessary to the evolution of capitalism. That is, humanism is neither a hindrance nor an irritant to the ambitions of a capitalist regime, but, instead, the guiding force for how capitalism should conduct itself. Cucinelli’s brand of humanism— often referred to, by him, as a neohumanism—makes itself known in and through these normative injunctions and ethical imperatives. That there is nothing capitalism should do besides maximize profits is anathema to Cucinelli’s vision of capitalism’s still-deferred promise. Indeed, under Cucinelli’s management, profits are the beginning and not the end of his humanistic preoccupations, since available equity can be used to promote, in his parlance, the human spirit. Build a library, a theater, an elementary school, and a hospital; restore a church, a town square, or an ancient ruin; plant a grove of trees, harvest olives for oil and grapes for wine; and give workers a raise, time off, or some form of social support— these are what profits are for. Again, the quality of the end product, its viability on the open market, and the return of yet-more-profits will take

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care of themselves if these immanent, human needs and desires are first addressed. Additional mantras of this sort can be adduced (and have been in my prior research6), but their service, however briefly or loquaciously these are described, find humanism heeding close to the business of capitalism. The double entendre is intentional; it is meant to keep close at hand Harari’s notion that the very activity of business (at the heart of capitalism’s workings) is increasingly being jobbed-out to computational algorithms. Much of the global stock market—from moment to moment—is already running ahead of, or beyond, human control, even if we are simultaneously meant to believe that humans make ultimate and essential decisions now and again (e.g., setting interest rates and where to invest/divest). As neoliberal incarnations of capitalism continue to spread—with their heedless obsession with outcomes, ratings/rankings, and the pernicious recalibration (often diminishment)  of human capital—management is increasingly, perhaps at a level never-before seen, in need of humanistic models. Consider a glimpse into different realms of “business”: where for generations, centuries in fact, capitalist business operated on market principles, the academy seemed part of an archaic world, a vestige of a lost age (among other ages, we might call it an age of humanistic inquiry—as in ancient Greece and Rome, later the Renaissance, and more recently, various Enlightenments and Romanticisms). Today, the academy has shifted almost entirely to control beneath a neoliberal order; the humanistic qualities, credentials, and occupations that defined the academy for most of its existence are extinct, or nearly so.7 Indeed, the very notion of “the Humanities” appears increasingly evacuated, displaced, and replaced by those fields that show promising return on investment (ROI). The cutting edge of the academic humanities, we are told, involves “data mining” (a fit trope for the logic capitalistic extraction). Gone is the need, the allowance, for close reading. While academic bureaucrats are given substantial raises, tenured faculty are swapped out for temporary adjuncts; while new infrastructure populates the campus (a Welcome Center here, a sports stadium there), departments (indeed, whole programs, including academic presses) are underfunded and occasionally simply shuttered. If we are addressing broad trends, the academy is, by and large, no longer a

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location in which humanistic inquiry can flourish—mainly because the vested interests (a lovely sartorial pun if ever there was one, and ironical too) are hostile to humanism’s claim for our time, attention, and value. In a lamentable coda to this crisis, it has been argued that the severe—perhaps irrecoverable—damage done to the humanities in the academy was largely self-inflicted.8 It is all the more intriguing that—in an uncanny and unexpected reversal—we have discovered in Cucinelli’s company a redoubt in which capitalism has come to announce (indeed, preserve, protect, and develop) the virtues, even profitability!, of humanism. Far from exploiting workers (as academic adjuncts are), reducing options  for inquiry (as academic departments have), and generally laying waste to the potential for academic work in the humanities to bestow—and secure—the dignity of labor (as the ruling elites of corporatized academy are wont to do), Cucinelli has with full, unironic commitment conceived and built a neohumanistic academy (equipped as it is with a so-called Neohumanistic Aurelian Library, and across a piazza from a massive Palladian theater constructed after Cucinelli’s design). It bears repeating—in part because it is rather rare and, in some measure, counterintuitive—that Cucinelli does not see the creation of these humanistic institutions as how the company spends its money, but rather how the business earns its money. This last point needs some elaboration. Theories of entrepreneurship, such as offered by J. P. Kuehlwein, who has interviewed me for his Ueber-Brands podcast and during research for his coauthored book, Rethinking Prestige Branding: Secrets of the Ueber-­ Brands (with Wolfgang Shaefer 2015), might point out how Cucinelli’s management style (bracketing its humanism in principle or practice) is, in fact, in keeping with the corporatized, neoliberal approach to “building a brand.” If that is the case, then we might wonder how we can “unbracket” the humanism to allow its enrichment of management practices; the onus of answering for what we would have to lose would be on those who entrench to avoid it, that is, who aim to keep humanism bracketed. Some anonymous readers of my earlier work on Cucinelli have leveled what we might call a cynical reading of his work, which, regrettably, may be the only way we have come to allow ourselves to think about corporate

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management (“humanistic” in name only, or by some other name that “virtue  signals” but does not instantiate its practices and summon its hoped-for effects); such critics say, I might add, with kind of blithe confidence and untroubled dismissiveness, that Cucinelli is using humanism as a marketing ploy (e.g., as one might accuse a company’s bid for “environmental friendliness” as a scandal of “green washing”). The cynical reading is thus part and parcel of a skeptical one: Cucinelli builds academies, schools, theaters, libraries, and, indeed, quotes from Marcus Aurelius and Kant as part of an attempt to align his business with certain values that are commodified and thus monetized. The brand is, on this reading, a kind of cult one can “buy into” by buying off the rack. Membership, like entreé into so many coveted guilds, can be had at a price. And yet, as a counterpoint to the cynical reading, we can see that the vast majority of Cucinelli’s adoption of humanistic principles for the management of his company never reach the website or catalog, the runway or the retail shop. There is no label on the clothes that admits, nay advertises, “humanism” as an ingredient of product or production. Most of his customers, for better or worse, remain casually unaware of—and perhaps even actively indifferent to—the ethics that pervades the day-to-­ day operations of the factory and other managerial aspects of the company. In a world where social media can lead to a sudden and severe boycott of goods on account of the purported or presumed moral failing of their corporate owners (e.g., fossil fuel frackers, child labor exploiters, and fascist regime supporters—and far lesser infractions  inveighed by “cancel culture”), it certainly would not likely hurt Cucinelli’s bottom line to have it broadcast that he aims at (and it would seem achieves) a high degree of loyalty from suppliers, worker dignity, customer satisfaction, and the like. But whether the humanistic programs Cucinelli does in fact instantiate in his corporate hometown of Solomeo reveal a positive correlation with profits remains at the level of speculation. One would need to interview each of his customers and ask: “Was your purchase from Brunello Cucinelli motivated by anything besides your admiration and desire for the products you acquired?” As that question stands for the sort of social scientific motivation to track a causative relationship between brand and profit, I wish to point

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our attention to things we do know, and don’t need to speculate about, namely that Cucinelli’s pronounced commitment to humanistic values is largely conducted away from the klieg lights and press kits. One indication of his sentiment—at once sincere and enacted—derives from him speaking about how most corporations have a twenty- or thirty-year plan for success. (We can pause to notice that that’s about the length of an average career, another indication that selfish, proximate motives are involved in the mainstream discourse of corporate arcs.) Cucinelli, contrariwise, speaks of a five hundred-year plan. Clearly, for a man in his late-sixties, he doesn’t presume to have much to do with the vast swath of that future. Indeed, as revenue neared half-a-billion in 2015, and Cucinelli’s net worth is purported to be $1.4 billion in 2020, there seems little reason for him to make such far-reaching claims. Can any reader mention another global entrepreneur who has spoken in such concrete, declarative terms about a vast, unknown future? Some visionaries come mind: Steve Jobs, Elon Musk, Jeff Bezos. And yet are they pursuing such an expansive time horizon while simultaneously not giving short-shrift to imminent issues of worker dignity? Moon shots and Mars landings, electric cars and delivery drones, may derive from their concentrated wealth, but what of the lives of the laborers who make all that possible? Are we enriched on the way to their extra-terrestrial obsessions?  While the official, corporate website—www.shop.brunellocucinelli. com—might stick to the exhibition of attractive clothes (and thus as a portal for purchasing them), the online presence—at www.brunellocucinelli.com—also makes a practice of articulating and advocating humanistic principles, especially as they are in league and in line with the mandates of the market. In this respect, prospective customers may encounter an ideology of humanistic management according to Cucinelli; whether this sways their purchase one way or another remains to be researched. Since when he was a boy, he witnessed his father working in an unwelcoming environment and became a close observer of the world, thus developing his dream to promote a concept of work that ensured “being moral and economic dignity.” This is a key element to understand his personality and the success of his business, which Brunello considers not only as a

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­ ealth-­generating entity, but also as a framework to develop and nurture w his dream of a capitalism that enhances the human being. His knowledge of the great figures of the past has always fed his dreams and ideals, but he is always looking ahead towards the distant future, and each action and accomplishment of his is designed to last over the centuries.9

The website describes how the “increasingly international market welcomed his made in Italy products” and by these acquisitions—figured as a form of medieval patronage—“enabled him to implement his ideals.” After decades of steady growth, the company went public on the Italian Stock Exchange, Borsa Italiana (call letters BC), a decision, it is noted, that “was not driven by financial reasons alone, as Brunello saw a wider participation in his business activity as an opportunity to spread his ideals of a new capitalism, a truly Humanistic Capitalism.” Indeed, when Cucinelli was greeted on the day of his company’s initial public offering, he remarked: “This listing shows that romanticism and enlightenment are compatible with a humanist form of capitalism,” after which he presented the chief executive of Borsa Italiana with a sixteenth-century edition of Aristotle’s Nicomachean Ethics.10 As part of his restoration of the Umbrian hill town, Solomeo, Cucinelli hired local craftsmen to build what became known as Teatro Cucinelli. The structure has since hosted myriad talks, conferences, plays, operas, and other performances. (During the COVID-19 pandemic, Cucinelli used the stage—and the empty seats before him—as a venue for a solo twenty-minute speech, in which he drew from poets, parables, and parents, to encourage us to consider how the crisis can spur our thinking and growth, and in turn the betterment of humanity.) By an easy measure, the theater has become the heart of the cultural life of Solomeo, and since so many employees work in the town or very near it, the theater and its offerings are part of their patrimony as well. The construction of the Teatro and the adjacent Forum of the Arts by Umbrian master craftsmen has led to the more recent founding of the Solomeo School of Arts and Crafts. Established in 2013 and inspired by the ideas and ideologies of essayist and aesthete, John Ruskin, and famed Arts & Crafts innovator, William Morris, the SSAC is devoted to training current and future generations in craftsmanship. Cucinelli regards craftsmanship

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itself—whether with stone and mortar, or needle and thread—as elemental to the humanistic enterprise. In any age that is speeding toward AI dominance in factories—where the productivity of computers and robots has already displaced millions and promises to displace millions more— Cucinelli’s turn toward craftsmanship, tradecraft, can seem at once naïve and antediluvian, if not also perilous, for any talk of a five hundred-­ year plan. And yet, despite the way Cucinelli’s projects challenge dominant corporatism and the dictates of neoliberal order, his business continues to expand (a new factory was constructed in 2017), his profits increase year after year. While he quotes Kant from memory, and alludes to the sayings of Roman emperors and Greek poets, Cucinelli presses on—founding the Project for Beauty in 2014. Part of its first phase was the creation of three substantive parks in the valley below Solomeo, land that has been reclaimed from abandoned factories. This initiative symbolizes the crucial value of earth, “from which all things are,” as Xenophanes put it. With this project Brunello highlights the duty to restore the dignity of the land and, feeling like a sort of small custodian of the creation, he shows that “Beauty will save the world” whenever the world will in turn save Beauty.11

Of his many attempts to have capitalism serve humanism, and in turn for humanism to make capitalism a milieu for the creation and maintenance of human dignity, the Project for Beauty is especially poignant. Pushing aside the question about corporate business practice (e.g., in the boardroom), or the factory floor, the retail shop, or indeed even a concern with the products made by the company, Cucinelli and his foundation, cofounded with his wife, Federica, attend to the earth, plant trees and vineyards, and reflect on their roles as custodians. Looking at these newly-­ planted trees and vines, one gets an immediate sense of the tenability of his five hundred-year plan.

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Part II While the first part of this chapter has shown that Cucinelli and his eponymous company antagonize the prevailing ideological trends and philosophical tenets of corporate global capitalism  (including its appointed pace and priorities), the second part will turn to what might be described as anthropological, even ethnographic, depictions of life in the company—something like a glimpse inside the day-to-day operations. Though Cucinelli has conflated, inverted, and otherwise confounded, the logic of this assignment—for example, by challenging the very notion that “humanistic management is about how a business earns its money, not how it spends its money,” I will attempt, in the space remaining, to translate the prevailing humanistic management skills, techniques, and procedures at the company so they might be understood by communities outside of Solomeo and the corporate culture of Brunello Cucinelli. To substantiate my claims, and enrich the dialogue between management inside the company and the models on offer outside it, I will relate details from a series of conversations conducted in the Spring of 2018 with Giorgiana Magnolfi, senior public relations and marketing director at Brunello Cucinelli, and company employee for more than a decade. When I presented Magnolfi with my mandate—to address humanistic management in so far as that activity is “about how a business earns its money, not how it spends its money,” she offered me a knowing smile. “These are not separable, or opposed, for my boss,” she explained. “Mr. Cucinelli sees his practice of humanistic management as a comprehensive project—ranging from the ethical treatment of the suppliers from whom he sources materials to the workers who cook for the banquets that celebrate a new season of clothes.” When Magnolfi engages the professional language of marketing and management practice, for example, when gesturing toward the company’s stance on “sustainability,” she pivots quite rapidly from some abstract discussion of “the earth,” and related environmental concerns, such as global warming, to a highly proximate focus on the people who work for the company. “How are the humans doing?” she asks rhetorically. In an age that is preoccupied, perhaps to a fault, with politically correct corporate speech—for example, that would keep

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everything at abstract, depersonalized levels—Magnolfi turns unapologetically to reflections on imminent concerns. She begins, “If you teach humans to be ethical,” and she concludes with a sage’s certainty, “they will sustain the earth.” Magnolfi has done her homework on sustainability as it is discussed in the contemporary corporate—and global—agenda. She confidently reports that “the company would qualify for several of the criteria in the United Nations charter for sustainable corporations.” She refers to the UN’s “Global Compact,” launched in 2000, and described as “a call to companies everywhere to voluntarily align their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption, and to take action in support of UN goals and issues. The UN Global Compact is a leadership platform for the development, implementation and disclosure of responsible corporate policies and practices.”12 From the company’s perspective, the environment always implies a hidden premise: “it is a humane environment.” Magnolfi is quick to reframe any corporate or marketing abstractions in anthropomorphic language, but even more boldly, anthropocentric terms. She speaks of Brunello Cucinelli as if it were a small village store, operating to serve its workers and local community, and as a natural effect of that care, satisfying its customers with products worthy of their appreciation. And in a genuine sense, aside from markers of scale, this is an accurate description of the company—in its embodied practices in Solomeo and in its representative locations beyond it. Magnolfi emphasizes that Cucinelli doesn’t tolerate hubris from his employees, much less harassment and other forms of degradation; rather, the goal is ever on “how you treat people”—with a focus on being an active, positive contributor to a community based on tolerance, shared interests, and also shared resources. This last point is not a nod to socialism, but rather to the vital social benefits of a capitalist corporation that holds tight to its humanistic priorities: the people first, and the rest will follow. With abundant profits, a corporate hegemon such as Cucinelli has the power to “spread the wealth,” and he chooses to do this by means of continual improvement of working conditions, but also by attending to the intellectual, social, and spiritual lives of his employees. Perhaps this is too much interference for a standard laissez faire entrepreneur, and yet, as we

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see with Elon Musk, Larry Page, Mark Zuckerberg, and Richard Branson, corporations can shape the values of the people who work for them but also who buy from them—and perhaps, even more importantly, those who don’t! As Tristan Harris has said, if you aren’t buying a product, you are the product. Consider, as a study in contrasts, how Zuckerberg’s abiding corporate credo has been “move fast and break things,” while Cucinelli’s has been the fostering of a series of mutually-enriching, highly-­ complementary, seemingly atemporal humanistic philosophies that seek the cultivation of and care for the human soul; indeed, given Cucinelli’s attention to physical as well as spiritual restoration, we might say his credo is precisely the opposite of Facebook’s founder: slow down and fix things. If we are eager to judge success by profits alone, then Zuckerberg may be acclaimed more successful (at present, his net worth is one hundred times more than Cucinelli); when we are thinking of the corporate management of human workers, such a de facto conclusion should give us pause. While locals in Umbria, who are not the company’s employees, will praise Cucinelli’s repair of earthquake damage to historic sites such as Norcia (hometown of St. Benedict and the monastery where he prayed) and Perugia (not far from Assisi, where St. Francis began his practice of humble service to the poor), Magnolfi finds these specific acts as representative of, as she says, “an overall desire—and hope—to create a work environment, as well as contribute to a broader community, where people are meant to respect one another, and when necessary, lift one another; instead of being individuals solely out for their own mark, each person operates as part of a greater whole, keeping in mind along the way the goals of the company and also the community. The two are truly one in this vision of things.” With such a sentiment at hand, we glean how the corpus of the corporation requires individual and communal notions of “bodies” in the service of one another. Moreover, seeing how closely the local medieval humanists (viz., Benedict, Assisi) are to Cucinelli’s vision, we can, without wincing at the pun, appreciate the difference between a profit motive and the motivation of prophets. What animates the dedicated behavior and developed talents of loyal workers?—Not the boss’s bottom line; rather, employees want to be sustained by a sense that their work has meaning in itself and also as part of a network of contributions

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by others.13 By these means, individual human dignity emerges as a kind of epiphenomenon of corporate humanistic management. We, the audience of this company’s approach to humanistic management—if not (also) prospective customers of the company’s wares—may ask questions that radiate beyond the bespoke practices at Brunello Cucinelli: What incentivizes the behavior of those who would “work for” capitalists, entrepreneurs, and managers? Thinking as an equity holder, looking out to a sea of employees, one could ask oneself: What if my motive for profit first addressed worker dignity—treating it, perhaps, as the very condition for envisioning corporate success? Or, for that matter, what if the care of the customer became a priority alongside standards of product quality?14 Returning to the management methods in place for decades in Solomeo, we see how, in reply to the first series of questions, Cucinelli draws inspiration from a cadre of humanists—from Socrates and Aurelius to Benedict and Kant—and on the second front, from the likes of Theodor Levitt, a Harvard business professor, who argued for the preeminence of the customer. (Levitt was an early and decisive influence on Cucinelli15). Cucinelli’s regard for employees and customers is coupled with the standard (now expected) concern for quality control with respect to products, but his ratios of attention and his sense of priorities (viz., that employees and customers are priorities) remain distinctive when compared with the dominant forms of profit-centric, capitalistic management in the age of AI and data-driven algorithms. Indeed, in the context of a luxury fashion brand, it’s highly consequential that we are told “style is an algorithm; no one is original anymore, not even you.”16 Decision-making by managers—and customers alike—has been disrupted by the rise of the machines and machine learning. Incrementally, and at a conspicuous rate, the human factor is being driven out. A still further valence of “management”—in the sense that Cucinelli’s capacious humanism affords, and no doubt, demands—finds his corporate largesse extending to the students at the School of Arts and Crafts in Solomeo: the company pays for student education in tailoring, patterning, as well as masonry and other “arts of craft.” Upon graduation, paid internships keep the talented graduates close to Solomeo, encouraging them to contribute new ideas to the company that was so generous with them. The loyalty exhibited on both sides of the relationship—from corporate

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sponsor to striving artisan—adds another degree of social stability and interpersonal  satisfaction; and, to be sure, in this context, there is still plenty of room for individual expressions of pride in accomplishment. Some models of corporate capitalism would identify these educational initiatives as tax write-offs or loss leaders, and, as it happens, such may be technically the case for Brunello Cucinelli, though, as he would say, not spiritually. Yet the point, given Cucinelli’s management priorities, is not to pursue only those things that either guarantee fiscal profit or otherwise enhance the brand (even if enhanced by virtue of financial losses). In this way, as a corporate head, Cucinelli is decidedly uncynical. One need only read his recent collection of remarks—Brunello Cucinelli: The Dream of Solomeo; My Life and the Idea of Humanistic Capitalism (Feltrinelli 2018)—to suss out his sincere demeanour and positive outlook. As befits such an approach, Cucinelli, is a steady student of Kant, and quotes from the German metaphysician and ethicist as if he were speaking his own sentiments: “Two things fill me with wonder, the starry sky above and the moral law within.” Again, the motivation for profit derives from a motive discerned by a prophet: Kant has illuminated for Cucinelli the way in which one’s intention is the limit situation for good works, not the common tack that mainly seeks utilitarian and financially advantageous outcomes. For Brunello Cucinelli—the company, its founder, and its current CEO—“humanistic management” is a phrase always in translation and action as a humanistic ethos. Humanism, on this view, predates and thus precedes the capitalist venture—and yet, is absolutely vital to it, and must be retained. As in any anthropocentric Weltanschauung worthy of the name, the people come first. (Umbria’s, and especially nearby Florence’s, medieval confluence of humanism and a market economy—no less in the textile trade—provides a rich scene for exploring their symbiosis, a hybridity that continues to inspire Cucinelli in his twenty-first-century endeavors.) Cucinelli’s intense focus on the experiences of his immediate accomplices in business—his family, his coworkers at the top of the corporate structure, his employees at all levels (foreign and domestic, full-­ time and part-time, consultant or associate), his suppliers and his retailers, craftsmen and students of craft, and so on and so forth—radicalizes his humanism so that it permeates the entire enterprise. His hallmark

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virtues—among them a focus on beauty, emphasis on the value of what is created, and dignity in and through labor—achieve their particular sheen in the light of his embodied practice of their emergence (e.g., in factories, farms, forests, schools, showrooms, theaters, libraries, and the like). The market analyst, the actuary, the business guru may find much to eschew and dismiss in Cucinelli’s special, even rarefied, approach to humanistic management. And yet, his results reveal his unintended defense: happy workers, esteemed products, and upward profits— “gracious growth,” as he puts.17

Notes 1. Cf. Yuval Noah Harari, Sapiens: A Brief History of Humankind (2015) and Homo Deus: A Brief History of Tomorrow (2017). This specific quotation was gleaned from a conversation Harari had with Russell Brand in the Under the Skin (podcast), 10 March 2018, #48: “Noah’s Arc—What is the Future for Sapiens?” 2. Cf. David LaRocca, “Brunello Cucinelli: A Humanistic Approach to Luxury, Philanthropy, and Stewardship,” Journal of Religion and Business Ethics, vol. 3 (2014a), article 9; “A New Philosophy of Clothes: Brunello Cucinelli’s Neohumanistic Business Ethics,” Journal of Religion and Business Ethics, vol. 3 (2014b), article 10. See also the documentary film, Brunello Cucinelli: A New Philosophy of Clothes, dir. David LaRocca (Fine Print Film, color, 38 min., 2013). 3. J.  P. Kuehlwein interviews David LaRocca, “Building a Brand on Bricks and Beliefs—Brunello Cucinelli,” 5 October 2015 (https:// masstoclass.wordpress.com/2015/10/05/building-a-brand-onbricks-and-believes-brunello-cucinelli-podcast-episode-02/). Marc Vander Maas interviews David LaRocca, “On Brunello Cucinelli’s New Philosophy of Clothes,” 21 December 2016, Radio Free Acton, The Acton Institute (https://soundcloud.com/actoninstitute/ david-larocca-on-bruno-cucinellis-new-philosophy-of-clothes#t=0:00). 4. LaRocca (2014b, p. 6). 5. For more on the trope of the Benedictine abbot, see LaRocca (2014a). 6. See notes 2 and 3.

