Business roundtable; Business executive in modern society

The following program is made possible through a grant from nation's business. This is a business roundtable a program of current comment from leading members of America's business community. Today William Lazar professor of marketing at Michigan State University and Dalton McFarland chairman of the MSU management department will explore the topic the business executive in modern society with series host Alfred L. Seeley dean of the Graduate School of Business Administration at Michigan State University. The business corporation has become the dominant economic and social organization of our time since World War 2 it has grown greatly in size and importance and complexity of operations in many cases it operates on a worldwide basis. Since the modern corporations role in society is

so important so too therefore are the men that administer these corporations. What is their background their education their social viewpoint and their value system. What are the social and economic environment that spawned them. Do examine these and related issues. I have as my guests on this session of the business roundtable two persons well qualified by their research and business consulting work to discuss the subject. The business executive in modern society Dr Lazar. What about the environmental changes that have been taking place in this country in recent years that have had some impact on this situation. Well Being silly is every business executive realizes that he is organized zation operates in an X Journal environment that establishes the boundaries of the constraints within which he can

make profits and in fact these boundaries and constraints some of the opportunities for him and for his company two of the very important changes that are usually referred to are the changes in population and the changes in income. For example since the end of World War 2 we've seen some very radical shift it's in incomes of families. We've seen radical shifts in the distribution of incomes throughout our nation and we've seen the development of this mass middle income market that is paved the way for the sharing of the bounties of our society. We've also seen consumers aspiration levels rise partly as a result of this. And if one looks at the shifts in population in terms of total population distribution of population one recognizes clearly that the ships to the

urban areas the development of the large megalopolis situations has shaped the business. Well if they're going anywhere then any changes to delays are in relation to what we might call fair use structures in our country during this period. Ah yes indeed all one has to do is to look at the lifestyles of consumers in our country. Look at the tastes mores the fact this is a mobile society. Look at the education levels and then consider the impact of this on the way in which we perform our activity as the business executive himself has become very aware of the role of the corporation in modern society has become aware of the fact that government and business are now involved in a certain dynamic and evolving relationship that perhaps in some instances is a partnership in the graphics of chess going back to that in a minute.

Dr. McFarland What do you see internally in the modern corporation that has taken place the other changes going on here or is it pretty static situation. There are many changes being silly the thing you could expect from the kind of external change that Dr Lazar describes would be a major impact on the inside of the organization. Such things as size of scale of operation productivity and the speed with which things have to be done the magnitude that was mistakes possible. All these things have a bearing on the executive fact of his judgments. Another thing that is obvious to many people is the computerization and automation changes in technology that are having an impact on a redesign of the task of the worker in the redesign of the task of the executive which is moving forward as a result of automation and computerization and

just beginning as a subject of research. Is this largely say complacence roughly the end of World War 2. Some of these more dynamic changes. That's right. Dean Seeley the World War 2 was rather a turning point in management when. We learned to apply some of the computerization the developments that began at that time and it became a turning point in the human relations movement. So on what we see now and instead of the pre-World War our two organization design concepts which were you know boxes and charts and the rather rigid structures now we see as a result of the modern developments a more open more ambiguous more fluid kind of organization structure which again will change the demands put on the individual.

What does this mean. Today the modern corporation requires perhaps a little different kinds or types of talents than it has in the past. Bigger variety of talent and a harder job for the executive I would say. And if one looks at the impact of the X turnover upon the internal organization and consider some of the statements that are made such as 90 percent of all the scientists who have ever lived in the world are now living or if one looks at the fact that we talk of a chemical revolution whereby we're able to change the structures of products the composition of material or an engineering revolution or the information revolution which is tied to the the computer Alric one considers the fact that in the next twenty five years we're supposed to double all of the knowledge that we've ever had since the time in memoriam. Then one can see what the modern corporation and the modern executive is faced with.

