Learning Organization

1 BUSINESS ETHICS

LEARNING ORGANIZATION &

Contents Learning Organization......................................................................................4 Why Learning Organization?............................................................................7 How to Develop Learning Organization............................................................9 Four Critical Processes of Learning Organizations........................................9 Empowering employees at all levels.........................................................9 Accumulating and sharing internal knowledge..........................................9 Gathering and integrating external information......................................10 Challenging the status quo and enabling creativity................................10 Tips for Becoming a Learning Organization................................................10 Begin with the Role of the Leaders..........................................................10 Create Your Learning Organization.............................................................11 Read together..........................................................................................11 Attend training and conferences.............................................................11 Provide alternative sources for learning..................................................12 Debrief every project and initiative.........................................................12 Twelve More Tips about How to Become a Learning Organization..............12 Build individual development plans quarterly..........................................12 Put each person directly into contact with customers.............................12 Promote field trips to other organizations...............................................12 Meet regularly across departments.........................................................13 Use cross-functional teams.....................................................................13 Pay for education for all employees........................................................13 Coach improved performance from all members of the organization.....13

2 BUSINESS ETHICS

LEARNING ORGANIZATION &

Form study groups...................................................................................13 Take time to read, to think, to talk about new ideas and work................13 Hold brainstorming (idea generation) sessions on specific topics...........14 Foster an environment of collegiality......................................................14 Use your performance management system effectively.........................14 Basic Elements of Learning Organization......................................................15 Systems of Preview.....................................................................................16 A simulation system................................................................................16 The prototyping system...........................................................................16 The listening post....................................................................................16 Systems of Review......................................................................................17 A decision-audit system..........................................................................17 A best-practice system............................................................................17 Culture........................................................................................................17 Learning Organization vs. Organizational Learning.......................................18 What is Organizational Learning?...............................................................18 What is a Learning Organization?...............................................................19 Business Ethics..............................................................................................20 Role of Business Ethics...............................................................................20 Ethical Organization.......................................................................................20 Organizational and Applied Ethics..............................................................21 Create an Ethical Organization...................................................................21 Key Elements of Highly Ethical Organizations.........................................22 Framework of an Ethical Organization........................................................23 Leadership and Theory for Ethics in an Organization.................................24

3 BUSINESS ETHICS

LEARNING ORGANIZATION &

Creating and Sustaining an Ethical Workplace Culture..................................25 The Values ---> Attitude ---> Behavior Chain.............................................25 Values Drive Behavior.................................................................................25 Wisdom and Knowledge..........................................................................25 Self Control..............................................................................................25 Justice and Fair Guidance........................................................................26 Transcendence.........................................................................................26 Love and Kindness...................................................................................26 Courage and Integrity..............................................................................26 Putting Virtuous Values into Practice..........................................................28 Behavioral Standards and Codes of Conduct: The Safety Net....................30 The Ethical Behavior Formula.....................................................................31 Three Good Reasons to Apply the Formula..............................................31 ARTICLE..........................................................................................................33 A Model of Business Ethics............................................................................33

LEARNING

ORGANIZATION

&

BUSINESS ETHICS Learning Organization A learning organization is one that is able to change its behaviors and mindsets as a result of experience. This may sound like an obvious statement, yet many organizations refuse to acknowledge certain truths or facts and repeat dysfunctional behaviors over and again. Examples include the number of

4 BUSINESS ETHICS

LEARNING ORGANIZATION &

times restructuring initiatives are repeated because the previous attempt did not achieve the desired outcomes or the failure of mergers and acquisitions to meet initial objectives. A "Learning Organization" is one in which people at all levels, individually and collectively, are continually increasing their capacity to produce results they really care about. Why should organizations care? Because, the level of performance and improvement needed today requires learning, lots of learning. In most industries, in health care, and in most areas of government, there is no clear path to success, no clear path to follow. What's in it for the people? Learning to do is enormously rewarding and personally satisfying. For those of us working in the field, the possibility of a win-win is part of the attraction. That is, the possibility of achieving extraordinary performance together with satisfaction and fulfillment for the individuals involved. Organizational learning (OL) is more than individual learning and arises through the interaction of individuals in groups and teams of different sizes. What is characteristic of OL is that it is an emergent process in the sense that its outcome is not predictable and it is more than the separate contributions of individuals. (The principles of complex systems shown in italics are discussed in Mitleton-Kelly 2003) OL needs the right environment to thrive, one that allows time for reflection on past actions and outcomes and is prepared to accept some unpalatable truths and one that is not a blame culture in the sense that ‘mistakes’ are unacceptable. Such an environment makes a distinction between ‘mistakes’ that are the result of irresponsibility and lack of forethought and those that are genuine explorations of a new idea or a new way of working. If individuals and teams are encouraged to be innovative then they need to explore alternatives and to take thoughtful risks.

