Learning Organization

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LEARNING ORGANIZATION &

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

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

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

L EA R N I N G

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

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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 should organ organiza ization tions s care? care? Becaus Because, e, the level level of perfor performan mance ce and impr improv ovem emen entt need needed ed toda today y requ requir ires es lear learni ning, ng, lots lots of lear learni ning ng.. In most most industries, in health care, and in most areas of government, there is no clear path to success, no clear path to follow. 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 winwin-wi win n is part part of the the attr attrac acti tion on.. That That is, is, the the poss possib ibil ilit ity y of achi achiev evin ing g extraordinary performance together with satisfaction and fulfillment for the individuals involved. Organi Organizat zation ional al learn learning ing (OL) (OL) is more more than than indivi individua duall learn learning ing and arises arises through the interaction of individuals in groups and teams of different sizes. What What is character characterist istic ic of OL is that it is an emerg emergent ent process process in the sense sense that that its its outc outcom ome e is not not pred predic icta tabl ble e and and it is mor more than than the the sepa separa rate te 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 blam blame e cult cultur ure e in the the sens sense e that that ‘mis ‘mista take kes’ s’ are are unac unacce cept ptab able le.. Such Such an environment makes a distinction between ‘mistakes’ that are the result of irr irrespo espons nsib ibil ilit ity y and and lack lack of for foretho ethoug ught ht and and thos those e that that are are genu genuin ine e 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.

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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 term terms s of su sust stai aina nabi bili lity ty,, the the conc concep eptt to work work towa toward rds s is that that of cocoevolutionary sustainability – in other words the ability of an organization to contin continuou uously sly and appropri appropriate ately ly adapt adapt to exter external nal change changes s in its broade broaderr environment. Another relevant concept, inspired by biology, is the notion of the social ecosystem. ecosystem. This includes includes all competitors competitors,, suppliers, suppliers, customers, customers, asso associ ciat ates es,, lega legall and and gove govern rnme ment nt bodi bodies es,, etc. etc. Comp Comple lexi xity ty theo theory ry sees sees systems as interacting wholes, influencing each other, in a co-evolutionary process. Learning organizations encourage self-organization, self-organization, so that 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 co -evolutionary sustainability. sustainability. Organizations include multiple and intricate networks of relationships, which are are sus sustai tained ned through through commun communica ication tion and other other forms forms of feedba feedback, ck, with with varying varying degrees degrees of inter-depe inter-dependenc ndence. e. Although Although heavily heavily influenced influenced by their history and culture, they can transcend both when necessary. When such

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orga organi niza zati tion ons s meet meet a cons constr trai aint nt they they are are able able to expl explor ore e the the sp spac ace e 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 dis distin tincti ctive ve charac character terist istic ic of comple complex x (as dis distin tinct ct from from compli complicat cated) ed) systems. Unfortunately, this innate source of innovation is often restricted. Unde Unders rsta tand ndin ing g the the char charac acte teri rist stic ics s of comp comple lex x sy syst stem ems s and of comp comple lex x 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 p erformance and competitive advantage

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For customer relations

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To avoid decline

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To improve quality

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To To understand risks and diversity more deeply

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For innovation

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For our personal and spiritual well being

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To increase our ability to manage change

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For understanding

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For energized committed work force

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To expand boundaries

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To engage in community

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For independence and liberty

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For awareness of the critical nature of interdependence

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Because the times demand it

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

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Learning organizations give people hope that things can be better

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Learning orgs provide a playground for creative ideas

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

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In learning organizations everyone's opinions are valued and amount that that peop people le can can cont contri ribu bute te is not not dete determ rmin ined ed by posi positi tion on in the 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 orga organi niza zati tion ons s

we

are are

in, in,

chan change ge

cons consis iste tent ntly ly

chal challe leng nges es

trad tradit itio iona nall

institution institutional al practices practices and beliefs. beliefs. Most important, 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 f rom 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."