It looks to me from what you both said that really managing modern corporations today is kind of the management of change. I think that's true this is the primary task of the manager and the manager is faced with managing himself to keep up with this change. We're all obsolete and it's a matter of how obsolete we're going to be. Well that's a good way to put it but I think I had a little idea there too. I think the manager's task is probably the create change and to manage change but. The complexity of all this need we need we need to add a third point. He has to learn to live in the in the middle of change. Yes and that's not to easy and look at the way we envisage the modern organization now with its international developments and living with change in different scenes and their different environments social religious cultural and many other aspects. He now deals with all over the world and this is very taxing.

Well let's look at another aspect of this problem. Recognizing this type of economic and social environment and the changes that are taking place the increased size and the modern corporation it's more world wide scope where the type of executives that are moving into these positions in our modern corporations where they're coming from what is their background. Essentially I think it would be fair to say that today's executive is the middle class from the middle class segment of society. The majority is a product of increasingly a formal education body duckling not a product of the inherited wealth. The family concern as a matter of historical record is is passing from the

scene of the days of the tycoon the moguls and so on are passing or have passed and I do you think that a man like Sue Lavery was to head up Montgomery Ward wouldn't rise to the top of a modern corporation. Well he might claw its way to the top but a better way to put this would be to say that we have now a concept in executive life of the professional executive now. We don't necessarily take this literally in the sense of doctors and lawyers but along that direction where the the the executive is a is a product of a high level. Kind of training and in law our advanced engineering or in business administration we have studies that demonstrate this but we have the professional outlook or the intent to practice managerial skills. Apart from

the Veil ability of an organization to practice in. In other words the executive today is very mobile and he doesn't. Have to practice within a particular organization as long as he can find another word to me and that is that talent and managing is recognised in other corporations also and a constant search for this kind of talent in one company will go after executives in another company so that the executive group in the country is rather theirs. There's always been a scarcity of the really able people. Let's look at the education aspect of the subject you've raised for a minute. Dr McClelland. I take it from what you said that we're finding that more and more of the various types of management in corporations today is better educated than the people that were formerly in these positions. Most of them today have a college degree. Some exceptions we find many of them have advanced

degrees I noticed a study recently that showed an increasing percentage of these are having a Master of Business Administration degrees view of regulation would you expect this trend to continue. I would indeed even I'd like to re-emphasize something that Dr. McFarland said this move from the family type of organization to the corporate farm that has brought with it the professional manager has placed a burden and a responsibility upon the university and I think there's a big difference in the way this responsibility has been met in the United States and the way in which it is being met or has been met in other countries. And I would expect the American trend to continue not only here but actually to be put into practice in other countries of the world. The universities in the United States it seems to me and have been having been educated partly in Canada think

of the license to say this. The universities in the United States have been the laboratories of society. And in other parts of the world this may not have been the case rather than merely emphasizing knowledge for knowledge's sake or the classical education of the universities in the United States have been willing to solve problems to become involved with society. The engineering schools the law schools and schools of business administration are evidence of this. And I think that since we have a business society that inevitably the universities must become totally immersed in preparing people for administrative positions. Why is that. To follow up on the point your dress made dark eyes or why is that. And much of the rest of the world compared with the United States even taking Western industrialized countries like Europe we don't find very depth or number or the basic concept until very recently of the

professional managerial group. Have certain tools and techniques and knowledge and background in certain types or kinds of education and then moving up in the hierarchy of a business documents. I recall if I recall correctly you were on the faculty at an institution in Italy at one time. But but your reaction to this as to why one of the problems here when you have a whole matrix of what we would call cultural factors. Immediately you run into and you try to transfer or export or exchange let's say management know our business know how and until these barriers these these factors operate as barriers. They interfere with the ways of doing things with conceptions of the ways things are done. For example there is no other at the time I was in Italy there was no universal system of check clearing by the time they get around to establish central Jack there and will probably be

doing away with it here but there are all kinds of habits and thought patterns. Also the European universities as Dr Lazar is intimating are for those people with what you might call classical education. They do not an invasion professions as a way of life. Is this partly the view that I think anyone regardless of education if he's bright can be an effective manager is just part of the philosophy and parts of Europe that's much bright but lucky in the political. And having the right and the right staff would help but I don't there are couple of other factors in addition. If one looks at the tradition of education in a well established country or an older country then what was the Business Administration curriculum of its day was it not the liberal arts. I mean this is what we had in the United States there was an opportunity to start a different period of time and look at the

