Business Management As Taught By The Holy Quran

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Toyota in particular owe their phenomenal success to adherence to certain golden principles of management, which includes: elimination of wastage/optimum capacity utilization, struggle for continuous improvement (Jihad), JIT, Visual Control, and TQM, to name a few? all which have been explicitly advertised by the Holy Quran since 1430 years.

The Holy Quran even sets out the institutional framework for achieving promised results. This article discusses only a few of these golden principles.

Islamic Concept of Management

Management today is defined as ?getting things done through others.' Following this concept, a Manager is now understood as the person who works through others. A good manager, therefore, is a person who not only knows what is to be done but exactly how to get it done. The Holy Quran confirms:

[43:32] ??We raise some of them above others in ranks, so that some may command work from others...'

This Ayat reveals in a nutshell as to why God raised some people over others in ranks, that being, that they can get work done from them. This Ayat (43:32) encompasses the entire philosophy and wisdom of modern management. It emphasizes, in essence, the creation of appropriate hierarchies and the division of responsibilities subject to individual capabilities. It basically implies the creation of organizational charts from the top management to the lower management.

The Holy Quran has also laid down the institutional framework for putting this golden rule into practice:

  • Obedience and Respect for Authority;
  • Principles of Equal Opportunities; and
  • Motivation and Commitment.

Obedience & Respect for Authority

Obedience and respect for authority is the basic fundamental requisite for taking work from others and getting it done. Working through people actually presupposes the willingness of people to obey. It is therefore necessary for those people who are given the job to complete a task to obey all legal and reasonable orders and perform it responsibly, as Holy Quran instructs:

[4:59] ?Obey Allah and His Messenger and those in position of authority among you.'

This Ayat is a commandment and not a plea. To be a good Muslim, it is incumbent upon the believer to observe the ruling with willingness and honesty. When this spirit of voluntary obedience is instilled in the mind of an employee, the scope of the hierarchy as envisaged by the Ayat is strengthened [43:32]. Needless to say, without the spirit of voluntary obedience among those who work, the creation of hierarchy will not serve any purpose.

Joint Consultation and Team-Work

The modern world realized the importance of joint consultation (Shura) and team-work when the Japanese based its management style on it and proved to the world of its effectiveness.

The Holy Quran advocates this concept:

[42:83] ?...and those who do their work through mutual consultation.'

[3:159] ??pass over (their faults), and ask for (God's) forgiveness for them; and consult them in affairs (of moment). Then, when you have taken a decision put your trust in God, for God loves those who put their trust (in Him).'

Principle of Equal Opportunities

The principle of equal opportunities postulate that all members of an organization shall have equal and fair chances to grow, contribute, and be rewarded accordingly.

The Holy Quran emphasis this golden rule:

[49:13] ?O people We created you from a single male and female couple and then divided you in nations and tribes so that you may recognize one another. ?Verily the most honorable among you in the sight of Allah is he who is most righteous of you.'

Our beloved Prophet Muhammad (PBUH) expounded the verse for us on the occasion of Hajat-ul-Widaa, in the following words:

?In the light of this Quranic verse no Arab has any superiority over a non-Arab nor does any non-Arab have any superiority over an Arab. Neither black is superior to white nor white is superior to black. Of course, if there is any criterion of superiority and respectability in the sight of Allah, it is Taqwa (righteousness).'

These words suggest that despite the fact that we are all equal, human beings can excel over one another in certain aspects of life. One such aspect could be in terms of righteousness.

There can be no better pattern for equal opportunities than the one spelled out by the above Quranic Ayat. In the realm of management, it would mean that the criteria for entitlement to any benefit, reward, position, or status shall be such that any one having requisite qualifications and experience should have equal opportunity to achieve it. This will obviously go a long way towards maintain the requisite degree of harmony in the work environment conducive to the smooth working of the management process.

Motivation and Commitment

Making people what they are supposed to do requires a certain degree of commitment which can only be achieve through motivation. It is an established fact that the way a Manager behaves or deals with the subordinates determines the level and vitality of their motivation and commitment to a great extent.

