SOULFUL STEWARDSHIPSTEERING CORPORATIONS THROUGH

HUMAN GOVERNANCE

Aziuddin Ahmad PhD & Arfah Salleh PhD FCPA

Universiti Putra Malaysia

Ministry of Agriculture RetreatColmar Tropicale17th January 2009

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DISCUSSION CONTENTS

Evolution of business/commerce, governance & role of organization leaders

LIMITATIONS OF CORPORATE GOVERNANCE

ONENESS in life & support of new sciences & traditions

• What is HG?• HG vs CG?• What are the benefits of HG?• Is there a need for HG?• Are we ready?

HUMAN GOVERNANCE

WHAT WOULD BE THE APPROPRIATE GOVERNANCE STRUCTURE?

What does it mean to be a HUMAN?

Bringing back human

to the centre

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OUR APPROACH

Turn into the past in order to prepare for

the future

Revisit the etymology of words

Regain the original

meanings attached to the words

Must be looked upon

in its ontological

context

Not in its secularized

meaning devoid of spirituality

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EVOLUTION OF BUSINESS

TODAY

• Business is the leading

segment of society to

achieve societal well-being

• Overtaken government’s

role

• Corporate leaders

make decisions

• HUMANS in life

make decision

• Getting through

dilemmas (permanent

texture of life) require

decisions

LEADERSHIP & DECISION MAKING

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The current financial turmoil is the result of

leadership crisis – failure to observe adab

Soulful Stewardship is about getting positive results the right way –

good adab

Must permeate all aspects of

organization including making informed &

timely choices, developing people,

reporting results accurately, & taking a sustainable approach

to management

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BUSINESS

ENVIRONMENT

TODAY

• No longer the same as before - then process was THE king

• Knowledge-based vs conveyer-belt, machine economy

• If you manage corporations TODAY using YESTERDAYS model, you have no corporation TOMORROW!

• But today’s models ARE yesterdays!

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BUSINESS &

GOVERNANCE

• Business/trade or commerce (tijarah) were originally transactions between humans (individual & in groups)

• Later groups granted LEGAL PERSONALITIES with legal rights & NEEDING A GOVERNANCE STRUCTURE

CORPORATE GOVERNANCE

• Slowly humans became (relegated to?) NATURAL person

• Competing with corporations that are granted legal personality

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ENRONWORLDCOM

SUB-PRIME,BANKS

MADOFF,SATYAM

LIMITATIONS OF CORPORATE GOVERNANCE

HOW MANY MORE?

AND MORE SOXs!!!

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• Corporate Governance mechanistic structure is already broken

• Cannot be repaired by patching/gluing, more regulations or legislation or policy

• Need to reinvent/redesign – Get out of conveyer-belt mentality

• We can't solve problems by using the same kind of thinking we used when we created them – Einstein

CORPORATE GOVERNANCEThe Unfolding Played Out & Still Playing Out

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VALUE, VALUES &

GOVERNANCE

• Limitation of valuing only what can be measured

• A CLASH! There is tension between human values & performance oriented value

• But ONENESS & INTERCONNECTEDNESS is a given

• NEED new measures to measure what is meaningful NOT the measurable only – Einstein

• Need to balance continuum of paradox (yin yang)

• Need a NEW GOVERNANCE STRUCTURE

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NEED TO RETURN TO

THE REAL MEANING OF BUSINESS(AN ENTERPRISE/PRINCIPAL ACTIVITY)

Is the purpose of business

just business?

Must it transcend business?

Is it not an enterprise to reach felicity?

Leadership shapes & plays a critical role

Financial bottom-line

only?

MUST be profit WITH BARAKAH

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Towards A New Array of Descriptives

• Disclosure• Transparent• Integrity• Edico venditor• Emergent• Meaning• Essence• Substance• Principle- & values-based• Innate nature (fitrah)• Adab & ihsan• Quantum science• Wholeness• Inner-out• Spirit of law

Corporate GovernanceLegal/Artificial Person?• Discovery• Translucent• Conformance• Caveat emptor• Dead• Symbol• Label• Form• Rule-based• Legal enactments• Rules & compliance• Newtonian classical• Fragmented• Outer-in• Letter of law

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POINT OF DEPARTURE

CORPORATE GOVERNANCE

Discovery Form

Translucent Rule-based

Conformance Legal enactments

Caveat Emptor Rules & compliance

Non-alive/ non-emergent Letter of the law

Symbol Fragmented

Label Outer-in

Newtonian classical science

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END STATEGOVERNANCE WITH THE FOLLOWING

