Islamic Management vs Conventional Management. By: Amiera Zulkifli. Msc Islamic Finance and Management, Durham University, UK.

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1 Islamic Management vs Conventional Management By: Amiera Zulkifli Msc Islamic Finance and Management, Durham University, UK. The under developed nations are currently in quest for formulas that could help their economic development and social progress. This has given much limelight to the area of practice and management of institutions which have been the key contributor to a state. Efficient management, sound economic institution coupled with great strategies is essential to erode the root of backwardness (Ali, 1988). The conventional view management as a process towards organisational goal by engaging in four major transactions of planning, organising, leading and controlling (Bartol & Martion, 1994). Another sub category of management that has gained popularity over the years is the Islamic management which refers to an approach to deal with production, consumption and distribution according to Islamic worldview. Generally, employee do not carry task in an organisational vacuum but rather they will bring along their culture, work-related values and religious belief into workplace (Branine & Pollard, 2010). Hence, the aim of this essay is to explore different management view, practice and its impact on organisational performance. The Sources The bases for Islamic management are found in the ontological and epistemology source which are the Quran and Hadith (Branine & Pollard, 2010). This is further supported by the axioms that articulate Islamic management principles. They are tawhid (God s unity and sovereignty), al adl wa l-ihsan (justice, equilibrium, and beneficence), ikhtiyar (free-will), fard (responsibility), rububiyyah (towards perfection), tazkiyah (purification and growth), ukhuwwah (fraternity, solidarity and unity), amanah (trust), takaful (cooperation), khilafah and human accountability before God, islah (struggle for excellence), taqwa (righteousness) and the maqasid al-shariah (Malik & Asutay, 2011). Apart from the above, Malik & Asutay, (2011) have developed a dynamic Islamic management model to facilitate the ihsani social capital processes that eventually distinguish the Islamic from the conventional model. 1

2 Figure 1 explains that stemming from the Quran and Hadith, articulation of axioms will lead to a dynamic self-articulation or khalifah typology. The outcome of such articulation will be a benevolent society namely efficient institutions and societies which then enable individual to strive for falah and building ihsani social capital. This resembles the process of becoming or islah in achieving the ideal management. In contrast, the source of principles, rules and regulations in the conventional management are derived from the rationale of person vested with authority. The rules and regulations on operational management set by the company are based from the rationale reasoning by the management itself. Hence, the rules may only represent interest of certain group of people. Further, conventional management focuses on organisational goal and objectives as the thrust for all activities. Here, since Islamic management based its source on the ontological and epistemology, the system has become a value loaded and more humane than the conventional ones. Individual Development (Micro) In order to achieve the ideal management, one must be concern with the development of individuals which later help develop the organisation and society. Tawhid, being the main principle in Islamic management help to shaped current practice by reflecting the idea of true submission and devotion to Allah in His commandments (Sulaiman, et. al., 2014). One must regard that every work is an ibadah to Allah by implying that the concept of worship is broad and applicable even in management (Ismaeel & Blaim, 2012). Aim, objectives and procedure must reflect submission and devotion towards pleasing Allah which simultaneously promote goodness and prevent evil (Sulaiman, et. al., 2014). The concept of khilafah (vicegerent) are further practice in Islamic management for developing individuals as human are considered as khalifah (trustee) to develop this world (Beekun & Badwi, 2005). Individuals have to work at his best to develop the skills and ability to achieve good performance in the company using the articulation of Islamic principles. In contract, practices in conventional management which based their values from rationale have result in clear separation between private matter and public domain (Sulaiman, et. al., 2014). Religious activities, spiritual values and needs are regarded as separate and should not be mixed together, hindering human growth. Work is never associated with religious values and one must not bring norms and behaviour 2

3 of private lives into workplace. The conventional management also relies on the idea of motivation and work values by the Western (Branine & Pollard, 2010) and works are designed to serve and contribute to organizations growth and not individuals. The managerial practices are based on worldly matter and are not integrated with the hereafter. In short, there is clear distinction between the Islamic and conventional in the aspect of human development. The first promote human growth through the articulation of Islamic foundations while the later only concern on the worldly matters. Organisational Development (Macro) Further comparison between Islamic management and the conventional ones are its organisation or society development. Islamic management promotes the idea of al adl wa l-ihsan (justice, equilibrium and beneficence). It means doing things in a proportionate manner, avoiding extremes, at a more metaphysical level, equilibrium, or embracing harmony in the universe (Beekun & Badwi, 2005). In Islamic management worldview, there is no prohibition by Allah on the accumulation of wealth and in fact He promises to reward person whom work hard in changing his faith. However, wealth must be accumulated in a noble manner in accordance with the tawhid and khilafah concept to generate more capital and later help the society. Every wealth accumulated by permissible way (halal) will be rewarded more (barakah) as it is based on taqwa and tawakkal (trust in Allah). Further, one shall note that homoislamicus idea on maximization of utility in Islam is always subject to islah (struggle for excellent). This means that even Islam aims at falah, it does not disregard the worldly matter as it requires its followers to work hard and struggle for excellence. Efforts made can be one of the way and mechanism for individuals to attain falah. Hence, Islamic worldview aims at achieving balance between wealth accumulations and the hereafter. In contrast, the conventional management has made competitive advantage as the most important concept in strategic management of a business (Fontaine & Ahmad, 2013). Competitive advantage can be defined as the ability to generate higher profit margin than the industry s average (Fontaine & Ahmad, 2013). Since the conventional management aimed at profit maximization, it concentrates more on individualism, performance-related and economic measure-based approached, as portrayed by the Western thought (Branine & Pollard, 2010). These have contributed 3