The Holy Quran too speaks about this golden rule:

[3:159] ?(telling the Prophet) If you had been stern and fierce of heart they (the companions and followers) would have disappeared from around you. So pardon them and ask forgiveness for them and consult them in the conduct of affairs'

This beautiful ayat emphasizes upon two aspects: one, that compassionate and sympathetic behavior towards companions and followers, and second, the adoption of participatory approach when dealing with them i.e. consulting them, is the most effective way of management. If this golden rule is not observed then ?they will disappear from you' i.e. they won't pay attention nor any interest in you or what your work entails.

Both these golden rules play vital role in the motivation of subordinates and inculcating in them the spirit of commitment and passion for work.

The Cornerstone of Toyota's Success: Elimination of Wastage

Wastage?either in terms of: material, human capital, energy, machine utilization, or processing time, creates inefficiencies resulting in the increase of costs and consequent decrease in profits.

The Holy Quran has spoken against wastage and lavish expenditures in sternest of words:

[17:26] ?And render to the kindred their due rights, as (also) to those in want, and to the wayfarer. But waste not (your wealth, time, health, talents, opportunities etc) in the manner of a spendthrift. '

[17:27] ?For the wasteful are the brothers of Satan; and Satan is ungrateful to his Lord.'

[7:31] ?O Children of Adam! wear your beautiful apparel at every time and place of prayer: eat and drink: But waste not by excess , for Allah loveth not the wasters.'

It was Toyota who first understood and implemented this golden rule in business, not the Muslims. Their success is thus based on two principles:

  • Complete Elimination of Wastage; and
  • Equal Level of Respect for All

Continuous and aggressive pursuit of wastage elimination led Toyota to become one of the most efficient manufacturing organizations in the world. The company is now able to produce the best quality of automotive products at the least possible cost while maintaining the highest pay-scale for its employees. Their success-story has inspired many companies throughout the globe, including those in Pakistan and adoption of these principles and methodologies in these companies concerning continuous elimination of waste is already underway. Jeffery K Liker in his book The Toyota Way has described that Toyota production system today comprises of 14 principles that have evolved as a result of continues pursuit of Toyota since the very beginning. Some of these processes are technically known as Kaizen, JIT, and 5-S.

Kaizen: The Management Jihad Against Inefficiency

Kaizen is a Japanese word meaning continuous improvement. For Toyota , Kaizen is a means to strive and struggle to achieve their golden rule of ?elimination of waste.' To implement Kaizen, the management continuously seeks to identify areas where wastage is being done. Once identified, they then set out to analyze the problem, suggest a solution, plan its implementation, implement it, and finally reviews the change for success or failure (PDCA cycle). This is not easy as implementation of Kaizen sometimes lead to minor or major changes in the system which is not always welcomed, and is resisted by the stakeholders of the status quo environment. Therefore, the management then also has to struggle against the resistance and make the change acceptable by different means.

A Muslims must also strive to eliminate any wastage around him, at home, workplace, or in society even when faced with resistance. A very common example would be to control the use of water, food, and electricity according to the needs. Wastage of resources such as material in the workplace, man-hours, machine-hours, human potential, and time should also be minimized. While 100% elimination is not possible we should still try to get as close to it as possible, and this can only be achieved through continuous struggle (Jihad). Muslims would find this easier to do than non-Muslims because they have been explicitly instructed by the Holy Quran. Continuous striving is the only way available to achieve minimum possible wastage or maximum possible efficiency, which is nothing but Jihad in Arabic.

The Holy Quran confirms this fact:

[5:35] 'You who believe! Have fear of Allah and seek the means of drawing near to Him, and strive in His Way , so that hopefully you will be successful. '

Just-in-Time (JIT) System for Inventory Management

The concept of Just-in-Time which has been invented by Toyota has revolutionized the Inventory Management Systems in the manufacturing organizations throughout the world. It is based on the golden principle of keeping only that much amount of inventory that is needed and that too in continuous movement in order to avoid in-process buffer inventory as much as possible until it is completely transformed into the finished good.

