Chapter 11 Strategic Leadership: Creating a Learning Organization and an Ethical Organization

Linkages Scanning, monitoring, analyzing external environment Formulated your strategy(ies) to fit internal and external strengths/opportunities, weakness/threats To carryout (implement)  Control  Structure/Design  Leadership/Learning/Ethics 11-2

Slide Overview I.Three Key Leadership Activities II.Elements of Effective Leadership III.Emotional Intelligence IV.Learning Organization V.Ethical Organization 11-3

I. Leadership: Three Interdependent Activities Leadership  process of transforming organizations from what they are to what the leader would have them become Leadership should be  Proactive  Goal-oriented  Focused on the creation and implementation of a creative vision 11-4

Three Interdependent Activities of Leadership 11-5

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 11-6

Setting a Direction Required capacities  Solve increasingly complex problems  Be proactive in approach  Develop viable strategic options 11-7

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 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 11-9

Nurturing an Excellent and Ethical Culture Excellent and ethical organizational culture  an organizational culture focused on core competencies and high ethical standards 11-10

II. Elements of Effective Leadership 1.Integrative Thinking 2.Overcoming Barriers to Change 3.The Effective Use of Power 11-11

1. 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 11-12

Integrative Thinking: The Process of Thinking and Deciding 11-13

2. 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 11-14

Resistance to Change Lack of understanding and trust Cultures that value tradition Different perspectives and goals Uncertainty Self-interest

Tactics for Introducing Change Communication & Education Employee Involvement Negotiation Coercion Top Management Support

3. 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

A Leader’s Bases of Power 11-18

III. 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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Emotions seven-basic-emotions-do-you-know- them/ 7 Universal Emotions Happy/Joy Surprise Contempt Sadness Fear Disgust Anger

Emotional Intelligence: Some Potential Drawbacks and Cautionary Notes Effective Leaders… Have Empathy for Others  Overidentify with others (Cannot make Tough Decisions) Are Astute Judges of People  Judgmental and overly critical, Dismiss other people’s insights Are Passionate about What They Do, and They Show It  Close minded to other possibilities Create Personal Connections with Their People  Too micromanaging Manipulative, selfish, and dishonest 

IV. Learning Organization Inspiring, Motivating People with a Mission or Purpose Empowering Employees at All Levels Accumulating and Sharing Internal Knowledge Gathering and Integrating External Information Challenging the Status Quo and Enabling Creativity

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 11-24

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 11-25

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

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 11-27

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 11-28

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 11-29

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 11-30

Best Practices: Learning from Failures Formalize Forums for Failure Move the Goalposts Share Personal Stories Bring in Outsiders Prove Yourself Wrong, Not Right Celebrate Smart Failures

V. 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

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. Organizational ethics is a direct reflection of its leadership 11-33

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 11-34

Integrity-Based versus Compliance- Based Approaches Essential links between organizational integrity and individual integrity  Cannot be high-integrity organizations without high- integrity individuals  Individual integrity is rarely self-sustaining  Organizational integrity, rests on a concept of Purpose, Responsibility, Ideals As important responsibility of leadership is to create this ethical framework and develop the organizational capabilities to make it operational 11-35

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

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 11-37

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

Approaches to Ethics Management CharacteristicsCompliance-Based Approach Integrity-Based Approach Ethics Conformity with externally imposed standards Self-governance according to chosen standards ObjectivePrevent criminal misconduct Enable responsible conduct LeadershipLawyer-drivenManagement-driven with aid of lawyers, HR, and others MethodsEducation, reduced discretion, auditing and controls, penalties Education, leadership, accountability, organizational systems and decision processes, auditing and controls, penalties Behavioral AssumptionsAutonomous beings guided by material self-interest Social beings guided by material self-interest, values, ideals, peers

Key Elements of Highly Ethical Organizations Role models Corporate credos and codes of conduct Reward and evaluation systems Policies and procedures 11-40

Role Models  Leaders are role models for their organizations  Leaders must be consistent in their words and deeds  Values and character of leaders become transparent to an organization’s employees  Effective leaders take responsibility for ethical lapses within the organization 11-41

Corporate Credos and Codes of Conduct  Provide a statement and guidelines for norms, beliefs and decision making  Provide employees with clear understanding of the organizations position regarding employee behavior  Provide the basis for employees to refuse to commit unethical acts  Contents of credos and codes of conduct must be known to employees 42

Codes of Conduct UTSA   Starbucks  us/company-information/business-ethics- and-compliance us/company-information/business-ethics- and-compliance 11-43

Reward and Evaluation Systems  Inappropriate reward systems may cause individuals at all levels of the organization to commit unethical acts that they might not otherwise do  Penalties in terms of damage to reputations, human capital erosion, and financial loss are typically much higher than any gains that could be obtained through such unethical behavior 11-44

Policies and Procedures  Should specify proper relationships with a firm’s customers and suppliers  Should guide employees to behavior ethically  Policies and procedures must be reinforced  Effective communication  Enforcement  Monitoring  Sound corporate governance practices 45

The Goolsby Leadership Model Source: Quick, J. C., Macik-Frey, M., & Cooper, C.L Journal of Management Studies, 44(2): 195.