ATTRIBUTES

Disclosure Substance

Transparent Principle- & Values-based

Integrity Innate nature

Edico Venditor Adab & Ihsan

Emergent Spirit of the law

Meaning Wholeness

Essence Inner-out

Quantum science

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• Turn to history to dissect the real ontological meaning of words, otherwise we will only apprehend a shadow• REGAIN the spiritual & sacred (vertical) dimension they are supposed to encapsulate

RETURN FROM TO

• cosmos

• Mercator projection

• Euclidean

• canvas

• map

• wise

• logic

• kosmos

• globe

• Riemann

• inner vision

• terrain

• wyse

• logos

Words Emanate Meaning

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ONENESS

• Even when we believe we’re making choices that are independent of others, we still find that those choices become part of collective patterns that are part of the coherent whole-world

• As the ancient sages would say, we are many expressed by the One – and we are the One that is expressed by the many

Ervin Laszlo & Jude Currivan (2008) - CosMos

SCIENCE

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Tawhidic Oneness – Convergence in Science & Ancient Traditions

• Wholly integral, interrelated & non-local cosmos – integrating material & non-material

• We must actualize this Tawhidic journey

• Ancient traditions & sacred texts all convey spirituality & interconnectedness

• Unbroken wholeness & indivisibility

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Human & Perception Devices

• Born with three devices of sense perception, intellection & contemplation

• On measuring the meaningful, not the measurable – Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted

• Are we limited to sense perception only?

• Sufism – The Spiritual HEART of Islam

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HEART

HEART

PHYSICAL SENSES & THE MIND

WOMB BABIES TO TODDLERS

OLD AGE

DEVICE

ADULTHOOD

HEART

HEART

The Heart has its Reasons which Reasons knows not – Pascal

Modes of Knowing

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Three Modes of Knowing

Born with coherence ability, we repressed

Cultural conditioning

emphasizes bodily senses over non-sense perception

Scientists demonstrate children

of 4 to 5 years old experience non-sense perception

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Limitation of Sense Perception

Visibility Spectrum of physical eyes: Only between 400 – 700 nanometers

Similarly Audible Sound

20Hz – 20kHz

Observable universe: Only 4% while the rest is made up of dark matters (dark matter & dark energy)

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STEWARDSHIP

ROLE OF ORGANIZATION LEADERS

• As soulful person or steward of organisation

• Need to live their leadership role genuinely,

be meaningful authentic responsible leaders

• Leading from within – the inner journey to self

• Need to uphold human values NOT fixated

with bottom line only

VICEGERENCY, TRUSTEESHIP

Leadership is About Being Human

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Connotes stewardship & vicegerency – at once trustee/custodian to self, community &

universe

Senge et al – Awareness of wholeness of

nature stolen from us, replaced by assemblage of

parts

Chittick & Murata – Human

actualized by Adab, governed

by Ihsan

Hernandez – Leader makes decision while

factoring in the implications on future generation, the way

leaders behave shapes decision makers of future

generations

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LEADERSHIP

• Is about the heart

• Is about BEING WHAT YOU ARE, & doing is the effect

of being i.e. a consequential to being

• Is about balancing the oneness – balancing along the

continuum of obligation to corporation, obligation to

people & obligation to universe

• Is about living the spirituality, the interconnectedness

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Life & Uncertainty

• There is no universal blueprint for certainty and it is a delusion of organisational physics to think the business world offers predictable results and conforms to precise laws. The search for certainty in the business world is misguided. Rosenzweig

• Hence need to change the way we approach questions, by adopting a mindset of probabilistic thinking and by replacing certainties with an appreciation of uncertainty, rather than trying to master uncertainty.

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Organisation Measures• Einstein: Everything that can be counted

does not necessarily count; everything that counts cannot necessarily be measured

• What measures to act as reference in arriving at decisions – the metrics & matrix

• Natural person measures good enough?

• Redefinition of success to encompass well-being of society not just maximization of shareholder value

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CRITICAL QUESTION

WHAT WOULD BE THE

APPROPRIATE GOVERNANCE

STRUCTURE?