5 BUSINESS ETHICS

LEARNING ORGANIZATION &

During the learning process, individuals will influence each other and their ideas will co-evolve; that is each idea will adapt and change in the context of other ideas, and once changed, it will, in turn, have an influence on what happens next. The concept of co-evolution is a powerful one and applies not only to internal organizational learning but also to strategy in relation to a changing environment, as well as to sustainability understanding. Whatever actions or procedures are in place at any one time regarding sustainability (whether organizational or environmental) they cannot remain static. As the broader environment changes these actions and procedures, policies, etc., need to change to respond to changes in the environment. Once changed, they will, in turn, influence that broader environment. When the influence and change are reciprocal and not unilateral then co-evolution has occurred. In terms of sustainability, the concept to work towards is that of coevolutionary sustainability – in other words the ability of an organization to continuously and appropriately adapt to external changes in its broader environment. Another relevant concept, inspired by biology, is the notion of the social ecosystem. This includes all competitors, suppliers, customers, associates, legal and government bodies, etc. Complexity theory sees systems as interacting wholes, influencing each other, in a co-evolutionary process. Learning organizations encourage self-organization, so that groups can come together to explore new ideas without being directed to do so by a manager outside that group. This is the process that occurs natural y around the coffee machine or the water cooler, but learning organizations actively encourage self-organization and do not see it as a waste of time. This is an essential part of the innovative process which is also an integral part of creating an environment that facilitates co-evolutionary sustainability. Organizations include multiple and intricate networks of relationships, which are sustained through communication and other forms of feedback, with varying degrees of inter-dependence. Although heavily influenced by their history and culture, they can transcend both when necessary. When such

6 BUSINESS ETHICS

LEARNING ORGANIZATION &

organizations meet a constraint they are able to explore the space of possibilities and find a different way of doing things, i.e., they are creative and innovative and can create something new. This creation of new orderis the distinctive characteristic of complex (as distinct from complicated) systems. Unfortunately, this innate source of innovation is often restricted. Understanding the characteristics of complex systems and of complex learning organizations means that we can work with those characteristics to achieve objectives, rather than against them.

Why Learning Organization? •

Because we want superior performance and competitive advantage

•

For customer relations

•

To avoid decline

•

To improve quality

•

To understand risks and diversity more deeply

•

For innovation

7 BUSINESS ETHICS

LEARNING ORGANIZATION &

•

For our personal and spiritual well being

•

To increase our ability to manage change

•

For understanding

•

For energized committed work force

•

To expand boundaries

•

To engage in community

•

For independence and liberty

•

For awareness of the critical nature of interdependence

•

Because the times demand it

•

It’s more fun to go to work in learning organizations.

•

Learning organizations give people hope that things can be better

•

Learning orgs provide a playground for creative ideas

•

Learning orgs provide a safe place to take risks with new ideas and behaviors and the challenge needed to stretch beyond perceived limits

•

In learning organizations everyone's opinions are valued and amount that people can contribute is not determined by position in the organization

Another driver towards organizational learning is change. It's been said a lot but the greatest constant of modern time is change. With regards to the organizations

we

are

in,

change

consistently

challenges

traditional

institutional practices and beliefs. Most important, most of the changes we now struggle to comprehend arise as consequences, intended or unintended, of created in some way by the folks from the organizations themselves. What is required then, given this constant state of change are fundamental new ways of thinking and acting. The most compelling of which is Systems Thinking, or "the ability to see the world as a complex system." This kind of thinking inspires people to say things like: in "you can't just do one thing" and "everything is connected to everything else."

