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Chapter 11 Strategic Leadership:
Creating a Learning Organization
and an Ethical Organization
Linkages
• Scanning, monitoring, analyzing external
environment
• Formulated your strategy(ies) to fit internal
and external strengths/opportunities,
weakness/threats
• To carryout (implement)
 Control
 Structure/Design
 Leadership/Learning/Ethics
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Slide Overview
I.
II.
III.
IV.
V.
Three Key Leadership Activities
Elements of Effective Leadership
Emotional Intelligence
Learning Organization
Ethical Organization
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I. Leadership:
Three Interdependent Activities
• Leadership
 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
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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 leader’s 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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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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II. Elements of Effective Leadership
1. Integrative Thinking
2. Overcoming Barriers to Change
3. The Effective Use of Power
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1. 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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2. 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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Resistance
to Change
Lack of
understanding
and trust
Self-interest
Uncertainty
Cultures that
value tradition
Different
perspectives
and goals
Tactics for Introducing Change
•
•
•
•
Communication & Education
Employee Involvement
Negotiation
Coercion
• Top Management Support
3. The Effective Use of Power
• Power
 a leader’s 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 leader’s
power.
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A Leader’s Bases of Power
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III. Emotional intelligence
• Emotional intelligence (EI)
 an individual’s 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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Emotions
•
•
•
•
•
•
•
7 Universal
Emotions
Happy/Joy
Surprise
Contempt
Sadness
Fear
Disgust
Anger
http://www.humintell.com/2010/06/theseven-basic-emotions-do-you-knowthem/
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Emotional Intelligence: Some Potential
Drawbacks and Cautionary Notes
Effective Leaders…
 Have Empathy for Others
 Overidentify with
others (Cannot make
Tough Decisions)
 Are Astute Judges of
People
 Judgmental and
overly critical, Dismiss
other people’s insights
 Are Passionate about
What They Do, and They
Show It
 Close minded to other
possibilities
 Create Personal
Connections with Their
People
 Too micromanaging
Manipulative, selfish, and dishonest 
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IV. Learning Organization
Inspiring, Motivating People with a Mission or Purpose
Empowering Employees at All Levels
Accumulating and Sharing Internal Knowledge
Gathering and Integrating External Information
Challenging the Status Quo and Enabling Creativity
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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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Empowering Employees
at All Levels
Top-down perspective
• Start at the top.
• Clarify the organization’s 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 employee’s 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
Formalize Forums for Failure
Move the Goalposts
Share Personal Stories
Bring in Outsiders
Prove Yourself Wrong, Not Right
Celebrate Smart Failures
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V. Creating an Ethical Organization
• Organizational ethics
 the values, attitudes, and behavioral patterns
that define an organization’s 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.
• Organizational ethics is a direct reflection
of its leadership
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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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Integrity-Based versus ComplianceBased Approaches
• Essential links between organizational integrity
and individual integrity
 Cannot be high-integrity organizations without highintegrity individuals
 Individual integrity is rarely self-sustaining
 Organizational integrity, rests on a concept of
Purpose, Responsibility, Ideals
• As important responsibility of leadership is to
create this ethical framework and develop the
organizational capabilities to make it operational
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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 organization’s and
members’ core guiding values, thoughts,
and actions; and
3. defining the responsibilities and
aspirations that constitute an
organization’s ethical compass.
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Approaches to Ethics Management
Characteristics
Compliance-Based
Approach
Integrity-Based Approach
Ethics
Conformity with externally
imposed standards
Self-governance according to
chosen standards
Objective
Prevent criminal
misconduct
Enable responsible conduct
Leadership
Lawyer-driven
Management-driven with aid
of lawyers, HR, and others
Methods
Education, reduced
discretion, auditing and
controls, penalties
Education, leadership,
accountability, organizational
systems and decision
processes, auditing and
controls, penalties
Behavioral Assumptions
Autonomous beings guided Social beings guided by
by material self-interest
material self-interest, values,
ideals, peers
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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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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 organization’s employees
 Effective leaders take responsibility for ethical
lapses within the organization
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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
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Codes of Conduct
• UTSA
 http://utsa.edu/infoguide/appendices/b.html
 http://www.utsa.edu/about/leadership/
• Starbucks
 http://www.starbucks.com/aboutus/company-information/business-ethicsand-compliance
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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
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Policies and Procedures
 Should specify proper relationships with a
firm’s customers and suppliers
 Should guide employees to behavior
ethically
 Policies and procedures must be
reinforced
Effective communication
Enforcement
Monitoring
Sound corporate governance practices
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The Goolsby Leadership Model
Source: Quick, J. C., Macik-Frey, M., & Cooper, C.L. 2007. Journal of
Management Studies, 44(2): 195.
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