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7. My remarks in this paragraph are informed by Wendy Brown, Undoing the Demos: Neoliberalism’s Stealth Revolution (New York: Zone Books, 2015). 8. As a representative set of reflections on this topic, see Eric Bennett, “Dear Humanities Prof: We Are the Problem,” The Chronicle of Higher Education (13 April 2018). 9. From the corporate website http://www.brunellocucinelli.com/en/ brunello-cucinelli.html (Accessed 4 April 2018). 10. Michael Rose, “Cucinelli’s stellar debut seen boosting Italy IPO appeal,” Reuters (27 April 2012). 11. From the corporate website http://www.brunellocucinelli.com/en/ brunello-cucinelli.html (Accessed 4 April 2018). 12. http://www.un.org/en/sections/resources-different-audiences/business/ (Accessed 4 April 2018). 13. See data on these claims as represented in “The Meaning of Work,” Ted Radio Hour (2 October 2015) https://www.npr.org/programs/ted-radiohour/443411154/the-meaning-of-work. 14. On this line of inquiry, see LaRocca (2014a). 15. For more on Levitt’s influence on Cucinelli, see LaRocca (2014b). 16. Kyle Chayka, “Style is an Algorithm,” Racked (17 April 2018), racked.com. 17. A phrase drawn from conversations with Giorgiana Magnolfi, Spring 2018.

References Bennett, E. (2018, April 13). Dear Humanities Prof: We Are the Problem. The Chronicle of Higher Education. Brown, W. (2015). Undoing the Demos: Neoliberalism’s Stealth Revolution. New York: Zone Books. Chayka, K. (2018, April 17). Style Is an Algorithm. Racked. Retrieved from racked.com. J. P. Kuehlwein Interviews David LaRocca. (2015, October 5). Building a Brand on Bricks and Beliefs – Brunello Cucinelli. Retrieved from https://masstoclass.wordpress.com/2015/10/05/building-a-brand-on-bricks-and-believesbrunello-cucinelli-podcast-episode-02/.

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LaRocca, D. (2013). Brunello Cucinelli: A New Philosophy of Clothes (David LaRocca, dir.). Fine Print Film, color, 38 min. LaRocca, D. (2014a). Brunello Cucinelli: A Humanistic Approach to Luxury, Philanthropy, and Stewardship. Journal of Religion and Business Ethics, 3, Article 9. LaRocca, D. (2014b). A New Philosophy of Clothes: Brunello Cucinelli’s Neohumanistic Business Ethics. Journal of Religion and Business Ethics, 3, Article 10. Marc Vander Maas Interviews David LaRocca. (2016, December 21). On Brunello Cucinelli’s New Philosophy of Clothes. Radio Free Acton, The Acton Institute. Retrieved from https://soundcloud.com/actoninstitute/ david-larocca-on-bruno-cucinellis-new-philosophy-of-clothes#t=0:00. Rose, M. (2012, April 27). Cucinelli’s Stellar Debut Seen Boosting Italy IPO Appeal. Reuters.

7 Doing Ordinary Things Extraordinarily Well: Illustrating the Concept of Triple Bottom Line and Integrity on the Case of Faber-Castell Laura Böhler and Marie-Christin Platz

Introduction: About Faber-Castell Looking into a pencil case of a school child, it is highly likely that one can find the typical gray triangular pencil with the black bumps for a perfect grip—the Faber-Castell Grip 2001. What stands behind it is a perfect example for a “Best of the Class” product in terms of quality and moreover, a company that is also “Best of the Class” in terms of business ethics. Faber-Castell was found in 1761 in Stein, Germany, where it still has its headquarters. The family business has remained in the Faber family for nine generations and finds itself in the industry of stationery, where it is one of the oldest manufacturers of pens, pencils and other office supplies as well as art supplies and high-end writing instruments. With more than two billion pencils produced each year, it is also the world’s largest manufacturer of pencils (see Faber-Castell AG 2015b: 3,

L. Böhler (*) • M.-C. Platz Eberhard Karls University, Tübingen, Germany © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_7

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8). Having production sites in 9 countries, sales units in 22 countries and trading companies in 120 countries, the family business is indeed spread around the globe. It has around 8000 employees and reached a revenue of about €667 million in the business year 2016–2017 (see Faber-Castell AG 2017b). Faber-Castell has always set itself the benchmark of providing products that are “best of its class”; this devotion toward quality can be seen across all product lines. Providing “Best of the Class” products to their customers means not only combing functionalism, aesthetics and convenience, but also considering aspects like the use of environment-friendly materials, an optimal price–performance ratio, reliability, and social auditing (see Faber-Castell AG 2015c: 62, 2010: 9). The products are designed to be a lifelong companion on every step “from preschool child to professional artist, from student to statesman—and from generation to generation” (see Faber-Castell AG 2010: 8). Aligned with this vision is how they grouped their product lines: “Eberhard Faber” targets kindergarten- and elementary school–aged children. The company was reintegrated into the Faber-Castell group in 2010 and is a brand with a very attractive price–performance ratio. “Spielen & Lernen” is made for children and hence focuses on bright colors and easy grip. “Creative Studio” addresses creative Hobby Artists for whom the “Spielen & Lernen” line is too immature and who search an alternative to the high priced “Art & Graphic” line for professional artists. “Creative Studio” was redesigned in 2017 after conducting a market research with more than 1600 participants in an online survey and a focus group with around 80 participants. This market research is one of the largest concluded in the company’s history. “Art & Graphic” contains exclusive art supplies that are valued internationally for their outstanding quality even by famous artists as Van Gogh. Products of the line “Allgemeines Schreiben & Markieren” are designed to complement every modern working space at the office or at home. The Grip 2001 pencil with its patented “bumps” for a nonslip and ergonomically correct grip belongs to this product line and exemplifies that the products offer benefits beyond durability and functionality. Consumers with high demands

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will find the right products in the line “Fine Writing”, a premium writing collection where products include materials such as coconut wood and stainless steel. Products of the “Graf von Faber-Castell Collection” are considered an elegant accessory for your desk (see Faber-Castell AG 2016: 15ff). Every year a new “Pen of the Year” is designed with a limited number of pieces attracting collectors. Furthermore, “Faber-Castell Cosmetics” includes private-label cosmetics, where one can purchase high-end cosmetic products for face, eyes and lips and nails. Faber-Castell is one of the leading private-label manufacturers in Color Cosmetics for the international beauty industry. The products are developed in-house and can be adapted to the client companies’ wishes. Having now a better overview about the business and product range of the company, the question arises what makes the point of differences to other companies in the industry. Being a medium-sized company in the industry of stationery, located in a small town in Bavaria—can you stand out and drive business practices, can you act as a role model for other businesses across industries and firm size? Yes, Faber-Castell does so and provides valuable insights for management on how to balance economic ambition and responsibility. Faber-Castell serves as a perfect example showing how ethical principles are integrated in management decisions not at the expense of profits but while increasing profits. Count Anton-­ Wolfgang von Faber-Castell, former head of the company, once said: “For me, business and integrity go hand in hand. The kind of integrity that embodies values such as social and ecological responsibility, trust, honesty and fairness is fully compatible with profitability” (Faber-Castell AG 2015a: 2). Moreover, it is remarkable that Faber-Castell addresses both challenges we face as a global community—the environmental and the distributional challenge. Social and environmental responsibility is deeply anchored in the company’s core values and such their constant commitment toward people and environment can be seen in their daily business practices. In this case about Faber-Castell, we will concentrate on the ethically grounded activity triple bottom line (TBL) and the moral principle acting with integrity.

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Ethical Foundation and Implementation In the following section, we outline the guiding ethical principles behind the actions of Faber-Castell and present examples how the company puts them into practice. The examples will portray the company’s active and ongoing engagement with stakeholders at large. The engagements of the company in favor of human rights will show their respect for human dignity and the management structure will be presented with regard to ethical decision-making.

Triple Bottom Line The ethical principle of triple bottom line (TBL) was first introduced by Elkington in the late 1990s. Taking into account social and environmental aspects, this concept enlarges the perspective of businesses that focus primarily on economic parameters. The strategies and priorities based on this concept turn out to be more robust because they are more reliable regarding all stakeholders. TBL is perceived as a “win-win-win” concept leading to even greater performance and outcomes on all dimensions, which were not reachable without TBL. Moreover, this concept is a long-term approach that focuses on enlarging the market (see Elkington 1998: 37ff, 45). TBL companies actively engage in forming the environment by shaping markets, having an impact on peers, modifying existing social perceptions and creating transparency. With regard to the transparency, the companies offer TBL value propositions to the marketplace by clearly showing the social and environmental costs and benefits involved. This is often shown through the usage of standards and certifications (see Glavas and Mish 2015: 630, 635f ). It is worth mentioning that “financial viability is necessary but was not the starting point in this business model” (Glavas and Mish 2015: 636). Regarding the financial performance of Faber-Castell, we want to highlight their structure and degree of internationalization. The management structure of Faber-Castell is centralized with regard to key functional areas and guiding principles, but decentralized within the three marketing units which are Europe/North America, Latin America and

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Asia/Pacific. These decentralized structures enable the company to react with a high degree of flexibility to regional market trends and settings. Furthermore, the company decided to locate production sides close to natural raw material sources. This strategy has turned out to be more profitable on the financial side as it cuts transportation costs meanwhile improving the environmental performance. Profiting from local knowledge and competence about the domestic resources is what makes this strategy successful. For example, in Brazil and Malaysia local wood and rubber are used for the local manufacturing, which exemplifies that profitability and sustainability can go hand in hand (see Faber-Castell AG 2011b: 8). In effect, addressing the global challenges conjoined with sustainability can lead to increased shareholder value and profitable future growth (see Hart and Milenstein 2003: 57, 65). Faber-Castell is a valid example as the annual profits show a continuous growth over the last years. In 2010–2011, global sales reached €538 million compared to €667 million in the business year 2016–2017, with presence in over 120 countries worldwide (see Faber-Castell AG 2011b: 11; Faber-Castell AG 2017b). Faber-Castell monitors its worldwide responsibilities with “FABIQUS”, which is an abbreviation for “Faber-Castell’s integrated management system for quality, the environment, and social standards”. It entails the responsibilities toward consumers, customers, employees, suppliers, and community and environment at large (see Faber-Castell AG 2010: 24). Faber-Castell set up a broad range of initiatives addressing the environmental challenge. Already in 1926 the company had early forms of recycling such as the reuse of paint solvents and the use of timber waste to generate electrics. Since 1956, a water turbine covers about 30% of the electricity needed in the headquarters in Stein. In 1993, Faber-Castell was the first company to introduce water-based paint which is more environmental-­friendly in the production process, but also healthier for workers and end customers. Additionally, the company reinforced its environmental engagement with its membership in the associations BAUM and COUP 21 (see Faber-Castell 2010: 12f ). In this chapter, we want to focus on how Faber-Castell addresses one of the greatest future challenges, which is to guarantee the wood supply for its production. Every year around 150,000 tons of wood are used in

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the manufacturing process. Therefore, Faber-Castell has initiated “Arboris”—the plantation of a pine forest in Prata, Brazil, in 1984. Around 10,000 hectares of former wasteland were cultivated with millions of seedlings of a specific tree called Pinus caribea, which is robust and grows in dry and sandy soils like the ones in the Brazilian savannah. Consequently, the company flourishes within every hour around 20 cubic meters of wood. On top, the forest helps to preserve biodiversity and ecosystems (see Faber-Castell AG 2011b: 58). “Within the plantations about 2,700  hectares are left wild to provide habitats for a large number of animal and plant species, many of which are threatened with extinction” (Faber-Castell AG 2011b: 60) .Additionally, Faber-Castell founded the projects “Animalis” and “ECOmmunity” in cooperation with respected universities whose mission is to document, protect and diversify the range of species prospering in the Brazilian forests as well as to create awareness. Faber-Castell also analyzes the total environmental impact of a product regarding the entire product life cycle aiming to reduce resource and energy consumption as well as environmental pollution (see Faber-Castell AG 2011b: 62). This approach follows the increasing interest of integrating environmental quality into total quality management by using eco-auditing and eco-labeling (see Elkington 1994: 94). With respect to the distributional challenge, Faber-Castell has a long-­ standing history. Lothar von Faber, representing the fourth generation, set standards upon European manufactures in the mid-nineteenth century. He cofounded one of the first company health schemes within Germany, introduced a savings scheme, and built apartments and schools for his workers. Delegations of Napoleon III were sent to Stein to report about the exemplary social services. As the company feels committed to this tradition, they set up initiatives like the “Quality of life” project in Brazil. This project provides free education and training and free leisure activities not only to all employees, but also to their families. The free courses taught range from basic reading and writing, computer skills and foreign languages, to university entry and MBA courses. Additionally, courses on hygiene and preventing

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drug addiction are offered. In the leisure time, the Faber-Castell Club offers free sports grounds, a swimming pool and other activities such as playing music or doing handicrafts. In 2001, the Graf von Faber-Castell Children’s Fund Foundation was set up to provide help for underprivileged children and the company also has its own company health insurance—BKK Faber-Castell & Partner (see Faber-Castell 2010: 18ff). For us, the Social Charter signed in March 2000 together with the trade union IG Metall is the most remarkable project. The charter is globally valid and regarding its scope the first contract of its kind. By the charter, the company commits to uphold the working and employment conditions recommended by the International Labor Organization (ILO) throughout the entire international group. The charter fosters the application of the same labor and social standards worldwide, including voluntary and freely chosen employment, ban of child labor, right to free collective bargaining and freedom of association, equal opportunities and treatment, decent wages, ban of excessive working hours, as well as safe, hygienic and humane working conditions and defined conditions of employment. The ban of child labor and safe, hygienic and humane working conditions, for instance, might seem normal and not like tough norms from an European point of view. However, this point of view might change regarding developing countries such as India. During the last decades, several scandals especially within the textile industry revealed that such norms cannot yet be seen as given standards worldwide. Indeed, India often has to face ethical dilemmas due to child labor and not safe, hygienic and humane working conditions, as, for instance, in the case of fire. Therefore, the Social Charter is revolutionary and outstanding in terms of its scope and commits to the respect for human dignity worldwide. The compliance with the charter is internally and externally audited. Furthermore, Faber-Castell extended the Social Charter to its contractors, subcontractors and suppliers in 2008. Moreover, managers and employees participate in routinely trainings to internalize the eight items of the international Social Charter to ensure its presence within the company worldwide (see Faber-Castell AG 2011b: 75ff).

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Integrity The moral principle that stands behind the actions of leaders of Faber-­ Castell is acting with integrity; therefore, the concept of integrity will be presented in the following. “Integrity is defined as the observance of a shared set of values or sound, acceptable principles” (Hewlin et al. 2017: 181), and emphasizes the idea of wholeness. Hewlin et al. (2017: 181) state in their paper that “fundamental characteristics of leaders who are perceived as having integrity include fairness, morality, honesty, and fidelity to stated principles that are shared by their followers”. According to Maak (2008: 357), meeting the social, environmental and humanitarian challenges that corporations have to face requires some integration work which he frames under the term “corporate integrity”. He argues, to insure integrity one needs to meet these seven conditions and align them: commitment, conduct, content, context, consistency, coherence and continuity. Since the different “C’s” are interdependent and overlap in their meaning, it would be difficult to really differentiate between one another; also, businesses can barely fulfill one condition without meeting another one. Obviously, the business itself cannot be accounted for “acting with integrity”; hence when referring to integrity, it relates to the actions of the managers, in this case of the leading members of the Faber-­ Castell family. Looking at the broad range of initiatives and projects realized by Faber-­ Castell, of which the triple bottom line principle could only highlight a few, Faber-Castell is definitely a business that does meet all seven “C’s”: They show commitment and moral conduct, they clearly represent certain values (content), they consider the relationships to all stakeholders in their context, they adhere to their principles in a consistent way, there clearly is coherence between their moral principles and their actions and, lastly, their integrity is ongoing even during rough times. We argue that the ownership structure of a family business has enabled Faber-Castell in performing great with regard to integrity. First of all, the family business of the Faber-Castell family is characterized by a long-term perspective. Tradition and heritage are emphasized and descendants have followed the dedication of their ancestors as a matter of duty. Managers

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usually remain in the business for a very long time, adding more stability and continuity in principles to the business. Family members think in generations and pass on experience and heritage to the next generation. As a second point to mention, the family business is embedded in the community where they operate. Beyond the fact of offering great job perspectives and year-round cultural and art events, a lot of employees feel emotionally attached to the business because it has positively influenced the region where they live and their ancestors as well have worked for Faber-Castell. Another example that highlights Faber-Castell’s effort toward the well-­ being of the community can be seen in the decisions made when their factory in Geroldsgrün, Germany, was facing difficulties. Geroldsgrün is a village in the north of Bavaria, where the company’s second factory was set up in 1861 for the production of slates. Later on Faber-Castell started producing slide rules made out of wood; they improved their quality over the years and then switched to plastic. Toward the end of 1940, Faber-­ Castell installed their first injecting molding machine, which enabled them to produce all kinds of technical drawing instruments. In 1969, they started the first series of plastic drawing boards, and in 1974 they brought a calculator, which actually looked like a combination of slide rule and calculator onto the market. Unluckily, this calculator was in comparison to cheap mass production of calculators in Eastern countries not at all competitive. The calculator was simply too heavy and also demand for slide rules had dramatically fallen; thus, Faber-Castell faced enormous difficulties and had to switch to short-time work. The population of the village of Geroldsgrün has already worked for several generations for the company and relied heavily on Faber-Castell as their employer, so closing the factory had never been an option for Faber-­ Castell. Since the factory in Geroldsgrün had a clear focus on manufacturing plastic, the management decided to move the production of sharpeners and fountain pens from other production sides, as well as the whole production of injection molding from Stein to Geroldsgrün. In 1978, a toolmaking department was established to construct tools directly at the production site. Setting up a whole new technologically innovative production building for injection molding allowed them to produce plastic pens such as fine liners, fiber pens, ball pens and overhead markers.

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Additionally, the injection modeling enabled the production of cosmetic pens with capillary system. In 1993, autonomous development of mechanical writing and drawing instruments was evolved in Geroldsgrün, which was the basis for the production and processing of premium products. Thereby, the factory in Geroldsgrün recovered from its economic hardship and Faber-Castell proofed once more that they care for the well-­ being of the community where they operate. Today, Geroldsgrün is the center of competence for plastic products in the area of writing, drawing instruments and cosmetic products. The production site supports other production sites worldwide with its expertise in the domain of development, quality assurance, construction and toolmaking (see Faber-Castell AG 2011a: 13f., 86–89, 2011c: 23–35).

Count Anton-Wolfgang von Faber-Castell For us, Count Anton-Wolfgang von Faber-Castell embodies the company’s relentless strive for acting with integrity. He managed the business from 1978 until 2016 in the eighth generation and initiated as well as took responsibility for a number of projects that led to the integrity for which the company stands for today. The Count started the pine plantations in Brazil that have become the company’s main resource for the pencil production and which was a milestone in terms of environmental sustainability and social responsibility by creating jobs. He also introduced water-based paint, another important contribution to protect the environment as well as small children who tend to lick on their colors. Moreover, he set up the FABIQUS Management System for quality, environment and social standards and launched the programs Animalis, Arboris, and ECOmmunity. He initiated and signed the Social Charter—a breakthrough in terms of the protection of human rights. Furthermore, he is the founder of the Graf von Faber-Castell Children’s Fund (see Faber-Castell AG 2016: 3ff). To conclude, Count Anton-Wolfgang von Faber-Castell has devoted his life to being a leader with integrity. Count Anton-Wolfgang von Faber-Castell was also a very passionate leader, which he proved in extraordinary quality tests. In 2012, he drank the ink of a children’s felt tips pen to prove that the ink is not harmful.

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The ink contains water, food dyestuff, a sugar derivative and a small quantity of alcohol as a preservative agent. In another quality test, he threw pencils from the castle tower of the headquarters to prove their break resistance. Due to the patented “secural” bonding process (SV), the leads are highly break-resistant. These extraordinary quality tests show not only the passion for his company and its products, but also the high-­ quality demand and transparency toward stakeholders at large. Count Anton-Wolfgang von Faber-Castell received several awards for his dedication, engagement and way of doing business. “In 2008, the Count von Faber-Castell was voted ‘eco-manager of the year’ by the German branch of the WWF and the business magazine Capital for his extensive economic and social commitment. In September 2010, he was awarded the 1st Class Cross of the Order of Merit of the Federal Republic of Germany” (Faber-Castell AG 2011a: 52). Unfortunately, Count Anton-Wolfgang von Faber-Castell died in January 2016 at the age of 74. Since 1 June 2017, Daniel Rogger followed him as chairman of the Faber-Castell AG. It is the first time in the history of the family-owned business that an external manager took over this position. Count Anton-Wolfgang von Faber-Castell’s wife Countess Mary von Faber-Castell, who was chairman in the meantime, is now part of the executive board. His son, Count Charles von Faber-Castell, leads the Premium segment of the company. Daniel Rogger was carefully selected and reached his position due to his successful work in the top management of internationally active companies over years. Additionally, he has valuable experience and competence regarding the Asian area and personally fits into the value-oriented culture of the family business. Faber-Castell pursues a cooperative, forward-looking, sustainable and successful collaboration with Daniel Rogger (see Faber-Castell AG 2017c).

Impact and Challenges Regarding a TBL firm’s impact, Glavas and Mish (2015: 637) state that “TBL firms also influence markets by changing market structure as well as developing new channels in which transparency about TBL costs is explicit. They push for standards, certification, and regulation in order to

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make TBL part of market practices for firms”. Globalization has assisted to offset some of the responsibility for protecting citizenship rights away from governments. Hence, corporations increasingly take over the administration of these rights (see Matten and Crane 2005: 171). Faber-Castell has demonstrated such behavior with the voluntary compliance to the internationally valid Social Charter, which sharpened the company’s worldwide internal legislations in the absence of governmental constraint. Additionally, the signature of the Social Charter in 2000 had an impact on Faber-Castell’s domestic direct competitors. In the region of Nuremberg, there is a prevailing traditional industry cluster with a high concentration and competence in pencil manufacturing. Apart from Faber-Castell, there are three other well-known manufacturing companies located in this area (see Simon 2012: 60). Five years after signing the Social Charter, Faber-Castell was followed by STABILO International GmbH, and after another year STAEDTLER Mars GmbH & Co. KG followed as well (see Eurofound 2005; Staedler 2017). Johann Froescheis Lyra-Bleistift-Fabrik GmbH & Co. KG has not signed the Social Charter so far. All in all, this example shows how Faber-Castell had an impact on its domestic competitors and advanced working and social conditions worldwide. As a consequence, Faber-Castell benefits from an outstanding reputation, which enables them to charge premium prices, and contributes to favorable employer branding. In this manner, the company advanced social conditions as it looked beyond community expectations and reinforced its corporate strategy by achieving social and economic benefit simultaneously (see Porter and Kramer 2006: 85). Regarding Faber-Castell’s own environmental impact, the sustainable wood plantations in Brazil show impressive results. Between 2012 and 2017, a total of 624 different species were recorded in the Faber-Castell forests. Some of the species are threatened with extinction. Additionally, the forests secure water quality and provide high levels of soil that prevent erosion and sequestrate CO2 from the atmosphere. In 1999, the wood plantations were awarded the FSC-Forest Management certificate for environmental, socially responsible and economically sustainable forest management by the Forest Stewardship Council. The percentage of FSC certificated wood that Faber-Castell sources from its own forests in Brazil and from additional external suppliers steadily increased. In 2008, about

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80% of the wood used was FSC certificated, whereas in 2010 the company reached 90% and today 93% (see Faber-Castell AG 2017a: 10f ). This shows how Faber-Castell improved its environmental impact and continuously enables sustainable growth.