A Muslim should be a born JIT expert. The Holy Quran instructs him in 2:219 that he should spend on himself only as much as he needs and to give away the excess in the way of Allah.

[2:219] ?? They ask thee how much they are to spend in the way of Allah; Say: ? What is beyond your needs .''

[10:58] ?The men on the heights will call to certain men whom they will know from their marks, saying: ?Of what profit to you were your hoards and your arrogant ways?'

One might argue that the context of this ayat is different. Factually, a Muslim should understand that the Holy Quran lays down golden rules which are all applicable universally for all times in all situations. What the Holy Quran intends as a whole is to create a specific mindset, or a worldview. Once, this mindset or the worldview is created, these rules automatically become a part of a lifestyle and ceases to be a chore. Thus a Muslim businessman will never accumulate large amount of inventories as prescribed by the ?economics of scale' philosophy because it will go against his ingrained core beliefs. He will know that accumulation of inventories (wealth) to gain economic benefits by deterring the forces of demand and supply is discouraged by the Holy Quran in 9:34, and so will refrain from doing such a thing.

[9:34] ?O ye who believe! ? those who bury gold and silver and spend it not in the way of Allah , announce unto them a most grievous penalty.'

JIT was pioneered by Toyota and it is an important part of Toyota Production System (TPS). Toyota believed that accumulation of inventory of any kind, be beginning, in-process, or finished goods, is a kind of wastage in the form of Material Holding Cost which is being added during the time material is sitting idle within the premises of the manufacturing facility.

Go and See For Yourself (Visual Control)

Toyota calls it Genchi Gembitsu 1. It works this way: in order to solve any problem, the manager or supervisor at Toyota is obligated to go and see for himself the issue, analyze it, and take corrective actions. Second hand information is simply not accepted because it is considered to be unreliable, or at least not 100% correct. It is a proven fact that when information passes along the chain from people to people, a degree of distortion and/or misinterpretation takes place. This distortion is due to the differences we have in our perceptions, semantics, state of minds, and basic psychology etc. These distortions can easily lead to misunderstandings about the situation or problem and hence can greatly reduce the quality of solution presented. Thus, in order to minimize or eliminate this distortion, it is utmost necessary that that the information should be first-hand as much as it can be possible. In the Chapter 12 of Jeffery K Liker's book ?The Toyota Way', it is explained how the company has developed the mechanisms to get the most accurate and first-hand information without wastage of time and money.

This golden rule is amply mentioned in the Holy Quran.

[17:36] ?You shall not accept any information, unless you verify it for yourself. I have given you the hearing, the eyesight, and the brain, and you are responsible for using them.'

The essence of management is all about handling information and making the right decisions based on it. A Muslim should know that the Holy Quran commands him (not asks him) to be very cautious about the information he receives and to verify it for its accuracy before making any decision or judgment or opinion. Although this may apparently seem to involve a lot of work and time but in reality it actually saves a huge about of time, energy, and money in the long run that might be wasted if the decisions taken turn out to be wrong and damaging. However, for minor day-to-day issues, systems can be designed to ensure accurate flow of information from department to departments and from persons to persons 2.

5-S

5-S is a set of 5 Japanese terminologies, each one of them stating a very practical and important golden principle. Almost all Japanese firms follow these principles in order to achieve maximum amount of efficiency in their work. A brief detail of each follows:

Japanese Term

 

English Equivalent

 

Meaning in Japanese Context

Seiri

Tidiness

Dispose of all unrelated and useless materials and items

Seiton

Orderliness

Set everything in proper place for quick retrieval and storage

Seiso

Cleanliness

Clean the workplace; everyone should be a janitor

Seiketsu

Standardization

Standardize the way of maintaining cleanliness

Shitsuke

Discipline

Practice ?5-S' daily?make it a way of life; this also means ?commitment'

Seiri

The first step of the ?5-S' process, Seiri, refers to the act of discarding all unwanted, unnecessary, and unrelated materials from any place of concern. It could be the workplace or home or even a town. The idea is to ensure that everything left is of use only. Even the number of necessary items must be kept to its absolute minimum.

