Global challenges and crises including environmental degradation, distributional inequality and societal distrust point to the need to rethink business strategies as well as management theories and practices. There have been considerable criticisms of conventional management theories that are based on the fundamental assumptions of an ‘economistic’ paradigm and view humans as driven by rational interests aimed at maximising utility (homo economicus). Both scholars and practitioners have called for the reincorporation of humanistic values into business theories, organisations and management practices. Consequently, humanistic management (HM), as a new management paradigm, is gaining increasing attention from academia as well as the business community.
HM was first introduced by Swart (1973) to refer to “a new way to cope with old problems — motivation, work satisfaction, morale and productivity”, and has since gone through several stages of development. Most of the earlier definitions regarded it as “a means for both productivity and for developing human potential” (Swart, 1973). The more recent people-focused definition was proposed by Domènec Melé in the early 2000s when he defined HM as “a management that emphasises the human condition and is oriented to the development of human virtue, in all its forms, to its fullest extent.”
In 2009, a group of scholars established the Humanistic Management Network (HMN)1 as a global network of scholars, policy makers and management practitioners aiming to enhance the body of knowledge and promote HM practices. To provide a common understanding and foundation for the work of the HMN, von Kimakowitz et al. (2011) defined HM on the basis of unconditional respect for the dignity of life and formulated three interrelated pillars, which are:
- the unconditional respect for dignity;
- the integration of ethical reflection in managerial decision making; and
- the active and ongoing engagement with stakeholders.
HUMANISTIC MANAGEMENT VS. HUMANISTIC LEADERSHIP
To date, HM has been established as a sharp contrast to other types of management that are mostly oriented toward profits, with people as mere resources to serve the profit goal. Management and leadership are sometimes used synonymously, and at other times they are treated separately in research literature. In reality, it takes both managers and leaders to accomplish goals. In most societies, managers are leaders, and vice versa. However, in societies with high power distance, such as China and Japan, only managers in executive positions are regarded as leaders and followers expect their leaders to act differently from managers. In societies where leaders and managers are distinguished, companies will not be able to implement HM unless those at the top of the company are humanistic and develop a humanistic culture in the company.
HUMANISTIC LEADERSHIP IN CHINA
In the past few decades, China has benefitted greatly from adopting many aspects of Western business systems and managerial theories and practices, which have helped to bring about rapid economic development. However, the values that are embedded in these theories are believed by many to have led to a series of injurious outcomes, including environmental degradation, numerous health problems, increased distrust and greater economic inequality. At the same time, many Chinese entrepreneurs, while having amassed great wealth, feel a lack of spiritual fulfilment. In response to these multiple concerns, many Chinese business professionals and scholars are seeking to develop alternative approaches to management based on China’s traditional culture and indigenous philosophies. This trend is similar to the increasing focus on bringing humanism into business through HM and conscious capitalism in the West.
We believe that Confucianism provides a strong foundation for the development of HM and humanistic leadership in the Chinese context because of its centrality to Chinese culture, its fundamentally humanistic and ethical nature, and its emphasis on self-cultivation and the establishment of moral relationships.
In the last decade, an increasing number of Chinese business leaders are reconnecting with Confucian values, building company cultures based on these values and urging their employees to internalise them.
CONFUCIAN LEADERSHIP AND CONFUCIANISM IN BUSINESS
Confucianism, a collective term used in Chinese to refer to the teachings of the great Sage, Confucius, is central to Chinese culture and the most quintessentially Chinese of all wisdom traditions emerging from China. For more than 20 centuries, Confucian philosophy and values have had a profound influence on almost all aspects of society, including politics, education, religion and family life in greater China, as well as in neighbouring countries such as Korea, Japan, Singapore and Vietnam. Confucianism teaches people how to become junzi (君子) and how to relate to and interact with others based on moral principles. In ancient Chinese, junzi had two meanings: “a person in a ruling position”, that is, a leader, and “a person of great virtue”.
The standing and legitimacy of Confucianism have gone through many ups and downs over the course of Chinese history. Certain institutionalised or “politicised” forms of Confucianism have been heavily criticised, for instance, for giving rise to despotism and nepotism, which some argue have hampered creativity in Chinese society and slowed China’s economic development. However, Confucian values remain the major cultural element underlying leadership practices in China and other East Asian societies. In addition, Confucianism has been regarded as an invaluable source for the creation of a modern Chinese cultural identity and rebuilding Chinese people’s pride in their cultural heritage. In the last decade, an increasing number of Chinese business leaders are reconnecting with Confucian values, building company cultures based on these values and urging their employees to internalise them.