8 BUSINESS ETHICS •

LEARNING ORGANIZATION &

develop the practice of life-long learning

The question is: how do we continually learn, if change is a constant? That leads to barriers to learning, what stops us from learning? : •

Defensive routines

•

Dynamic complexity of systems

•

Inadequate and ambiguous outcome feedback

•

Misperceptions of the feedback

•

Poor interpersonal and organizational inquiry skills

If we could collectively see and to some extent overcome these barriers, the environment, our families, our communalities and our organizations would all dramatically improve – another reason for pursuing organizational learning.

How to Develop 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

9 BUSINESS ETHICS

LEARNING ORGANIZATION &

Four Critical Processes of Learning Organizations 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 Accumulating and sharing internal knowledge ○ “Open book” management ○ Numbers on each employee’s 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 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 Challenging the status quo and enabling creativity ○ Challenging the status quo ○ Create a sense of urgency ○ Establish a “culture of dissent”

10 BUSINESS ETHICS

LEARNING ORGANIZATION &

○ Foster a culture that encourages risk taking ○ Cultivate culture of experimentation and curiosity

Tips for Becoming a Learning Organization Begin with the Role of the Leaders Begin with the behavior and contribution of your leaders. Your leaders make four critical contributions to the development of a learning organization. •

Leaders provide the initial vision about why your organization exists and where you are going.

•

They communicate this vision. They clearly communicate their belief that continuous growth, learning, and improvement will ensure its accomplishment.

•

They build consensus and ownership around this vision, and are influenced by the views of others in the organization.

•

They model the actions they want to develop in others.

•

Their expectations are verbal, but most importantly, actions that others can see. Leaders who want a learning organization continually learn themselves.

•

They read books and articles and share the content with the rest of the organization. They attend training sessions and conferences.

•

They foster an environment in which people are empowered to make decisions about their work. They make intelligent risk-taking the norm. They assure that all information people need to make good decisions is communicated. They promote an organizational environment that supports learning and personal mastery.

Create Your Learning Organization To become a learning organization, everyone must contribute. Following are my ideas about how you can ensure the development of this environment at work.

11 BUSINESS ETHICS

LEARNING ORGANIZATION &

Read together. One printing shop, with thirty employees, set aside two lunch hours per week to read and discuss the book, The Goal, as a group. The marketing staff of a software development company voted on a book to read. The department members took turns leading the discussion of various chapters at staff meetings. The leadership team in a student health center read, Leading Change, together. The group discussed concepts and chapters at their weekly leadership team meeting. Attend training and conferences. A recent study by the American Society for Training and Development suggests that there is a direct “causative relationship between training and performance but doesn’t prove it.” (The ASTD Benchmarking service continues to gather data each year which may prove the relationship over time.) Create the expectation that anyone who attends training or a conference will make presentations to other staff about the most important learning they took away from the event. Provide alternative sources for learning Such as CDs and online learning. Debrief every project and initiative. If you have developed a new product, designed an ad campaign, or purchased new equipment, to cite a few examples, don’t just move on to the next activity. Bring together everyone in the organization who contributed to the success or failure of the initiative.

12 BUSINESS ETHICS

Twelve

More

LEARNING ORGANIZATION &

Tips

about

How

to

Become

a

Learning

Organization Build individual development plans quarterly. These should list negotiated expectations for growth and learning over the quarter. These plans may include cross-training, skill stretching assignments, and representing the department at organization-wide meetings, as well as education. Put each person directly into contact with customers. When each individual personally knows customer needs, she is enabled to make better decisions to satisfy the customer. Remember also, the internal customers. Anyone to whom you provide a product or a service is a customer. Promote field trips to other organizations. Even organizations in different industries can provide opportunities for learning. Meet regularly across departments Even in a larger organization, bring the whole company together, at least quarterly. People have to understand the whole work system; otherwise they improve just their small part of the system. While these small improvements are important, they do not necessarily optimize the success of the entire system. This is an area in which every technological advancement makes meeting easier. Use cross-functional teams To solve problems, scout for new opportunities, and cross-fertilize units with new ideas. Pay for education for all employees In fact, some forward thinking organizations have determined learning is so important, that they pay for any educational pursuit, not just those related

