Strategic Leadership: Creating a Learning Organization

and an Ethical Organization

Chapter Eleven

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning Objectives

After reading this chapter, you should have a good understanding of:

LO1 The three key interdependent activities in which all successful leaders must be continually engaged.

LO2 Three elements of effective leadership: integrative thinking, overcoming barriers to change, and the effective use of power.

LO3 The crucial role of emotional intelligence (EI) in successful leadership as well as its potential drawbacks.

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Learning Objectives

LO4 The value of creating and maintaining a learning organization in today’s global marketplace.

LO5 The leader’s role in establishing an ethical organization.

LO6 The difference between integrity-based and compliance-based approaches to organizational ethics.

LO7 Several key elements that organizations must have to become an ethical organization.

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Leadership: Three Interdependent Activities

• Leadership process of transforming organizations from

what they are to what the leader would have them become

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Three Interdependent Activities of Leadership

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Setting a Direction

• Scan environment to develop Knowledge of all stakeholders Knowledge of salient environmental trends

and events

• Integrate that knowledge into a vision of what the organization could become

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Setting a Direction

• Required capacities Solve increasingly

complex problems Be proactive in

approach Develop viable

strategic options

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Designing the Organization

• Designing the organization A strategic leadership activity of building

structures, teams, systems, and organizational processes that facilitate the implementation of the leader’s vision and strategies.

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Designing the Organization

• Difficulties in implementing the leaders’ vision and strategies Lack of understanding of responsibility and

accountability among managers Reward systems that do not motivate individuals and

groups toward desired organizational goals Inadequate or inappropriate budgeting and control

systems Insufficient mechanisms to coordinate and integrate

activities across the organization

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QUESTION

XYZ's CEO scrapped the company's commission-based reward system because it was rewarding employees for inappropriate behavior. This is an example of A. Setting a directionB. Designing the organizationC. Unethical behaviorD. Failure to maintain the status quo

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Nurturing an Excellent and Ethical Culture

• Excellent and ethical organizational culture an organizational culture focused on core

competencies and high ethical standards

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Integrative Thinking

• Integrative thinking the process by which people reconcile

opposing thoughts to identify creative solutions that provide them with more options and new alternatives

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Integrative Thinking: The Process of Thinking and Deciding

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Overcoming Barriers to Change

• Reasons why organizations are prone to inertia and slow to change Vested interests in the status quo Systemic barriers Behavioral barriers Political barriers Personal time constraints

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The Effective Use of Power

• Power a leader’s ability to

get things done in a way he or she wants them to be done.

• Organizational bases of power A formal

management position that is the basis of a leader’s power.

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A Leader’s Bases of Power

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Emotional intelligence

• Emotional intelligence (EI) an individual’s capacity for recognizing his

own emotions and those of others, including the five components of self

awareness, self regulation, motivation, empathy, and social skills.

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Five Components of Emotional Intelligence at Work

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Inspiring and Motivating People with a Mission or Purpose

• Successful learning organizations Create a proactive, creative approach to the

unknown Actively solicit the involvement of employees

at all levels Enable all employees to use their intelligence

and apply their imagination

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Inspiring and Motivating People with a Mission or Purpose

• A Learning environment involves: Organization-wide commitment to change An action orientation Applicable tools and methods Guiding philosophy Inspired and motivated people with a

purpose

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Key Elements of a Learning Organization

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QUESTION

The "top down" perspective of empowerment A. Encourages intelligent risk-takingB. Trusts people to performC. Encourages cooperative behaviorD. Delegates responsibility

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Empowering Employees at All Levels

Top-down perspective• Start at the top.• Clarify the organization’s mission, vision, and

values.• Clearly specify the tasks, roles, and rewards for

employees.• Delegate responsibility.• Hold people accountable for results.

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Empowering Employees at All Levels

Bottom-up View• Start at the bottom by understanding needs of

employees• Teach employees skills of self-management• Build teams to encourage cooperative behavior• Encourage intelligent risk taking• Trust people to perform

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Accumulating and Sharing Internal knowledge

“Open book” management• Numbers on each employee’s work performance

and production costs are generated daily• Information is aggregated once a week from top

level to bottom level• Extensive training in how to use and interpret

the numbers

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Gathering and Integrating External Information

• Internet accelerates the speed with which useful information can be located

• Employees can use “garden variety” traditional sources to acquire external information

• Benchmarking

• Focus directly on customers for information

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Challenging the Status Quo and Enabling Creativity

• Create a sense of urgency

• Establish a “culture of dissent”

• Foster a culture that encourages risk taking

• Cultivate culture of experimentation and curiosity

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Best Practices: Learning from Failures

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Creating an Ethical Organization

• Organizational ethics the values, attitudes, and behavioral patterns

that define an organization’s operating culture and that determine what an organization holds as acceptable behavior.

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Creating An Ethical Organization

• Ethical orientation the practices that firms use to promote an

ethical business culture, Includes ethical role models, corporate

credos and codes of conduct, ethically-based reward and evaluation systems, and consistently enforced ethical policies and procedures.

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Creating An Ethical Organization

• Ethical values Shape the search for opportunities Shape the design organizational systems Shape the decision-making process used by

individuals and groups Provide a common frame of reference that

serves as a unifying force

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Example: Wal-Mart Ethics for Managers

• Meet with your direct reports as a group periodically to review the Guiding Principles and this Statement of Ethics.

• Where there is a conflict between our ethics and business objectives, our ethics must always come first.

• Lead by example, and encourage your associates to act with integrity in all dealings to avoid even the appearance of a violation of our business standards.

• If an ethics issue arises with one of your associates, make sure other associates in your area are not making the same mistake.

Source: walmartstores.com 11-32

Integrity-Based versus Compliance-Based Approaches

• Compliance-based ethics programs programs for building ethical organizations

that have the goal of preventing, detecting, and punishing legal violations.

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Integrity-Based versus Compliance-Based Approaches

• Integrity-based ethics programs programs for building ethical organizations

that combine a concern for law with an emphasis on managerial responsibility for ethical behavior,

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Integrity-based Ethics Programs

Integrity-based Ethics Programs include:

1. enabling ethical conduct;

2. examining the organization’s and members’ core guiding values, thoughts, and actions; and

3. defining the responsibilities and aspirations that constitute an organization’s ethical compass.

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Approaches to Ethics Management

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Key Elements of Highly Ethical Organizations

• Role models

• Corporate credos and codes of conduct

• Reward and evaluation systems

• Policies and procedures

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The Goolsby Leadership Model

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