Creating a Learning and Ethical Organization Chapter 11 Creating a Learning and Ethical Organization McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

After studying this chapter, you should have a good understanding of: Learning Objectives After studying this chapter, you should have a good understanding of: The three key activities in which all successful leaders must be continually engaged The importance of recognizing the interdependence of the three key leadership activities The value of creating and maintaining a “learning organization” in today’s global marketplace The five central elements of a “learning organization” The leader’s role in establishing an ethical organization The benefits of developing an ethical organization The high costs–both financial and non-financial–associated with ethical crises

Three Interdependent Activities of Leadership Exhibit 11.1 Three Interdependent Activities of Leadership Designing the Organization Determining a Direction Nurturing a Culture Dedicated to Excellence and Ethical Behavior

Developing a Learning Organization Knowledge is a key factor of production Learning is the process of developing and sharing new knowledge Learning allows a firm to maximize its human and social capital Learning allows a firm to fully exploit its competitive advantage

Developing a Learning Organization Empowerment is crucial Accumulating and sharing internal knowledge (competition and cooperation) Gathering and integrating external information Challenging the status quo through creativity Creating an ethical organization

Management by Walking Around Exhibit 11.2 (adapted) 10 MBWA tips from the pros 1. Wander frequently. 2. Wander aimlessly without an agenda. 3. Be inconsistent. Be spontaneous. Schedule time for this spontaneity if necessary. 4. Be a good listener. Don’t try to steer the conversation. Let the other person do most of the talking. 5. Be open and don’t argue. The goal is to provide an open environment of trust. Source: Hoppe, J.B. 1997. Is MBWA still alive? Measure (a Hewlett-Packard internal company publication), July-August: 27-28.

Management by Walking Around Exhibit 11.2 (adapted) 6. Talk about non-company matters to really get to know your employees. 7. Wander about even if you’re an introvert; it gets easier with time and practice. 8. Remember, this is not a waste of time. Personal involvement is essential to good management. 9. Ask open-ended questions. Do you like your job? How could it be more meaningful and productive? How is the family? How was the vacation? 10. Talk with all your employees, not just the ones who are talkative or who have similar interests.

Characteristics of an Ethical Organization Leaders serve as role models Credos and codes of conduct exist that are visible and are well communicated Reward and evaluation systems reward ethical behavior Policies and procedures are in place and are followed - Customers - Accounting - Investors - Human Resources - Manufacturing process (quality, emissions, etc.)

Johnson & Johnson’s Credo (1) Exhibit 11.3 We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical. Source: Company records.

Johnson & Johnson’s Credo (2) Exhibit 11.3 We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens—support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return. Source: Company records.