13 BUSINESS ETHICS

LEARNING ORGANIZATION &

exclusively to the individual’s current job. The goal is to foster learning and they presume that any investments in learning translate into more effective work performance over time. Coach improved performance from all members of the organization Work constantly to enable people to set and achieve their next goals. Spend time with people thinking about and planning their next objective. Form study groups Internally, and even externally, these groups can focus on creating a learning organization or any other topic that interests you. Check Peter Senge's Fieldbook.com Web site for more information about organizing these groups. There may be people, who are close to you geographically, seeking members or holding group meetings. Take time to read, to think, to talk about new ideas and work Create discussion areas, conference rooms, and break areas that foster people communicating. Hold brainstorming (idea generation) sessions on specific topics Bring "experts" in to help you. As an example, a technical writer can add value to a discussion about print presentation. Foster an environment of collegiality Recently, I attended a meeting led by a young manager. I watched the interaction for a few minutes as she provided direction and led a discussion. The most striking feature of the interaction was that she talked to the group as if they were all colleagues working on the same goal. She demonstrated no need to be more important than any member of the group. Use your performance management system effectively In addition to the development plan, mentioned above, provide 360 degree feedback from peers, reporting staff members, and the boss.

14 BUSINESS ETHICS

LEARNING ORGANIZATION &

Basic Elements of Learning Organization To

build

a

learning

organization,

executives

and

managers

must

institutionalize a specific set of practices. For example, the military developed the practice of “debriefing” an operation so that everyone could learn from its successes as well as its failures. In turn, as military officers became experts at debriefing operations, they built up a methodology and culture that supported this activity. Even if an officer were uncomfortable with the review of an operation he led, he had to learn how to contain his discomfort to proceed with the process. The change in practice, debriefing and the cultural climate, “I can tolerate a debriefing of my errors,” established the foundation for organizational learning. Building a learning organization requires very pragmatic questions: What is a requisite variety of practices we need? What systems information, technological or social—is needed to support these practices?

15 BUSINESS ETHICS

LEARNING ORGANIZATION &

Systems of Preview A simulation system Decision makers at all levels master a methodology for anticipating and assessing the likely consequences of a decision, action or initiative. This methodology includes guidelines for using role plays, writing scenarios and creating a logical sequence of possible causes and consequences. Histories of the future, in which one travels to some future date and invents a plausible narrative of how the system has evolved, can be a powerful process tool in this area. The prototyping system Organizations learn most effectively when they are able to mount prototypes of proposed new programs or procedures. To mount prototypes effectively, decision makers should learn the basic technology of social experimentation: How does one choose a setting or unit where the prototype is tested? What data does one collect to evaluate the prototype? When are control groups

16 BUSINESS ETHICS

LEARNING ORGANIZATION &

useful, and how should one use them? What process and outcome data should the prototyping group collect? What inferences can be made from a prototype system about the likely success or failure of its institutionalization? The listening post To periodically but regularly take the pulse of the unit, division or organization, and anticipate emerging issues and problems, the decision maker selects employees at random to come to a half-day meeting. At this meeting each employee is asked to think of him/herself as listening posts within the organization’s culture. Trusted clients or customers are invited. Participants talk about what they are seeing and experiencing, but under no circumstance are asked to develop solutions.

Systems of Review A decision-audit system Decision makers at all levels master a methodology for auditing the impacts of important decisions on organizational performance. A “decision audit policy” helps decision makers learn when to launch an audit. For example, the policy might state that a decision should be audited, “if it puts $10,000 or more at risk.” A best-practice system Managers and decisions makers at all levels master a methodology for regularly recording an action or decision they made that they believe was very effective. They record the action on a template designed so that other people can understand the decision and its good consequences. The records of these decisions are kept in best practices.