4 to the idea of capitalism management where profit is the main objective and development can be at the expense of anything. Bribery and corruptions are permissible as long as business deal can be closed (Fontaine & Ahmad, 2013). Developments for organisations are at the expense of moral values. The yard sticks for success in conventional management are determined by the ability to generate highest income. Thus, the Islamic management differs from the conventional management in organizational development as it features the concept of moderation and includes social concerns in accumulating wealth. The later however, aim at wealth accumulation at the expense of organisational development. Distinct Outcome It is also believe that the consequence of good management would have significant impact on business ethics and performance. Among example of good behaviours and moral values stemming from Islamic management are steadfastness, trustworthy, truthful, sincere, cooperation, transparency and others (Branine & Pollard, 2010). There is also sense of humanity through personal discretions among those who are in the Islamic managerial positions (Branine & Pollard, 2010). Subordinates are treated fairly regardless of their ranks and positions in the company. Consultation or shura, being the key leadership values in Islam had been the basis in all decision making. The suggestions and ideas of others shall be taken into considerations prior to decision making. In contrast, the conventional management may have less degree of humanity in the organisations. Strong adherence to the rules and regulations are the key to good management. Discretions are rarely practiced on its workers which showed lack of humanity in the management practice. Works are primarily important and personal excuses are not accepted. Thus, such practice has led to divorce standing between ethics and economy in the neo-classical realm which resulted to insensitivity to moral issues (Naqvi, 2003). Unethical work practice like bribery, corruption, breach of trust, misappropriation of funds, immoral trading, fraudulent transactions, bribery, interest, coercion, and greed can emerged in conventional management (Maududi, 2011). Overall performance can be affected if mal practices of the above continued in organisations. Hence, it is important that the current management practices are based on moral and ethical foundations as laid by the Islamic ontology and 4

5 epistemology. With good managerial practice and motivated worker, an organisation can achieve success in this world and the hereafter (falah). In conclusion, it is noted that in this modern context, the social constructivist and cross-cultural management suggest that different management practice can be made possible with the influence of cultural and norms (Malik & Asutay, 2011). Islamic management is among the possible managerial practice that can be administered in an organisation as it has proved to stimulate individual growth and develop high performance in organisations. Islamic ontology & epistemology Articulation of axioms Process Dynamic Self Articulation Content Outcome Khalifah typology Benevolent society; efficient institution & society Enable and functioning individual aiming at falah Building & enhancing ihsani social capital Ideal management Feedback into system / becoming process (islah) Figure 1: Islamic Management Model 5

6 Bibiliography/References: Ali, A. (1988) Scaling an Islamic Work Ethic. The Journal of Social Psychology. 128 (5), pp Bartol, K. M. & Martin, D. C. (1994) Management. 2 nd Edition. New York: McGraw Hill. Beekun, R. & Badwi, J. A., (2005) Balancing Ethical Responsibility Among Multiple Organizational Stakeholders: The Islamic Perspective. Journal of Business Ethics. 60 (2), pp Branine, M. & Pollard, D. (2010) Human Resource Management with Islamic Management Principles: Dialectic for a Reverse Diffusion in Management. Personnel Review. 39(6), pp Fontaine, R. & Ahmad, K., (2013). Strategic Management from an Islamic Perspective: Text and Cases. Wiley. Available from < [Accessed date: 1 st January 2015]. Ismaeel, M. & Blaim, K. (2012) Towards Applied Islamic Business Ethics: Responsible Halal Business. Journal of Management Development. 31 (10), pp Malik, M & Asutay, M. (2011). Conceptualising Islamic Governance. Discussion Paper, SGIA, Durham Business School. Maududi, S.A.A., (2011) First Principles of Islamic Economics. Leicestershire: The Islamic Foundation. Naqvi, S. N. H., (2003) Perspective on Morality and Human Well-Being: A Contribution to Islamic Economics. Leicester: The Islamic Foundation. Sulaiman, M., Abdul Sabian, N. A. & Othman, A. K., (2014) The Understanding of Islamic Management Practices among Muslim Managers in Malaysia. Asian Social Science. 10 (1), pp