Goodbye to management malpractice

Tuesday, January 06, 2009

MANAGING FOR SOCIETY column, The Manila Times

Goodbye to management malpractice by Benito L. Teehankee

The year 2008 would be remembered for decades to come as a pivotal one for the business environment. It was the year when accumulated business malpractices came to a head and brought the worst economic downturn in more than half a century to the US and eventually, because of globalization, to the rest of the world.

Of course, management malpractice is common everywhere. What made the US 2008 case so dramatic is the sheer volume of financial resources that have been foolishly raised and lost using such practices. As they say: the higher you climb, the harder you fall. I hope, though, that local business managers learn their lessons, too.

A new year is always an opportunity for new beginnings. Managers who are intent on avoiding malpractice would do well to prepare their resolutions for the year, without waiting for these to be imposed on them by acts of Congress. In case they need some suggestions, here are three.

Resolution #1: I will create real value for all stakeholders. I realize that the mission of business is to create benefits for people who depend on it. This isn’t achieved by pushing sales at all costs because I could be selling products or services which don’t meet genuine needs of customers or are even downright harmful to them. This isn’t achieved by maximizing profits for stockholders because this will blind me to the harm I may cause to other stakeholders. This can only be achieved by producing socially beneficial products and services for customers at an attractive and economically sustainable price so that I can meet my obligations to all other stakeholders (employees, suppliers, creditors, government, the community and, of course, stockholders).

Resolution #2: I will run the business for the long term. I will not play accounting games. I realize that accounting numbers (whether from the balance sheet or from the income statement) are meant to be useful estimates and that accounting periods are merely conventional reporting intervals; they do not force me to do things to look good in the short-term while destroying the business in the long-term. I will be conscious about the legacy I leave with each decision and not use each management position as a convenient stepping stone to my next promotion so that I’m far away when the problems I have planted with my short-sighted decisions explode in my successor’s face. I will always leave a business stronger than when I found it, not just on paper but in reality.

Resolution #3: I will treat people as partners, not as things. I realize that with power comes responsibility and this includes the responsibility to treat people honestly and humanely. I will never use my power to deceive people about the state of the business or the benefits of my products and services. I will never use my power as an excuse to bully employees or suppliers. I will inspire employees and help them develop so that they can help me build the best business we can be. I will always earn the trust of everyone with whom the business interacts, because people are not disposable commodities or gullible cash machines; they are thinking, feeling, co-creators of value.

To expect the end of management malpractice is unrealistic. Managers are human after all, with their frailties and foibles. I would be happy for people simply to be wiser in recognizing management malpractice for what it is: a slow, termite-like, destroyer of businesses that should be exterminated wherever it exists. Businesses deserve better management for all our sakes. Here’s to better management for 2009 and a Happy New Year to all good managers out there!

Dr. Ben Teehankee is an associate professor at the Ramon V. del Rosario Sr. Graduate School of Business, College of Business and Economics at De La Salle University. His e-mail address is