whole aspect of the front tier and we don't have the rigidities of society in terms of the institutionalization is in some sense. And there's another factor possibly the sunrise. Typically again at least in the modern era our corporations have been larger and corporations in other parts of the world because we had a large central market the United States yes. And you start getting minute real management problems one factors son is running a very small business with five employees is very is complicated is running one with 65000. And if one looks at the European common market and what's that that has done for the size of the organization there then one can look at some of the demands for executives who are well trained and qualified and understand some of the development delays or you're been a visiting faculty member some of the universities in Japan. Yes. What about what are they doing there in terms of education of executives.

Well outside of the United States I would suspect that the Japanese are educating more executives than educational institutions in any other country. The Japanese as you know are very business oriented. They're innovative they're willing to change. They have developed large business administration faculties. There's been an interchange between professors in the United States and those of Japan. They've developed their own literature and in many ways there are more prone to understand the problems of international business than we are. Their models seem to fit other areas of the world better than ours. And so in some ways they are pioneering. There's been this ministration program you talked about these are at the university level. Yes they are in their established University. Yes that's true to reprogram degree programs are fully accepted. The well-recognized universities Tokyo universities and Keio University is ahead of others.

Parks It's interesting that Great Britain as you both know of course has recently established some business schools within their university framework for the first time in the history of that country. When you stop and look back and think that that was the country that was the mother of the Industrial Revolution and the modern factory and it just realization sprang from that from that. It's rather interesting that it's only been in the past few years that they recognize that American management methods and techniques were so far superior that they needed to emulate many of these and now establish some educational institutions to do it. Course many same thing is going on in many of the developing countries isn't it. Yes but it surprises you a lot of developed fairly well developed country needs to import management ideas and I'm constantly amazed how many of my British friends demand management ideas from over here. I know a little earlier both of you mentioned that you thought

that are bad you structure had been changing and again to take a dividing point let's say roughly the World War Two period of contracting the executives value structure prior to World War 2 and the executive in the modern corporation today's value structure that there are some changes. Well what are these changes and why have these changed. But I think there's a very fundamental change that has taken place. If one can oversimplifies situation think that prior to World War Two most business men were concerned with profit only and the theory was that if a company produce a product or service that was profitable thereby they made their contribution to society but I think that since World War 2 and certainly within the last five years or so business executives have become very conscious of

social responsibility recognizing that business extends beyond the profit motive. They're concerned with the contributions to society in terms of employment in terms of urban renewal in terms of the development of opportunities for members of our society and I think there's been a decided shift although there are some business executives who would certainly argue that this is not the case and that perhaps they shouldn't be involved beyond profit courser corporation has got to make a profit or it can't make any of the other I in your shoes which you mentioned not to return what would you think of the situation what what are some of the areas. Did you think today most at least corporations and corporate executives are really concerned with in the sense that are different than those they used to be. Well I think the exact is and their corporations

do is Dr laser suggest show a very. Notable increase in the social responsibility factor in their in their in their lives. I think you can document this I think you could you could document the number of activities and the number of books coming out on the subject a number of scholarly research efforts that indicate as and you can take examples on as for example in the case of the recent pronouncements of the some of the automobile companies that they were going to open recruitment offices in the ghetto areas of urban cities where they would go to the source of the of the negro and and impoverished people for employees there are definite advancements that have been made in companies which have established departments of them. Severed relations governmental relations and hearts and courage their

people to be out in the community in the nation. You could detail an awful lot of examples and then be met by the cynic who would say yeah but that's just because they're chasing dollars. Well I would assume your illustration that you gave to some companies are in their ghettos attempting to recruit some of the minority group of people that have not had adequate education and not had adequate background for certain types of employment. This obviously is costly isn't it done mean. If they're going to hire these kind of people they're going to be much longer training periods. Many of the job situations are very different. Isn't this going to be quite a costly process word. Indeed it is but I recall reading very recently a comment made by prominent business executives stating that business now must adjust to the level of the labor force. It's not a matter of just competing for skilled labor and they are adjusting in terms of new methods of

