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11-1
11-2
Strategic Leadership: Creating a Learning Organization
and an Ethical Organization
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter eleven
Part 3: strategic implementation
11-3
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.
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
11-4
Learning Objectives
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
After reading this chapter, you should have a good understanding of:
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 today’s global marketplace.The five central elements of a “learning organization.”
11-5
Learning Objectives
After reading this chapter, you should have a good understanding of:
The leader’s role in establishing an ethical organization.
The benefits of developing an ethical organization.
The high financial and nonfinancial costs associated with ethical crises.
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
11-6
Leadership: Three Interdependent Activities
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Leadership is the process of transforming organizations from what they are to what the leader would have them becomeLeadership should be
ProactiveGoal-orientedFocused on the creation and implementation of a creative vision
11-7 Leadership: Three Interdependent Activities
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Determining aDetermining adirectiondirection
Designing theDesigning theorganizationorganization
Nurturing aNurturing aculture dedicatedculture dedicatedto excellence andto excellence andethical behaviorethical behavior
Successful leaders must recognize three interdependent activitiesDetermining a direction
Designing the organization
Nurturing a culture dedicated to excellence and ethical behavior
Adapted from Exhibit 11.1 Three Interdependent Activities of Leadership
11-8
Setting a Direction
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Scan environment to developKnowledge of all stakeholdersKnowledge of salient environmental trends and events
Integrate that knowledge into a vision of what the organization could becomeRequired capacities
Solve increasingly complex problems Be proactive in approachDevelop viable strategic options
11-9
Patterns of Growth of Large Corporations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Difficulties in implementing the leaders’ vision and strategies
Lack of understanding of responsibility and accountability among managersReward systems that do not motivate individuals and groups toward desired organizational goalsInadequate or inappropriate budgeting and control systemsInsufficient mechanisms to coordinate and integrate activities across the organization
11-10
Nurturing a Culture
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
In nurturing a culture dedicated to excellence and ethical behavior, managers and top executives must
Accept personal responsibility for developing and strengthening ethical behaviorConsistently demonstrate that such behavior is central to the vision and missionDevelop and reinforce
Role models Corporate credosCodes of conduct
Reward and evaluation systemsPolicies and procedures
11-11Overcoming Barriers to Change and the Effective Use of Power
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Reasons why organizations and managers at all levels are prone to inertia and slow to learn, adapt, and change
Vested interests in the status quoSystemic barriersBehavioral barriersPolitical barriersPersonal time constraints
11-12
A Leader’s Bases of Power
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Exhibit 11.2 A Leader’s Bases of Power
11-13Emotional Intelligence: A Key Leadership Trait
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Accounting, business
planning, etc.
Analytical reasoning, quantitative analysis,
etc.
Ability to work with others, passion for
work, etc.
Successful traits Successful traits of leaders at the of leaders at the
highest levelhighest level
Technical Technical skillsskills
Cognitive Cognitive abilitiesabilities
Emotional Emotional intelligenceintelligence
11-14
Emotional Intelligence
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Five components of emotional intelligence
Self-awarenessSelf-regulationMotivationEmpathySocial skill
Emotional Emotional intelligenceintelligence
11-15 Five Components of Emotional Intelligence at Work
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Self-management
skills:Self-awareness
Definition Hallmarks
The ability to recognize and understand your moods, emotions, and drives, as well as their effect on others.
Self-confidence
Realistic self-assessment
Self-deprecating sense of humor
The ability to control or redirect disruptive impulses and moods.
The propensity to suspend judgment—to think before acting.
Trustworthiness and integrity
Comfort with ambiguity
Openness to change
Source: Adapted from D. Goleman, “What Makes a Leader,” Harvard Business Review, October-November 1998, p. 95 (with permission)
Self-regulation
Adapted from Exhibit 11.3 The Five Components of Emotional Intelligence at Work
11-16 Five Components of Emotional Intelligence at Work
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
motivation
Definition Hallmarks
A passion to work for reasons that go beyond money or status.
A propensity to pursue goals with energy and persistence.
Strong drive to achieve
Optimism, even in the face of failure
Organizational commitment
The ability to understand the emotional makeup of other people.
Skill in treating people according to their emotional reactions.
Expertise in building and retaining talent
Cross-cultural sensitivity
Service to clients and customers
Self-management skills:
Managing relationships
Empathy
Adapted from Exhibit 11.3 The Five Components of Emotional Intelligence at Work
11-17 Five Components of Emotional Intelligence at Work
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Social skill
Definition Hallmarks
Proficiency in managing relationships and building networks.
An ability to find common ground and build rapport.