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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 f rom learning? : •

Defensive routines

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Dynamic complexity of systems

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Inadequate and ambiguous outcome feedback

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Misperceptions of the feedback

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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

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Actively solicit the involvement of employees at all levels

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Enable all employees to use their intelligence and apply their imagination

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Learning environment ○

Organization wide commitment to change

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An action orientation

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Applicable tools and methods

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Guiding philosophy

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Inspired and motivated people with a purpose

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Four Critical Processes of Learning Organizations Empowering employees at all levels ○

Salient elements of empowerment ○

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Start at the bottom by understanding needs of employees Teach employees skills of self-management

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Build teams to encourage cooperative behavior

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Encourage intelligent risk taking

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Trust people to perform

Accumulating and sharing internal knowledge ○

“Open book” management ○

Numbers on each employee’s work performance and production costs generated daily

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Information is aggregated once a week from top level to bottom level

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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 Awareness of environmental trends and events ○

Internet accelerates the speed with which useful information can be located

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“Garden variety” traditional sources for acquisition of external information

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Benchmarking

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Focus directly on customers for information

Challenging the status quo and enabling creativity ○

Challenging the status quo ○

Create a sense of urgency

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Establish a “culture of dissent”

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○

Foster a culture that encourages risk taking tak ing

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Cultivate culture of experimentation and curiosity

Tips for Becoming a Learning L earning 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 that contin continuou uous s growt growth, h, learni learning, ng, and impro improvem vement ent will will ensure ensure its accomplishment.

•

The They y buil build d cons consen ensu sus s and and owne ownersh rship ip arou around nd this this visi vision on,, and and are are influenced by the views of others in the organization.

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They model the actions they want to develop in others.

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The Their ir expe expect ctat atio ions ns are are verba verbal, l, but but most most impo import rtan antl tly, y, acti action ons s that that others can see. Leaders who want a learning organization continually learn themselves.

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

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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 commun communica icated ted.. They They promo promote te an organi organizat zation ional al envir environm onment ent that that supports learning and personal mastery. 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.

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Read together 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 membe members rs took took turns turns leadin leading g the dis discus cussio sion n of variou various s chapte chapters rs at staff staff meeti meetings ngs.. The leader leadershi ship p team team in a studen studentt health health center center read, read, Leadi Leading ng Chan Change ge,, toge togeth ther er.. The The group group disc discus usse sed d conc concep epts ts and and chap chapte ters rs at thei theirr weekly leadership team meeting.

Attend training and conferences. A rece recent nt stud study y by the the Amer Americ ican an Socie Society ty for for Train rainin ing g and and Deve Develo lopm pmen entt suggests suggests that there is a direct direct “causative “causative relations relationship hip between training and perfo perform rman ance ce but but does doesn’ n’tt prove prove it.” it.” (The (The AS ASTD TD Benc Benchm hmark arkin ing g serv servic ice e continues to gather data each year which may prove the relationship over time time.) .) Crea Create te the the expec xpecta tati tion on that that anyo anyone ne who who atte attend nds s trai traini ning ng 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 you have have deve develo lope ped d a new new prod produc uct, t, desi design gned ed an ad camp campai aign gn,, 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.

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Twelve

More


Tips

about

How

to

B e c om e

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 cust custom omer ers. s. An Anyo yone ne to whom whom you you prov provid ide e a prod produc uctt or a serv servic ice e is a customer.

Promote field trips to other organizations. Even Even organi organizat zation ions s in differ different ent indust industrie ries s can provid provide e opportu opportunit nities ies 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 Pa y for education for all employees In fact, some forward forward thinking thinking organizat organizations ions have determine determined d learning learning is so important, that they pay for any educational pursuit, not just those related

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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 organi organizat zation ion or any other other topic topic that that inter interest ests s you. you. Check Check Peter Peter Senge' Senge's s Fieldbook.com Web site for more information about organizing these groups. There may be people, who are close to you geographically, geogr aphically, seeking members or holding group meetings.

Take time to read, to think, to talk about new ideas and work Creat Create e dis discus cussio sion n areas, areas, confer conferenc ence e rooms, rooms, and break break areas areas that that foster 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. p resentation.

Foster an environment of collegiali collegiality ty Recentl ecently, y, I attend attended ed a meeti meeting ng led by a young young manage managerr. I watch watched ed 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.