Conclusion All in all, the company’s own “brand essentials” recapitulate best the values the company stands for and why it is a good example for actively practiced business ethics from which to draw transferable lessons. Four core values were identified that characterize the company’s consistent management and its identity. These core values, called “brand essentials”, are the company’s guidelines as to how to behave and interact within the company, toward customers, business partners, stakeholders at large and the environment. Indeed, defining core values might look nice on a piece of paper, but in order to act with integrity, these values have to be transferred also into practice. Faber-Castell does this by training employees at all levels throughout the Group on core brand values to differentiate between favored and defaulted behaviors within and between other areas of the company. The four brand essentials are competence and tradition, outstanding quality, innovation and creativity, and social and environmental responsibility. First, competence and tradition refers to the long history, experience, know-how and constant learning of Faber-Castell. Therefore, the company is able “to maintain or build a solid leadership, high degree of credibility and a strong global communication and distribution network based on fair partnership” (Faber-Castell AG 2017a: 4). Second, outstanding quality displays the company’s aim for being “Best of the Class”. This entails taking both, regional and global, requirements into consideration. The company defines outstanding quality as a distinct point of difference, relevant and perceived added value, characteristic and timeless design, and outstanding performance. Third, innovation and creativity stands for the continuous improvement of products and processes. Creativity and personal dedication is promoted through international

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interdisciplinary project groups and an open working atmosphere. Mistakes are hereby not seen as a threat, but as an opportunity for additional improvement. Fourth, social and environmental responsibility embeds the company’s commitment and consistent obligation toward both responsibilities. The company especially sees the environmental responsibility as key factor to their long-term success and seeks to play a leading role in developing sustainable technologies (see Faber-Castell AG 2017a: 4f ). We conclude that Faber-Castell’s continous effort toward environmental sustainability and social responsibitlity, is not realized at the expense of profitability, but does go hand in hand with increasing profits. Therefore, the company well demonstrates the concept of triple bottom line. The way the leaders in the family implement their dedication with integrity and passion has made Faber-Castell a sustainably successful business.

References Elkington, J. (1994). Towards the Sustainable Corporation: Win-Win-Win Business Strategies for Sustainable Development. California Management Review, 36(2), 90–100. Elkington, J. (1998). Partnerships from Cannibals with Forks: The Triple Bottom Line of 21st-Century Business. Environmental Quality Management, 8(1), 37–51. Eurofound. (2005). Global Framework Agreement Signed at SchwanStabilo. Retrieved November 30, 2017, from https://www.eurofound. europa.eu/observatories/eurwork/articles/global-framework-agreementsigned-at-schwan-stabilo. Faber-Castell AG. (2010). A Matter of Respect: Quality – Environment – Social Standards. Retrieved December 1, 2017, from http://www.m.fc-shop.net/ page89.html. Faber-Castell AG. (2011a). Faber-Castell Anniversary Magazine. Retrieved December 1, 2017, from https://media.faber-castell.net/Site/FaberCastellPre ss?country=de&language=en.

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Faber-Castell AG. (2011b). Sustainability Report 2011. Retrieved December 1, 2017, from http://www.faber-castell.com.tw/assets/sustainabilityreport_2011.pdf. Faber-Castell AG. (2011c). Zum Jubiläum Werk Geroldsgrün 1861–2011. Geroldsgrün: Faber-Castell AG, Werk Geroldsgrün. Faber-Castell AG. (2015a). Communication on Progress  – Global Compact 2015. Retrieved December 1, 2017, from https://www.unglobalcompact. org/system/attachments/cop_2015/170071/original/Communication_on_ Progress_-_Global_Compact_2015.pdf?1435149111. Faber-Castell AG. (2015b). Nachhaltigkeit FACT SHEET 2015. Retrieved December 1, 2017, from https://media.faber-castell.net/Site/FaberCastellPre ss?country=de&language=en. Faber-Castell AG. (2015c). Sustainability Report 2015 de. Retrieved December 1, 2017, from https://www.faber-castell.de/~/media/Faber-Castell-new/ Corporate/sustainability/NHB%20DE%202015/LR_2909-NHB-deutsch. ashx?la=de-DE. Faber-Castell AG. (2016). Nachhaltigkeit seit 1761. Retrieved December 1, 2017, from https://www.faber-castell.de/~/media/Faber-Castell-new/ Corporate/sustainability/NHB%20DE%202015/LR_2909-NHB-deutsch. ashx?la=de-DE. Faber-Castell AG. (2017a). Communication on Progress  – Global Compact 2017. Retrieved December 1, 2017, from https://www.unglobalcompact. org/system/attachments/cop_2017/438291/original/Communication_on_ Progress_-_Global_Compact_2017_FINAL.pdf?1510767391. Faber-Castell AG. (2017b). Zahlen & Fakten. Retrieved December 1, 2017, from https://www.faber-castell.de/corporate/zahlen-und-fakten. Faber-Castell AG. (2017c). Pressemitteilung: Daniel Rogger wird Vorstandsvorsitzender von Faber-Castell. Retrieved March 3, 2017, from https://www.faber-castell.de/service/presse/pr-mitteilung_170523. Glavas, A., & Mish, J. (2015). Resources and Capabilities of Triple Bottom Line Firms: Going Over Old or Breaking New Ground? Journal of Business Ethics, 127(3), 623–642. Hart, S. L., & Milstein, M. B. (2003). Creating Sustainable Value. The Academy of Management Executive, 17(2), 56–69. Hewlin, P. F., Dumas, T. L., & Burnett, M. F. (2017). To Thine Own Self Be True? Facades of Conformity, Values Incongruence, and the Moderating Impact of Leader Integrity. Academy of Management Journal, 60(1), 178–199.

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Maak, T. (2008). Undivided Corporate Responsibility: Towards a Theory of Corporate Integrity. Journal of Business Ethics, 82, 353–368. Matten, D., & Crane, A. (2005). Corporate Citizenship: Toward an Extended Theoretical Conceptualization. Academy of Management Review, 30(1), 166–179. Porter, M. E., & Kramer, M. R. (2006). Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review, 84(12), 78–92. Simon, H. (2012). Hidden Champions  – Aufbruch nach Globalia (p.  60). Frankfurt a. Main: Campus. Staedler. (2017). Staedtler® unterzeichnet Sozialcharta. Retrieved November 30, 2017, from https://www.staedtler.de/de/unternehmen/verantwortung-tragen/staedtler-sozialcharta/.

8 Integrating Simplification at Buurtzorg Nederland Sharda S. Nandram and Jos de Blok

Introduction Buurtzorg Nederland is one of the most talked about and revolutionary cases (Brodie 2017) in community care, and an inspiration for many organizations active in both home care and other industries. Its practices and achievements have attracted attention in the Netherlands and internationally. While many organizations have struggled to address the negative impacts of the aging population and growing healthcare expenditures, Buurtzorg, which was founded in 2006, has shown huge growth in turnover, an increase in personnel, impressive financial results, and a low cost per client relative to other organizations active in community care

S. S. Nandram (*) Nyenrode Center for Entrepreneurship Governance and Stewardship, Nyenrode Business Universiteit, Breukelen, The Netherlands e-mail: [email protected] J. de Blok Stichting Buurtzorg Nederland, Almelo, The Netherlands © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_8

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(KPMG 2013). Moreover, Buurtzorg has achieved positive outcomes, including highly satisfied customers (Nivel 2017) and employees who enjoy autonomy in daily decision making (Zorgvisie 2015). In this chapter, we examine this case from an organizational design perspective rooted in a worldview that is driven by a humane perspective. First, we address the company’s origins by presenting the home-care context as the basis for revitalizing the nursing profession and discuss the need to deliver better care. Then we address Buurtzorg’s growth from a social-movement perspective. The remainder of the chapter offers a description of Buurtzorg’s organizational design.

 he Inspiration for Revitalizing Home Care T and the Nursing Profession Until the 1980s, Dutch district nurses were second only to general practitioners in terms of monitoring people’s health in villages or neighborhoods. The district nurses were employed by home-nursing services and they generally worked on their own. They had a wide variety of tasks, from running infant-welfare centers, handling student vaccinations and health checks, and providing health-care information and courses to home care for the sick and dying. In the 1980s, teams of community nurses and nurse assistants were introduced, which were managed by a head district nurse. Slowly but surely, the tasks of patient care, healthcare for the young, and preventive tasks, such as education and courses, were divided. As a result of healthcare cuts, home-nursing services ended in 1990 and were replaced with home-care organizations in which district care was combined with family care. Family care originated from social work rather than the healthcare sector. From that point on, home-care organizations were required to offer healthcare in the home to all who did not need to be hospitalized or in a nursing home. The community nurses’ tasks were narrowed to medical-technical activities and the management of caregivers. Moreover, caregivers had to leave domestic tasks to “home

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help,” who were cheaper and who had fewer protections under the labor laws. With the merger of community nursing and family care, preventive tasks largely disappeared. In addition, community nurses had to manage caregivers who had completely different educational and professional backgrounds than their own. They were not happy with this forced merger, especially as they could no longer perform their work in its broadest sense. Moreover, the caregivers became an extension of the medical world, whereas their work used to be directed by social-welfare concerns. In addition, they had to leave a large part of their work to others who were not trained to handle attendant tasks. Professional and patient organizations anticipated the negative effects of this change in the healthcare system and warned of a likely decline in quality. In the 1990s, healthcare policies were still dominated by the ideal of an empowered patient making autonomous choices, which was the result of several emancipatory movements. However, following the policy adjustments, healthcare organizations were forced to compete with each other and with commercial home-care providers. Previously empowered patients become “care consumers” and care was formulated in terms of “products”—which clearly described actions that a patient required at certain times of the day. Most organizations decided to merge and reorganize, and hired managers who often lacked an education or experience in the healthcare field. The impact of this rationalization process was that patients saw a different home-care employee for each form of help or care, and they often encountered different people from day to day. Moreover, managers were not very familiar with the daily work of the care providers. Notably, the production and quality checks mainly focused on addressing the concerns of the financiers. Nevertheless, care costs increased and actual profits disappointed. Just as in commercial companies, executive boards saw expansion as the ultimate way to manage their market and to rationalize their business processes. Over time, this caused a clear gap between healthcare institutions’ management teams and the professionals directly responsible for patient care. These developments were the motivation behind the establishment of Buurtzorg, which adopted an approach of “putting humanity above bureaucracy.”

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Purpose-Driven Growth: A Social-Movement Perspective One of the main factors that drives growth in any organization is whether the organization is able to fulfill a need among its stakeholders. New clients are the main driving force for growth. However, the driving factor for Buurtzorg was the availability of nurses who could adapt to Buurtzorg’s ways of meeting clients’ needs, which emerged shortly after the company was founded. One way to explain Buurtzorg’s growth is by applying insights from the social-movement concept. Diani (1992) highlights different trends in social-movement analysis and offers a synthesis of the dynamics behind such movements, which is expressed in four aspects. 1. A network of informal interactions among those who are part of a social movement. One characteristic of these networks is that they may range from very loose and dispersed to very tight. The aims of these networks are to help create the preconditions for mobilization and to provide a setting for expressing specific worldviews and lifestyles. Diani defines a social movement as “a network of informal interactions between a plurality of individuals, groups and/or organisations” (1992, p. 8). When we apply this definition to Buurtzorg, it holds. The majority of the internal processes are based on informal interactions among nurses in their teams, between nurses and clients, and among the founders. Although plurality may not be present in the Netherlands, on an international level, we find plurality in the number of nurses, the government contexts, and the public-policy contexts in which informal interactions occur with the aim of following Buurtzorg’s way of working and organizing. 2. Shared beliefs and a feeling of solidarity. A social movement has its own boundaries. “The boundaries of a social movement network are defined by the specific collective identity shared by the actors involved in the interaction” (Diani 2000, p. 9). Buurtzorg is characterized by several shared beliefs: the nursing profession should be valued; care giving should be based on the idea that the client should be made as

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independent as possible; and nurses are capable of handling many tasks on their own. Another shared belief is that bureaucracy is a bad thing. 3. Collective mobilization for conflict resolution. A social movement often focuses on resolution of conflicts. “Social movement actors are engaged in political and or cultural conflicts, meant to promote or oppose social change either at the systemic or non-systemic level” (Diani 2000, p. 11). At Buurtzorg, collective mobilization is clearly evident and aims at “fighting” against management, bureaucracy, and control systems, and at revitalizing the nursing profession. 4. Informal institutions, routines, and procedures. Buurtzorg’s interactions with external parties and the activities it undertakes for compliance purposes are formalized. However, wherever possible, Buurtzorg strives for focused communication that is not distracted by the need to comply with formal procedures. For example, the company has formal and informal routines, institutional frames, and procedures in place with a supervisory board, insurance companies, and the IT provider Ecare.

Integrating Simplification The Buurtzorg approach is manifested as integrating simplification (Nandram 2015c). This business design focuses on the process of engaging in simplicity and refraining from complexity to avoid organizational disintegration. Disintegration becomes evident in different types of wastage, such as: • Wastage of time and other resources: There can be an imbalance between what is necessary in the practical domain and what is required due to rules and regulations. • Wastage of craftsmanship: Nurses’ natural orientation and dedication to the nursing profession are important requirements for Buurtzorg. A failure to respect this aspect can lead to an imbalance between personal and organizational motives and values.

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• Wastage of personal energy and effort: Organizations can introduce unnecessary structures, which are often based on the notion of conflicts of interest between employees and employers. Such structures can lead to distrust in the organization. Integrating Simplification Theory aims to avoid this type of wastage, which is usually the result of conditioning. In the following sections, we explain several characteristics of this organizational design.

 n Organizational Design Based on Self-management: A A Respect for Craftsmanship Buurtzorg Nederland, which was founded in the Netherlands in 2006, focuses on community healthcare. The Buurtzorg case is widely viewed as an example of best practice and of an innovative way of organizing processes based on self-managed teams of nurses and nurse assistants that basically lead themselves. These teams questioned the existing organizational models and built an organization without traditional hierarchies and management layers. Coaches were introduced to facilitate the processes within the teams. They do not have a formal leadership role and they do not hold formal responsibility for the teams’ productivity (Bindlish and Nandram 2017). They are mainly asked for support in connection with the establishment of new teams, conflict resolution, and the implementation of new approaches. Moreover, as each coach has an overview of approximately 40 teams in a certain geographical region, they can advise teams on numerous issues or encourage teams to learn from each other. They do not wish to be viewed as “managers” and upward promotion is not part of their approach. Intrinsic promotion can occur in which nurses can become coaches, or coaches can work on projects as headquarters staff members. Teams with more than 12 members can decide to split into new teams. Nurses and nurse assistants also enjoy the ability to define how the various tasks should be done to meet the goal of taking care of the patient in

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the best possible way, thereby ensuring a good quality of life and a holistic approach to the patient’s needs. A generalist orientation to the nursing tasks helps nurses deliver care based on a holistic view of the patient.

 ttunement to the Client: A Positive A Psychological View Buurtzorg’s philosophy reflects a customer-centric focus (Nandram 2015a, 2015b, 2015c). Members of the organization use certain terms that reflect their worldview, such as “clients” instead of “patients.” The term buurten, a Dutch term meaning “first becoming acquainted with the client and getting to know him well before caring for him,” expresses the importance Buurtzorg attributes to building a good relationship with the client. One important aspect of this belief system is that patients should be treated as clients to ensure that the focus is on what they can do themselves. At Buurtzorg, a core consideration is the likely future physical and mental capabilities of the clients. Moreover, clients are believed to appreciate privacy and consistency, which makes the avoidance of fragmentation in care delivery another important value (Nandram and Koster 2014). The philosophy of putting the client at the center requires the mobilization of others who are connected to the client through social (e.g., family members, neighbors, volunteers) or professional ties (e.g., general practitioners, therapists). Buurtzorg’s delivery of care is unique in that it is based on building good relationships with clients by being attuned to their needs, capabilities, and resources; and on making clients as independent as possible by empowering them with knowledge, and by mobilizing resources in the social and professional context.

 Structure That Empowers A an Entrepreneurial Mindset At Buurtzorg, nurses lead the teams themselves (Kreitzer et  al. 2015). They are viewed as entrepreneurs who are able to effectively utilize

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freedom and autonomy. They are expected to ensure their own productivity, decide what is best for their clients, and decide what works best in the team within the self-management structure. They are also believed to be able to attune to value-based systems of care, adopt a professional attitude, and find balance in a team.

 he DNA of Integrative Intelligence for Harmonizing T Humane Aspirations The approach is driven by humane values of providing the best possible care to others—the care you would provide to your own family members. As discussed above, craftsmanship and attunement to the client allow for the realization of this humane-focused way of working. Just like any other organization, Buurtzorg must deal with systems, including procedural and IT systems. From the start, the company has claimed that procedures are only required when they have meaning for an important stakeholder. Therefore, procedures that do not serve a stakeholder’s need will not be executed. As the organization was built from scratch, it has successfully established its own culture in this regard. The intensity of integrative intelligence can be further explained by focusing on the mindset and perceptions (Bindlish et al. 2017) that are evident in the business operations, and by discussing the role of rationality in the procedural and IT systems. Nandram et al. (2017) define integrative intelligence as focused on both human intelligence and systems intelligence, where the latter is expressed in bureaucratic and IT systems. The intensity of integrative intelligence at Buurtzorg is based on the level of coherence among the perspectives and purposes of various stakeholders (e.g., clients, nurses, family members, medical professionals, insurance companies) achieved through the application of human and systems intelligence.

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 uman Intelligence: Managing Knowledge Based on Need, H Rethinking, and Common Sense Buurtzorg’s organizational design is not about managing structures or people, but about managing knowledge. This is deeply rooted in the company’s worldview. Knowledge is managed on the basis of three principles (Nandram 2015b): need, common sense, and rethinking (Nandram 2017). These principles resemble the Indian philosophical concepts of human aspiration (Nandram et  al. 2017). Swaartha (responsible self-­ interest) refers to the determination of means for the aligned purposes that a person decides to follow mainly driven by his or her own understanding of what he or she has to do or what he or she feels interested in. Swavalamban (self-reliance) is the sustainable generation and utilization of those means. Swaraaj (self-freedom) is the process of aligning those means and applying to achieve a higher purpose, which evokes a feeling of self-freedom. Need (Swaartha): The process of systematically identifying and assessing needs involves asking the following questions: • What are the client’s needs? • Why do we do things as we do? • How do these ways of doing things help the client? This process requires reflection on actual needs and practices. It can lead to a resetting of behavioral patterns. Rethinking (Swaraaj): The following questions are relevant for continuously connecting to different types and sources of information and cues, and for reconstructing perceptions of reality: • What is really happening? • Are we doing the right things? • Is there a simpler way of doing things?

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This process requires reflection on existing perceptions. It may result in a resetting of the mind to allow novel ideas to emerge and to better understand how resources can be used efficiently. Common sense (Swavalamban): This principle involves the designing and implementation of tasks according to current circumstances or a new perceived reality until doing so no longer makes sense because the context has changed or there is a better alternative. Questions that apply in this regard are: • What do I need for this novel approach? • How do I bring this simpler approach into practice? • How does the new practice improve the client focus? This process requires reflection on resources as well as pragmatic actions. It may result in a reallocation of resources (e.g., mobilization of several types of resources) and renewal (e.g., empowering a client to find solutions to problems). Overall, knowledge management is about understanding clients and their needs, rethinking existing habits and finding new paths, and solving issues in pragmatic ways.

Systems Intelligence At Buurtzorg, these principles are expressed in the presence of small teams that are close to the clients, and in the systematic assessment and quality-control systems. They are also evident in the application of nurses’ professional expertise and extensive experience, the utilization of resources from the client’s social context, and the focus on continuous learning. Moreover, they can be found in the existence of complementary team roles, the step-by-step application of IT facilities to allow users to continuously learn and adjust, and the simplification of processes through the use of IT while attuning to the client.

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T  ypes of Rationality Weber’s ideas (Kalberg 1980) have been oversimplified in current discussions on rationality and bureaucracies. In general, when people speak of bureaucracy, they seem to be referring to a formal bureaucracy. However, the founding ideas of bureaucracy were based as much on thinking about forms of rationality, and were built on a typology of social action consisting of affectual, traditional, value-rational, and means-end rational action. These were believed to be universal capacities and anthropological traits of man that existed outside of history. Weber’s teachings encompass four forms of rationality: 1. Practical rationality refers to ways of life that view and judges worldly activity in relation to the individual’s purely pragmatic and egoistic interests (Kalberg 1980, p. 1151). 2. Theoretical rationality is the conscious mastery of reality through the construction of increasingly precise abstract concepts rather than through action (Kalberg 1980, p. 1152). 3. Formal rationality relates to spheres of life and structures of domination that only acquired specific, delineated boundaries when industrialization emerged, which gave rise to clear economic, legal, and scientific spheres and the bureaucratic form of domination. This type of rationality legitimates a means-end rational calculation by referring to universally applied rules, laws, or regulations. There is no space for arbitrariness. Bureaucratic domination is formally rational because it is oriented toward intellectually analyzable general rules and statutes, and focuses on selecting the most adequate means for continued adherence to those rules and statutes. The most “rational” type of domination is found in bureaucracies because they aim to do nothing more than calculate the most precise and efficient means for resolving problems by ordering them under universal and abstract regulations (Kalberg 1980, p. 1158). 4. Substantive rationality is a manifestation of man’s inherent capacity for value-rational action. It orders actions into patterns not on the basis of a purely means-end calculation of solutions to routine problems but in relation to a past, present, or potential “value postulate.” These

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value postulates cover entire clusters of values that vary in comprehensiveness, internal consistency, and content. They serve to organize a specific domain of life while leaving all others untouched. One example is friendship, which encompasses loyalty, compassion, and mutual assistance. Groups, organizations, institutions, political entities, cultures, and civilizations are ordered in specifiable value postulates even if they are not directly observable for participants or observers. No absolute array or rational values exist as a set of perennial standards for this type of rationality or for rationalization processes. These processes depend on an individual’s implied or stated, unconscious or conscious preferences for certain ultimate values, and on the systematization of his or her actions to conform with those values (i.e., Weber’s “radical perspectivism”). The standpoint that is chosen indicates how something is perceived. For example, a religious person may be considered irrational by non-religious persons and by modern intellectuals who put their trust in science and empirical knowledge (Kalberg 1980, p. 1155). All of these rationalities have a common foundation: they aim to consciously master reality. One can look at mental processes and regularities of actions at the group, organizational, or societal levels. The formal and practical types are based on the capacity for means-end rational action, while substantive rationality derives from value-rational action. Rational actions follow cognitive processes in theoretical rationality.

