10

Strategic Leadership:
Creating a Learning Organization
and an Ethical Organization
Dr Md Moazzam
Husain
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Learning Objectives

After reading 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, and the
salience of power in overcoming resistance to
change.
- The crucial role of emotional intelligence (EI) in
successful leadership as well as its potential
drawbacks.
- The value of creating and maintaining a learning
organization in todays global marketplace.
Dr Md Moazzam
Husain
 1 1- 3

Learning Objectives

After reading this chapter, you should have a

good understanding of:
- The five central elements of a learning
organization.
- The leaders role in establishing an ethical
organization.
- The benefits of developing an ethical organization.
- The high financial and nonfinancial costs associated
with ethical crises.

Dr Md Moazzam
Husain
 1 1- 4

Leadership: Three
Interdependent Activities
Leadership is the 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

Dr Md Moazzam
Husain
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Leadership: Three
Interdependent Activities

Successful
leaders must
recognize
three
interdependent
activities:

Adapted from Exhibit 11.1 Three Interdependent Activities of Leadership

Dr Md Moazzam
Husain
 1 1- 6

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
Required capacities
- Solve increasingly complex problems
- Be proactive in approach
- Develop viable strategic options

Dr Md Moazzam
Husain
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Example

DuPonts vision statement is to be the world's

most dynamic science company, creating
sustainable solutions essential to a better, safer
and healthier life for people everywhere.

Source: www.dupont.com Dr Md Moazzam

Husain
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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

Dr Md Moazzam
Husain
 1 1- 9

Nurturing a Culture

In nurturing a culture dedicated to excellence and

ethical behavior, managers and top executives must
- Accept personal responsibility for developing and
strengthening ethical behavior
- Consistently demonstrate that such behavior is central
to the vision and mission
- Develop and reinforce
Role models
Corporate credos
Codes of conduct
- Reward and evaluation systems
- Policies and procedures
Dr Md Moazzam
Husain
 1 1- 10

Overcoming Barriers to Change and

the Effective Use of Power
Reasons why organizations and managers at all
levels are prone to inertia and slow to learn,
adapt, and change
- Vested interests in the status quo
- Systemic barriers
- Behavioral barriers
- Political barriers
- Personal time constraints

Dr Md Moazzam
Husain
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A Leaders Bases of Power

Dr Md Moazzam Exhibit 11.2 A Leaders Bases of Power

Husain
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Emotional Intelligence: A Key

Leadership Trait
Successful traits
of leaders at the
highest level

Technical Cognitive Emotional

skills abilities intelligence

Accounting, Analytical reasoning, Ability to work with

business quantitative analysis, others, passion for
planning, etc. etc. work, etc.

Dr Md Moazzam
Husain
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Emotional Intelligence

Five components of emotional intelligence

- Self-awareness
- Self-regulation
- Motivation
- Empathy
- Social skill

Dr Md Moazzam
Husain
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Five Components of Emotional

Intelligence at Work

Definition Hallmarks
Self-management The ability to recognize Self-confidence
skills: and understand your
Self- Realistic self-
moods, emotions, and
awareness assessment
drives, as well as their
effect on others. Self-deprecating sense
of humor
Self-regulation The ability to control or Trustworthiness and
redirect disruptive integrity
impulses and moods. Comfort with ambiguity
The propensity to Openness to change
suspend judgmentto
think before acting.
Source: Adapted from D. Goleman, What Makes a Leader, Harvard Business Review, October-November 1998, p. 95 (with permission)

Adapted from Exhibit 11.3 The Five Components of Emotional Intelligence at Work Dr Md Moazzam
Husain
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Five Components of Emotional

Intelligence at Work

Definition Hallmarks
Self-management A passion to work for Strong drive to achieve
skills: reasons that go beyond Optimism, even in the
Motivation
money or status. face of failure
A propensity to pursue
Organizational
goals with energy and commitment
Managing persistence.
Relationships:
Empathy The ability to Expertise in building
understand the and retaining talent
emotional makeup of
other people. Cross-cultural
sensitivity
Skill in treating people
according to their Service to clients and
emotional reactions. customers
Adapted from Exhibit 11.3 The Five Components of Emotional Intelligence at Work Dr Md Moazzam
Husain
 1 1- 16

Five Components of Emotional

Intelligence at Work

Definition Hallmarks
Managing
Relationships: Proficiency in managing Effectiveness in leading
Social Skill relationships and change
building networks.
Persuasiveness
An ability to find
common ground and Expertise in building
build rapport. and leading teams

Source: Adapted from D. Goleman, What Makes a Leader, Harvard Business Review, October-November 1998, p. 95 (with permission)

Adapted from Exhibit 11.3 The Five Components of Emotional Intelligence at Work Dr Md Moazzam
Husain
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Developing a Learning Organization

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
Learning environment
- Organization-wide commitment to change
- An action orientation
- Applicable tools and methods
- Guiding philosophy
- Inspired and motivated people with a purpose
Dr Md Moazzam
Husain
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Key Elements of a
Learning Organization

Dr Md Moazzam
Husain
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Key Elements of a
Learning Organization
Empowering employees at all levels
- Salient elements of empowerment
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

Dr Md Moazzam
Husain
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Question

Do you agree with this statement by Ken Melrose,

the great leader is a great servant?