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Basic Elements of Learning Organization To

buil build d

a

lear learni ning ng

orga organi niz zatio ation, n,

execut cutives ives

and and

manag anage ers

mus ustt

inst instit itut utio iona nali lize ze a sp spec ecif ific ic set set of prac practi tice ces. s. For examp xample le,, the the mili milita tary ry 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 and the the cult cultur ural al clim climat ate, e, “I can can tole tolera rate te a debr debrie iefi fing ng of my erro errors rs,” ,” established the foundation for organizational learning. Building a learning organization requires very pragmatic questions: What is a requisite variety of practices practices we need? What systems systems informatio information, n, technologi technological cal or social—is social—is needed to support these practices? pr actices?

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Systems of Preview A simulation system Decisi Decision on makers makers at all levels levels master master a metho methodolo dology gy for antici anticipat pating ing and assess assessing ing the like likely ly conseq consequen uences ces of a decisi decision, on, action action or initia initiativ tive. e. This This methodology includes guidelines for using role plays, writing scenarios and creating creating a logical logical sequence sequence of possible possible causes causes and consequenc consequences. es. Histories Histories of the the futu future re,, in whic which h one one trave travels ls to some some futu futurre date date and and inve invent nts s a plau plausi sibl ble e narr narrat ativ ive e of how how the the sy syst stem em has has evol evolve ved, d, can can be a powe powerfu rfull 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

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useful useful,, and how should should one use them? them? What What proce process ss and outcome outcome data 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 peri period odic ical ally ly but but regul egular arly ly tak take the the puls pulse e of the the unit unit,, divi divisi sion on or organi organizat zation ion,, and antici anticipat pate e emer emergin ging g iss issues ues and proble problems, ms, the decisi decision on 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 import important ant decisi decisions ons on organi organizat zation ional al perfor performan mance. ce. A “decis “decision ion audit 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 Mana Manage gers rs and and deci decisi sion ons s mak makers ers at all all leve levels ls mast master er a meth methodo odolo logy gy for 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. pr actices.

Culture A cultur culture e that that promo promotes tes organi organizat zationa ionall learni learning ng posses possesses ses at least least four four critical features: 1. The The abil abilit ity y to see the worl world d as it is, with without out denia deniall or distor distorti tion ons s of unpleasant or threatening features

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2. The willingne willingness ss to risk speaking speaking the truth truth to powerful powerful people people 3. The ability ability to tolerate tolerate feelings feelings of being being ignorant, ignorant, in the dark and “one “one down” in the service of one’s learning 4. The The capa capaci city ty to feel feel accoun accounta tabl ble e for for a deci decisio sion n that that has has gone gone awry without feeling excessively shamed These abilities may at first appear too scarce or unevenly distributed across peop people le to imag imagin ine e that that they they coul could d be comb combin ined ed to crea create te a lear learni ning ng 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 An g & Jose Joseph ph (199 (1996) 6) cont contra rast st Orga Organi niza zati tion onal al Learn earnin ing g and and Learn earnin ing g Organization in terms of process versus structure. McGill do not distinguish between Learning Organization and Organizational Learni arning ng..

The They

defi define ne Organi ganiza zattiona ionall

Lear earning ning as the the

abil abiliity of an

organi organizat zation ion to gain gain insigh insightt and unders understan tandin ding g from from exper experien ience ce throug through h 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 lear learni ning: ng:

know knowle ledg dge e

acqu acquis isit itio ion, n,

infor informa mati tion on

dist distri ribu buti tion, on,

infor informa mati tion on

interpretation, and organizational memory. 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

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need need not resul resultt in observ observabl able e change changes s in behavi behavior or.. Taking aking a behavi behavioral oral 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 lear learn. n. Inst Instea ead, d, they they are are patt patter erns ns of mean means-e s-end nds s relat elatio ions ns deli delibe bera rate tely ly 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 been descri described bed in the past: "the "the proces process s withi within n the organiza organizatio tion n 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, Als o, he define defines s Learn Learning ing Organ Organiza izatio tion n as "a group group of people people contin continual ually ly enhancing their capacity to create what they want to create." I would define Learning Organization as an "Organization with an ingrained philosophy for anti antici cipa pati ting ng,,

react acting ing

and and

respo espond ndiing

to

chan change ge,,

com comple plexity xity

and and

uncertainty." The concept of Learning Organization is increasingly relevant give given n the the incr increa easi sing ng comp comple lexi xity ty and and unce uncert rtai aint nty y of the the organ organiz izat atio iona nall environme environment. nt. As Senge (1990) remarks: remarks: "The rate at which which organizat organizations ions learn may become the only sustainable source of competitive advantage."