This principle should be ingrained in the mindset of a true Muslim. The Holy Quran instructs:

[2:219] ?? They ask thee how much they are to spend in the way of Allah; Say: ? What is beyond your needs .''

The added advantages of discarding unnecessary materials from any place is that it simplifies task, makes effective use of space, and careful purchase of items needed. It also helps the person to increase his efficiency at home and at work for he must handle items and maintain them with minimum wastage of time and energy. The Holy Quran mentions this in 17:27 and 7:31.

Seiton

A mindset of a Muslim evolves after learning, implementing, and benefiting from ?Seiri' towards ?Seiton,' or orderliness, which is all about efficiency. This golden principle relates with putting everything in an assigned place so that it can be accessed or retrieved quickly, as well as returned to that same place without delays. The logic is that if everyone has quick access to an item or material, workflow becomes efficient and less time is waste in locating it.

Seiso

Everyone should be a janitor. Seiso consists of cleaning up the workplace and giving it a ?shine.' Cleaning must be done by everyone in the organization, from operators to managers. It would be a good and a practical idea to have certain areas of the workplace assigned to different persons or group of people for cleaning purpose. No area should be left unclean. Everyone should see the workplace through the eyes of a visitor?always thinking whether it is clean enough to make a good impression or not.

Seiso cannot be achieved without having mutual respect for everyone and an atmosphere of brotherhood. Furthermore, it also requires an intrinsic desire and motivation for cleanliness.

The Holy Quran understands the importance of cleanliness and instructs its believers to keep themselves clean at all times, and sets about to describe how this can best be achieved. The entire system of Salat is a perfect example and an exercise to ensure that Muslims obey and follow this golden rule at least five times a day, every day, throughout their lives.

A Muslim offers his Salat in a Masjid behind an Imam. He first performs ablution which not only purifies him physically but also spiritually. He then stands shoulder-to-shoulder with his brothers irrespective of any social and economic status behind an Imam, and follows his instructions. Similar should be the scenario in a workplace as well where everyone should feel responsible to work passionately (worship in Salat), respect each other (stand shoulder-to-shoulder), keep his surroundings clean (ablution and cleanliness of Masjid), and follow the instructions of their superiors (Imam) without any resistance or laziness. Needless to say, it is a perfect system.

Seiketsu

The fourth step of 5-S is Seiketsu which more or less translates into ?standardized clean-up.' What it consists of is definition of standards against which people must measure and maintain cleanliness. Seiketsu encompasses both personal and environmental cleanliness. People must practice Seiketsu starting with their personal tidiness to keep themselves motivated and mentally fresh. Visual management is an important ingredient of Seiketsu.

The Holy Quran also provides us with a standardized yet very comprehensive set of rules to obtain and maintain cleanliness at all physical, emotional, intellectual, and spiritual levels. One such standard is the five-time obligatory Salat which is also considered as the Pillar of Islam. Another is ablution, the standards of which are clearly stated in Islamic Fiqh. How the state of intellectual and spiritual cleanliness is achieved and maintained is a very comprehensive subject in Islam, and outside the scope of this article. Those interested must read ?Tazkia-e-Nafs' (Purification of Self) by Molana Ameen Ahsan Islahi

Shitsuku

The last step of 5-S is Shitsuke which literally means ?Discipline.' This golden rule denotes commitment to maintain orderliness and to practice the first 4 S's as a way of life. The emphasis of Shitsuke is on the elimination of bad habits and constant practice of good ones. Once a person achieves the state of Shitsuke, cleanliness and orderliness is then voluntarily and at times subconsciously observed at all time, without the need of reminders or motivation.

Shitsuke is the most evolved state of mind that incorporates all the previous golden rules. It is too obvious for any rational mind to conclude how natural it should be for a true Muslim to have this state of mind.

Optimum Capacity Utilization

The following ayats from the Holy Quran reveals another golden rule that a Muslim businessman should learn from and practice in his daily life.

[2:233] ?? No soul shall have a burden laid on it greater than it can bear?'