Bureaucracy and Economic Thinking Bureaucracy may mean different things to different people. Formal bureaucracy is derived from formal rationality in many types of organizations. This is largely the consequence of the focus on efficiency and the cheapest possible solutions, which is driven by economic thinking. In this type of bureaucracy, processes are considered measurable, and actions are oriented toward adherence with rules and regulations (Kalberg 1980). In contrast, Weber’s substantive bureaucracy creates space for the inclusion of a values orientation in actions. To understand economic

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behavior, Weber conceptualized the idea of rationality in a pure sense as an ideal type (Kalberg 1980). This ideal type is clearly understood and, thus, lacks ambiguity among stakeholders. However, actual behavior is not purely rational. To position formal rationality, Weber pointed to the use of calculations, particularly in financial or resource terms, as a distinctive feature. This rationality aims at the achievement of the highest possible return (Vanagunas 1989). Substantive rationality, on the other hand, includes the ultimate ends of economic activities, such that it goes beyond full rationality. It involves not only means-ends calculations of solutions to routine problems but also potential solutions owing to the inclusion of values. This type of rationality may include ethical, political, and hedonistic values. These values cannot be formally calculated and may not be efficient. In practice, there may be multiple ways to act, as the value postulates may be infinite. Technological developments made it possible to scale up ideas and to predict actions related to those ideas. However, these developments went beyond our comprehension of what was actually created because they were used in the building of bureaucratic systems. Many stakeholders located within such systems are confused, experience anxiety, and lose interest because the substantive form of bureaucracy is undermined. This substantive form was originally intended for relating actions to past experiences and entire value systems. These values, which naturally exist in human relationships, include loyalty, compassion, mutual support, and collaboration. They are evident in Buurtzorg’s self-management approach. There are no absolutes in terms of what constitutes formal rationality or substantive rationality in Weber’s thinking. The categorization of rationality type depends on the individual’s observation and context. What is formal in one culture or organization could be substantive in another culture or organization. Overall, however, many organizations view formal rationality as the only way to organize business processes, which leads to formal bureaucracy. Those who complain about this formal bureaucracy do so in different ways. Some ask that attention be paid to humane values in organizations, while others highlight organizations’ responsibilities in their communities. Organizations compensate for their one-sided approach of formal bureaucracy through corporate social

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responsibility projects, which allow for substantive bureaucracy to some extent. Organizations should include substantive rationality in their processes because it is naturally present in human behavior. We are inclined to behave by holistically including the experiences and values of others, and by not reducing human beings to machines. Moreover, numerous events can happen over a long period of time with effects that expand over the long term. Such events cannot be measured as formal rationality requires. In general, people utilize various ways of gathering knowledge and making use of it, when there is plenty of space for substantive rationality.

Buurtzorg and Rationalities At Buurtzorg, some employees are comfortable with formal bureaucracy and formal rationality, while others are comfortable with substantive rationality and substantive bureaucracy. The acceptance of responsibility and collaboration require the incorporation of different realities based on the perspectives (e.g., religious, non-religious, rules-oriented, values-­ oriented) of different individuals working in the organization, and the inclusion of the views and perspectives of those being served. It also requires inclusion of the different purposes these individuals may have. At Buurtzorg, “humanity above bureaucracy” largely refers to formal bureaucracy comprised of processes and procedures. In general, Buurtzorg is characterized by a dislike for bureaucratic procedures and IT systems are prioritized in order to minimize unnecessary manual procedures. In Weber’s conceptualization of bureaucracy, these IT systems are also a form of formal bureaucracy, as they are built and function in a systematic, predictable way. In addition, the IT is based on formal rationality. However, at Buurtzorg, this form of bureaucracy does not overpower the substantive form of rationality, which the company refers to as putting humanity first. The substantive form deals with the Buurtzorg way of working, and its philosophy of giving space to values and putting the client at the center in all activities and procedures. There are no compromises in relation to this philosophy, as it serves as the anchor for serving the client in the best possible way while taking quality and costs into account. Integrating simplification at Buurtzorg by type of rationality

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Mindset Practical rationality Formal rationality

Theoretical rationality Substantive rationality

Craftsmanship Attunement to client Craftsmanship Attunement to client

– • Craftsmanship • Attunement to client

Organizational architecture Entrepreneurial team freedom

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Leadership Strategic decisions

• IT for Buurtzorg’s web Strategic decisions as a virtual platform for communication • IT for Omaha’s quality system •  Learning platform • Business-information system – – • Entrepreneurial team freedom

• Strategic decisions leading toward a higher purpose • Daily decisions at the team level leading toward a higher purpose

Nandram et al. (2017, pp. 168–169)

At Buurtzorg, theoretical rationality is not a dominant factor in the organization of business processes. All other forms of rationality are present. Craftsmanship and attunement to the client have all three forms of rationality. The formal rationality is mainly driven by IT systems. It is clear where the responsibility lies for strategic decisions, and that rationality has formal, practical, and substantive features.

Inspiration for Others The self-managed approach is expected to lead to organic growth, but there are no other fixed ideas about the future. Change is the only constant in community care of the elderly. The stream of new and returning clients requires adaptability to new needs and new resources. The insurance companies, which are important partners given the Dutch

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social-­security systems and Dutch law, create constant anxiety about whether healthcare providers will be compensated for delivering care to clients. International interest in Buurtzorg’s approach has resulted in several experiments and implementations in healthcare across the globe such as in China, India, Germany, United Kingdom, Austria, and Sweden. Other sectors, such as the Dutch banking sector, have also shown interest and been inspired to implement some aspects of this approach. Clearly, however, exact replication of Buurtzorg’s approach will not yield results as good as those seen in Buurtzorg, as each context is different. Therefore, any kind of implementation should be dynamically adopted to the focal context.

References Bindlish, P. K., & Nandram, S. (2017). Leadership and Authenticity: The case of Buurtzorg Nederland. In Leadership Today (pp.  89–109). Springer International Publishing. Bindlish, P. K., Nandram, S. S., & Joshi, A. (2017). Integrativeness Through Pursuing Integrative Intelligence as the Way Forward. In Managing VUCA Through Integrative Self-Management (pp. 321–330). Springer International Publishing. Brodie, C. (2017). Buurtzorg’. The Dutch Word That Could Revolutionize Healthcare. Retrieved May 9, 2018, from https://www.weforum.org/ agenda/2017/06/the-dutch-community-care-revolution/. Diani, M. (1992). The concept of Social Movement. The Sociological Review, 40(1), 1–25. Diani, M. (2000). Simmel to Rokkan and beyond. Towards a network theory of (new) social movements. European Journal of Social Theory, 3(4), 387–406. Kalberg, S. (1980). Max Weber’s Types of Rationality: Cornerstones for the Analysis of Rationalization Processes in History. American Journal of Sociology, 85(5), 1145–1179. KPMG. (2013). De toegevoegde waarde van Buurtzorg ten opzichte van andere aanbieders van thuiszorg. Retrieved May 9, 2018, from http://www.invoorzorg.nl/docs/ivz/informatiecentrum/de-toegevoegde-waarde-van-buurtzorgt-o-v-andere-aanbieders-van-thuiszorg.pdf.

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Kreitzer, M. J., Monsen, K. A., Nandram, S., & de Blok, J. (2015). Buurtzorg Nederland: A Global Model of Social Innovation, Change, and Whole-­ Systems Healing. Global Advances in Health and Medicine, 4(1), 40–44. Nandram, S. S. (2015a). Organizational Innovation by Integrating Simplification. Springer. Retrieved from http://www.springer.com/business+%26+ management/organization/book/978-3-319-11724-9. Nandram, S. (2015b). ‘Buurtzorg’: A Case of Being-Centredness as Example of an Organic Worldview for Corporate Peace. In Business, Ethics and Peace (pp. 333–349). Emerald Group Publishing Limited. Nandram, S. (2015c). The Buurtzorg Case and Illustrations of Zorgaccent and Amstelring. Amity Global Business Review, 10, 56–63. Nandram, S.  S. (2017). Integrating Simplification Theory for Navigating the VUCA: The Case of Buurtzorg Nederland. In Managing VUCA Through Integrative Self-Management (pp.  263–287). Springer International Publishing. Nandram, S., & Koster, N. (2014). Organizational Innovation and Integrated Care: Lessons from Buurtzorg. Journal of Integrated Care, 22(4), 174–184. Nandram, S. S., Bindlish, P. K., & Keizer, W. A. J. (2017). Integrative Intelligence with the S-Model: The Case of Buurtzorg Nederland. In Understanding Integrative Intelligence: Embodied in S-Model. Halfweg: Praan Uitgeverij. Nivel. (2017). Interne rapportage voor zorgaanbieder Buurtzorg Nederland: Resultaten vragenlijstonderzoek over ervaringen van cliënten met de wijkverpleging. Retrieved May 9, 2018, from https://www.buurtzorgnederland. com/assets/documenten/Clienttevredenheidsonder zoek-2017Terugkoppelingsrapportage-Buurtzorg-Nederland.pdf. Vanagunas, S. (1989). Max Weber’s Authority Models and the Theory of X-Inefficiency: The Economic Sociologist’s Analysis Adds More Structure to Leibenstein’s Critique of Rationality. American Journal of Economics and Sociology, 48(4), 393–400. Zorgvisie. (2015). Buurtzorg vijf keer op rij beste werkgever. Retrieved May 9, 2018, from https://www.zorgvisie.nl/buurtzorg-vijf-keer-op-rij-bestewerkgever-2697574w/.

9 FAVI, France-Picardy: A Managerial Innovation Built on Humanist Values Patrick Gilbert, Nathalie Raulet-Croset, and Ann-Charlotte Teglborg

FAVI (Fonderie et Ateliers du Vimeu) is an intermediate-sized company based in Hallencourt (1416 inhabitants in the 2010 census), a village in the Somme, in the Picardy region of France, 15 km from Abbeville. It is the most important company of a canton, the Vimeu, high place of the French locksmith since the seventeenth century, and then in the nineteenth century of the taps and the foundry. The industrial economy of Vimeu is composed of a fabric of small structures, generally patrimonial. As in most rural areas, the local population is poorly trained. The Vimeu ranks last among Picardy’s employment areas and is highly exposed to the crisis.

P. Gilbert • N. Raulet-Croset (*) IAE Sorbonne Business School, Paris, France e-mail: [email protected]; [email protected] A.-C. Teglborg ESCP Business School, Paris, France e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_9

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Founded in 1957, this public limited company with a capital of € 960 000 is part of the family group AFICA (Refinage Champagne Ardennes), a copper alloy refiner, which bought FAVI in 1971 and of which it is a supplier. It specializes in the design, die-casting, machining, assembly and marketing of all parts that can be made from injected copper alloys. FAVI is in a healthy financial position, with a return of over 15% over the last 25 years. In 2010, FAVI generated a turnover of €75.5 million, 32% from export markets. Today, FAVI generates 80% of its turnover through the automotive sector, supplying one-in-two cars in Europe with gearbox forks on a sub-contractual basis. As a European industry leader, FAVI supplies almost all European automobile manufacturers (Renault, PSA, Fiat, Opel, Audi, Volvo, Volkswagen etc.). In a sector in which the threat of delocalization is very real, only the quality of the company’s products, its specialist skills and its competitiveness (with the exception of the evolution of the cost of raw materials, FAVI has not increased its prices since 1995) can explain its current success. However, it is very dependent on the evolution of the manufacturers’ activity, so it is engaged in a search for diversification. FAVI has built its reputation on a succession of product-market innovations based on specific know-how enabling it to cast copper alloys above 1000°C. During the post-war period, FAVI intervenes on the sanitary market by marketing sanitary products (washbasin siphons), and then water meters were in great demand when the construction industry was booming. During the 1970s, Asian competition in the sanitary and water meter markets became a threat. FAVI then identified a new opportunity: to manufacture copper gearbox forks for the European automotive industry. This new product will ensure FAVI’s growth from 100 to more than 600 employees at the height of its activity. Meanwhile, the company decreased its level of production in the traditional sanitary and water counter sector, specializing instead in top-end products. While FAVI has become the European leader in the gearbox range, since the 1990s, the medium-sized company has been looking for new opportunities based on its skills in the field of foundry, machining and assembly of copper alloys. Around 1995, the current technical and sales director, Dominique Verlant, who held a sales position at the time, identified an opportunity. Many industrial customers were looking for a way

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to improve the electrical conductivity of electric motor rotors. A research and development (R&D) project involving a Picardy engineering school and FAVI workers with unique tacit foundry know-how was launched in 1997. In 2000, it resulted in the launch of a new electric motor rotor improving electrical conductivity by 3–6%. To date, this new product, which corresponds to the ideals of sustainable development of FAVI, is experiencing continuous growth and has already sold more than 1,000,000 copies. Aware that the automotive market has reached maturity, FAVI continues its conquest of new markets and initiated, in 2008, a new R&D project to offer a range of antimicrobial products (door handles, switches, handles etc.) for the hospital sector to counter nosocomial diseases. The marketing of these products was launched at the end of 2012. But FAVI is also known for its managerial innovation which has been the subject of stories and conferences. It has set up a management system, the “FAVI system”, which is based on respect for human dignity, the participation of operators in operational decisions and in which the customer has gradually established itself as a key figure. The FAVI system is not a creation ex nihilo, but a progressive construction whose adventures we will relate by evoking the events and the most significant actors, since the origin until 2012.

 p to the Mid-1980s: A Factory Like U So Many Others During the post-war period, FAVI manufactured washbasin siphons and then water meters. In the 1970s, the company identified a new opportunity: manufacturing brass gearbox forks for the automotive industry. This new product ensured its growth and the smelter occupied a leading position in its field in Europe. But in the early 1980s, the organization remained traditional. FAVI was not a special case. It was like other companies in the sector. The general manager’s hierarchical structure was broad, he left his office little, a window of which offered him a view of the whole plant. He

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governed through a management committee and executive meetings, which in turn coordinated supervisors monitoring workers. Information was essentially top-down and circulated through the traditional hierarchical channel. The technostructure was relatively developed: RH management, methods, planning service and quality control imposed their rules on production. The difficulty of the work was compensated by nuisance bonuses (heat bonus for the foundry), and results were sanctioned by a result bonus and absenteeism by a presenteeism bonus. A form of mistrust also marked the relations of the management with the personnel of execution. For example, the supply store was locked with a key held by the storekeeper; there were time clocks, and delays were punished by a payroll deduction. The workers were closely supervised by the foremen. The managers kept their distance and had almost exclusive access to the director. In short, FAVI was a factory like so many others.

 986: The Arrival of an Inspired 1 and Inspiring Director At the beginning of April 1986, a new director, Jean-François Zobrist (JFZ thereafter) was appointed by Max Rousseaux (1915–2000), a captain of industry and founder of AFICA, with whom he worked within the PUM (Produits d’Usines Métallurgiques). The mandate he gave to JFZ was direct (“making money”) but open as to the means. The vision of future of the new director contributed to a radical shift for the company which, upon its arrival, had less than 200 permanent employees. Although he may have appeared as a “parachute”, when he took the direction of FAVI, JFZ did not arrive in a totally unknown territory. As a metallurgist, he was delegated by Max Rousseaux to provide technical support to this company for about ten years. He is a charismatic leader who, according to his own testimony, draws his inspiration from his personal history. He says he learned how to manage as a team leader, as a summer camp instructor, and then by his time in the army. Son of a soldier, he often refers to his military service as an artillery officer.

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And above all, he claims to have a humanist conception of management that he has nurtured by training and attending various professional circles, such as the Association Progrès du Management (APM), a network of clubs of managers of small- and medium-sized enterprises. To shape his conception of management, he draws on various sources, although convergent in their minds: • The theory of needs of Abraham Maslow and, in its extension, the work of Douglas McGregor, two North American psychologists who developed the idea that economic actors are also individuals with non-­ economic aspirations and nourished reflection on more participatory organizations. • The sociodynamics of Jean-Christian Fauvet, a consultant who has made his reputation on an “art of governing” and leading organizational change, consisting of a set of concepts and methods designed to reduce antagonisms in the company. • Total Quality Management, in particular the concepts and methods of Soji Shiba, one of the central figures of this movement. In the TQM philosophy, every employee—even the most modest—is a contributor to production objectives. Loving to surprise and adept at formulas, JFZ defines himself as “a naïve and lazy boss”,1 naïve because he trusts, proclaiming that “man is good”,2 and lazy because he has adopted the formula of the philosopher and sinologist François Julien for whom the good prince is the one who, acting only in season, has practically nothing to do (Zobrist 2018).3 When he arrived at the head of FAVI, for many months he reported, he did nothing (Zobrist 2018). For the first three months, working in pairs with his predecessor, he left him in the management office, went to the shop floor and talked with the workers, who for him are the primary source of performance. Then he observed and analysed. He considered the structure as not very reactive, even paralysing. Salespeople, the only organizational actors in contact with customers, had to wait weeks for the response from the design office to find out if it is possible to meet the customer’s request. JFZ believes that this traditional organization, with a technical director, workshop managers, team leaders, workers and

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support functions, had to be overturned (Zobrist 2018). He also felt that he could hardly count on management to lead change.

F rom 1987 to 1996: Creation of the First Mini-­Plant, a Foreshadowing of a New Organization Anticipating the difficulties in transforming the company, he decided to start the change from the shop floor, because it is necessary to maximize worker’s responsibility (Zobrist 2018). In December 1986, on the eve of the Christmas holidays, he brought together all the staff and announced the main lines of his revolution. Concrete measures that everyone could easily understand were stressed: • • • • •

suppression of time clocks and timing elimination of individual bonuses direct access to spare parts setting up of free beverage dispensers free access of tools for each machine

JFZ was convinced that FAVI’s success depends on the liberation of workers’ intelligence, territorial anchoring and listening to the customer (Zobrist 2018). Also, he proposed to define FAVI’s ambition as the desire to do “always more, better for less, in the love of our customers, in Hallencourt and in the respect of our children’s land”.4 This territorial anchoring is translated in an ecological commitment in the way production is managed, but also in product innovations such as the electric motor rotor, which saves energy. FAVI defines itself as an “enterprise that believes that people are inherently good”.5 All employees are regarded as acting sensibly and in good faith, on condition that they know why and for whom they work. All employees are supposed to share four values: “Good sense [common sense], good faith [honesty], good humour, and goodwill” (expressed by a leader and the director).

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They know that their common dream of “staying and working in their village” can only be realized if the customer pays for their product.6 Therefore, they do not work for their boss, but for their client. In this regard, the men and women of FAVI, the faviens, share a common mission: “To be loved by all our clients.” and share a motto, “Par et pour le client” (“By and for the client”).7 This renewal was then based on young operators, who immediately adhered to this vision. JFZ’s desire to transform the organization happened in a promising context. Indeed, in 1989, he detected an extraordinary commercial opportunity: Peugeot decided to place an order for gearbox forks representing approximately 20% of the turnover. The question rose as to how to accompany this growth. Was it necessary to work in 3/8? Expand the foundry? Appoint more foremen? Initially, JFZ decided to create an autonomous unit, composed of about 25 people to manufacture parts ordered by Peugeot in order to be totally focused on the customer’s need and satisfaction without disrupting the rest of the production. This model was replicated in subsequent years as new contracts were obtained. It was thus gradually that the old production mode disappeared to give way to a production entirely organized by autonomous mini-plants, each working for a single customer such as Renault, Fiat, Opel, Audi, Volvo, Volkswagen, and so on. At the service of each mini-factory, FAVI dedicates a team of 20–35 multi-­ purpose operators, led by a “leader” who is a former operator elected by his co-workers, as well as a sales representative, unique and privileged interlocutor of the customer. The leader of a mini-plant remains a worker and can return to a production station if he feels that he is no longer able to fulfil this role. JFZ removed the daily controls that were considered inappropriate in his new vision of the role of autonomous and responsible operators. Flexible schedules were determined within each mini-factory, according to production needs linked to the customer’s order. Everything is based on trust: no timekeeper at the pick-up and at the end of the service and self-service tools, share parts and work clothing, which were previously locked in. There is no more job description, no boundary between functions; in the event of a problem, a problem-solving group is formed to fix

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the problem. Individual bonuses are included in salary (based on the average of bonuses earned in the last two years). The performance bonus is the same for everyone, from the CEO to the most junior operator. In good years, employees could have up to 18 months’ salary (between 13th month and profit-sharing). The most spectacular transformation is that of the organizational structure. The former organization had six hierarchical levels: Plant Manager, Technical Manager, Manufacturing Manager, and Department Manager (foundry, tooling, etc.), Workshop Manager and Team Manager who supervised the operators on a daily basis. The new organization has only two hierarchical levels: the plant manager and the mini-plant leaders. To support operators in taking responsibility, FAVI set up a three-year training plan (1995/1997) including new technical skills, problem-­ solving techniques and validating prior learning in order to recognize employees’ skills. However, when the mini-plants were set up, the support services continued to operate as in the old system. The design office took a long time to analyse the feasibility of applications. Faced with this lack of responsiveness, JFZ asked sales representatives to respond directly to their customers, which leads to the resignation of the head of the design office. The human resources department was abolished. The support functions (design office, quality, tools, maintenance, etc.) are called to put themselves at the service of the mini-factories-oriented customers. Salespeople concerning whether or not the firm could meet client demands, JFZ requested the salespeople to reply directly to their clients and describe the product ranges on offer without asking the manager of design office as it was the case before. In response, the manager of the design office resigned. As for salespeople, they get into the habit of taking responsibility for the follow-up of each consultation and gradually transform themselves into project managers. In this dialectic between production and sales, the salesman becomes the driving force in the organization. In a peaceful internal social context, without trade unions, the workers welcomed the setting up of mini-factories. They first saw it as a simplification of relations, in reference to other industrial contexts they have experienced. The communication channels became more satisfactory for them: “You don’t have to make several requests to say… to have

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something”. The greater proximity with the representatives of the functional departments became also a source of satisfaction: “There is the leader, the quality agent, the salesman and the person in charge of shipping in the same office, in the same sector. (They are) closer, therefore more reactive” (one employee). Today, it is difficult for older people to imagine that they could work differently. Thus, in his 23rd year of seniority, this operator says he has always known the FAVI system: “It has always been the same principle— there has always been a leader, a quality agent, we have always worked like that”. On the other hand, at first, the changes introduced provoked strong resistance among managers to such an extent that the elders speak of a “sling of managers that led to the departure of some” (an employee). Their lack of support was explained by the fact that the changes made involved risks for them. For example, in the beginning, they rejected the decision to stop paying individual bonuses on the basis of productivity. This decision went against a long-established practice in the company. They felt that it would lead to a loss of productivity and saw that it would lead to a weakening of their personal authority: it deprived them of the power to dimension these bonuses. A sort of front of opposition to the new management system was formed among traditional managers who had chosen to stay. JFZ then decided to remove them in a non-violent way, subtracting them from the hierarchical line to offer them promotions to positions of experts in support of the mini-factories: “we had to brush their hair in the right direction! Your knowledge we’ll keep it, you’ll become an expert! Somewhere… They joined their new function. The managers who agreed to play the game benefited from this status of experts and production support. The others left the company. Contrary to negative forecasts, the abolition of productivity bonuses led to an overall increase in productivity (of the order of 20%), an increase that has become the main argument for generalizing the organization into mini-plants.