Confucianism maintains that a society should be made up of reciprocal interpersonal relationships, with the leaders teaching, supervising, mentoring and looking after the followers like family heads taking care of their children’s professional and personal lives. Furthermore, Confucius believed that human nature inherently tends to seek its own cultivation and perfection, and that human transformation can only take place through continuous learning and education. Many scholars agree that unlike other conceptualisations of leadership, the Confucian ideal conceptualises leadership as a result of relationalism, self-cultivation and self-regulation. For example, Kim et al. (2015) found that introspection, self-cultivation and ethical integrity are essential to Korean traditional leadership, which is deeply influenced by Confucianism.
The merchants of Huizhou
The “Hui merchants” (徽商) hailed from Huizhou and Anqing prefectures, and once ruled over the most powerful commercial network in China. They were famous for their reverence of Confucian values, and were said to conduct their business during the day while reading Confucian classics at night. Photo: William Yu Photography / Alamy
There is an old Chinese saying that “one can lead a country with half a volume of the Analects of Confucius.” Although clearly an exaggeration, it implies that Confucianism contains wisdom and tenets that can be effectively applied to the practice of management and governance. Confucianism is humanistic in nature and, therefore, offers a natural philosophical foundation for building Chinese humanistic leadership (Fu et al., 2018).
In the following pages, we use the case of the top leader of a Chinese company, Fotile Kitchenware Group Corporation, to illustrate how Confucian humanistic philosophy can be applied to leadership practices, and its impact on corporate culture as well as employees.
Humanistic leadership
In Fotile’s corporate headquarters in Ningbo, Mao Zhongqun has set up the Confucius Hall (Kongzi Tang), a 200-square-metre classroom decorated like an ancient Confucian school. Leaders at different levels are required to take monthly classes on Confucianism, and all employees are encouraged to begin their daily work by reading Confucian classics every morning.
A CHINESE CASE OF HUMANISTIC LEADERSHIP
Fotile Kitchenware Group Corporation was founded by Mao Zhongqun shortly after he graduated from Shanghai Jiaotong University with a Master’s degree in Electrical Engineering. Although he benefitted from having an entrepreneurial father who had created a successful business making electronic lighters, he decided to focus on manufacturing high-end kitchen appliances after carefully conducting a market analysis. Quiet and gentle, Mao is both very modest and extremely committed to fulfilling the company mission and vision. Mao gathered a strong technical team to launch the first product in 1996. After a few years of focusing intensively on products and markets, Mao recognised the need to build the company’s culture.
After completing an executive MBA degree at the China European International Business School, he concluded that Western management principles and concepts primarily draw on how Americans and Europeans run their companies, which he believed may not be actionable and sustainable in China without incorporating Chinese indigenous culture. After two years of searching, which included intensive reading and attending classes on philosophy at leading universities in China, he decided to incorporate Confucian values into the company culture, and adopted the Confucian virtues as the company core values. He said, “Confucian ideologies are in the blood of the Chinese people. All we need to do is to arouse them and help people become aware of their existence.”
In 2006, the company adopted “ren yi li zhi xin” (仁义礼智信 — humanity, righteousness, propriety, wisdom and fidelity), the five Confucian cardinal virtues, as the company’s core values.
It was not easy at the beginning. For example, salespeople complained that following these virtues would not allow them to compete with aggressive competitors, leading to a loss of sales. In response, to emphasise the importance of the values, Mao added five behaviours from the Analects: “lian chi qin yong yan” (廉耻勤勇严 — frugality, remorsefulness, diligence, courageousness and rigour) to the core values as well. In 2009, Mao designated 200 square metres of the company lobby for a Confucius Hall for managers and employees to study the classic texts of Confucianism. Leaders at different levels attend monthly classes in the hall, which is also used to train second-generation family business leaders from outside.
Over time, Mao changed the policies that were inconsistent with the company core values and established new ways to exemplify them. Mao persisted by acting as a role model and he expected other leaders in the company to do the same. He also encouraged employees to spend the first 15 minutes at work reading the Confucian classics. By 2017, the company had grown to over 19,000 employees, and it continues to be the most competitive in the industry with an average annual growth rate of 30% over the past two decades. Fotile’s continuous growth has attracted many investors, but Mao has refused to take the company public. Instead, he modified the traditional practice of issuing ‘body shares’ (身股) according to ownership and issued body shares to anyone with a tenure of two years or more, and also offered dividends twice a year based on tenure and performance. This gives employees a strong sense of belonging and ownership. In 2018, Fotile received the Best Employer award from Aon- Hewitt with an employee engagement score of 87, which is higher than the average of all the Best Employers award recipients in the world.