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McGill McGill (1992) (1992) define define the Learn Learning ing Organi Organizat zation ion as "a compan company y that 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 prin princi cipl ples es and and mora morall or ethi ethica call prob proble lems ms that that can can aris arise e in a busi busine ness ss environment. Business ethics can be both a normative and a descriptive discipline. As a corp corpor orat ate e prac practi tice ce and and a care career er sp spec ecia iali liza zati tion on,, the the fiel field d is prim primar aril ily y normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perce perceive ived d to be at odds with with non-ec non-econom onomic ic social social values values.. Histor Historica ically lly,, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia.

Role of Business Ethics Busi Bu sine ness ss ethi ethics cs has has a vita vitall role ole in lear learni ning ng orga organi niza zati tion on.. A lear learni ning ng organi organizat zation ion always always follow follows s the ethics ethics.. When When any learn learning ing organi organizat zation ion implements Business ethics, it becomes an ethical organization.

Ethical Organization Organizational Ethics is the the ethi ethics cs of an orga organi niza zati tion on,, and and it is how an orga organi niza zati tion on

ethi ethica call lly y

respo espond nds s

to

an

inte intern rnal al

or

exter xterna nall

stim stimul ulus us..

Organi Organizat zation ional al ethics ethics is inter interdep depend endent ent with with the organi organizat zation ional al cultur culture. e.

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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). ethics). Organization Organizational al ethics ethics express express the values values of an organizat organization ion to its empl employ oyee ees s

and/ and/or or othe otherr

enti entiti ties es irre irresp spec ecti tive ve of gove govern rnme ment ntal al and/ and/or or

regulatory laws.

Organizational and Applied Ethics

Organi Organizat zation ional al ethics ethics is a develo developin ping g field field that that recog recogniz nizes es a dynami dynamic c 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: pr actice: •

Essential Social Responsibility 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 ○


Unethical business practices ○

Involves tacit, if not explicit, cooperation of others

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Reflect the values, attitudes, and behavior pattern that define the organization’s operating culture

○

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Driving forces of ethical organizations ○

ethical values

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Integrity

Ethical values ○

Shape the search for opportunities

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Shape the design organizational systems

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Shape Shape the the deci decisi sionon-ma maki king ng proc proces ess s us used ed by indiv individ idua uals ls and and groups

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Provide a common frame of reference, that serves as unifying force

Key Elements of Highly Ethical Organizations Ther There e are at least least four four eleme elements nts which which exist exist in organ organiza izatio tions ns that that make make ethical behavior conducive within an organization. 1. Written Written code of of ethics ethics and standards standards 2. Ethics Ethics training training to executi executives, ves, managers, managers, and and employees employees 3. Availabili Availability ty for advice on ethical ethical situations situations (i.e., (i.e., advice lines lines or offices) offices) 4. Systems Systems for confidenti confidential al reporting reporting

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These interrelated elements must be present and constantly reinforced ○

Role models

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Corporate credos and codes of conduct

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Reward Reward and evaluation systems

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Policies and procedures

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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 “organi organizat zation ional al ethic ethics”, s”, but "organ "organiza izatio tions" ns" and "ethic "ethics" s" are wide wide and