training. But wouldn't it be even costlier they didn't adjust in this way. And business executives now as we pointed out are better educated I think they recognize the impacts and demands of environments and I think they genuinely want to practice good citizenship in a community. But there are points of conflict certainly and there are times when the Comicon. In the name of civic duty or humanity do certain things that people ask of it. There's a kind of a social conscience at work and a corporate conscience at work and in the mind of the executive as kind of a balance point going on all the time. In his decision making. Yes and isn't this the case in any situation like a sure taken legal situation or a medical situation or dental situ any decision. Yeah but in other words you are saying that the fact that this would cost the company

more than they knowingly go in to do this shows one one aspect of the social responsibility in society today to attempt to do something about a pretty fundamental social problem. Some of the minority racial group type problems of employment poverty and lack of education support. Yes indeed and there are other developments. Do you think the average American corporation would have done this 30 years ago. Oh I don't think so. I don't think so I think it's been highly unusual in our doctrine. Part of may disagree I think individual businessman would have done it as individuals but they would have dissociated themselves from doing it as a corporate. Well that's a very different thing as you and so many others are going to do to learn doing it as a corporation it seems many respects this is a clear fundamental shift in philosophy in relation to the corporation's existence or what they think they ought to be doing in our society today compared with us.

Yes and it ties into a concept that mass flow developed in terms of motivation he talks now about met a motivation that an individual in an abundant society turns his values outwards and he realizes himself in terms of contributions to society and if we look at the contributions that a business executive makes to society we should remember that they participate in all sorts of governmental missions that they are involved in cultural affairs of the community that they head up various social agencies and I think the business executives as individuals as members of their corporation truly practice the good citizenship in this because God writes the system they have for our society and we could well afford to turn some of our resources. And a social concern. So let's look at another aspect of the changing environment you mention quite obviously.

One other thing that's been happening in recent years not only the development of big business but the development of big labor the development in the sense of big government. Again if I go back oh 25 30 years seems to mean that corporations and businessmen in general are seen to reach an impasse many times when they would discuss government they thought government was best it never bothered them and they had nothing to do with it. What has happened in this area. Is this still the same or. Well I think you have a very interesting interesting situation developing and it's very clear that that there is on. Aben the flow in the affairs of business concerns and the government over the years and right now are in a cycle where they're moving closer to what you might call a partnership aspects of business and government. We have a government willing businessman we have moving in in one sense going to them with problems and asking their help in

joint ventures of one sort and others as for example in some of the aerospace kinds of problems we have. The concern that expressed by government units about pollution and the thoughts that pollution and streams for example that only some kind of great collaboration between public and private agencies can like a problem of that sort because both seem to be involved. You know municipalities on the rights and two to land and companies have know how and profit lasered you expect this process to continue this kind of cooperation with the undoubted leading serious chronic that government in business now is inextricably intertwined. Really I think that they are partners in many ventures that they must cooperate I think

both sides realize this. I think the business executive formally looked at the government as an enemy. This is no longer the case. So that's a fundamental change that Oh I think it is and there's one other aspect I think that is really changed now. The government is in the position to control the life of business in terms of the laws that are on the books and can be an act not a laser and not McFarlane. I certainly want to thank you for appearing on business roundtable. We've had a most informative discussion. Thank you. Participating in today's business roundtable where William Lazar professor of marketing at Michigan State University and Dalton E. McFarland chairman of the MSU management department for the program was Alfred L. C. Lee Dean of the Graduate School of Business Administration at Michigan State University. The topic for next week's Business Roundtable is

civil rights in 1968. A guest on the program will be John a resident of Michigan State University and chairman of the United States Commission on Civil Rights. This program was produced by the Graduate School of Business Administration and the Broadcasting Services of Michigan State University under a grant from nation's business a publication of the Chamber of Commerce of the United States. Business Roundtable is distributed through the facilities of national educational radio. This is an E.R. the national educational radio network.