Strategic Leadership:

Creating a Learning Organization and an Ethical Organization

Chapter Eleven

McGraw-Hill/Irwin

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

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 todays global marketplace. LO5 The leaders 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 leaders 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 commissionbased reward system because it was rewarding employees for inappropriate behavior. This is an example of

A. Setting a direction B. Designing the organization C. Unethical behavior D. 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 leaders 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 leaders power.

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A Leaders Bases of Power

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Emotional intelligence
Emotional intelligence (EI)
an individuals 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-taking B. Trusts people to perform C. Encourages cooperative behavior D. Delegates responsibility

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Empowering Employees at All Levels

Top-down perspective
Start at the top. Clarify the organizations 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 employees 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 organizations 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

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Integrity-Based versus ComplianceBased 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 ComplianceBased 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 organizations and members core guiding values, thoughts, and actions; and 3. defining the responsibilities and aspirations that constitute an organizations 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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