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 996–2004: The Apotheosis of the FAVI Model 1 Based on Autonomy and Freedom Whereas until then they had always been assisted by the former line managers, the mini-plants became autonomous around 1996. All the elders then retired. From now on, the three pivots of the FAVI system are the operators, the leaders and the salesmen. They are the guarantors of the love of the customer (symbolized by the hearts), which will ensure the perennially of FAVI (symbolized by the tree). Operators’ autonomy and freedom are the cornerstone of the system because everything must be done to ensure that the worker makes real-­ time decisions to deliver the best quality to the customer in a timely manner. The operator gets his supplies, regulates his machine, and carries out his self-check. If the initial training of operators is on average low, do not enter FAVI who wants. The probationary period is long and no confirmation of hiring is made without the colleagues having expressed their point of view. Integration is always conditional, because if the operator is not competent in the eyes of the team or if he does not integrate FAVI’s values, he will be rejected. Every member of the mini-factory must work to ensure that his unit “does more, better, and for less” said a productivity sponsor. The aim is the liberation of workers’ intelligence. Operators are encouraged to submit “progress projects”. These projects can improve quality of products, productivity, security, and work conditions. The focus on sustainable development is very strong. Every month, a jury hands out prizes to two of those “progress projects” (a €1000 first prize and a €500 second prize), and, at the end of the year, the mini-factory that has suggested the largest number of ideas receives a reward. The jury is composed of a sample of leaders, salespersons and operators, which change every year. One of the operators interviewed won a €1000 prize for an idea concerning a modification to the machining system used for gearbox forks. Previously, in order to machine a gearbox fork, two manufacturing machines were required. The operator’s project consisted in introducing a modification to the first manufacturing machine so that it would no longer be

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necessary to use the second machine. The modification made it possible to increase the rate at which gearboxes were produced. The operator being at the heart of the system, the leader’s mission is to listen to his needs and facilitate his autonomy. The leader is elected by peers through a democratic process. The leader is in charge of the work organisation, the team members holidays and their pay raise. On a daily basis, the leader receives directly the requests of his customer. The minifactory organizes itself autonomously to deliver to the customer: “the right part at the right time, in the right place and at the right price” (manager). To do this, the leader decides whether his mini-plant should operate in one, two or three shifts and adjusts with his colleagues in case of peak activity. It is also the leader who ensures that the operators’ skills are increased. The company puts the resources into it: it devotes nearly 10% of its payroll to training. Each salesperson representative is considered a “one-stop shop for a particular customer”. He responds to calls for tenders and sets its selling price after consulting the experts of the design office for feasibility. If he gets the contract, he becomes the project manager: he will run the mini-­ factory that will manufacture the product. The role of the sales representative is to “get the outside in” (manager). The salesman represents the customer to such an extent that “when you look at Carlos, it’s Fiat, when you look at Remi, it’s Audi. It sweats when you listen to them” (director). The mini-factory must know that it does not work for a boss, but for a client who holds the real power: “It is his daily work that will allow the client to have confidence and be faithful to us when it comes to consulting for new markets” (director). The sales representative then has complete responsibility for the customer relationship cycle. Depending on the phases of the cycle, he is a technical-commercial, project manager in the industrialization phase and then productivity sponsor of his mini-factory in order to be able to ensure that the prices promised to the customer allow the desired margin to be released. He plays an important role in managing the dialectic between production and marketing. Thus, for the design of a new product, he makes the design office work as part of his project to meet the needs of the customer. When industrialization starts, he usually organizes a meeting between the customer and the mini-factory so that operators hear the

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customer’s expectations. In addition, he is the guarantor of the quality of the product and the customer contacts him directly in the event of a problem. For example, if a customer calls to report a problem, a small delegation finds itself in record time at the customer’s plant, often surprised by so much responsiveness. Regularly, convivial meetings with the customer are encouraged, as during a football match or a karting on the carpark of the factory. There is no longer a traditional commercial service. Each mini-factory has its own sales representative, usually a former production line technician. The advantage of this system is that the employee has a solid knowledge of the product and manufacturing processes. To meet customer requests, he does not need to turn to a different service to calculate the new price, or the delivery times, he is completely autonomous and much more responsive. The mini-plant leader and his team take broad responsibility from supplier selection through processing to product delivery, a complex process that includes the foundry, cutting, machining and assembly. The traditional functions of the factory are still there, but they are directly implemented by operators. “From the moment they work directly for their client, and not for a boss, they don’t need a planning service”, explains Dominique Verlant. Nor is there any inventory management service since they manage their production directly in relation to orders placed by sales representatives. As proof, there would have been no delay in delivery during the last 20 years. It is always within the same structure, which brings together the operators, their production leader and their sales representative that the budgets necessary for purchases, equipment renewal or salary increases are drawn up periodically. From now on, FAVI represents its organization in mini-factories in an unconventional way by placing the customer at the centre of the mini-­ factories’ activity, while the support functions are at their service and the boss, shareholders and suppliers are stakeholders in this ecosystem. Many support services (planning, marketing, methods, personnel etc.) have disappeared because their activities have been integrated within the mini-­ factories. However, it should be noted that the Research and Development department is made up mainly of engineers (35 people). Unusually, this

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department usually works in two shifts to be in tune with production. There are less than ten administrative staff, including six in accounting. Aware that the automotive market has reached maturity, FAVI launched in 2000 a new electric motor rotor improving electrical conductivity from 3 to 6%, as previously mentioned. At the beginning of 2003, the company had nearly 600 employees, 82% of whom were productive. The FAVI system is certainly innovative, but it also appears very profitable. Sales and net margin increased strongly during this period (net margin of 6.7% in 2002, turnover doubled from 1995 to 2002).

From 2008: Change of Context This period is characterized by significant changes, both in the internal context and in FAVI’s environment, which raise new challenges. JFZ gradually withdrew from the management of FAVI between 2004 and 2008. He became an expert with the Association Progrès du Management and appeared at numerous conferences. After having prepared him for this position for nearly ten years, without telling him anything about his intentions, he co-opted Dominique Verlant, FAVI’s sales manager who became FAVI’s director in 2008, after the parent company’s agreement. In an increasingly competitive environment, the new director, whose appointment represents the advent of the “salesman” at the head of the organization, initiates a series of organizational changes that will lead to “mini-plants with increased autonomy” even more responsive and able to satisfy their customers. Following a supply disruption at the general store, he decentralized the stores in each mini-factory to remedy the situation. Following the loss of a major market, he decided that the sales representatives would now have their offices in their mini-factory, in order to create an even closer and direct link between the customer and the mini-factory. Convinced that “the devil might wriggle into the gap”, he solves the problems of information transmission between the support and production functions by integrating the quality function and then the maintenance function into the mini-plants. Cross-functional proximity and collective responsibility promote responsiveness to hazards.

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At the same time, FAVI has accumulated certifications (ISO 9001-2000, OHSAS 18001, and ISO 14001) and is distinguished by its customers by becoming, for example, the winner of the PSA Quality Trophy 2010 and is recognized for its involvement in sustainable development. The foundry is committed to its customers not to increase its prices and to achieve a 3% productivity gain every three years. In fact, prices (excluding raw material prices) have hardly increased in the last 25  years, thanks to FAVI’s R&D eco-design efforts working in co-development with its customers’ R&D and the mini-plants’ commitment to seeking productivity gains orchestrated by the sales representative, who also has the role of “Productivity Sponsor”. However, in the mid-2000s, FAVI had to face a new context, and in particular it was faced with new customer behaviour: “The customer is no longer the same, whereas FAVI has not changed! (leader)”; it gets harder to get the outside in. (commercial). Today, the relationship with the customer is almost exclusively through the commercial, which contrasts with the previous period when many FAVI players, including operators, could have access to the customer. Similarly, only salespeople maintain friendly relations with the customer, whereas they were previously favoured at the production level. The customer’s industrial site has become inaccessible. FAVI’s almost symbiotic relationship with its customers is also undermined by the relocation of part of the manufacturers’ production. Geographical distance increases the difficulty of developing intuitu personae relationships. The exchanges are now mainly done by e-mail or telephone. This dematerialization of exchanges runs counter to the personalized relationships developed with customers over the last decade. Moreover, the change of position “every 4 years” has become the rule for the client, which no longer makes it possible to establish long-­ term relationships. Fully aware of these difficulties, Dominique remains confident. At the end of 2012, the company employed 430 people. Most of the workers, recruited in the region, are in modest levels of qualification (about 50% at level II of the classification of the Metallurgy Collective Agreement).

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Closing Remarks The secret of FAVI’s prosperity seems to lie in an original managerial model characterized by a respect for human dignity. Indeed, FAVI has integrated democratic principles into its organizational model and promotes autonomy, freedom at work, the personal development of its workers and the liberation of workers’ intelligence. FAVI demonstrates also a strong engagement with stakeholders (customers, local schools etc.) and its territorial anchorage guides its ecological commitment. Not only other medium-sized companies such as Poult (biscuiterie) or Chronoflex (hydraulic hose maintenance), but also large companies have found in FAVI a source of inspiration to promote greater freedom of action within their own organization.

Notes 1. http://www.favi.com/management/ a naive and lazy boss translate from French Un petit patron naïf et paresseux. 2. http://www.favi.com/management/ man is good translated from French l’homme est bon. 3. Zobrist, J-F (2018) La belle histoire de Favi: l’entreprise qui croit que l’homme est bon Tome 1 Nos belles histoires, Humanisme, Organisation, Paris. 4. Internal document. 5. www.favi.com. 6. Internal document. 7. Internal document.

Reference Zobrist, J.-F. (2018). La belle histoire de Favi: l’entreprise qui croit que l’homme est bon Tome 1 Nos belles histoires. Paris: Humanisme, Organisation.

10 ALLSAFE: Responsible Freedom in Action Claus Dierksmeier and Oliver Laasch

Upon entering the premises of ALLSAFE, a premier supplier for the automotive and aerospace industry in southern Germany, one is greeted with the concepts ‘freedom’ and ‘responsibility.’ These words loom large, in oversized font, on a wall in the reception area covered with several citations emblematic of the firm’s vision. The quotations are aptly chosen because responsible freedom is, as our study will show, indeed what drove the strategic transformation of the company from a mechanistic to a humanistic management model, and what inspires its policies in regard to stakeholders. ALLSAFE, a typical medium-sized firm of the German Mittelstand located in Engen, close to Lake Constance, is currently led by Detlef Lohmann, the CEO. In running the firm, he was assisted for many years

C. Dierksmeier (*) Institute of Political Science, University of Tübingen, Tübingen, Germany O. Laasch Alliance Manchester Business School, Manchester, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_10

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by his brother, Ulrich Lohmann, who was in charge of organizational development, until his departure from the company in 2018 for a career in strategy consulting. Since the two brothers developed the firm’s philosophy and strategy in close collaboration, this chapter will draw on insights from conversations with both. In the worldview of either brother, when given freedom, people tend to make a responsible use of it, which is why ALLSAFE entitles and empowers its employees to act as autonomously as possible. The human being is not, the Lohmann brothers hold, a purely self-interested homo economicus, as conventional economics suggests, but rather a homo cooperans, that is, a being that on balance prefers cooperation to competition (Lohmann and Lohmann 2016). People will therefore, when given the right conditions, collaborate with a view to the common good. Firms should, therefore, be shaped so as to facilitate and assist this inherent striving of their employees: a humanistic vision of entrepreneurship par excellence. Over the years, ALLSAFE has won dozens of awards and commendations for its capacity for innovation and leadership.1 In recent years, ALLSAFE also received regular media attention. After Detlef Lohmann published an award-winning management bestseller on ALLSAFE’s humanistic business practices (Lohmann 2012), the firm was portrayed in a television documentary and received favorable coverage in the leading German business daily Handelsblatt in an issue entitled ‘The World’s Craziest Companies.’ Moreover, ALLSAFE was highlighted as one of Germany’s best employers by Germany’s Department of Labor (Clement 2015). Last, not least, numerous companies are studying ALLSAFE’s strategy and culture with an interest in replicating it, which in some instances—for example, in the case of the steel-welding firm ‘Tübinger Stahlfeinguss’2—has already happened. Nevertheless, there is not yet a comprehensive academic case study on the firm, a lacuna this chapter intends to fill in. In what follows, we track how the Lohmann’s humanistic conception of management, resting as it does on a conception of freedom intimately wedded to responsibility, shapes the business model of ALLSAFE and contributes to its commercial success. After briefly describing the methods employed for our study (1) and the recent history of the firm and its

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products (2), we delve into the operative values of the firm and their strategic benefit for ALLSAFE (3) before drawing conclusions (4).

Method of Our Study Our study is based on an on-site data collection over a period of ten days at ALLSAFE’s headquarter in Engen, where we participated in and observed everyday practices throughout the company. During the three months prior to this process, we studied all available media material on the firm (first and foremost, the two management books of the Lohmann brothers, published in 2012 and 2016) and on this basis prepared interview questions for managers and employees. On-site, our activities consisted of 72 interviews with company employees, 3 parallel narrated history workshops with 5 employees each, and further on-site observation as immersed participants in office life, production, meetings, and celebrations. Our data collection concluded with an open-invitation meeting with 65 people (approximately one-third of the company’s staff). The eventual data set consists of approximately 50 hours of transcribed interview recordings, over 400 pictures, and 25 in-house documents. All 72 interviews were semi-structured as follows: We first asked the interviewees for whom ALLSAFE offered which value, so as to tease out their business model’s value proposition. Next, the interviewees described the essential practices that led to the realization of this proposition. They were also asked to identify coherent bundles of practices, label them, and highlight how they made the firm successful. From these inputs, we drew a causal path map, later to be consolidated by the overall employee meeting, which shows how staff viewed the nexus between the humanistic practices at ALLSAFE and their impact on the firm’s commercial strength. The three 90-minutes workshops served to understand how practices had emerged over time. Five participants per workshop, all of whom had been with ALLSAFE over a period of over 25 years, worked out a narrative history of the firm. We asked participants to recount how ALLSAFE’s core practices had changed over the years. Then, we collaboratively drew up the company’s history on a wall-sized sheet of paper. Through the

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combined analysis of spoken and visual data, we eventually sequenced key dynamics and events within ALLSAFE’s recent past. At last, all interviews were coded inductively and triangulated with other data, particularly the ALLSAFE books, and on-site observations. In the following sections of this chapter, we will concentrate on the essential findings of this analysis.

History and Products of the Firm ALLSAFE produces load restraint systems to secure cargo or passengers in ground and air transport such as seat rails, loading rods, and tie-down nets.3 Since the company’s foundation in 1964, it has slowly but surely altered its business model in a way that can best be summarized as a transformation from a mechanistic to a humanistic style of management; a transition, notably, accompanied by a decided improvement in the firm’s financial health. ALLSAFE set out as a small trade company, but later turned toward industrial manufacturing and is increasingly steering its business model toward servitization.4 Today, ALLSAFE seamlessly integrates advanced manufacturing practices with a humanistic organizational culture and humanistic marketing policies; but, as the history of the company illustrates, the company did not set out that way. Before Detlef Lohmann took over the firm in 1999, ALLSAFE had been run under a different leadership since 1964. Throughout the 1960s and 1970s, ALLSAFE was but a small trade company importing and reselling fixtures for transport, focused on buying low-priced quality fixtures from manufacturers and reselling them to a variety of customers. In the mid-1980s, ALLSAFE began to make adjustments to the purchased products, successively trying to custom-make them. In 1986, these practices led to the foundation of the first technical development department. By 2000, confectioning practices landed ALLSAFE a sizable order from a major car manufacturer, which helped push the business model from trade to confectioning. Responding to ever-larger orders from the car industry, ALLSAFE aspired and managed to cater to customers’ demands for scale, speed, and quality through lean manufacturing, quality management, and Kanban

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process flow. Harnessing a beneficial order climate and driving continuous change and improvement, the Lohmanns eventually readied ALLSAFE to run large-scale ‘industrial mass customization’ conforming to the global ISO 9001 quality standard. As most of its competitors, ALLSAFE has long since embraced ‘Japanese’ management practices such as total quality control, quality circles, just-in-time production (JIT), and work flow organization (Womack et  al. 2007). What sets ALLSAFE apart, today, is the firm integration of these practices and techniques into a wider frame of reference characterized by the core tenets of humanistic management. Since Detlef Lohmann took over the reins in 1999, ALLSAFE consistently reduced department boundaries and hierarchies while, at the same time, increasing decisional leeway for employees, beginning to foster a culture of freedom and responsibility. When the world economic crisis hit in 2009, the Lohmanns used the slack in demand and the resultant decrease in operational pressure for further organizational development. On top of conducting regular continuous improvement projects, the Lohmanns introduced one-piece-flow and abolished all warehousing so as to increase production speed and flexibility. Importantly, during the crisis, through cost and salary cutting across the board, ALLSAFE managed to avoid layoffs. When demand picked up again afterwards, these novel techniques, combined with loyal and experienced staff, helped the firm to reduce response times and gave more flexibility in regard to customer requests. As a result of this product and service innovation, ALLSAFE managed to become the global market leader in the fixtures industry. Holding a leadership position in its niche market, the firm, however, presently faces extreme growth pressure because of a dramatically heightened demand for its products. The Lohmann brothers continue to be wary of these pressures as hiring and on-boarding employees rapidly and in too great numbers might have detrimental effects on the organizational culture of the company. In 2018, ALLSAFE began expanding to a second production facility close to Berlin. In order to assure that it too would develop a humanistic spirit of cooperation and collaboration, the plan is to seed the organizational culture in new employees by having them work for a while in the established facilities first. Then, employees

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would one-by-one transfer these practices to the new location so as to reproduce this culture in the new facilities. ALLSAFE also aims to dematerialize its value proposition by moving from a model based on product ownership to a closed-loop product-pay-­ per-use scheme. Anticipating increasing societal demands for environmental sustainability, ALLSAFE plans to make services their main product. The Lohmann brothers hope that, since services are more difficult to replicate and are less amenable to a solely price-based competition, this move will also help to maintain and strengthen the humanistic culture of ALLSAFE. Time will tell if the internal maturity of ALLSAFE’s core business practices can be sustained in the new facility and whether customers support the transition to a service-oriented value proposition.

 he Operative Values and Their T Strategic Benefit When visualizing the company to outsiders, ALLSAFE employees are wont to use the image of an upside-down pyramid. Other than a traditional firm where all essential decisions are made at the top of the pyramid, at ALLSAFE the key strategic and financial leadership comes from the customer consultants. Being in direct contact with clients, customer consultants have the best feel for how to adjust to changing markets. ALLSAFE can thus remain flexible and agile in its response to fluctuating demand. Accordingly, the CEO views himself not as the top-decider but as an enabler of bottom-up decision-making, not as the last arbiter but as the first assistant of his employees’ efforts. The operative belief is that in tandem with the freedoms granted to employees, their willingness to take on responsibility for the firm’s success will increase. Since business is, after all, a human affair, the guiding assumption is that any improvement in the human side of working conditions translates also into an improvement in the labor product as well. In brief, creativity and collaboration thrive when employees do. What keeps this inverted pyramid stable is, according to the interviewees, a set of values characteristic of the company. Chief among these are

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equal respect for human dignity, radical transparency, and, most importantly, responsible freedom.

Equal Treatment of All Respect for all human beings inspires all interpersonal communication practices at ALLSAFE.  Equality in treatment and the equalization of working conditions are, therefore, paramount goals at the firm. The head of production, for instance, personally greets each employee every morning. Similarly, every day, the CEO personally delivers the mail to all employees. This allows him to catch up with current affairs, not only professional but also personal, and also creates equal, barrier-free access to the CEO. Furthermore, ALLSAFE offers and pays language courses for foreigners so that they can communicate on an even level with their German co-workers as quickly as possible. Clearly, besides the commercial benefits of these practices, they also transport a humanistic message, that is, the Lohmanns’ strong belief that at the core of a healthy business lies sound sociality (Miteinander) that must be nurtured by a ‘people first’ attitude. Thus, the firm can also tap into ethnic diversity as a font for alternative ideas and perspectives; a heuristic and hermeneutic resource unavailable to competitors whose staff is less diversified. Another expression of the culture of respect at ALLSAFE is that offices are on the same floor with the production facilities. This contrasts with most manufacturing companies, where, typically, offices are located above the factory floor so that there is a material/physical barrier between them which often takes on a symbolic life of its own. To the contrary, at ALLSAFE, white- and blue-collar workers share each and all facilities, canteens, and bathrooms as well as leisure areas. New employees in manufacturing often stated that they still had to get used to not to being looked down upon by their colleagues from administration, as was the case at their previous employers. For the respect received, interviewees stated they wished to pay the firm back with loyalty and diligence. Moreover, in fostering an ever-closer collaboration between office employees and production workers, between temporary staff and

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permanent employees, the company achieves more efficient processes and more agile responses to customer demands, as these rely heavily on flexible as well as trustful eye-level communication. The Lohmann brothers foster such eye-level interaction (Kommunizieren auf Augenhöhe) through inter-disciplinary teams and projects, and by job rotation between administrative and manufacturing roles. Every new employee at ALLSAFE first gathers basic work experience in both production and administration, no matter their later job concentration, so as to get a comprehensive view of the firm at large. The strategic benefit here is to abolish silo-mentalities and groupthink in favor of a holistic perspective on the firm. Employees find it easier to do what is in the best interest for the company when they are familiar with the firm in its entirety. As a result, employees are more inclined to pitch in beyond the call of duty. It is, for instance, common at ALLSAFE that in times of high demand administrational staff of all levels, including the CEO, come in and help out on a Saturday production shift. Respecting all human beings as equals also means, for ALLSAFE, to empower employees to take on as much responsibility for the strategic development of the business as desired. What in other firms are ‘team leaders,’ are ‘team coaches’ at ALLSAFE, who do not operate from a hierarchical command position but on a peer-to-peer level with their team members. The job of these ‘team coaches’ is not to direct their co-workers but to assist them in fulfilling their respective tasks by sharing their advanced knowledge or seasoned experience as readily and as broadly as possible. As a consequence, fixed hierarchies do not exist. Rather those who, as signposted by an openly accessible competence matrix, offer the best qualifications for a given task, assume functional and transitional authority in teams. Work groups form and dissolve in sync with the tasks to be accomplished, always self-organized for the specific missions they pursue and oriented at the requisite mix of competences rather than at sectorial divisions and formal job specifications. The business case behind this practice is that through fluid forms of authority a broader set of talents and insights comes into play than in a hierarchical system where the ever-same decider makes all the judgment calls. In line with the fluidity of functions within the firm, ALLSAFE does not hire people for specific or fixed job profiles but rather employs people

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based on their overall fit with the organizational culture and then lets them self-assign to certain teams and tasks. This enables ‘pragmatic organizing’ at ALLSAFE, with fewer barriers and hierarchies, and it contributes to a culture of ‘protected empowerment,’ where employees practice ‘learning by doing’ and acquire additional competences all the time. Respect and equality are also the operative values behind two further practices. ALLSAFE continuously improves employees’ social and health benefits in sync with revenue gains. And since part-time workers are situated worse than long-term employees in terms of insurances and social security, ALLSAFE pays short-term hires more, not less, than its regular staff. Plus, ALLSAFE hires minorities and immigrants at a higher than representative proportion in order to help improve their standing in society. Last, not least, equality is practiced at ALLSAFE by including all employees, from CEO to cleaning staff, into its profit-sharing scheme.

Radical Transparency ALLSAFE is dedicated to advance transparency inside and outside its production sites. At Engen, glass walls enable anyone to see on what or with whom colleagues are working. All section-dividing walls are movable so as to allow for the flexible re-organizing of workspace and project-­ based organizing through the temporary restructuring of workspace. Walls, for instance, are used as display media for the company’s up-to-­ date results. Anyone visiting the firm can see how the various departments and the company as a whole are doing economically: from key performance indicators, via prices and costs, up to work schedules; any and all information of operational relevance is continuously made public and updated on bulletin boards across the walls of all facilities. This transparency is what allows for ALLSAFE’s decentralized processes. By making the current state and course of the firm transparent to everyone, the company assures that employees have the wherewithal to act in the best strategic interest of the firm. Raising consciousness about what helps or hinders the firm’s economic success, this policy gives employees the strategic orientation required for their decentralized decision-­making and agile reactions to changing contexts.