Culture A culture that promotes organizational learning possesses at least four critical features: 1. The ability to see the world as it is, without denial or distortions of unpleasant or threatening features

17 BUSINESS ETHICS

LEARNING ORGANIZATION &

2. The willingness to risk speaking the truth to powerful people 3. The ability to tolerate feelings of being ignorant, in the dark and “one down” in the service of one’s learning 4. The capacity to feel accountable for a decision that has gone awry without feeling excessively shamed These abilities may at first appear too scarce or unevenly distributed across people to imagine that they could be combined to create a learning organization. However, these psychological dispositions can be developed if they are nourished by bedrock of concrete practices and systems.

Learning Organization vs. Organizational Learning Ang & Joseph (1996) contrast Organizational Learning and Learning Organization in terms of process versus structure. McGill do not distinguish between Learning Organization and Organizational Learning.

They

define

Organizational

Learning

as

the

ability

of

an

organization to gain insight and understanding from experience through experimentation, observation, analysis, and a willingness to examine both successes and failures.

What is Organizational Learning? Argyris (1977) defines organizational learning as the process of "detection and correction of errors." In his view organizations learn through individuals acting as agents for them: "The individuals' learning activities, in turn, are facilitated or inhibited by an ecological system of factors that may be called an organizational learning system". Huber (1991) considers four constructs as integrally linked to organizational learning:

knowledge

acquisition,

information

distribution,

information

interpretation, and organizational memory. He clarifies that learning need not be conscious or intentional. Further, learning does not always increase the learner's effectiveness, or even potential effectiveness. Moreover, learning

18 BUSINESS ETHICS

LEARNING ORGANIZATION &

need not result in observable changes in behavior. Taking a behavioral perspective, Huber (1991) notes: An entity learns if, through its processing of information, the range of its potential behaviors is changed. Weick (1991) argues that the defining property of learning is the combination of same stimulus and different responses, however it is rare in organizations meaning either organizations don't learn or that organizations learn but in nontraditional ways. He further notes: "Perhaps organizations are not built to learn. Instead, they are patterns of means-ends relations deliberately designed to make the same routine response to different stimuli, a pattern which is antithetical to learning in the traditional sense". Or else, he argues, Organizational Learning perhaps involves a different kind of learning than has been described in the past: "the process within the organization by which knowledge about action-outcome relationships and the effect of the environment on these relationships is developed" (Duncan & Weiss 1979). In his view, "a more radical approach would take the position that individual learning occurs when people give a different response to the same stimulus, but Organizational Learning occurs when groups of people give the same response to different stimuli."

What is a Learning Organization? Senge (1990) defines the Learning Organization as the organization "in which you cannot not learn because learning is so insinuated into the fabric of life." Also, he defines Learning Organization as "a group of people continually enhancing their capacity to create what they want to create." I would define Learning Organization as an "Organization with an ingrained philosophy for anticipating,

reacting

and

responding

to

change,

complexity

and

uncertainty." The concept of Learning Organization is increasingly relevant given the increasing complexity and uncertainty of the organizational environment. As Senge (1990) remarks: "The rate at which organizations learn may become the only sustainable source of competitive advantage."

19 BUSINESS ETHICS

LEARNING ORGANIZATION &

McGill (1992) define the Learning Organization as "a company that can respond to new information by altering the very "programming" by which information is processed and evaluated."

Business Ethics Business ethics is a form of the art of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia.

Role of Business Ethics Business ethics has a vital role in learning organization. A learning organization always follows the ethics. When any learning organization implements Business ethics, it becomes an ethical organization.

Ethical Organization Organizational Ethics is the ethics of an organization, and it is how an organization

ethically

responds

to

an

internal

or

external

stimulus.

Organizational ethics is interdependent with the organizational culture.

20 BUSINESS ETHICS

LEARNING ORGANIZATION &

Although, it is akin to both organizational behavior (OB) and business ethics on the micro and macro levels, organizational ethics is neither OB, nor is it solely business ethics (which includes corporate governance and corporate ethics). Organizational ethics express the values of an organization to its employees and/or other entities irrespective of governmental and/or regulatory laws.