[2:286] ?On no soul doth Allah place a burden greater than it can bear? (Pray) Our Lord! Lay not on us a burden greater than we have strength to bear.'

This principle is emphasizing on the fact that physical, emotional, and intellectual capacity of an individual is limited and not exhaustive. Additionally, since every person is unique in his talents and temperament, and in his skills, it is important not to burden someone with a task that is beyond his scope to deal with it. This is an important principle of modern business management.

If we add the another ayat to the above mentioned ones, we will come across a set of very comprehensive principles for business management and personal life.

[55:7-9] ? And the Firmament has He raised high, and He has set up the Balance (of Justice), In order that ye may not transgress (due) balance. So establish weight with justice and fall not short in the balance.'

[17:27] ? For the wasteful are the brothers of Satan; and Satan is ungrateful to his Lord.'

[7:31] ?O Children of Adam! wear your beautiful apparel at every time and place of prayer: eat and drink: But waste not by excess , for Allah loveth not the wasters.'

The principles mentioned in 2:286, 55:7-9, 17:27, 7:31 mean:

  • Do not over-burden any resource, whether it is a machine or an employee;
  • Do not under-load any machine or employee; and
  • Balance out the workload onto different machines or on different employees so that none of them is over-burdened or under-loaded with regards to their respective capacities.

For Toyota, these three principles are called Muri , Mura and Muda 3categorized under a single principle called Heijunka, which means to level out the workload. Toyota Company practices these principles almost religiously. 4

If principle (1) is not implemented and the machines are overloaded, then a lot of work-in-process inventory may pile up which will lead to added expenses in terms of material handling and holding cost. If the employees are overloaded, they may feel frustrated, de-motivated, and get tired very quickly, making them inefficient and prone to mistakes which will lead to wastage of time and money.

If principle (2) is not implemented and the machines or employees are under-utilized, the company will face an obvious wastage in the form of fixed overheads. Besides, idle employees are bored employees and highly de-motivated to carry out even the work which is assigned to them.

If principle (3) is not implemented and some employees are over-burdened while the others are sitting in idleness, it will not only create a feeling of injustice in the minds of those employees working but a sense of discrimination coupled with frustration and anger which can easily ignite into a possible conflict. (I have witnessed this for myself).

This is just a preview or an insight into the vast field and scope of the subject at hand. These golden principles are not merely for business management but for every person from every walk of life and profession. It is in fact a system of life as a whole (Deen).

The Philosophy Behind Quality Management System

A business cannot flourish in the long run if it doesn't give its customer what it promises to. Being a customer it is easy to understand this but for a business it is usually not. The main focus of a businessman is to make profits and not necessarily to satisfy the customer. It would not be wrong to say that the only time the businessman realizes that customer satisfaction is important is when he understand that this is directly related with his profitability margins.

This has been realized the hard way by the western organizations that customer satisfaction is vital for their survival and growth. So, in order to achieve the highest levels of customer satisfaction, they have put in considerable amount of research on the concept what is now known as Quality Management Systems including its various tools and methodologies such as the Six-Sigma and TQM.

The West after years of experimentation and failures has now found out this golden rule, the same golden rule which was mentioned in the Holy Quran.

The Holy Quran commands:

[6:152] ?And come not nigh to the orphan's property, except to improve it, until he attain the age of full strength; give measure and weight with (full) justice ;- no burden do We place on any soul, but that which it can bear;- whenever ye speak, speak justly, even if a near relative is concerned; and fulfill the covenant of Allah. Thus doth He command you that ye may remember. ?

[7:85] ?...Give just measure and weight, nor withhold from the people the things that are their due ; and do no mischief on the earth after it has been set in order: that will be best for you, if ye have Faith.'

[11:84-85] ?O my people! Worship Allah. Ye have no other god but Him. And give not short measure or weight : I see you in prosperity, but I fear for you the penalty of a day that will compass (you) all round. ? And O my people! give just measure and weight, nor withhold from the people the things that are their due : commit not evil in the land with intent to do mischief.'

[17:35] ?Give full measure when ye measure, and weigh with a balance that is straight: that is the most fitting and the most advantageous in the final determination .'