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The same transparency applies to customer relations. Whereas other manufacturing companies have their sales-representatives hide production and sourcing costs and the like from customers, ALLSAFE representatives make such information readily available to their clients. ALLSAFE is asking premium prices and wants their customers to know what comprises them. While ‘sales reps’ in other firms are prodded to increase sales whenever and wherever possible, ALLSAFE’s ‘customer consultants’ are rather primed to build lasting relationships with customers. Accordingly, they are only to sell if they can provide real utility for their respective customers. ALLSAFE encourages its employees even to dissuade customers from purchases whenever a customer consultant perceives that other products or solutions might better serve the customer’s needs. Likewise, they are to reject orders downright whenever their fulfillment would compromise the moral or technical quality standards of the firm. As a result, customers trust ALLSAFE and are willing to reward these fair and square sales practices, for instance by informing their counterparts proactively about impending changes at their firms with potential impact on their future needs and purchases. Based on longstanding personal connections to their customers, ALLSAFE can thus anticipate shifting demand and adjust its product offerings early on. These practices go hand in glove with ALLSAFE’s uncommon value capture practices. Unlike most for-profit-companies, ALLSAFE aims not at maximum returns but at an optimal redistribution of revenue to employees. ALLSAFE employees—as if to corroborate key tenets of stakeholder theory (Freeman 2004)—emphasized in unison that only by protecting this unique organizational culture, the multi-dimensional value proposition offered to their stakeholders could be preserved. In the interest of long-term vitality, ALLSAFE is thus more focused on managing the company for stability and sustainability, than for rapid growth; a particularly delicate task as customer demand for products has been dramatically increasing.

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Responsible Freedom Most important for ALLSAFE’s culture, however, is surely the dual lodestar of freedom and responsibility. The Lohmann brothers believe that firms can create environments wherein freedom and responsibility enhance one another. This vision clearly contrasts with the understanding of freedom as choice, predominant in neoclassical economics, intent on the maximization of personal options and the greatest possible extension of individual leeway. In this quantitative conception of freedom, responsibility can seemingly only be had at a cost to liberty, as any and all commitments result in giving up alternative options. Where economic philosophy tracks the notion of a ‘quantitative freedom,’ though, there results an inevitable trade-off between freedom and responsibility (Dierksmeier 2019). It is characteristic of the firm that ALLSAFE embraces an altogether different notion of liberty that can be best summarized as a conception of ‘qualitative freedom’ (Dierksmeier 2016, 2019). That is to say, ALLSAFE opts for a philosophy that marks responsibility as an internal dimension rather than as an external constraint of economic freedom. As a consequence, ALLSAFE is committed to create the environments that this approach needs to succeed, that is, a business climate and an organizational culture wherein the quest for individual freedom and engagement on behalf of corporate responsibility reinforce one another. Thus, we find numerous business practices at ALLSAFE where employees enjoy uncommon degrees of individual leeway coupled with the expectation that they use their freedoms in the best interest of the firm and, vice versa, where the responsibilities the personnel of ALLSAFE takes on is the very precondition for the continuous enhancement of the individuals’ realm of options, as the following examples may illustrate. New employees undergo a one-day work trial (Probe-Arbeiten) without being assigned any particular tasks. Rather they receive a workspace and are asked to employ themselves by connecting freely to their potential future colleagues. Through this process, it becomes automatically clear to what degree people are able to flourish in a work environment of

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autonomy-cum-responsibility, and to which degree they have the social competences that undergird ALLSAFE’s practices. Once people are hired, they are hardly ever fired. A general consensus in the firm is that people, to whom the firm’s culture of ‘responsible freedom’ does not appeal, do not sign up or eventually resign on their own. Hiring is, after all, more often than not based on word-of-mouth—a process that does much to attract prospective new employees who do not view themselves as a homo economicus but rather as a homo cooperans seeking a cooperative work environment. On the job then, employees are astoundingly free to change their work profiles, crafting, developing, or reshaping their own areas of responsibility—from administrative office to production floor and back, for example. This does not mean that there are no limits whatsoever—but these boundaries are self-imposed by the collaborating workers. In regular sessions, the various teams come together and discuss how they could improve what they do. Since pay is not attached to fixed performance indicators or sales numbers, the feedback given in these groups is uncommonly honest and, as a consequence, highly productive. Errors are frankly admitted and the overall climate at these meetings is not one of mutual assessment but rather of joint exploration: a veritable paragon of pragmatist problem-solving (Dewey 1938). Since employees are not punished for errors, they feel emboldened to be creative and innovative—much to the benefit of the firm’s overall productivity. In line with the firm’s commitment to marry freedom with responsibility, workers even have budgetary authority. Purchases they deem necessary and investments they find crucial, do not need to be cleared with the CEO or a budget officer. Instead, insofar as they convince and have the agreement of a thematically involved co-worker, they can defray the requisite costs themselves. This arrangement speeds up purchases of requisite machinery and materials and so contributes to the overall agility of the firm. The budgetary autonomy of employees also extends to their own salaries, which are set and adjusted by the teams themselves under consideration of the firm’s overall performance indicators. ALLSAFE’s employees are consequently used to look out for strategic opportunities for the company.

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Similarly, employees do not have fixed work hours or need to ask anyone for approval for their vacations but plan their absence from work autonomously, considering the needs of their respective teams and of the firm at large notwithstanding. As a result, ALLSAFE employees have no problems with their ‘work–life balance’ to report, since they adjust this very balance themselves. Whenever they want to subtract some time from work in favor of their private lives, they are, after all, at liberty to do so. That arrangement, apart from being beloved by the staff, is also much less costly than any traditional scheme of a centralized administration of work time. Another way of individual freedom being conducive to a responsibility for the whole at ALLLSAFE is the following: Employees of all kinds (from production laborer to CEO) are constantly proposing countless projects to improve ALLSAFE’s value proposition. Often, these ideas stem from employees’ pet projects. Everyone at ALLSAFE is given the time, space, and wherewithal to tinker around with idle machinery in order to realize whatever gadgets or ideas they come up with. Employees cherish this niche of creativity and also acknowledge proudly that quite frequently such initially non-purposive projects spilled over into strategically relevant innovations later. In all, the abovementioned practices create an organizational culture highly conducive to the well-being of employees, and its effect can be found in uncommonly low rates of absenteeism and turnover. What is more, the manifold subjective opportunities for employees at ALLSAFE clearly strengthen, as we have shown, the objective preconditions of ALLSAFE’s agility and continuous improvement. The Lohmann brothers do accordingly not see the costs for these policies as deadweight loss but as investments in the sustainability of ALLSAFE’s productivity.

Conclusion This case study highlighted how the prevalent business practices of ALLSAFE are, at their center, anchored to a conception of freedom that does not shun but seek responsibility. The outcome is a strongly humanistic culture of mutual support and voluntary commitments. ALLSAFE’s

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uniqueness rests, however, not only in its humanistic business practices. What is more, ALLSAFE has a thoroughly developed theoretical stance on humanistic management. The notion of responsible liberty embraced at ALLSAFE is itself a clear marker of a highly reflected management philosophy. This position, undergirded as it is by a culture of transparency and respect for human dignity, reflects the core tenets of humanistic management and proves their mettle in the cauldron of a highly competitive industry. The persistent implementation of humanistic management practices fosters a highly collaborative organizational culture that in turn allows for an extremely agile manufacturing process and a continual reinvention of the firm’s value proposition. The commercial success of ALLSAFE appears thus to be owed to its humanistic value-orientation.

Compliance with Ethical Standards Conflict of interest: Authors declare that they have no conflict of interest. Ethical Approval: This chapter rests on interviews, performed by the authors, based on the voluntary contributions of the interviewees. Informed consent has been obtained in written form from all interviewees.

Notes 1. http://www.ALLSAFE-group.com/en/company/ALLSAFE-milestones/. 2. https://tsf.de. 3. http://www.ALLSAFE-group.com/en/load-restraint/. 4. http://www.ALLSAFE-group.com/en/company/ALLSAFE-milestones/.

References Clement, W. (2015). Wertschätzer. Munich: Redline. Dewey, J. (1938). Logic: The Theory of Inquiry. New York: Henry Holt. Dierksmeier, C. (2016). Reframing Economic Ethics: The Philosophical Foundations of Humanistic Management. London/New York: Palgrave/Macmillan.

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Dierksmeier, C. (2019). Qualitative Freedom  – Autonomy in Cosmopolitan Responsibility. Heidelberg/New York: Springer. Freeman, R.  E. (2004). The Stakeholder Approach Revisited. Zeitschrift für Wirtschafts- und Unternehmensethik, 5(3), 228–241. Lohmann, D. (2012). … und mittags geh ich heim: die völlig andere Art, ein Unternehmen zum Erfolg zu führen. Vienna: Linde. Lohmann, D., & Lohmann, U. (2016). …und heute leg ich los. Vienna: Linde. Womack, J. P., Jones, D. T., & Roos, D. (2007). The Machine That Changed the World. London [u.a.]: Simon & Schuster.

11 An Example of African Humanism: Ivory Couture Kemi Ogunyemi and Nneka Udeh

The Humanistic Approach to Management Humanism values human dignity and stresses the worth of every human being. In this wider sense, it has been presented throughout history from different perspectives. Some scholars have focused on human rationality while others have paid a lot of attention to human spirituality. Both are valid viewpoints and have been incorporated into current scholarly work on humanistic leadership and humanistic management (Melé  et  al. 2011;  Melé  2012; Ogunyemi  2014). Humanism entails a recognition that our activities and performance impact others—humans do not live in a vacuum. The term management is derived from a Latin phrase manuagere, which means ‘to act by hand’ (Mahmood et al. 2012), and is the art

K. Ogunyemi (*) Lagos Business School, Pan-Atlantic University, Lekki-Ajah, Nigeria e-mail: [email protected] N. Udeh Institute of Management and Technology, Enugu, Nigeria © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_11

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of achieving a company’s goals and objectives through the available people. Since management involves people, the relevance and importance of a humanistic approach to management that centres on respect for people cannot be over-emphasised. The precepts of humanistic management have also been specifically attributed to Christian beliefs, where love for one’s neighbour or for humankind is the primary focus in the gospel (Adeleye et al. 2011; Melé 2003). Management, considered as a platform for achieving business and enterprise goals through bringing people and resources together effectively, is an obvious arena for humanism, since it involves dealing with humans and, as explained by Melé (2012), therefore requires a rational conception of who and what humans are. He proposes that humanistic management means grasping this conception in its full clarity and therefore treating people well such that their good is important to the enterprise (Melé 2012). Thus, one could say that Humanistic management and humanistic leadership are philosophical approaches that are at once compassionate, ethical, reasonable and strategic. To be an effective ethical leader requires a variety of different interrelated skills (Loza Adaui and Habisch 2013). When one is in a leadership position, one has even more obligation to do good, not just for oneself, but for one’s followers as well. Humanism in management therefore advocates a paradigm shift away from economistic views on market activities towards a human-centred approach—respect for human dignity, ethics in decision-making and promotion of human flourishing in and from the company so as to positively impact employees and other stakeholders. Humanistic management is currently becoming a necessity for management and operations in organisations. Being closely related to business ethics practice, it deals particularly with placing a very high priority  on the human stakeholders of the business organisation, both those within and without the organisation. According to Melé (2003), an organisation’s management can be termed humanistic when there is an emphasis and development of human needs and virtues to a great extent. Humanistic values are now being entrenched in management education in business schools all over the world, as traditional economic and management theories and concepts tended to be emphasised previously, in Africa as well. This wave is due to a growing understanding in business

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schools that business leaders must aim to do more than achieve profitability, and perhaps also due to a heightened awareness of their responsibility as business schools to grow ethical and responsible managers for the world’s economic entities (Adeleye et  al. 2011). At the same time, in Africa, local philosophies like Ubuntu and Omoluwabi continue to move entrepreneurs to be humanistic in their approach to the people who work with them and to the society in which they operate. Thus, while most studies of humanistic management are of western countries and organisations, in the African context, the concept of humanistic management is yet to be fully explored in academia (Adeleye et al. 2011; Arnold 2013). However, it is being practised already in local organisations, motivated by indigenous beliefs and value systems—Ubuntu, a South African term that means ‘I am who I am through others’ (Adeleye et al. 2011; Inyang 2008); Omoluwabi, a Nigerian term that describes a person of sound ethical character; and others less widely known but just as strong. It is a fact that the African economy is ridden with socio-economic potholes that encourage unethical practices by companies. Factors such as corrupt governments, high unemployment rates, poverty and violations of civil rights cause myriad economic problems. Notwithstanding, Africa is fast becoming a most lucrative continent for foreign direct investment, due to global technological advancement and the abundant human resource at workable age across the continent. This brings a special importance to the need for humanistic management practices in the African context. In as much as there are few formal laws and regulations protecting people and the environment in Africa, and that the few that exist are further weakened by low enforceability, companies doing business in Africa could respond to the call to operate more responsibly by adopting humanistic management approaches whether based on principles coming from outside the continent or from within.

Humanistic Management in Nigeria There is a need for deepening and embedding, in the economic system, of respect for human dignity and well-being (Kure 2020) in Nigeria as well. Despite the fact that Nigeria has abundant  energy and other

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natural resources and is growing in various economic sectors especially in agriculture, communication, entertainment, and technology, the country is still battling with a high incidence of extreme poverty and illiteracy,  climbing  unemployment and underemployment rates; low quality healthcare systems; and inadequate supply of power and basic infrastructure.  At the same time, there continues to be  widespread corruption, which brings its own challenges to business growth especially for small and medium enterprises (SMEs). The complexity of its context as described above makes Nigeria a prime example of the need for ethics and humanism in the way business is conducted, especially since any lessons learnt would be useful for other emerging economies with similar contexts. Some advocates of African humanism reject some conceptions of humanism (for example, social-contract and stakeholder management) because they find them somewhat  individualistic and therefore consider that they do not adequately deal with the challenges created by the widely-accepted notion of shareholder-wealth maximisation as the sole aim of business,  a notion that is also firmly hinged on individualism (Lutz 2009). They find that foundations that are communitarian in nature, such as Ubuntu and Omoluwabi, are stronger for building humanistic management theory, perhaps because they are strongly oriented to the common good. To the extent that the different approaches are valid and indeed aim for the same goal, businesses adopting one or a combination will end up improving the way people are seen in and from their organisations. The economic growth in Nigeria makes it an interesting country to explore the practices of humanistic management and ethical behaviours of organisations. Nigeria boasts of a population of over 180 million, with over 60% as youth who require active employment, and with increasing technological advancement and foreign investment, such a context is certain to yield valuable insights on the nature of humanism in management practices. More importantly, despite the propensity for unethical business practices in Nigeria due to the weak regulatory environment (Adeleye et al. 2011; Chibuike 2004), the relatively few businesses who do practice humanistic management display a resilience to operate against the grain,

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and demonstrate the importance of embedding core values into organisational culture (Adeleye et al. 2011). Humanistic management in Nigeria becomes an essential tool to alleviate socio-economic ills, through corporate responsibility, social innovation, economic productivity and job security and satisfaction to the people engaged by the companies that practice it (Adeleye et al. 2011). Besides, given that Nigeria is a powerful economy in the Sub-Saharan African region, humanistic management, including traditional philosophies that are oriented to the common good, acquires greater significance in creating more awareness and momentum for business management not just in Nigeria but in Africa as a whole. As a starting point, humanistic management theory, implemented appropriately to Nigerian institutions and companies, will help their managers to better understand employees’ needs and meet them. In so doing, they will end up enhancing productivity. An experience of humanism will enable an individual worker to commit more deeply to achieving the stated goals and objectives of the organisation. In addition, the appropriate application of humanistic management theories has the potential to increase employee retention rate, again almost surely impacting productivity positively. It will ultimately enable managers to understand the dynamism of human nature and aspirations so that they will be able to better relate with individual employees in the organisation and be interested in their wellbeing, looking beyond simply making profit through their work (Melé  et  al. 2011;  Mesa 2012; Ogunyemi 2014). Some of these expectations are reflected in the case of Ivory Couture, a small business in Enugu, Nigeria.

Ivory Couture: A Case Study In the words of the sole owner of Ivory Couture Mrs. Nneka Ikeyi, ‘Ivory Couture is a fashion brand, with its strength in ready-to-wear retail and bespoke tailoring’, which she prefers to refer to as a ‘fashion enterprise’. Nneka is a fashion entrepreneur with the dream to build a brand like Marks and Spencer or Zara that cuts across West Africa. Ivory Couture started out in 2009 as a small business providing bespoke tailoring out of Nneka’s house with a few tailors. It grew slowly

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because it was done mostly born of a passion for fashion during a period when Nneka was in a fulltime paid employment as a banker. However, in 2015, she resigned from the banking industry and gave her full attention to Ivory Couture because she saw the prospects in the fashion industry and wanted to be one of the first to build a strong fashion brand that would be recognised across the globe. Her work experience in a structured environment contributed to her ability to build a business with a highly professional touch. Ivory Couture launched its first retail outlet in 2015 and has since expanded to five locations with three stores stocking their products as well as two Ivory Couture stores. Ivory Couture’s target market is every woman who requires good quality, stylish and fashionable clothing. Ivory clothes are easily recognised just by looking at them because of the attention to detail and exceptional finish.

 ommitted Company, Committed Staff: C Happy Customers In Ivory Couture, there is the CEO, Nneka, who also undertakes the roles of accountant, designer and general manager of the staff and of the company’s affairs, and there are the front desk staff and the production section staff—tailors, pattern drafters and their assistants. In all, the staff strength comes to about 12 people who work together in harmony despite a diversity of age, gender and cultural roots. Many Nigerians exhibit a preference for white collar jobs and this has led to a dearth of skilled labour in the arts, crafts and technical professions. Thus, for example, there is a lack of qualified tailors, designers, pattern drafters and the different levels of staff needed in the fashion industry. Due to this, all staff that need skills to do their job in Ivory Couture come from other West African countries, while the front desk, marketing and other support staff are hired locally. The employees of Ivory Couture are committed and have what can be considered excellent terms of employment for a small business in Nigeria. All the non-locals, who are considered permanent staff, are provided with free housing and

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medicals while their remuneration is based on a monthly salary. The locals are considered temporary staff and are paid a monthly salary. Given the fact that non-payment or delayed payment of staff frequently occurs in both public organisations and private businesses in Nigeria, it is impressive that in Ivory Couture, irrespective of the financial condition of the business, employees are never owed salaries. This is a standard that Nneka has set, which has motivated her staff to stay committed to the business. Ivory Couture has a very low employee turnover—disengagement or termination of employment hardly occurs on either part; thus, employees are confident in the fact that their job is secure as long as they keep up with their end of the employment contract. In addition, Ivory Couture has an annual bonus policy that rewards all staff and gives extra incentives to employees who have been outstanding or exceptional in their service during the course of the year. One area, however, where Nneka is hoping to improve the care for her employees is to establish a retirement plan for them. She sees it as a possibility that can and will be achieved once the factors required are put in place. Ivory Couture’s people focus extends beyond their employees to their customers. Every Ivory Couture customer, described by the company as an ‘Ivory Belle’, gets effective, efficient and professional services at every encounter. Also, Ivory loyal customers get special 24  hours emergency service at normal rates, and they also get gifts for their special occasions in addition to regular discounts. It is important to the company to give every ‘Ivory Belle’ the assurance of a ‘wow effect’ for every Ivory Couture outfit. In addition, Nneka is planning a more robust reward scheme for Ivory Couture customers in the future.

Contributing to Sustainable Development For Nneka, social developmental goals are goals that both the public and private sectors set and are responsible for. Nneka’s list of social developmental goals that she can relate to in her field of business include skills acquisition for self-employment, infrastructure to aid business growth and employment opportunities. She sees private business owners as partners with the government in the realisation of the global sustainable

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development goals (SDGs). For its part, Ivory Couture has contributed to the achievement of some SDGs by running a holiday scheme for children to develop their fashion sense and take an interest in the business of fashion while acquiring set skills. The aim of this scheme is to help children understand the need for skill acquisition and also introduce to them the numerous job opportunities that are available in the fashion industry at an early age. In future, Ivory Couture has plans to run apprenticeship schemes and fashion schools in order to help with the goal of providing employment for Nigerians. The apprenticeship schemes will be paid apprenticeships where individuals who are indigent are given an opportunity to train for free and then work for Ivory Couture for a specific number of years as paid employees before they can leave or become part of the growing Ivory family. In addition, Ivory Couture will be giving some preference to gender when developing these future goals, so as to encourage women who are sometimes treated like second-class citizens to be self-employed and to generally contribute more to their society. More women succeeding in business means more women empowered to contribute to the struggle for gender equality in Nigeria. Apart from the holiday scheme, the high operational cost of the business (discussed below) has greatly reduced the ability of Ivory Couture to give back to the society as Nneka would like. However, she as an individual gives back to the society via special causes she holds dear to her heart and Ivory Couture has ongoing plans to teach basic fashion skills free of charge in schools within Enugu State.

Facing the Challenges Energy and manpower are the two major challenges that Ivory Couture has to deal with regularly. The irregular or epileptic power supply in most of Nigeria has affected the growth of many businesses and has also led to the collapse of many small businesses. While some alternative sources of power are available, they are not affordable, easy to maintain or sustainable for most businesses. For Ivory Couture, this is a huge challenge that affects their productivity negatively and increases overhead costs, making

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it difficult for the business to break even or achieve the financial goals it has set. Again, the concentration of basic education in Nigeria on theoretical knowledge more than on technical skills has led to a nation filled with educated people with a low level of skills. While education is a fundamental human right and must be ensured for all citizens, skill acquisition is also important as a tool for economic growth and indeed for human survival. When businesses like Ivory Couture are forced to hire their employees from other countries, this reduces the positive effect they have on the Nigerian economy. Also, the lack of locals with the requisite skills for the fashion industry leaves businesses like Ivory Couture on the edge most of the time, worrying about how much longer they can survive if a key employee decides to go back to his country. Thus, there is a critical need for the Nigerian government to create an enabling environment for skill acquisition as well as further educate the populace about the dignity in labour, as majority of Nigerians currently believe that white collar jobs or professionals (doctors, for example) are the only kind of jobs that are dignified. This kind of thinking leads to little respect for or discrimination against those who work in roles perceived to be less dignified and promotes instances of behaviour that is contrary to humanistic management in both private and public sectors. Private small businesses also need a more conducive environment to thrive and grow at a pace that will allow individuals with set of skills to either own a business or be employed in businesses where they can earn decent and regular salaries, thus contributing to the overall efforts towards poverty alleviation.

Ivory Couture’s Style of Humanism Nneka is very passionate about people and she strives to provide good conditions of service for her staff, thus creating a good work environment. She also offers her staff at Ivory welfare packages that are above the standard that is currently obtainable in the industry, thus building a committed and passionate work force. She personally studied French in order to enhance communication between her and her non-English-speaking staff. This reflects a readiness to go out of her way to reach every

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individual that works for and with her and to respect their being culturally different from her. Through her efforts, she contributes to building their sense of self-worth and gives an example of an orientation towards the good of the others in the community constituted by all staff of Ivory Couture. According to Chidera, the front desk staff at Ivory, ‘Ivory Couture is the place to be’ and the ‘best place to work’, because of how convenient and conducive the environment is. She was also happy with the perks of getting trained in the fashion business alongside her job—something that was not owed to her in strict justice by Nneka. She described her boss (Nneka) as a kind person who is sociable and makes working with her easy and fun. She also spoke about how a colleague at Ivory was given financial assistance to treat his sick daughter when he needed it. She is confident that if she had a personal problem and needed some assistance, she would definitely get it from her boss. Another Ivory staff, Hassan, a tailor who has worked for Ivory for over four years, says he enjoys working at Ivory because his boss treats them (the staff) very well. He helped to recruit some of the current Ivory staff because of the excellent working conditions. He is happy with his workplace and working conditions because salaries are paid on time, at the end of the year everyone is happy, and they get vacation time to go home to Ivory Coast and spend time with their families there. In addition, he mentioned that staff medical bills are taken up by the management team of Ivory.