Effectiveness in leading change
Persuasiveness
Expertise in building and leading teams
Managing relationships
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
11-18
Developing a Learning Organization
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Successful learning organizationsCreate a proactive, creative approach to the unknownActively solicit the involvement of employees at all levelsEnable all employees to use their intelligence and apply their imagination
11-19
Developing a Learning Organization
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Learning environmentOrganization-wide commitment to changeAn action orientationApplicable tools and methodsGuiding philosophyInspired and motivated people with a purpose
11-20
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Salient elements of empowerment
Start at the bottom by understanding needs of employeesTeach employees skills of self-managementBuild teams to encourage cooperative behaviorEncourage intelligent risk takingTrust people to perform
Four Critical Processes of Learning Organizations
Empowering Empowering employees at all employees at all
levelslevels
11-21
Four Critical Processes of Learning Organizations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Empowering Empowering employees at all employees at all
levelslevels
Accumulating and Accumulating and sharing internal sharing internal
knowledgeknowledge
“Open book” managementNumbers on each employee’s work performance and production costs generated dailyInformation is aggregated once a week from top level to bottom levelExtensive training in how to use and interpret the numbers – how to understand balance sheets, cash flows and income statements
11-22
Four Critical Processes of Learning Organizations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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 informationBenchmarkingFocus directly on customers for information
Empowering Empowering employees at all employees at all
levelslevels
Accumulating and Accumulating and sharing internal sharing internal
knowledgeknowledge
Gathering and Gathering and integrating external integrating external
informationinformation
11-23
Four Critical Processes of Learning Organizations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Empowering Empowering employees at all employees at all
levelslevels
Accumulating and Accumulating and sharing internal sharing internal
knowledgeknowledge
Gathering and Gathering and integrating external integrating external
informationinformation
Challenging the Challenging the status quo and status quo and
enabling creativityenabling creativity
Challenging the status quoCreate a sense of urgencyEstablish a “culture of dissent”Foster a culture that encourages risk taking Cultivate culture of experimentation and curiosity
11-24
Creating An Ethical Organization
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Organizational ethics is a direct reflection of its leadershipUnethical business practices
Involves tacit, if not explicit, cooperation of othersReflect the values, attitudes, and behavior pattern that define the organization’s operating culture
11-25
Creating An Ethical Organization
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Driving forces of ethical organizationsEthical valuesIntegrity
Ethical valuesShape the search for opportunitiesShape the design organizational systemsShape the decision-making process used by individuals and groupsProvide a common frame of reference that serves as a unifying force
11-26Integrity-Based versus Compliance-Based Approaches to Organizational Ethics
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Essential links between organizational integrity and individual integrity
Cannot be high-integrity organizations without high-integrity individualsIndividual integrity is rarely self-sustainingOrganizational integrity, resting on a
concept of PurposeResponsibilityIdeals
11-27
Approaches to Ethics Management
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Ethics Conformity with externally Self-governance according to
imposed standards chosen standards
Characteristics Compliance-Based Integrity-BasedApproach Approach
Objective Prevent criminal Enable responsible conductmisconduct
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 11.5 Approaches or Strategies for Ethics Management
11-28
Approaches to Ethics Management
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Methods Education, reduced Education, leadership,discretion, auditing and accountability,
organizationalcontrols, penalties systems and decision
processes, auditing and controls, penalties
Characteristics Compliance-Based Integrity-BasedApproach Approach
Behavioral Autonomous beings Social beings guided byAssumptions 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 11.5 Approaches or Strategies for Ethics Management
11-29 Key Elements of Highly Ethical Organizations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
These interrelated elements must be present and constantly reinforced
Role modelsCorporate credos and codes of conductReward and evaluation systemsPolicies and procedures
11-30 Key Elements of Highly Ethical Organizations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Leaders are role models for their organizationsLeaders must be consistent in their words and deedsValues and character of leaders become transparent to an organization’s employeesEffective leaders take responsibility for ethical lapses within the organization
Role modelsRole models
11-31 Key Elements of Highly Ethical Organizations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Provide a statement and guidelines for norms, beliefs and decision makingProvide employees with clear understanding of the organizations position regarding employee behaviorProvide the basis for employees to refuse to commit unethical actsContents of credos and codes of conduct must be known to employees
Role modelsRole models
Corporate credos Corporate credos and codes of and codes of
conductconduct
11-32 Key Elements of Highly Ethical Organizations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Inappropriate reward systems may cause individuals at all levels of the organization to commit unethical acts that they might not otherwise doPenalties 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
Role modelsRole models
Corporate credos Corporate credos and codes of and codes of
conductconduct
Reward and Reward and evaluationevaluationsystemssystems
11-33 Key Elements of Highly Ethical Organizations
McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Policies and procedures can specify proper relationships with a firm’s customers and suppliersPolicies and procedures can guide employees to behavior ethicallyPolicies and procedures must be reinforced
Effective communicationEnforcementMonitoringSound corporate governance practices
Role modelsRole models
Corporate credos Corporate credos and codes of and codes of
conductconduct
Reward and Reward and evaluationevaluationsystemssystems
Policies and Policies and proceduresprocedures