“Hey! Management is about nothing but the human dimension!” was the response of a friend when I told him that I was writing an article on this subject.
From one point of view, that is true.
Yet we all know that most discussion of “real management” – e.g. in a Board or business meeting, in an MBA or in Executive Education – focuses rather on finance, supply chains, and all sorts of other things.
Clearly, the human dimension is only one dimension of management.
In fact, it is usually considered a less important dimension than finance: isn’t finance the only thing that companies are required to report on, in most of the world?
So perhaps we need to take a wider view of the human dimension alongside other dimensions of management.
In order to identify the different aspects that are encompassed by the term “management”, what is the most comprehensive approach that exists at present”?
In my assessment, that is the approach of the International Integrated Reporting Council (IIRC), which encourages all organisations to report not just on financial capital, but also on all the other major sorts of capital:
- Natural Capital. not only resources such as timber, fish, and minerals which can be used by humans but also resources provided by nature (which some people call “ecosystem services”) such as air, water, and the symbiotic processes that enable all life and all organisations to survive.
- Manufactured Capital: physical objects such as buildings, equipment, infrastructure (e.g. roads, ports, bridges and waste and water treatment plants) available to an organization for producing goods or providing services.
- Intellectual Capital:
- Intellectual property – e.g. patents, copyrights, software, rights and licences
- “organizational capital” – e.g. tacit knowledge, systems, procedures and protocols
- Intangibles associated with the brand and the reputation that have been developed and which have accrued to an organization.
- Human Capital: the skills, competencies, capabilities and experience of the human beings involved in an organisation, as well as their motivations to go beyond their job descriptions to innovate, including their:
- Alignment with and support for an organization’s governance framework, risk management, and ethics
- Ability and willingness to understand, develop and implement an organization’s strategy
- Loyalty and willingness to improve processes, goods and services, including the ability to lead, manage and collaborate.
- Social Capital: an organization’s social licence to operate, shared norms, values and behaviours that enhance individual and collective well-being.
- Relationship Capital: the quality of internal and external relationships – e.g. in relation to hierarchy, location, or function; and with direct stakeholders, with individuals, groups, associations, networks, organisations, institutions, regulatory bodies, governmental agencies, and so on.
In fact, the IIRC lumps the last two forms of capital together.
That, and many other things above can be, are debated.
For example, some people object to calling anything to do with humans “capital” or “resources”. Others object to measuring anything to do with humans.
Those who object, claim that any such nomenclature or measurement demeans humans.
But naming and categorising the humans involved, and making some attempt to measure organisational relationships, is surely better than ignoring them entirely, as the dominant practice is at present?
Moreover, it is not only the last two capitals, but all the capitals, that have consequences for humans.
So here are some questions (not in any exclusive sense) to get the discussion going on our GPDF theme for this year:
- Can an approach such as that of IIRC clarify the discussion, and enable it to move forward?
- In what areas or aspects is business – as a whole, around the world – improving the lives of humans, and in what areas or aspects is it causing a deterioration in the quality of life for humans?
- How can we encourage the positive contributions of business to be better recognised?
- What steps could be taken to meliorate the negative impacts of business?
- What contexts/structures/ processes/ incentives, discourage managements from recognising human considerations?
- What steps could transform those contexts/ structures/ processes/ incentives, so that managements take human considerations more seriously?
- Are publicly quoted companies less humane than privately owned companies? If so, what differences contribute to the end effect?
- The latest technological advances – e.g. AI, robotics – hold enormous potential for improving the quality of human life. How can we develop more reliable models for assessing the impact of technologies from the perspective of human welfare – at the levels of the workplace, the organisation, and society – and that we see these three simultaneously and in relation to each other?
That range of questions is an invitation for you to put your thoughts, your questions and your answers to everyone involved with GPDF by getting your fingers dancing on your computer or smartphone.
About the author:
Prabhu helps Boards with issues of governance, strategy and performance. He is Distinguished Professor of Global Business, Management and Public Policy, at William Carey University, India; and a Member of the Board, Institute of Management, University of St Gallen, Switzerland.