Ethics at Ivory Couture According to the Ivory CEO, Nneka, they are conscious at Ivory of the fact that, to run a successful business, it is important to conduct their affairs ethically with regard to abiding by the rules and regulations that govern the conduct of fashion businesses in Nigeria. They recognise that the restrictions that accompany their efforts to achieve this exist for the common good of the industry and of all Nigerians. Thus, Ivory is a registered member of Fashion Designers Association of Nigeria (FADAN), which is an association that is registered with and recognised by the

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Nigerian government. FADAN is responsible for setting the rules, regulations and standards for the conduct of fashion businesses in Nigeria. Also, Ivory has management policies that help to maintain good governance and high ethical practices and standards within the company. For instance, Ivory ensures that rates and levies that are prescribed by the state and local government for businesses are paid on time to avoid any harassment that could lead to the pressure to bribe government officials. On a certain occasion, rather than pay the electricity company staff a bribe to reconnect power while a discrepancy in their electricity bill was being sorted out, Ivory bore the cost of running their business on generators until the issues were resolved and power was restored officially. Generally, any form of unethical practices such as bribes is frowned upon by Ivory management and staff. In their opinion, since a bribe only serves as a temporary fix and is illegal, it can only lead to higher costs as well as possible legal problems that could be avoided by doing the right thing. In addition to the above, customer feedback, going by the experiences shared by four Ivory Belles, also confirms that Ivory is known to have high ethical standards. One of them mentioned that, while some tailors and fashion designers tend to ‘keep’ fabrics left over from a client’s order, at Ivory, all extra fabric left over from a bespoke order is returned to the customer together with the finished outfit.

Final Considerations and Recommendations Issues of ethics in the business world are garnering more awareness globally, as both internal and external stakeholders affected by companies’ operations are becoming more particular about how they run and to what extent they ensure a positive while minimising a negative impact on the society (Adeleye et al. 2011; Melé 2013). Conversations about such ethical issues encompass social responsibility, ethical and/or sustainable human resource management (Adda et  al. 2016; Chibuike 2004) and three-dimensional sustainability. Having profitability and the bottom line as sole objectives of the organisation has often resulted in practices that are unethical to non-shareholding stakeholders including the society (Melé 2013). The ensuing instances of socially irresponsible business

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activities have contributed to a negative perception that businesses operate (Adeleye et al. 2011; Melé 2003) with disregard for humanity as represented by their employees, their customers, the society and the environment. Humanism in business seeks to address such issues coming from a position that business should primarily work towards the good of human beings. Over the years, as stakeholders have voiced out against corporate irresponsibility, the practice of ethics and humanism in organisations has been encouraged and has improved, often leading to increased financial returns and competitive advantage. Humanistic management ideas and practices, by placing people’s dignity and flourishing at high priority in business operations (Acevedo 2012; Melé 2003), have contributed to the shift. The move for the Africanisation of business management practices that are ethical is further spreading the Ubuntu concept as a catalyst for increased humanistic management on the continent. The existence of traditional and cultural values that support humanism is, therefore, constituting an efficient promoter in this direction. Businesses like Ivory Couture that already practice humanism are good examples that others— small entrepreneurs and large corporations alike—can learn from in selecting and adopting humanistic management practices that work well in the Nigerian, and African, context.

References Acevedo, A. (2012). Personalist Business Ethics and Humanistic Management: Insights from Jacques Maritain. Springer International Publishing Switzerland, 105(1), 197–219. Adda, G., Azigwe, J. B., & Awuni, A. R. (2016). Business Ethics and Corporate Social Responsibility for Business Success and Growth. European Centre for Research Training and Development, 4(6), 26–42. Adeleye, I., Amaeshi, K., & Ogbechie, C. (2011). Humanistic Management Education in Africa. Humanistic Management Network.

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Adeyemi, J.  A. Contribution of Management Theories to Modern Library Management. Unpublished Seminar Paper Presented on 21st February, 2016 at School of Postgraduate Studies, Babcock University. Arnold, S. (2013). Foreword by the President of Business Ethics Network Africa. AJOBE. Chibuike, U. (2004). Ethics in Nigerian Banking. Henry Stewart Publications, 8(1), 66–74. Inyang, B. J. (2008). The Challenges of Evolving and Developing Management Indigenous Theories and Practices in Africa. CCSE, 3(12). Kure, K. U. (2020). Leadership, Corruption and the Dignity of Humans: Some Reflections from the Nigerian Context, HTS Teologiese Studies/Theological Studies, 76(2). https://doi.org/10.4102/hts.v76i2.5873. Loza Adaui, C. & Habisch, A. (2013). Humanistic Management. In Handbook on the Economics of Reciprocity and Social Enterprise (pp.  191–200). Northampton, MA: Edward Elgar. Lutz, D. (2009). African Ubuntu Philosophy and Global Management. Journal of Business Ethics, 84(3), 313–328. Mahmood, Z., Basharat, M., & Bashir Z. (2012). Review of Classical Management Theories. International Journal of Social Sciences and Education, 2(1), 512–522. Melé, D. (2003). The Challenge of Humanistic Management. Kluwer Academic Publishers, 44(1), 77–88. Melé, D. (2012). Management Ethics: Placing Ethics at the Core of Good Management. UK: Palgrave Macmillan. Melé, D. (2013). Antecedents and Current Situation of Humanistic Management. AJOBE, 7(2), 52–61. Melé, D., Argandoña, A., & Sanchez-Runde, C. (2011). Facing the Crisis: Toward a New Humanistic Synthesis for Business. Journal of Business Ethics, 99, 1–4. Mesa, W.  B. (2012). A Consulting Model that Clarifies Core Values and Promotes Greater Organisational Integrity. In Agata Stachowicz-Stanusch and Wolfgang Amann (Eds.), Business Integrity in Practice: Insights from International Case Studies. NY: Business Expert Press. Ogunyemi, K. (2014). Managerial Anthropology: A Humanistic Approach to Management Studies. In Nathaniel Lupton and Michael Pirson (Eds.), Humanistic Perspectives on International Business and Management (pp 241-255). NY: Palgrave-MacMillan.

12 Humanistic Management with a Confucian Twist: The Case of FOTILE Matthias Niedenführ

Humanistic Management in China? Since the economic liberalization of the People’s Republic of China in the “Reform and Opening” policy (gaige kaifang) of Deng Xiaoping of 1978 and especially since WTO accession in 2001, the country has quickly conquered a position as “extended workbench of the world”. Both in volume and quality, China is now deeply integrated in the supply chains of the world economy. In the plan “Made in China 2025”, the Chinese government in June 2015 formulated the aspiration of China to become a leading industrial and technological power by 2035, as well as the world leader in many key industries such as artificial intelligence, biotech, and e-mobility by 2050.1 Impressive advancements in industrial, technological and digital upgrading, not least among them the fact that today far more automobiles with electrical drive systems are sold in China than in either Europe or the US,2 make this more than a distant possibility.

M. Niedenführ (*) China Centre Tübingen, University of Tübingen, Tübingen, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4_12

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Still, Chinese companies have a very bad image abroad. In the telling of China’s success story, we will find that Western media give little attention to stories of exemplary Chinese entrepreneurship, occupying itself instead with a high amount of reports on scandals, corporate corruption and managerial misbehavior. Therefore, our endeavor in this volume—to identify “best practices” of the implementation of humanistic management in business—in the case of China seems surprising. But the economic landscape in China is quickly changing from an opaque situation of government interventionism, corporate corruption, and an unreliable jurisprudence to one where corporate misbehavior is prosecuted and various political campaigns for the improvement of social morality and conduct are rigorously implemented.

Philanthropy and Corporate Sustainability Corporate responsibility and sustainability already are a hotly discussed topic in China. We can see this in the following remark made by Jack Ma, founder of China’s digital giant Alibaba, at the World Economic Forum in Davos in 2018: Business people should have a philanthropic heart and entrepreneurial mind instead of an entrepreneurial heart and a philanthropic mind.3

With this, Ma rejects superficial actions in favor of substance: A “philanthropic mind” moves an entrepreneur to fund philanthropic activities to make the company appear sustainable, yet without changing its fundamental operational logic. In contrast, a “philanthropic heart” in a business person leads him/her to work on substantial change inside the company in the long term and to focus more on the ultimate gains a business can bring to society rather than just looking at the quick buck. In China, the understanding of sustainable corporate development is still mostly limited to philanthropy. This is a misunderstanding of the concept of sustainable development. Chinese companies often support philanthropic projects (gifts to needy children, green projects, etc.), but these projects remain window dressing as long as exploiting employees,

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ignoring environmental guidelines, lying to customers, abusing purchasing power, and other negative practices are continued. For sustainable corporate behavior or humanistic management, measures and changes to corporate culture need to be implemented across the board and on all levels of corporate operations. This includes value oriented decision-­ making, impact analyses, stakeholder dialogues, and key performance indicators that emphasize responsible behavior of managers. Changing corporate culture indeed is the must-have; philanthropy is merely a nice-­ to-­have on top.4 Although, in global comparison, Chinese corporations are still lagging behind in the area of corporate sustainability, this will change sooner rather than later. The government seriously requires full cooperation of domestic companies in order to tackle the dual challenges of environmental degradation and social imbalances that four decades of unbridled growth left behind and is increasingly enforcing its regulations. For instance, industries with a high negative environmental impact—such as cokeries, carbon energy plants, and so on—had to install costly filter technology or risk shut down in the vicinity of metropolises such as Beijing to tackle air quality problems. On the other hand, incentives such as awards for corporate responsibility and exemplary entrepreneurship have been implemented as well.

The Story of FOTILE FOTILE Company (Chinese: Fangtai), founded by Mao Zhongqun, is a privately owned high-end kitchen appliance maker based in Ningbo, Zhejiang, province. They are among those companies that have been awarded for their endeavors of implementing sustainable management practices across the whole organization. Its success earned the company recognition as the national leader in high-end kitchen technology and was recognized by the Sino-Swedish CSR Initiative of the Ministry of Commerce (MOFCOM 2017): In surveys carried out by a third party on the ideal brands in Chinese customers’ mind in 2008 and 2010, FOTILE was rated as the first ideal brand

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by Chinese customers successively. The brand value of FOTILE ranked first in the industry among China’s top 500 most valued brands for 4 straight years, with a high-end market share of over 24%.5

The recognition FOTILE has received both inside and outside of China makes the company a particularly suitable case for this study.

From Feixiang to FOTILE In 1994, Feixiang, under its founder Mao Lixiang, was a reasonably successful but stagnating company in the mass production of gun-shaped lighters for international markets. When invited by his father to help, Mao Zhongqun agreed to give up his promising career as a engineering scientist, and, in 1996, Feixiang was transformed into FOTILE, a modern company with new industrial products. They started out with the production of European-style fume hoods, where Mr. Mao saw great market potential to undercut the European competition with high-­ quality “Made in China” products that were adapted to the specific needs of Chinese cooking.6 As an executive MBA degree holder of the Chinese-European International Business School (CEIBS) in Shanghai, Mao Zhongqun is trained in modern management styles and tools taught at leading Western graduate schools of business. These tools he also employed during the intergenerational handover process. For instance, he insisted on receiving full control of the company, since sharing control with his siblings would have diluted his discretionary executive powers needed for the transformation. He also only took over those employees from the old company he deemed qualified, disregarding their personal connection to the family. Instead of relying on family members, professional managers were hired in order to separate ownership and management of the company and to integrate professional expertise (Liu and Heler 2012). These measures are all in accordance with Western management knowledge. But Mao Zhongqun also feels strongly about traditional Chinese values as well. For example, the sacrifice of his academic career for the sake of the family business is indicative of the family-oriented values of a Confucian background.7

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Mao has been very successful with his combination of traditional Chinese values and Western management, which he calls a “Chinese-­ Western hybrid” (zhongxi hebi). Until 2019, the company grew to an annual sales volume of 10 bio. RMB (about 1.4 bio. EUR), over 17,000 employees, a broad product portfolio for B2C and B2B customers ranging from kitchen appliances to complete kitchens, a network of showrooms in the whole country, and several advanced R&D centers. Unlike many other Chinese manufacturers, the company did not agree to performing OEM production for foreign manufacturers or to diversifying into the real estate market during the boom of the last decade. Rather, with 5% of its annual income, it reinvested heavily into research and development (R&D) to create a local Chinese brand that is increasingly known outside of China.8 FOTILE managed to grow with double digits against the market trend and has a backlog of six months in orders.9 The company is now the market leader of Chinese manufacturers in this sector and received over 50 awards, such as a 2016 Red-Dot-Award for a patented “in-sink dishwasher”.10

Management Thinking with Chinese Characteristics FOTILE refers to Confucian values in the reorientation of its corporate culture. Mao Zhongqun—and other likeminded entrepreneurs—consider themselves “Confucian entrepreneurs” (rushang), a concept that combines the values of Confucianism (ru) with the profit orientation of entrepreneurs (shang). Among them, Mr. Mao has created his own humanistic management style that he calls the “Confucian way of FOTILE” (fangtai rudao)11 or a “Management Thinking with Chinese Characteristics” (zhongguo tese guanli sixiang).12 In order to get a better picture of FOTILE’s company culture, the process of implementing Confucian management elements in general, and the challenges of convincing employees to adopt the change in particular, I undertook a series of qualitative interviews in September 2017 and December 2018 with Mr. Mao himself and dozens of employees of all levels. My study attempts a critical assessment of this alternative approach to humanistic management.13

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Yin Ai Wei Da “For Love We Do” FOTILE’s turn toward Confucian values started in the mid-2000s, when Mao Zhongqun attended several training classes in traditional culture— “National Studies” (guoxue)14—at both Peking University and Tsinghua University. At first, he used what he had learned as guide for himself for good behavior as an individual, family head, and corporate leader. From 2010 onward, he started experimenting with different measures to spread this learning to managers and employees. His studies had brought him to the conviction that the aim of his company should not be mere growth in size, return on investment, number of employees, market share, or other quantifiable parameters, but rather a quality-oriented management style with the company’s contribution to society at its core. Therefore, FOTILE gave up its initial goal of becoming the “Number One Company” (diyi qiye) in its industry. Instead, Mr. Mao set his eyes on becoming what he calls an “excellent company” (youxiu qiye) or “great company” (weida qiye). He considers this switch an important juncture in the history of FOTILE. Moreover, he is convinced that once FOTILE manages to improve its corporate culture along Confucian values and achieves its goal of becoming an “excellent company”, it might eventually become “number one”, as well. This, however, would only be a side effect. For Mr. Mao, the main Confucian value to integrate into the corporate identity of FOTILE is a strife for “benevolence” (ren) or “love for others” (ren’ai), which is epitomized by the company motto: Yin Ai Wei Da “For Love We Do”. Evidently, the formulation of such lofty goals is just the first step. In the following, I first elaborate a few more elements of FOTILE’s corporate philosophy and then I will try to portray whether and how these values are implemented and operationalized in the daily business of the company.

Personal Connection and Moral Leadership When the company was still smaller Mao endeavored to connect personally with managers and employees:

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In the past, when [I and my father] talked about how to retain talented people, we mainly considered that salary retains people, career perspectives retains people and affection retains people. The element of ‘affection’ is very important. You regularly have to socialize with your subordinates, for example have meals or go drinking together, to build affection. But when the scale of your company is large and the employees are many, you cannot go drinking every day.15

In this situation, Mao looked for instructions from traditional culture that would help him deal with the issue of talent retention: Later, through reading [the Analects of Confucius] I discovered to particularly emphasize the moral character of leaders. That is to say, if as a leader you possess a very high moral character, you don’t need to retain talented people through [socializing] anymore. “He who exercises government by means of his virtue may be compared to the north polar star, which keeps its place and all the stars turn towards it.” (Lunyu 2:1, reference added)

Mao refers to the Confucian concept of “government by means of virtue” (renzheng),16 which in Confucian political thinking was considered as a way to make people follow a leader (Liu 2018: 88). Leadership by example is of course not exclusive to Confucianism. It is a tool of humanistic management of successful entrepreneurs to earn the support and respect of employees.

Stakeholder Considerations and Sustainability Confucianism has the concept that an exemplary person (junzi) “establishes others if they want to establish themselves” (Lunyu 6:30, Legge 1893; Ni 2017). This concept is behind the idea of FOTILE’s notion that a “great company” would “lead people towards goodness” (yin ren xiang shan). Starting from achieving “happiness” for the employees and customer’s confidence in products and services, the company would positively influence a “healthy atmosphere” in society and through all this achieve sustainability (Fig. 12.1).

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Fig. 12.1  Four characteristics of a “great company”

The illustration above has a great overlap with the Western concept of corporate social responsibility (CSR), with a strong emphasis on stakeholders within and outside the company. To the Western observer, morally loaded terms such as “happiness”, “love”, “goodness”, and “healthy atmosphere” seem unusual in a company’s value catalogue. But FOTILE’s choice of this language is compatible to moral education terminology both in Communist value campaigns (e.g. president Xi Jinping’s Chinese Dream Zhongguo Meng) and the language of Confucian virtue ethics that informed centuries of bureaucratic value training in the Imperial examination system.

Reciprocity in the Employee-Employer Relationship Confucian humanistic ideals can be summed up in Confucius’ version of the Golden Rule: “What you do not wish for yourself, do not do to others” (yi suo bu yu, wu shi yu ren). Mr. Mao refers to this concept of “reciprocity” (zhongshu) when he suggests that “benevolent” superiors first

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have to deal with sympathy and support toward their subordinates, which in turn would result in a responding loyal behavior from the employees (Fig. 12.2). Confucianism emphasizes personal relationships. The core of success in business in many Chinese companies is the Confucian ideal of the family and pragmatism in personal relationships (Clair et al. 2012). Mao attempts to consciously apply the Confucian ideal of a family17 to the whole company which then is seen as one “big family” (dajia) with the company head as a benevolent and lenient “father figure” and the employees as family members that are loyal to the company. The relationship of employees and the company is at the same time hierarchical but also meant to be one of mutual benefit. Employees are supposed to be treated with respect and support, who in turn have a vested interest in the long-­ term growth and success of the company. The Confucian ideal of “trust” (xin) and “harmony” (he) between people is also supposed to inform the relationship between fellow employees who are not in a hierarchical relationship (Fig. 12.3).

Fig. 12.2  The relationship between superior and subordinates in Confucian-style moral leadership

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Fig. 12.3  FOTILE’s notion of “trust” and “harmony” between fellow employees

 oncrete Measures of a Confucian C Value Implementation These values and concepts are—in theory—good examples of humanistic management on the basis of Confucian thinking, but they only gain relevance if best practices can be reported of how these humanistic values are implemented. In the following, I will report and assess a selection of them.

Humanistic Education In 2013, FOTILE at its headquarters opened a “Confucius Hall Classroom” (Kongzi tang jiaoshi) where managers and employees were given the opportunity to attend lectures and classes by invited experts on Chinese philosophy. “Humanistic education” in traditional values is supposed to complement their extensive technical training program.18 Another humanistic education element was the introduction of a daily routine of 15-minute reading sessions in work groups within the company, in order to expose employees to Confucian primers, such as the Dizigui or the Sanzijing.19 The work groups—now organized as WeChat groups—were encouraged to jointly discuss the sections that were read in the session, to incite critical comment and exchange feedback on the practical relevance for daily work. Best practice stories of successful

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implementation then are being shared with the work groups and ultimately within the company in a multilayered discussion system. This program—like others FOTILE uses—is a work in progress. Originally reading assignments for all employees were decided centrally, but eventually this task was relegated to the level of the department or work group as a reaction to critical employee feedback. In the same way, reading requirements for management trainees that used to included having to read The Analects (Lunyu) of Confucius dozens of times was reduced in response to trainee feedback. Several employees I interviewed said that at first these educative lectures and sessions felt like an increase in the workload. Managers, who generally have a higher level of education than regular employees, tended to be especially critical of these exercises in moral education. According to several managers, a small number of employees even left the company because of this unusual measure. But eventually the employees started to tolerate these sessions and to incorporate them in the daily work routines, or even to appreciate them as a positive influence in both work and private life. The “reading of classics” (dujing) in group settings is aimed at resulting in a group motivation. The measure is accompanied by five recurring measures of self-motivation called the “Five Ones” (wugeyi) in FOTILE corporate speak: “Read a classic” (du yige jing), “Perform a good deed daily” (rixing yishan), “Correct a short-coming” (gai yige guo), “Perform an act of filial piety” (xing yige xiao), and “Set an ambition” (li yige zhi). In my analysis, we can identify several different groups of employees in respect to the two dimensions of (a) acceptance or rejection of the new corporate culture and (b) level of understanding of this culture (Fig. 12.4). Several interviewees, especially veteran employees, who had a long experience in the company prior to the corporate culture shift, voiced their opinion that the company really developed a more “harmonious” communication culture after the implementation of this measure. With “harmonious” they did not only refer to passive compliance, but rather an improved communication culture both top-down and bottom-up. In their view, the way people at FOTILE interact and communicate with others, both within and outside the company, was positively affected—a gradual transformation which in several cases was first detected by spouses

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Fig. 12.4  Employee types concerning acceptance and understanding of FOTILE culture

or family members. Several employees recognized a perceivable difference to the communication style in other companies they worked at before. I prompted a senior manager to give a concrete example of how “moral leadership” is implemented: I’ve been here for 18 years and [Mr. Mao Zhongqun] has never banged his fist on the table and talked angrily at us. He himself has the ability to control his moods rather well […] The important thing about traditional culture is to carry it out and practice it yourself, and not to go on preaching about what you only just learned—it’s no great use just to talk about it.

Praise by a subordinate within a company is of course not unexpected. But similar impressions of their boss’s character were mentioned in a number of interviews. When asked about how changes in the corporate culture affected regular employees, some interviewees mentioned a change in how line managers treat employees who made mistakes. According to the interviewees,

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managers did not scream at their subordinate anymore, as was the case before the introduction of the new corporate culture, but rather tried to communicate in a calm manner and help the respective person solve the problem. FOTILE has introduced a four-level behavioral reinforcement system to handle mistakes or serious misdemeanor of employees. For a first time occasion, a warning is issued; a repetition or more serious mistake results in a fine. Only in extreme cases or when all sincere efforts to help the respective employee solve his/her problems a person would be discharged. A higher level relates to higher extra rewards in the company incentive system. The Confucian notion of family is supposed to inform this system, with a preference for assisting a “family member” in improving themselves over dismissal. In my assessment, FOTILE’s form of Confucian humanistic education within a company is quite transferable to companies of a smaller or similar size in China. Collective education has been part and parcel of the education system in Communist China, so collective learning measures such as this seems somewhat less out of place as in other—especially Western—societies. It might also be transferable to companies in the Confucian hemisphere, such as in Japan, Korea, Vietnam, or Southeast Asia, where the Confucian way of learning, which involves repetition of text, is prevalent. In Western countries, there is quite some reservation against institutional value education, so education measures such as this have to be adjusted accordingly to be accepted by the workforce.