COMMON ELEMENTS IN CHINESE HUMANISTIC LEADERSHIP
Using the three components of the working definition of humanistic leadership given by Fu et al. (2020) as a guide, we identified three noteworthy commonalities in the management philosophies and behaviours of Mao and other humanistic leaders we studied in China:
- They offer humanistic care and treat people as holistic human beings;
- They provide humanistic education as a foundation for employees to grow while simultaneously pursuing their own development because they see them as interrelated; and
- They take care of the interests of multiple stakeholders and strive to create common good.
Offering humanistic care and treating people as holistic human beings
Mao has shown a commitment to unconditionally offer genuine humanistic care and love to his employees, not in exchange for performance. He regards employees not as an instrumental means to achieve business objectives but as holistic persons who have both material and non-material (such as psychological, emotional and spiritual) needs. This reflects a key principle of humanistic management: one should manage a business based on compassion and care for employees’ well-being instead of ruling by fear or punishment.
Fotile used to fine employees who showed up late for work. Mao realised the penalty-based approach was against the Confucian tenets of virtue-based leadership, and he abolished that policy. Instead, he directed the immediate supervisors of the employees concerned to talk to them in person to find out the reason behind their tardiness and to offer help if needed. The new approach significantly reduced the occurrence of tardiness and made employees feel trusted and cared for. Driven by the spirit of benevolence, Mao also gives generous benefits to his employees to make them feel like members of a family. Unlike most other companies in the region, Fotile provides employees with extra days of paid leave and substantial amounts of interest-free loans to help them purchase cars or homes, or to pay for their children’s schooling.
Simultaneously pursuing the development of the self and others
Mao is committed to becoming a role model. He has made employees’ development a high priority for his organisation. At Fotile, developing and realising people’s full potential is viewed not only for the sake of business performance, but as a response to an intrinsic human desire and the foundation for running a successful business. Mao believes the quality of people, products and the enterprise need to be aligned.
Under Mao’s leadership, Fotile University was formally established in 2016. Since its establishment, Fotile University has functioned as the centre of Fotile’s ‘people development’, shouldering the unique and important responsibility of helping employees achieve both material and spiritual prosperity, in both career and life development. Mao encourages his employees to set up a goal, read classic literature, practise filial piety, identify and overcome their own weaknesses, and perform a good deed every day. Such effort is a core element of Fotile’s humanistic education and an important methodology for cultivating both virtuous and competent leaders.
The Six Arts (六艺)
The Six Arts formed the basis of education in ancient Chinese culture. During the Zhou dynasty (1122-256 BC), students were required to master the Six Arts: rites (礼), music (乐), archery (射), charioteering (御), calligraphy (书) and mathematics (数). Men who excelled in these six arts were thought to have reached the state of perfection and become the perfect gentleman, paralleling the Western concept of the Renaissance man. Photo: 王渡 / 123rf
Taking care of the interests of multiple stakeholders for the common good Mao shows a strong sense of responsibility toward multiple stakeholders, rather than having profit maximisation as his sole goal. While Mao aims to build Fotile into a great company, he believes the four features of a great company are: (a) its customers obtain peace of mind from the products and services they acquire; (b) its employees gain happiness through constant learning and hard work; (c) society benefits from its activities because it abides by the law and upholds justice; and (d) its business is sustained by effective strategies and proper management.
Fotile has also adopted the internationally recognised SA8000 social responsibility standards and focuses on developing stable labour relations. Mao holds a ‘General Manager Open Day’ every month during which the general manager communicates with and listens to employees’ opinions. Similar to treating fellow employees with compassion and humanistic care, Mao also urges employees to embody the same virtues and to exhibit a sincere love for the customers, products and each other.
A PROPOSED FRAMEWORK
Based on the common characteristics and practices we observed among Mao of Fotile and a few other business leaders we have studied, and a synthesis of these observations with core concepts in Confucianism, we propose a conceptual model for Confucian humanistic leadership comprising five key attributes. We present these attributes using some well-known expressions in Confucianism.
Tui ji ji ren 推己及人 (“Putting oneself in another’s position”) relates to how Confucian humanistic leaders treat others. It compels them to be considerate and treat others with compassion and humanity, just as how they themselves want to be treated as holistic human beings.
