Growing up in a poor immigrant family, Isadore Sharp learned about the importance of earning an honest living. That virtue of honesty is ingrained in him and is a factor in his success today. His chain of hotels, Four Seasons Hotels & Resorts, today extends worldwide, partly thanks to the company’s commitment to honesty and good customer service. It’s an example of how doing virtuous business can pay off.
Sharp – the 2006 winner of the Ivey Business Leader award – is one of 14 CEOs featured in the new PBS documentary, Doing Virtuous Business, by Yale Professor Ted Malloch, which was presented during an event discussing how good guys can come first.
Malloch spoke to Ivey students on November 10 at Ivey Business School and participated in an Ivey Idea Forum, The Good Leader, with executives on November 11 in Toronto. The events also featured Gerard Seijts, Executive Director of the Ian O. Ihnatowycz Institute for Leadership and Tima Bansal, Director of the Centre for Building Sustainable Value and Executive Director of the Network for Business Sustainability. Hank Vander Laan and Marv DeVries from Trojan Technologies and Jeff Brown, founder of 18 Asset Management Inc., also participated in a panel discussion for the student session.
“I’m not saying these 14 companies featured are virtuous. Who am I to say that? I’m just saying certain companies demonstrate certain virtues well,” said Malloch. “Some companies are trying to be good and struggling to exercise good virtues. There are thousands of companies – not just 14 – who are trying to do good.”
Focusing on virtues is even more important than ever in business given that public trust has been eroded in the wake of corporate scandals and the global economic crisis of 2007-09.
Citing from Ivey’s new report, Leadership on Trial, which investigates the failings of leadership that led to the financial crisis, Seijts said a critical lesson from the crisis is the need for an increased focus on competencies, character and a renewed commitment to leadership.
Seijts co-authored the report with Ivey professors Jeffrey Gandz, Mary Crossan and Dean Carol Stephenson; and with research assistance from Daina Mazutis. It was based on findings from a nine-month study involving in-depth discussions with more than 300 senior leaders in the private, public and not-for-profit sectors across Canada, in New York, London and Hong Kong. Results showed lack of character was largely blamed for the downfall in leadership and there was an emphatic call for a greater emphasis on character development in business schools.
“Business schools do a good job of teaching competencies, but there needs to be a greater focus on character-development,” he said. “The question is, why do we even need to talk about this – doing good – shouldn’t it be part of our humanity? Where did we derail?”
Malloch, a former Wall Street financier, said there was a shift in the late 1980s to a focus on short-term, rather than long-term, planning. He said taking time to make decisions and thinking long term is an important factor in success.
“We’ve given ourselves over to short-termism, which leads to instant gratification, but has a lot of ramifications. We need to take time to reflect, to continually learn and to have deeper discussions with people,” he said. “We’ve become more centred on ourselves – on material things and other measures of success. Then there was a litany of bad apples that were greedy. Some people would now say that’s what business is – it’s greedy.”
He also stressed companies that are committed to doing good for society, often also do well financially.
“The companies we looked at did 24 per cent better than their competitors over the long term. That shows that doing virtuous business pays,” he said.
Bansal also said long-term planning often pays off with increased productivity and employee and investor loyalty, but noted older CEOs, rather than younger, are more likely to demonstrate social responsibility.
“If you’re older, you realize there is a generation that will succeed you so you make longer-term investments,” she said.
That’s why Ivey Business School is committed to teaching the next generation of leaders to contribute to the societies in which they operate. In addition to being the first business school in Canada to include sustainability in its core curriculum, more than half of its faculty are focused on business sustainability in some way, such as research or teaching, Bansal said.
Seijts also said Ivey has added a new elective course on character-development to its MBA curriculum to enhance its focus on developing responsible and committed future leaders.