Organizational and Applied Ethics

Organizational ethics is a developing field that recognizes a dynamic in organizational life that requires its own special attention regardless of the purpose of the organization. Organizational ethics is one of the four broad categories of applied and practical ethics. The figure above depicts the integration of applied ethics as four overlapping circles of ethical theory and practice: •

Essential Social Responsibility

•

Ethics of Social Purpose

•

Organizational Ethics

•

Environmental Ethics

Create an Ethical Organization ○ Organizational ethics is a direct reflection of its leadership

21 BUSINESS ETHICS

LEARNING ORGANIZATION &

○ Unethical business practices ○ Involves tacit, if not explicit, cooperation of others ○ Reflect the values, attitudes, and behavior pattern that define the organization’s operating culture ○ Driving forces of ethical organizations ○ ethical values ○ Integrity ○ 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 unifying force Key Elements of Highly Ethical Organizations There are at least four elements which exist in organizations that make ethical behavior conducive within an organization. 1. Written code of ethics and standards 2. Ethics training to executives, managers, and employees 3. Availability for advice on ethical situations (i.e., advice lines or offices) 4. Systems for confidential reporting

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

22 BUSINESS ETHICS

LEARNING ORGANIZATION &

Framework of an Ethical Organization

Leadership and Theory for Ethics in an Organization There are many theories and organizational studies that are coarsely related to “organizational ethics”, but "organizations" and "ethics" are wide and

23 BUSINESS ETHICS

LEARNING ORGANIZATION &

varied in application and scope. These theories and studies can range from individual(s),

team(s),

stakeholder,

management,

leadership,

human

resources, group(s) interaction(s), as well as, the psychological framework behind each area to include the distribution of job tasks within various types of organizations. As among these areas, it is the influence of leadership in any organization that cannot go unexamined, because they must have a clear understanding of the direction of the organization’s vision, goals (to include immediate and long term strategic plans), and values. It is the leadership that sets the tone for organizational impression management (strategic actions taken by an organization to create a positive image to both internal and external publics). In turn, leadership directly influences the organizational symbolism (which reflects the culture, the language of the members, any meaningful objects, representations, and/or how someone may act or think within an organization). The values and ideals within an organization are generally center upon “values for business” as the theoretical approach that most leaders select to present to their "comembers" (which in truth maybe subordinates). In fact, an examination of business methodology reveals that most leaders approach the ethical theory from the perspective of values for business. Importantly, as transverse alongside of presenting the vision, values, and goals of the organization, the leadership should infuse a spirit of empowerment to its members. In particular, leadership using this management style of empowerment for their subordinates is based upon view of: “Achieving organizational ownership of company values is a continuous process of communication, discussion, and debate throughout all areas of the organization”.

24 BUSINESS ETHICS

LEARNING ORGANIZATION &

Creating and Sustaining an Ethical Workplace Culture The Values ---> Attitude ---> Behavior Chain Values drive behavior and therefore need to be consciously stated, but they also need to be affirmed by actions. Ethics is about behavior. In the face of dilemma, it is about doing the right thing. Ethical managerial leaders and their people take the "right" and "good" path when they come to the ethical choice points.

Values Drive Behavior A well-used axiom in organizational behavior thought asserts that values ultimately drive our behavior. In a nutshell, values exert influence over our attitudes, and attitudes influence our behavior. Values are integral to attitude formation and to how we respond to people and situations. Extensive literature exist dealing with how values relate to effective managerial leadership. A review of this body of work leaves us with the clear picture that values are a key component of effective managerial leadership. Wisdom and Knowledge The capacity to take information and convert it to something useful. Wisdom comes from capitalizing on one's experience to interpret information in a knowledgeable manner to produce wise decisions. A prerequisite to doing the right thing when facing an ethical dilemma knows what to do, knowing the difference between right and wrong. Self Control The ability to avoid unethical temptations. The capacity to take the ethical path requires a commitment to the value of acting with temperance. Ethical people say "no" to individual gain if it is inconsistent with institutional benefit and goodwill.