Care for Employees In China, companies have to tackle the challenge that even for a small increase in wages employees are willing to switch to another company, translating into a very high annual employee fluctuation of more than 20% and corresponding challenges for talent retention. Because of this, the incentives for a company to invest in the training of the skills of its employees is very low. FOTILE attempts to apply the Confucian notion of family by showing “care for the employees”. This care is expressed in several benefit

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programs that are unusual in China. For instance, the company implemented an incentive structure called “identity shares” (shengu), which are doled out annually to employees of all levels once they have been with the company for at least two years. Through this, the company lets the employees share in the corporate success and hopes to be rewarded with loyalty. The Confucian concept of “filial piety” (xiao) or “good behaviour towards parents” is addressed in a FOTILE program of extra paid holidays for employees who need to take care of their parents or children. In the case of China, many employees live very far away from their aging parents who remain in more rural areas and often take care of their grandchildren, since their own children and spouses both work in the coastal areas. Several employees I interviewed specifically mentioned these shares and special family-friendly holidays as outstanding measures they appreciate. According to two top-level managers, the employee fluctuation was successfully reduced to around 5%. This high talent retention rate justifies investment in an extensive skill training program. The investment in the personal development and training of employees that stay for a long time is an investment in the future development of the company. FOTILE also implements a continuous stakeholder dialogue with employees in order to grasp their real situation and to devise measures to improve it. In the words of a top manager: At the moment, […] I think that although compared to the average company we do a lot of listening to the true opinions of the front-line employees, this is still not enough. We still need more channels to listen to the voices of the employees. How to resolve these things after having listened to them, this is where you have to rely on wisdom. The management of a business in very complex in all aspects.

A stakeholder dialogue with employees is a long-term project. New challenges can always arise and a successful dialogue needs both mutual trust and an atmosphere of critical open exchange of ideas.

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C  oncern for Customers As the platform “Sino-Swedish CSR Website” points out, FOTILE is recognized for an exemplary mechanism of ensuring customer satisfaction: [FOTILE has a] whole process consultative service, it means covering its service through all phases of the selling, pre-, mid- and after-sales. FOTILE has built a professional service system based on the CRM customer relationship management information platform and supported by the national service hot-line 400, 51 branch offices, 27 service stations, 630 special service outlets and 1200 well trained service staff, requiring service staff to plunge into action as soon as they get the call from customers […]. With this system, professional engineers can reach customers at the first time and help them to solve difficulties whenever and wherever. (Sino-Swedish CSR Website 2017)

Several employees corroborated the following anecdote of a functional customer care system: A customer had bought a kitchen but had to move to Canada. His aging mother was contacted by a CRM officer to schedule an installation date. When she said that her son is now away and that she feels overwhelmed by the idea of having to work with a new kitchen, the company decided to pick up the kitchen and reimburse the customer. Several months later, the son returned and was very moved by this customer-­friendly behavior. Once best practice stories like this circulate on social media, they tremendously boost a company’s brand image in China and also instill professional pride among employees. Another best practice story mentioned in several interviews is one of deep concern for customer’s safety: FOTILE engineers learned about possible fire risks in the plans of a real estate developer who was to order any kitchen units kitchens for a project. But the developer dismissed these concerns and would not change plans. FOTILE then rejected this dollar deal due to consumer safety concerns and the business went to a competitor. Ultimately, after bad experiences elsewhere, said company chose FOTILE as a reliable supplier for future projects.

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Evidently, a positive image like this needs much effort and a long time to develop and maintain but can be quickly destroyed by a few scandals. The sizable investment in the complete customer satisfaction system mentioned in the report above is designed to avoid such crises. Mr. Mao considers Confucian thinking a guide for the development of practical solutions to a number of business ethics issues common in Chinese companies. These are low product and service quality, high social stress and internal conflict, limited identification of employees with the company, and high employee fluctuation, just to name a few. His understanding of Confucianism brought him to a form of management that is highly compatible with the ideas of this volume: Humanistic management should be based on long-term thinking that considers human beings, that is, the stakeholders of a company (employees, suppliers, customers, etc.) and also the environment. It avoids quantitative myopia which can mislead a company into sacrificing its core values in order to achieve fast growth and a raise in market share.

 omeback of Confucianism and C Confucian Entrepreneurship In order to contextualize Mao’s thinking, some background information might be helpful. Until the twentieth century, “Confucianism”—called “Ruism” (ruxue) or “scholarly tradition” (rujia)—was considered to be “the most powerful intellectual persuasion in China proper” and “one of the longest-continuing spiritual traditions in human history” (Tu 2010: 37). But anti-Confucian sentiment, especially during the May-Fourth-­ Movement 1919, and most notably during the Cultural Revolution (1966–1976), almost completely eradicated the material culture and marginalized the custodians that represented Confucianism. Traditional philosophical thinking was effectively removed from public and private life in the PRC.20 Therefore, a reference to Confucianism in a modern company in China is in itself remarkable. Confucian thinking, as well as other traditional philosophies and religions, underwent a revival from the 1990s onward.

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In Confucian tradition, there has been a bias against merchants and entrepreneurs which is rooted in a negative view on “profit making” (li), seen as in opposition to “righteousness” (yi) (Fung 1947: 68). The pursuit of profit is only allowed when ethical means of wealth accumulation are employed (Chan 2008; Mittag 2011). Therefore, the social role of entrepreneurs is connected to the respective contribution to the community.21 In this tradition, Mao Zhongqun and other Confucian Entrepreneurs maintain that they share a deep appreciation for traditional Chinese culture, a sense of commitment to the community and of patriotic mission concerning their contribution to China’s “national rejuvenation” (Niedenführ 2018: 68). This by no means is a new phenomenon. Already in Ming and Qing times a hybrid group of Confucian scholars and merchants amalgamated practical business wisdom with the lofty ideals of the literati-gentry. As “Confucian merchants” (rugu) they became prominent for maintaining humanistic values alongside profit orientation, for example through fair business practices, community projects, and charity measures. This tradition was disrupted in the Mao era, but private entrepreneurship later reemerged. The ideals of Confucian Entrepreneurship reentered China through the intermediary role of business people of Chinese ancestry from Taiwan, Hong Kong, and Southeast Asia (Niedenführ 2018: 69, 70). Today, Confucian entrepreneurship—which also draws from Daoism, Buddhism, and other traditional schools of philosophy—is an indigenous concept that can inform a Chinese approach to ethical business practice (Niedenführ 2018: 71). Contemporary Confucian entrepreneurs attempt to marry business ethics with the role of economic success for the “rejuvenation of the nation”22 and emphasize the role of “interconnectedness” in an age of globalization (Lam 2002).

Conclusion Mao Zhongqun and like-minded Confucian Entrepreneurs are experimenting with different measures to operationalize Confucian values in companies. Since they have to survive in the market place, this is a most

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complex task. The case of FOTILE can act as an example of what humanistic management in a Chinese context could be. FOTILE’s dedicated welcome center daily receives delegations from other parts of the country—entrepreneurs, government officials, and academic researchers— who want to learn more about the “FOTILE Confucian way”. Although I’m skeptical about the transferability of Confucian reading sessions in other countries—especially in the Western context where moral education is not understood as part of the remit of private enterprises—I nonetheless think that entrepreneurs and managers could be inspired to experiment with humanistic education in their companies. This, for instance, could be done through initiating a discussion about best practices of humanistic management. The concrete family friendly measures mentioned or incentive structures that align the interest of both company and employees introduced by FOTILE are transferable to other companies independent of their respective cultural background. In the case of FOTILE, a company culture infused with Confucian and other traditional Chinese thinking was introduced in a top-down-­ process. In my view, family-centered and patriarchal notions of Confucian management are more compatible to small or medium-sized (private) companies (SME) where the founding figure or family has great influence. In contrast, state-owned enterprises (SOE) are encouraged by the government to create CSR reports similar to Western standards. Initiatives by Confucian entrepreneurs are welcomed by the party for private companies since they support the party’s overarching goal of promoting social harmony, but moral educational in SOEs remains a domain of the party. In December 2017, several CEOs of “national champion” companies, such as Mr. Liu Changzhi of Lenovo and Mr. Chen Feng of Hainan Airlines, participated in the Bo’ao Confucian Entrepreneur Summit on Hainan island and showed appreciation for the implementation of traditional values in business in China (Niedenführ 2017). China in the economic miracle since the 1980s so far has not yet experienced a sustained and considerable downturn to the economic development. Therefore, we cannot yet evaluate how sustainable the “Management with Chinese Characteristics” approach is in the long run or how helpful it is in cases of a serious crisis for the company. We do not yet know whether this model is scalable when the company becomes even bigger.

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At the moment FOTILE is mostly active in China and adjacent markets. It is market leader in Pakistan and just opened an R&D subsidiary in Japan.23 The forays into the North American markets consciously cater to customers of Chinese ancestry. We therefore cannot yet gauge what level of value education is still acceptable for foreign talents. The current challenge of the trade war between the US and China since mid-2018 will be a test for the resilience of this management model. Nonetheless, there is reason for cautious optimism that a careful approach and continued humanistic contemplation of what the company can do for its stakeholders might give FOTILE an edge in the next steps toward relevance in foreign markets. In any case, this study of FOTILE might help to some degree to correct the overly negative image of Chinese companies in the West.

Notes 1. See European Chamber of Commerce (2017): China Manufacturing 2025  – Putting Industrial Policy Ahead of Market Forces”. http://docs. dpaq.de/12007-european_chamber_cm2025-en.pdf (retr. 02.05.2018). 2. In the first quarter of 2018, the sales of electrical vehicles in China soared to 132,000, compared to 93,000 in Europe and 55,000 in the US. http:// www.ev-volumes.com/country/total-world-plug-in-vehicle-volumes/ (retr. 02.05.2018). 3. weforum.org (24.01.2018): “Jack Ma on the IQ of love – and other top quotes from his Davos interview”. 4. Remarks by Klaus M.  Leisinger, senior advisor in the Sustainable Development Network at the “Confucian Entrepreneur Seminar” at Peking University (November 25–26, 2017). 5. Sino-Swedish CSR Website (15.06.2017): “Ningbo FOTILE Kitchen Ware Co., Ltd.: Whole process consultative service leads the new era of kitchen lifestyle”. http://csr2.mofcom.gov.cn/article/bp/cp/201706/ 20170602593401.shtml (retr. 08.05.2018). 6. Chinese cooking involves a bigger amount of oil in open woks and therefore a high exhaust of fumes that need to be managed. Treehugger (14.03.2016): “Chinese manufacturer Fotile designs an exhaust hood that actually exhausts”. http://www.treehugger.com/kitchen-design/chi-

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nese-manufacturer-fotile-designs-exhaust-hood-actually-exhausts.html (retr. 08.05.2018). 7. Interview by the author with Mao Zhongqun on September 19, 2017. 8. Data from interviews with Mao Zhongqun and several employees during September 19–21, 2017. 9. China Daily (09.12.2016): “Fotile Kitchenware cooks North America expansion plan” http://www.chinadaily.com.cn/business/2016-12/09/ content_27618773.htm (retr. 08.05.2018). 10. According to Mao Zhongqun, this form is better suited to the size of Chinese kitchens and dishwashing habits than stand-alone dishwashers, since customers in China prefer to washing smaller amounts of dishes right away rather than waiting to fill up a bigger machine. For more info, see China Daily (20.11.2017): “Dishwasher boom shows appliance is a future ‘kitchen star’”. See also China Household Electrical Appliances Association (16.02.2017): “Dishwasher makers saw big market opportunity after adapted products to Chinese tastes”, http://en.cheaa.org/contents/476/6255.html (retr. 08.05.2018). 11. When Director Mao talks of the “Confucian way”, he uses the term dao, which is extensively used in many Chinese philosophies. Daoism created an entire philosophy around this concept. Here the term simply refers to a broadly seen “social concept” that guides everyone (Hansen 2000: 206; Niedenführ and Hennig 2020). 12. This term is a nod to China’s reformer Deng Xiaoping, who coined the term “Socialism with Chinese Characteristics” (Zhongguo tese shehui zhuyi) for a combination of authoritarian rule and market liberalization. 13. In order to be able to conduct any meaningful research, I required full access to employees and the guarantee of anonymity and nondisclosure toward the company leadership. 14. Interest in traditional Chinese thinking and culture already reemerged in the 1980s when the repression of it that characterized the Mao era, 1949–1976, was eased. In the 1990s and 2000s, a number of higher academic institutions started to offer executive education on these topics to meet a growing demand from the growing community of private entrepreneurs in China. 15. Quotes from Mao Zhongqun are from interviews in September 2017 and December 2018. 16. This term was coined by Mencius, a philosopher in the fourth century BCE, considered to be the second most influential person in Confucian thinking.

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17. In China, the concept of family is not the clearly defined nuclear family as in the West, but rather an extended network of people connected through kinship (Fei 1947: 63). 18. Participation is encouraged but not mandatory and counted as work time. 19. The “Standards for the Good Pupil” (dizigui) and the “Three-Character-­ Classic” (sanzijing) originally were entry-level texts used for the education of children in Confucian thinking and as such were in use for centuries in China before the discontinuation of Chinese tradition in the twentieth century during the early years of Communist rule. 20. An introduction to the historical background can be found in Spence (1990). 21. For Confucius, poverty relief (Lunyu 6:1) and support for neighbors (Lunyu 6:5) are desirable, both compatible to contemporary notions of philanthropy and social responsibility. 22. This project of Xi Jinping is a larger attempt to reinstate China as a leading nation in the world—a status arguably lost in the upheavals of the nineteenth and the twentieth century. 23. Jetro.go.jp (19.07.2017): “Chinese kitchen appliance manufacturer Ningbo Fotile Kitchenware establishes subsidiary in Japan” https://www. jetro.go.jp/en/invest/newsroom/2017/74e01d57579f7ece.html [retr. 12.05.2018].

References Chan 2008 Chan, Gary Kok Yew. (2008). The Relevance and Value of Confucianism in Contemporary Business Ethics. Journal of Business Ethics, 77(3), 347–360. Clair, S., Scott, N., & Norris, J.  T. (2012). Business Ethics and Social Responsibility in Contemporary China. Journal of Academic and Business Ethics, 5, 1–9. Fei, Xiaotong ([1947] 1992). From the Soil: The Foundations of the Chinese Society. Translated by Gary Hamilton and Wang Zheng. Reprint, Berkeley: University of California Press. Fung, Y.-L. (2007, 1947). A Short History of Chinese Philosophy [Zhongguo Zhexue Jianshi]. Tianjin: Tianjin Academy of Social Sciences Press. Hansen, C. (2000). A Daoist Theory of Chinese Thought: A Philosophical Interpretation. Oxford: Oxford University Press.

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Lam, K.-C.  J. (2002). Confucian Business Ethics and the Economy. In Conference Proceedings  – International Conference on Business Ethics in the Knowledge Economy (pp.  1–24). School of Business, Hong Kong Baptist University. Legge, James (translator), Confucius (author). (1893). Confucius – The Confucian Analects, the Great Learning & the Doctrine of the Mean. New York: Cosimo Classics. Reprint of 2009. Liu, H. (2018). Chinese Business – Landscapes and Strategies (2nd ed.). London: Routledge. Liu, J., & Heler, K.  C. (2012). Feixiang to FOTILE: Growth of a Family Business. Emerald Emerging Markets Case Studies, 2(8), 1–8, Retrieved May 31, 2018, from https://doi.org/10.1108/20450621211312910. Mittag, A. (2011). Wirtschaftsethik. In: Enzyklopädie der Neuzeit. J.B. Metzler, Stuttgart Ni, P. (2017). Understanding the Analects of Confucius – A New Translation of Lunyu with Annotations. SUNY Series in Chinese Philosophy and Culture. New York: SUNY Press. Niedenführ, M. (2017). Re-thinking Entrepreneurship from a Chinese Perspective. LinkedIN. Retrieved May 31, 2018, from www.linkedin.com/ pulse/re-thinking-entrepreneurship-from-chinese-perspective-niedenführ/. Niedenführ, M. (2018). Management innovation aus China? Der Ermerging Trend des “Confucian Entrepreneur”. In Deutsch-Chinesische Wirtschaftsvereinigung Jahrbuch 2018 (pp. 67–76). DCW: Cologne. Niedenführ, M., & Hennig, A. (2020). Confucianism and Ethics in Management. In C. Neesham & S. Segal (eds.), Handbook of Philosophy of Management, Handbooks in Philosophy, Berlin/New York: Springer. https://doi. org/10.1007/978-3-319-48352-8_48-1. Sino-Swedish CSR Website. (2017). Ningbo FOTILE Kitchen Ware Co., Ltd.: Whole process consultative service leads the new era of kitchen lifestyle. Retrieved May 31, 2018, from http://csr2.mofcom.gov.cn/article/bp/ cp/201706/20170602593401.shtml. Spence, J. (1990). In Search of Modern China. New  York and London: W.W. Norton & Company. Tu, W. (2010). The Global Significance of Concrete Humanity  – Essays on the Confucian Discourse in Cultural China. New Delhi: Centre for Studies in Civilizations.

Index1

Africa, 204, 205, 207 African economy, 205 Africanisation of business management practices, 214 Apprenticeship schemes, 210 Autonomous unit, 177 Autonomy, 198

Bottom-up and top-down communication, 227 Bottom-up approach, 12, 29 Bureaucracy, 155, 157, 163–166 Business ethics, 204, 232, 233 Business management, 207 Business practices in Nigeria, 206 Buurtzorg, 153–168

B

C

A

Basic education in Nigeria, 211 Behavioral reinforcement systems, 229 Benevolence, 222 Best practices, 218, 226, 231, 234 Bluzone, 55 Bonus policy, 209

Capitalism, 117–133 Charismatic leader, 174 Chinese entrepreneurship, 218 Chinese-Western hybrid, 221 Civil rights, 205 Coexistence and prosperity, 29 Collaborate, 2

 Note: Page numbers followed by ‘n’ refer to notes.

1

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 E. von Kimakowitz et al. (eds.), Humanistic Management in Practice, Humanism in Business Series, https://doi.org/10.1007/978-3-030-51545-4

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240 Index

Collective wisdom, 14, 17, 29 Common good, 206, 207, 212 Communication, 211 Communitarian, 206 Confrontation and harmony, 19 Confucian Entrepreneurship” (rushang), 232–233 Confucianism, 221, 223, 225, 232–233 Constructive labour-management relations, 18–19 Corporate culture, 100–104, 108, 109, 111, 219, 221, 222, 227–229 Corporate irresponsibility, 214 Corporate social responsibility (CSR), 224, 234 Corporate values, 46 Cucinelli, Brunello, 117–133 Culture change, 69, 87, 94 Customer care (system), 231 Customers, 172 Customer’s safety, 231 D

Delegating, 71 Dignity, 3–4, 7, 8, 193, 200 The dignity of labor, 120–121, 123, 133, 211 Dizigui, 226, 237n19

Employee types, 228 Empowerment through the division system, 16–17 Entrepreneurs, 205, 207, 214 Enugu, 207 Ethical, 204–206, 213, 214 Ethical issues, 213 Ethically, 212 Ethical practices and standards, 213 Ethical reflection, 3, 4 Ethical standards, 213 Ethics in the business world, 213 Exemplary person, 223 F

Family company, 98, 111 Family enterprise, 97–112 Fashion brand, 207, 208 Fashion businesses in Nigeria, 212, 213 Fashion enterprise, 207 Filial piety, 227, 230 Flexible organizations, 69 Framework assurance, 84–86 Freedom, 187–200 Fundamental human right, 211 G

Global Ethos, 104, 106, 113n9 “Golden Rule,” 224 Good conditions of service, 211 Good governance, 213

E

Employee commitment, 12 Employee participation, 67, 84 Employees needs, 207 Employee turnover, 209

H

Happiness, 223, 224 Hierarchical structure, 173

 Index 

Hipp, Claus, 101–103, 107, 110 HiPP GmbH & Co.KG, 101–109 Homecare, 153–155 Human dignity, 185 Human flourishing, 52 Humanism, 117–133, 203–214 Humanism in business, 214 Humanism in Business series, 1 Humanistic education, 226–229, 234 Humanistic environment, 87 Humanistic management, 68–86, 118–120, 125, 128, 131–133, 187, 191, 200, 204–207, 211, 214, 217–235 Humanistic management in Nigeria, 205–207 Humanistic Management Network, 2 Humanistic-oriented, 41 Humanity, 155, 166

241

K

Knowledge enterprise, 34 L

Leadership leadership style, 104–106, 114n10 leadership system, 104–106, 108, 114n10 leadership values, 104, 106 Leadership by example, 223 Leaf Community, 33 Liberated organizations, 91 Livelihoods, 2 Loccioni, Enrico, 32 Loccioni Group, 31 Long-term employment perspectives, 22 Luxury fashion, 119, 131 M

Incentive structure, 230, 234 Individualism, 206 Innovative, 2, 6, 9 Integrative intelligence, 160–167 Integrity, 137–150 Intergenerational handover, 220 Internal communication, 52–54 Ivory Couture, 203–214

“Made in China,” 217, 220 Management, 203–206, 212, 213 “Management Thinking with Chinese Characteristics,” 221 Managerial innovation, 173 Matsushita Union, 18 Means and ends of business, 2, 8 Mission of industrialists, 15 Moral education, 224, 227, 234 Movement, 155–157 Mutual prosperity, 14, 16, 25–28

J

N

I

Job security, 22

Nigeria, 205–210, 212

242 Index O

Olivetti, Adriano, 32 Omoluwabi, 205, 206 Open Company, 51 Operating standards, 84–86 P

People, 204–209, 211, 214 People management, 54–59 Philanthropy, 218–219, 237n21 Philosophy, 117–133 Play Factory, 41 Poverty alleviation, 15 Practical solution, 232 Practice, 1 Private enterprise, 234 Professional management, 220 Profit making, 233 Protection of employment, 12 R

“Reform and Opening”-policy, 217 Responsibility, 4, 5, 7, 8, 187, 188, 191, 192, 194, 197–199 Righteousness, 233 S

Sanzijing, 226, 237n19 Selective rating, 25 Self-worth, 212 Set skills, 210 Skill acquisition, 209–211 Small business in Nigeria, 207, 208, 210

Socially irresponsible business activities, 213–214 Social responsibility, 213 Society, 2, 5, 8 Stakeholders, 3–5, 7, 8, 204, 206, 213, 214 Stewardship, 119 Successful business, 212 Suppliers’ association, 26, 27 Sustainability, 2, 34, 218–219, 223–224 Sustainable developmental goals (SDGs), 210 Sustainable human resource management, 213 Symbolic leadership, 12, 26, 29 T

Talent retention, 223, 229, 230 Teams, 69, 71, 75–77, 83–85, 91 Technical skills, 211 Terms of employment, 208 Theoretical knowledge, 211 Three-stepped approach to humanistic management, 3–5, 8 Traditional and cultural values, 214 Traditional Chinese values, 220, 221 Triple bottom line, 2, 6, 137–150 Trust, 67, 69, 71–73, 78, 87 Trust-mutual trust, 230 U

Ubuntu, 205, 206, 214 Unethical practices, 205, 213

 Index  V

Value implementation, 226–232 Value proposition, 4, 8 Values company values, 103, 107, 109, 112 corporate values, 100, 103, 107 cultural values, 100, 103 family values, 98, 101–103, 107–110, 112 functional values, 106 Global Ethos values, 103, 104, 106, 107, 109, 112 leadership values, 104, 107 operational values, 113n7

243

principal values, 101, 106, 113n6 procedural values, 102, 106, 113n7 values-oriented management, 97, 98, 100 Voluntary early retirement allowance, 27, 28 W

Water-supply philosophy, 16, 22 Wealth, 9 Welfare packages, 211 Working hours, 68, 73, 77–78, 94