Dr Md Moazzam
Husain
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Key Elements of a
Learning Organization
Accumulating and sharing internal knowledge
- Open book management
Numbers on each employees work performance and
production costs generated daily
Information is aggregated once a week from top level to
bottom level
Extensive training in how to use and interpret the
numbers how to understand balance sheets, cash
flows and income statements

Dr Md Moazzam
Husain
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Key Elements of a
Learning Organization
Gathering and integrating external information
- Awareness of environmental trends and events
Internet accelerates the speed with which useful
information can be located
Garden variety traditional sources for acquisition of
external information
Benchmarking
Focus directly on customers for information

Dr Md Moazzam
Husain
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Key Elements of a
Learning Organization
Challenging the status quo and enabling
creativity
- Challenging the status quo
Create a sense of urgency
Establish a culture of dissent
Foster a culture that encourages risk taking
Cultivate culture of experimentation and curiosity

Dr Md Moazzam
Husain
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Creating An Ethical Organization

Organizational ethics is a direct reflection of its

leadership
Unethical business practices
- Involves tacit, if not explicit, cooperation of others
- Reflect the values, attitudes, and behavior pattern that
define the organizations operating culture
Driving forces of ethical organizations
- Ethical values
- Integrity

Dr Md Moazzam
Husain
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Example

In order to avoid unethical business practices,

you should never do the following:
1. Suppress information that might damage your
reputation.
2. Deny charges that are relevant and factual.
3. Spend money for public relations or advertising to
counter honest complaints.
4. Ignore problems with the products you sell.
5. Refuse to accept blame.

Source: Gerson, Vicki. Avoiding Unethical Business Practices, www.nfib.com. February 21, 2003. Dr Md Moazzam
Husain
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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

Dr Md Moazzam
Husain
 1 1- 27

Integrity-Based versus Compliance-Based

Approaches to Organizational Ethics

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, resting on a concept of
Purpose
Responsibility
Ideals

Dr Md Moazzam
Husain
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Question

Integrity-based ethics programs combines a

concern for law with an ______.
A) emphasis on the proper use of managerial
power
B) emphasis on legal consequences of unethical
behavior
C) emphasis on managerial responsibility for ethical
behavior
D) emphasis on social responsibility for ethical
behavior
Dr Md Moazzam
Husain
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Approaches to Ethics Management

Characteristics Compliance-Based Integrity-Based

Approach Approach
Ethics Conformity with externally Self-governance according to
imposed standards chosen standards
Objective Prevent criminal Enable responsible conduct
misconduct
Leadership Lawyer-driven Management-driven with aid of
lawyers, HR, and others

Source: L. S. Paine, Managing for Organizational Integrity, Harvard Business Review 72, no. 2 (1994), p. 113 (with permission).
Adapted from Exhibit 11.6 Approaches to Ethics Management Dr Md Moazzam
Husain
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Approaches to Ethics Management

Characteristics Compliance-Based Integrity-Based

Approach Approach
Methods Education, reduced Education, leadership,
discretion, auditing and accountability, organizational
controls, penalties systems and decision
processes, auditing and
controls, penalties

Behavioral Autonomous beings Social beings guided by

Assumptions guided by material material self-interest, values,
self-interest ideals, peers

Source: L. S. Paine, Managing for Organizational Integrity, Harvard Business Review 72, no. 2 (1994), p. 113 (with permission).
Adapted from Exhibit 11.6 Approaches to Ethics Management Dr Md Moazzam
Husain
 1 1- 31

Key Elements of Highly

Ethical Organizations
These interrelated elements must be present and
constantly reinforced
- Role models
- Corporate credos and codes of conduct
- Reward and evaluation systems
- Policies and procedures

Dr Md Moazzam
Husain
 1 1- 32

Key Elements of Highly

Ethical Organizations
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 organizations employees
- Effective leaders take responsibility for ethical lapses
within the organization

Dr Md Moazzam
Husain
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Key Elements of Highly

Ethical Organizations
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

Dr Md Moazzam
Husain
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Key Elements of Highly

Ethical Organizations
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

Dr Md Moazzam
Husain
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Key Elements of Highly

Ethical Organizations
Policies and procedures
- Policies and procedures can specify proper
relationships with a firms customers and suppliers
- Policies and procedures can guide employees to
behavior ethically
- Policies and procedures must be reinforced
Effective communication
Enforcement
Monitoring
Sound corporate governance practices

Dr Md Moazzam
Husain