25 BUSINESS ETHICS

LEARNING ORGANIZATION &

Justice and Fair Guidance The fair treatment of people. Justice is served when individuals perceive that they receive a fair return for the energy and effort expended. For example, a leader's commitment to justice is tested continually with the allocation of organizational resources. Are certain individuals and groups given special treatment without regard to objective criteria by which to judge fairness? Ethical leaders value and embrace fair advice and guidance. Transcendence The recognition that there is something beyond oneself more permanent and powerful than the individual. Without this value, one may tend toward selfabsorption. Leaders who are motivated predominately by self-interest and the exercise of personal power have restricted effectiveness and authenticity. Love and Kindness The expression through words and deeds of love and kindness. Researchers have documented that there appear to be different types of "love." In an organizational context, love refers to an intense positive reaction to another co-worker, group and/or situation. An organization "with heart" allows for the expression of love, compassion and kindness among and between people, the goodwill which can be drawn upon when one faces ethical challenges. Courage and Integrity The courage to act ethically and with integrity. These values involve discerning right from wrong and acting accordingly. They impel one to consistently do what is right without concern for personal consequences, even when it is not easy.

In practice, these six categories of virtuous values are intertwined. For example, the capacity to administer resources fairly and offer fair guidance to stakeholders along the way is supported by courage and integrity. Difficult decisions surrounding the allocation of limited resources leave some

26 BUSINESS ETHICS

LEARNING ORGANIZATION &

individuals and groups with less than they would prefer. The redeeming grace is the perception that such decisions are made with fairness and integrity. Unpopular decisions are easier to accept when they are perceived to be derived fairly and with integrity. Driving ethical behavior with values and attitudes requires that there be alignment among values, attitudes, and behavior. Examples of this alignment between each of the virtuous values, associated attitudes, and behavior are offered in Table. Table: Values ---> Attitude ---> Ethical Behavior Chain Value Wisdom

Attitude

Ethical Behavior

and Experience

Knowledge

wisdom

promotes Using knowledge to solve that

helps problems ethically and to do

convert information to what is right. knowledge. Self-Control

Self-control effectively

means Putting personal motivations managing aside

and

acting

with

reactions to challenging objectivity by doing what is situations

and right.

temptations. Justice

Acting justly and fairly Establishing is a long-term driver of mutually ethical

behavior; criteria

just

and

agreed and

upon

administering

remember the "Golden them fairly to all people. Rule." Transcendenc The belief in a power Putting e

and

source

institutional

and/or

outside stakeholder interests above

oneself

reduces

serving

actions

self- self interests. Identifying a and personal

purpose

that

is

27 BUSINESS ETHICS

LEARNING ORGANIZATION &

increases humility.

aligned with organizational mission.

Love

and Treating

Kindness

people

with Recognizing

and

kindness helps increase encouraging others for their the reservoir of positive contributions. affection and love.

Courage and Ethics Integrity

requires

the Making unpopular decisions

courage to do the right based on fair consideration things without

consistently of the facts. regard

to

personal consequences.

Putting Virtuous Values into Practice "What can managerial leaders do on a proactive basis to encourage ethical behavior? At least five practices help leaders steer their organizations toward ethical conduct. First, any gap between knowledge about what to do and actual actions needs to be closed. If you know what is the right thing to do, just do it. Unfortunately, too often "white collar" criminals will tell us that they knew what was right, yet they failed to do it. John Maxwell, in his recent book "There's No Such Thing as Business Ethics," explains various reasons for ethical transgressions, including that people just rationalize their choices with relativism. While the reasons for the transgressor's actions are varied and complex, the simple truth is that they failed to "do the right thing" in spite of their knowledge. They did not act with wisdom. Second, managerial leaders must be very deliberate about who joins their organization. Many organizational leaders believe that selecting people for

28 BUSINESS ETHICS

LEARNING ORGANIZATION &

their values is as important as selecting for skill sets. Jim Collins, in his compelling book Good to Great: Why Some Companies Make the Leap . . . and Others Don't underscores how long-term success depends on putting the right people in place. Larry Bossidy, as CEO of Allied Signal, made people selection a top priority and considered it a key task of top management. Selecting people who share your virtuous values is critical to building an ethical culture and long-term business success. Third, new personnel need to be socialized into the organization so as to advance virtuous values. As an executive, I regularly attended new employee orientations to espouse the organization's values. As a way of promoting and influencing ethical behavior, it is very powerful for new employees to hear managerial leaders espouse core virtuous values and to see those values affirmed through the actions of others in the organization. Fourth, accountability and follow-up are critical in putting virtuous values into practice. Systems and procedures can remind people of commitments and help connect words or promises with deeds. In organizations with behavioral integrity, words and deeds count. When virtuous values are driving behavior, the alignment of words and deeds serves to advance the creation of an ethical work culture. Finally, managerial leaders can positively impact the practice of ethical behavior by fairly allocating organizational resources and linking them appropriately. All managerial leaders have five key resources to manage: people, money, capital assets, information, and time. Allocation of these resources and the process managers use to accomplish such distribution can create perceptions of equity and fairness, or inequity and unfairness. Managerial leaders who value justice and fairness are more likely to deal the cards fairly -- thereby modeling ethical behavior -- than are those who do not.