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NEED

Governance that:• Goes beyond sense perception / experience, to intellection (mind/brain) & contemplation (heart/consciousness)• Regain Human Centrality• Bring back the ‘Vertical’ Dimension• Human Integrity – Ihsan & Adab/Akhlaq• Corporations/Legal persons CANNOT mimic Human Beings

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• Transformation – akin to metamorphosis from caterpillar to chrysalis to butterfly (via the IMAGINAL CELLS)

WAY FORWARD

TRANSFORMATIONIf there is no transformation inside each of us, all of

the structural change in the world will have no impact on our institutions!

Peter Block

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HUMAN GOVERNANCE

Redefine Human as Soul of Being

REGAIN our sacredness:• innate nature (fitrah), • subjectivity & experiential, • emotions/feelings,• empathy• compassion• INNER KNOWING ability• SPIRITUALITY

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WHAT DOES IT MEAN

TO BE HUMAN?

• Natural vs. Artificial/Legal person

• The spiritual is what makes human, human (Salleh & Ahmad, 2008 & Stapp, 2008)

• Physical is for locomotion

• Human’s drive is towards inspiration, meaning &

purpose

• Ad Dhariyat Quran (51:56)

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ISLAM, IMAN & IHSAN

• IHSAN – Virtue, Perfection, Excellence

• Third dimension of Islam

• Life is series of dilemmas

• Ihsan is Governance

• Story of Muadh ibn Jabal

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• Human Governance is about INTEGRITY• Integrity from Latin integritas: integer, whole

number, being whole being one – AL TAWHID• Integrity is a state/condition, but not an end-state• The actuator/actualizer to felicity & tranquility • Originally only be applied to human beings• Integrity – ala Bobby Jones when he still

assessed himself a one stroke penalty even though no one else saw him touch the ball. Not the tournament official, not his playing partner, neither of them believed he actually touched the ball. He did the right thing even when no one was looking!

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BENCHMARKING INTEGRITY

• What is legal MAY NOT be moral

• What is moral is legal

• INTEGRITY – IS IT LAW OR BEYOND LAW?

• Conformance or Beyond Conformance?

• Rising beyond the self: Rectification of character

– getting rid of bad attributes (Murata & Chittick, 1994)

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COMPLIANCE- & VALUES-BASED

• Compliance-based approach is divorced from values and ethics i.e. THE SPIRIT

• Compliance-based system: what is not prohibited is allowed. Attention is NOT on doing what is right but on NOT DOING what is wrong, NOT on doing one’s best but on NOT DOING one’s worst

• Values-based encourages NOT to do ethical minimum but to DO ethical maximum

• Rules DO NOT inspire. Values DO

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Human Governance Primer

What is Human

Governance?

How is it different from

Corporate Governance?

How will Human

Governance benefit us?

Is there a need to go beyond Corporate

Governance to Human

Governance?

Is the corporate

world ready for such a

framework?

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WHAT IS HG?

• an internal mechanism to guide human in emanating internal behaviour

•Human Governance is rooted in religiosity whose core criteria/measures or ‘standards’ is Spirituality

• Human Governance brings back due regard to the profoundness of governing the individual rather than the corporation which is the artificial legal person

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HG vs CG

HG

• inside-out values-based conviction to guide human

• human is viewed as a non-material soul & embodied in the physical being

• human is NOT machine

• emphasizes the spirit of the law

CG

• external, outside-in rules & regulations to legislate the corporations

• parameter-driven & rule-based

• emphasizes the letter of the law

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BENEFIT TO

SOCIETY

• Corporations although granted legal person status are incapable of commitment to community – lack consciousness & conscience

• Human Governance improves human well-being

• A conscious business fosters personal fulfillment in the individuals and mutual respect in the community & sustainable success in the orgnaisations (Kofman, 2006)

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IS THERE A NEED

FOR HG?

• Human Governance, our only hope if we believe that corporations should consider public interest as how they were originally meant to

• Yes, we need to actualize our humanness, NOT just as a natural person but a sacred person with spirituality

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ARE WE READY?

• The corporate world CANNOT do without it!

• Sure we are ready – we were born with traits of God-consciousness (taqwa), trusteeship, iman, custodian, & connectedness

• We need to regain our fitra – our innate nature

•Human Governance as core & complemented with Corporate Governance

The Message• Transform mindset from centuries-old secular

mechanistic ‘command-control’, outside-in, quantitative & positivistic to the quantum mould

• Return to fitrah (innate nature), inside-out, human-centric, principle- & values-based, tawhidic (unbroken wholeness epitome) meaningful leadership

• Actualize a qualitative, subjective, spiritually devolutionary sacred view, morally & divinely ordained world bounded by SPIRITUAL standards & in line with quantum physics

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