SOULFUL STEWARDSHIP STEERING CORPORATIONS THROUGH HUMAN GOVERNANCE

SOULFUL STEWARDSHIPSTEERING CORPORATIONS THROUGH HUMAN GOVERNANCE Aziuddin Ahmad PhD & Arfah Salleh PhD FCPA Universiti Putra Malaysia Ministry of Agriculture Retreat Colmar Tropicale 17th January 2009

DISCUSSION CONTENTS What does it mean to be a HUMAN? Evolution of business/commerce, governance & role of organization leaders WHAT WOULD BE THE APPROPRIATE GOVERNANCE STRUCTURE? Bringing back human to the centre ONENESS in life & support of new sciences & traditions HUMAN GOVERNANCE • What is HG? • HG vs CG? • What are the benefits of HG? • Is there a need for HG? • Are we ready? LIMITATIONS OF CORPORATE GOVERNANCE

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 Not in its secularized meaning devoid of spirituality Must be looked upon in its ontological context

EVOLUTION OF BUSINESS • Corporate leaders make decisions • HUMANS in life make decision • Getting through dilemmas (permanent texture of life) require decisions TODAY • Business is the leading segment of society to achieve societal well-being • Overtaken government’s role

LEADERSHIP & DECISION MAKING The current financial turmoil is the result of leadership crisis – failure to observe adab Must permeate all aspects of organization including making informed & timely choices, developing people, reporting results accurately, & taking a sustainable approach to management Soulful Stewardship is about getting positive results the right way – good adab

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!

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

LIMITATIONS OF CORPORATE GOVERNANCE HOW MANY MORE? WORLDCOM ENRON STRA TEG I ES AND MORE SOXs!!! MADOFF, SATYAM SUB-PRIME, BANKS

CORPORATE GOVERNANCE The Unfolding Played Out & Still Playing Out • 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

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

NEED TO RETURN TO THE REAL MEANING OF BUSINESS (AN ENTERPRISE/PRINCIPAL ACTIVITY) Is the purpose of business just business? Is it not an enterprise to reach felicity? Must it transcend business? Leadership shapes & plays a critical role Financial bottom-line only? MUST be profit WITH BARAKAH

Towards A New Array of Descriptives Corporate Governance Legal/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 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

POINT OF DEPARTURE

END STATE

Words Emanate Meaning • 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 TO RETURN FROM • kosmos • globe • Riemann • inner vision • terrain • wyse • logos • cosmos • Mercator projection • Euclidean • canvas • map • wise • logic

ONENESS SCIENCE • 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

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

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

DEVICE BABIES TO TODDLERS ADULTHOOD OLD AGE WOMB PHYSICAL SENSES & THE MIND HEART HEART HEART HEART The Heart has its Reasons which Reasons knows not – Pascal

Modes of Knowing Cultural conditioning emphasizes bodily senses over non-sense perception Three Modes of Knowing Scientists demonstrate children of 4 to 5 years old experience non-sense perception Born with coherence ability, we repressed

Limitation of Sense Perception Observable universe: Only 4% while the rest is made up of dark matters (dark matter & dark energy) Visibility Spectrum of physical eyes: Only between 400 – 700 nanometers Similarly Audible Sound 20Hz – 20kHz

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 STEWARDSHIP VICEGERENCY, TRUSTEESHIP

Leadership is About Being Human Connotes stewardship & vicegerency – at once trustee/custodian to self, community & universe Hernandez – Leader makes decision while factoring in the implications on future generation, the way leaders behave shapes decision makers of future generations 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

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

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.

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

CRITICAL QUESTION WHAT WOULD BE THE APPROPRIATE GOVERNANCE STRUCTURE?

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

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

HUMAN GOVERNANCE • Redefine Human as Soul of Being • REGAIN our sacredness: • innate nature (fitrah), • subjectivity & experiential, • emotions/feelings, • empathy • compassion • INNER KNOWING ability • SPIRITUALITY

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)

ISLAM, IMAN & IHSAN • IHSAN – Virtue, Perfection, Excellence • Third dimension of Islam • Life is series of dilemmas • Ihsan is Governance • Story of Muadh ibn Jabal

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!

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) 34

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 35

Human Governance Primer How is it different from Corporate Governance? What is Human Governance? Is the corporate world ready for such a framework? How will Human Governance benefit us? Is there a need to go beyond Corporate Governance to Human Governance?

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

HG vs CG • CG • external, outside-in rules & regulations to legislate the corporations • parameter-driven & rule-based • emphasizes the letter of the law • 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

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)

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

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

SOULFUL STEWARDSHIP STEERING CORPORATIONS THROUGH HUMAN GOVERNANCE