29 BUSINESS ETHICS

LEARNING ORGANIZATION &

Behavioral Standards and Codes of Conduct: The Safety Net Ideally, managerial leaders and their people will act ethically as a result of their internalized virtuous core values. I like to think of this as ethics from the "inside out." Relying solely on this "inside out" approach, however, is simply naïve in many circumstances. Established behavioral standards and written codes of ethical conduct can help bolster virtuous values and promote ethical organizational behavior. Behavioral standards usually incorporate specific guidelines for acting within specific functional workplace areas. For example, a sales department may clearly outline criteria for expense reimbursements. Codes of ethical conduct have received varying degrees of attention over the past three decades. They can be categorized into three types: Type 1: Inspirational-Idealistic codes of conduct specify global themes such as "Be honest," "Show integrity in all matters," "Practice wise decision making," etc. Such themes are not anchored to specific behavior or situations. Type 2: Regulatory codes of conduct proscribe clearly delineated conduct. This type of code is designed to help as a jurisprudential tool when disputes occur. It is more of a "do and don't" approach. Type 3: Educational/Learning-Oriented codes of conduct offer principles to guide decision making and behavioral reactions into likely situations. This approach is compatible with building a learning organizational culture. For example, the principle and value of fairness might be applied to allocating a bonus pool. Managerial leaders responsible for this process could be engaged in scenarios wherein they would be asked to take "fair action" in making these allocations. Such learning experiences can serve to enlighten and inform so as to foster ethical decision making. Behavioral standards and codes of ethical conduct can help steer ethical behavior by offering a cue or written rule to remind personnel of the right

30 BUSINESS ETHICS

LEARNING ORGANIZATION &

thing to do--an "outside in" process for ethical behavior management. These standards and codes trigger peoples' internalized values, thus gaining strength through firm yet fairly administered consequences.

The Ethical Behavior Formula Taken together, virtuous values, actions, and behavioral standards/codes can produce a "formula," such as that illustrated below, that may increase the likelihood of ethical organizational behavior: Virtuous Values + Aligned Action + Behavioral Standards/Codes --> Increased Ethical Behavior Consider adapting the six virtuous values and aligning them with key managerial

leadership

actions

such

as

selection,

employee

orientation/socialization, and allocation of resources. Behavioral standards and/or codes of ethical conduct can be added as appropriate. Acting on these three formula components may serve to increase the display of ethical organizational behavior. Three Good Reasons to Apply the Formula There are at least three good reasons to practice ethical behavior in your organization. These reasons may motivate you to adapt the "formula" into your managerial leadership practice repertoire. First, it is the right thing to do. Employees and external stakeholders alike want and deserve to be treated ethically. Taken to the extreme, a culture allowing unethical behavior can breed all manner of damaging and even criminal activity. Second, it makes economic sense. A mounting body of evidence shows that an emphasis on the softer sides of business, including ethics, positively influences the harder traditional bottom line. By listening to employees, effectively recognizing their work, and practicing good ethical behavior, managers have given a boost to such hard measures as operating earnings, ROI, and stock price.

31 BUSINESS ETHICS

LEARNING ORGANIZATION &

Third, in line with a growing trend to look beyond shareholder value to a broader stakeholder perspective, organizational ethical behavior becomes the socially responsible thing to do. Just think for a moment about the impact of Enron's, Tyco's and World Com's unethical behavior on their respective communities, workforces, and other stakeholders.

32 BUSINESS ETHICS

LEARNING ORGANIZATION &

ARTICLE

A Model of Business Ethics