Xiu ji da ren 修己达人 (“Developing others through self-cultivation”) indicates that, in addition
to viewing themselves and others as holistic persons, humanistic leaders see continual self- cultivation as an essential aspect of human well- being. This entails constant and conscientious effort to develop themselves and their followers to their full potential.
Yi yi wei li 以义为利 (“Making profit by doing righteous things”) describes how they conduct themselves when doing business with their partners and other stakeholders. It helps humanistic leaders to make the right choices when faced with difficult business decisions and moral dilemmas.
允执厥中 (“Insisting on a balance among different positions”) is reflected in the pursuit of the common good through a steadfast approach that seeks to balance multiple perspectives, needs and interests.
Zhi xing he yi 知行合一 (“Aligning one’s knowledge with one’s deeds”) emphasises how Confucian humanistic leaders believe that their knowledge and growth must be manifested in how they behave and what they practice.
Our research showed that the practice of Confucian humanistic leadership in China corresponds well with the emerging scholarly conceptualisation of humanistic leadership. In addition, the five attributes mentioned above found the building blocks, derived from Confucianism, that inform and guide the practice of humanistic leadership in China. While the common elements show the connection between our research and a more universal view of humanistic leadership, the five attributes show the cultural embeddedness of the practice of Confucian humanistic leadership. Table 1 shows how the five attributes relate to the three common elements.
Importantly, the five attributes contribute to humanistic leadership research by providing important insights into specific capabilities that can help put the principles of humanistic leadership into practice.
For example, tui ji ji ren points to the importance of developing the ability to treat others with dignity, support others’ development, and engage with multiple stakeholders and respond to their needs. Xiu ji da ren suggests that a focus on self-cultivation, especially on moral self-perfection, is the most direct way to promote the development of others. Yun zhi jue zhong indicates that moderation and seeking a balance among different positions and interests are essential if one aims to treat others with dignity and respond to the needs of multiple stakeholders. Zhi xing he yi points to the importance of consistency between what one knows and how one behaves, and of being a humanistic leader by actively putting one’s learning into practice.
Developing a framework of Confucian humanistic leadership should be more than a conceptual exercise to build a leadership theory that is universally applicable and culturally sensitive. It is our hope that it helps Chinese business leaders address paradoxical leadership challenges they face in their daily operations, and creates an opportunity to connect contemporary issues of sustainability and human well-being to ancient wisdom that has guided many generations of leaders over thousands of years.
REFERENCES
- Fu, P.P., Qu, Q. and Yang, B. (2018), An exploration of the relationship between Confucian humanism and Chinese humanistic management, paper presented at the International Association for Chinese Management Research (IACMR) conference.
- Fu, P.P., von Kimakowitz, E., Lemanski, M. and Liu, L.A. (2020), Humanistic leadership in different cultures: defining the field by pushing boundaries, Cross Cultural and Strategic Management.
- Kim, D.M., Ko, J.W. and Kim, S.J. (2015), Exploring the ethical aspects of leadership: from a Korean perspective, Asian Philosophy, Vol. 25 No. 2, pp. 113-131.
- Swart, J.C. (1973), The worth of humanistic management: some contemporary examples, Business Horizons, Vol. 16 No. 3, pp. 41-50.
- von Kimakowitz, E., Pirson, M., Dierksmeier, C., Spitzeck, H. and Amann, W. (2011), Humanistic management, in von Kimakowitz, E., Spitzeck, H., Pirson, M., Dierksmeier, C. and Amann, W. (Eds), Humanistic Management in Practice, Palgrave Macmillan, Houndmills.
DR FU PINGPING
Dr Fu Pingping is Professor in Organisational Behavior at Nottingham University Business School China. Her research has been mostly on leadership and cross-cultural comparisons, including Project GLOBE. But her recent work has been on the application of traditional Chinese wisdom to leadership, such as Confucian humanistic leadership and paradoxical leadership. She has taught in the Chinese University of Hong Kong, and has been serving as a visiting scholar at Waseda University in Japan since 2011.
YANG BO
Yang Bo is a doctoral student at Nottingham University Business School China. His research interests include cross-cultural leadership, humanistic leadership, international business and corporate governance. He has published papers and book chapters, and presented papers at conferences on cross-cultural adaptation of senior expatriate managers, application of Confucian humanism in corporate management practices, and humanistic leadership.
JUNE 2021 | ISSUE 8
At The Crossroads of East and West