[26:181-182] ?Give just measure, and cause no loss (to others by fraud). And weigh with scales true and upright.'

[55:7-9] ?And the Firmament has He raised high, and He has set up the Balance (of Justice), In order that ye may not transgress (due) balance. So establish weight with justice and fall not short in the balance.'

[83:1-3] ?Woe to those that deal in fraud,- Those who, when they have to receive by measure from men, exact full measure, But when they have to give by measure or weight to men, give less than due. Do they not think that they will be called to account?'

For a Muslim businessman, there is no alternative but to satisfy his customer, even if the market and economic forces are making it difficult for him to do so. It is his obligation to God that he resists these forces and struggle and strive (wage Jihad) to fulfill the above-mentioned commandments, even if he has to compromise on some profit or put up some extra effort (up to his capacity). For him, profit is only a ?means' to keep his business alive and to satisfy his customer i.e. the ?end.'

The wisdom behind the golden rule is that the welfare and wellbeing of the customers and the society is far more important than the profitability of a single entrepreneur. Yes, by preferring customers over profit, a business will reduce its income in the short-term but will surely improve its sustainability in the longer run. Besides, a Muslim knows that his job is to simply work within the framework of Quranic injunctions and the rest will itself follow. The Holy Quran authorizes this fact in 51:58

[51:58] ?Allah is He who is the provider of all Rizq (Livelihood), the Lord of all Power.'

[2:212] ?And Allah provides 'Rizq' to whom he wishes without any account.'

There are some western and far-eastern organizations whose sole purpose is to meet the needs of the customer and society alone (?end') by leaving profitability as a ?means' for it. Their main focus is to satisfy their customers as much as possible in terms of their expectations about the quality of the product or service, and they never compromise on it. Interestingly enough, such companies are many times more profitable over other companies who do not have such intentions 5. The author and researcher Jim Collins describes such companies in his best-selling books titled ?Built to Last' and ?Good to Great.' Two such companies are Sony and Merck. The founder of the Merck believed that medicine is for the sick (end) and not for making money out of it (means). The author states that these beliefs are even openly evident in their everyday activities within their companies.

It is a natural law that when ?means' are recognized as ?means' and ?ends' of human life are recognized as ?ends', only then the real process of socioeconomic, intellectual, and spiritual evolution takes places and takes us to the extremes of our potential.

The following ayat reveals a lot than the apparent:

[26:182] ?And weigh with scales true and upright'

Fulfilling Contracts, Commitments, and Promises

Whereas promises are verbal commitment, contracts are written. From the ?Nikah Namah' to a business plan, including any financial agreement, are all different forms of written promises that we make. If we look at it strictly from the business point-of-view, commitments and promises are a daily routine affair. But how much do we keep of the promises that we make, promises as seemingly insignificant as: ?I will call you back in 15 minutes?' To run a business successfully, a businessman should not make promises that he cannot keep nor break any that he has made.

Dr. Stephan R. Covey writes in his book ?The 8 th Habit' 6:

?Nothing destroys trust faster than making and breaking a promise. Conversely, nothing builds and strengthens trust more than keeping a promise you make.'

This fact is applicable not only in the business environment but also in our individual, social and political environments.

The Holy Quran has instructed the Muslims about this golden rule at several places:

[17:34] ?Allah says, ?Fulfill your contracts. Contracts will be asked about.''

[16:91] ?And the Almighty says, ?Be true to Allah's contract when you have agreed to it.'

[5:1] ?The Almighty says, ?O you who believe! Fulfill your contracts.'

[61:2-3] ?And the Almighty says, ?O you who believe! Why do you say what you do not do? It is deeply abhorrent to Allah that you say what you do not do.''

Conclusion

Success and prosperity is the outcome of commitment to certain golden principles of life, and not out of luck and fate?principles that are readily available to us in the Holy Quran. These principles are independent and universal of any particular profession and primarily aims at building a ?whole' man capable of achieving his true potential in the purpose of his life?either through some business setup of his own or through as an employee. What remains desired is the practical implementation of these principles in our socio-economic and political lives.

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