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

team(s),

stakehold older,

manage agement,

leadersh rship,

human

resource resources, s, group(s) group(s) interactio interaction(s), n(s), as well as, the psychologic psychological al framework 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 incl includ ude e imme immedi diat ate e and long long term term strat strateg egic ic plan plans) s),, and and value values. s. It is the the leader leadershi ship p that that sets sets the tone tone for organi organizat zation ional al impr impress ession ion manage manageme ment nt (strategic actions taken by an organization to create a positive image to both inter internal nal and exter external nal publics publics). ). In turn, turn, leader leadershi ship p direct directly ly influe influence nces s the organizational symbolism (which reflects the culture, the language of the members, members, any meaningful meaningful objects, objects, represent representations ations,, and/or how someone someone may act or think within an organization). The values and ideals within an orga organi niza zati tion on are are gene genera rall lly y cent center er upon upon “valu values es for for busi busine ness ss” ” as the the theor theoret etic ical al appr approa oach ch that that most most lead leader ers s sele select ct to pres presen entt to thei theirr "co"comembers" (which in truth maybe subordinates). In fact, an examination of business methodology reveals that most leaders approach the ethical theory from from the perspe perspecti ctive ve of values values for busine business. ss. Import Important antly, ly, as transv transvers erse e alongside of presenting the vision, values, and goals of the organization, the lead leader ersh ship ip sh shou ould ld infu infuse se a sp spir irit it of empowerment to its its memb member ers. s. 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”. organization”.

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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. thing. Ethica Ethicall manage manageria riall leader leaders s and their their people people take take the "right "right"" and "good" path when they come to the ethical choice points.

Values Drive Behavior A wellwell-use used d axiom axiom in organi organizat zationa ionall behavi behavior or thought thought assert asserts s that that values values ultimately drive our behavior. In a nutshell, values exert influence over our attitudes, and attitudes influence our behavior. Values Values are integral to attitude form format atio ion n and and to how how we resp respond ond to peop people le and and situ situat atio ions ns.. Exte Extens nsiv ive e lite literat ratur ure e exis existt deal dealin ing g with with how how value values s rela relate te to effe effect ctiv ive e mana manage geri rial al 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.

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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 organizati organizational onal resource resources. s. Are certain individuals individuals and groups groups given special treatme treatment nt without without regard regard to objective objective criteria by which 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. 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 The coura courage ge to act act ethi ethica call lly y and and with with inte integri grity ty.. Thes These e valu values es invo involv lve e disc discer erni ning ng right right from from wron wrong g and and acti acting ng acco accord rdin ingl gly y. They They impe impell one one to consis consisten tently tly do what what is right right without without concer concern n for person personal al conseq consequen uences ces,, even when it is not easy.

In practic practice, e, these these six categor categories ies of virtuou virtuous s values values are intert intertwi wined ned.. For For example, the capacity to administer resources fairly and offer fair guidance to stakeholders along the way is supported by courage and integrity. Difficult deci decisi sion ons s su surr rrou ound ndin ing g the the allo alloca cati tion on of limi limite ted d reso resour urce ces s leav leave e some some

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indivi individua duals ls and groups groups with with less less than than they they would would prefe preferr. The redee redeemi ming ng grace grace is the percep perceptio tion n that that such such decisi decisions ons are are made made with with fairn fairness ess and integrity. Unpopular decisions are easier to accept when they are perceived to be derived fairly and with integrity. Drivin Driving g ethic ethical al behavi behavior or with with values values and attitu attitudes des requir requires es that that there there be alignment among values, attitudes, and behavior. behavior. Examples of this alignment between each of the virtuous values, associated attitudes, and behavior are offered in Table. Table. Table: Values ---> Attitude ---> Ethical Behavior Chain

Value Wisdo isdom m

Attitude

Ethical Behavior

and and Expe Experi rien ence ce

Knowledge

wisdom

prom promot otes es Usin Using g that

know knowle ledg dge e

to solv solve e

helps problems ethically and to do

convert convert infor informat mation ion to what is right. knowledge. Self Self-C -Con ontr trol ol

Self Self-c -con ontr trol ol effe effect ctiv ivel ely y

mean means s Putting personal motivations mana managi ging ng aside

a nd

acting

with

reactions to challenging objectivity by doing what is situations

and right.

temptations. Justice

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

behavior; crit criter eria ia

just

a nd

agreed and and

upon

admi admini nist steri ering ng

remem remember ber the "Golde "Golden n them fairly to all people. Rule." Transcendenc The The beli belief ef in a powe powerr Puttin Putting g e

a nd

source

instit instituti utiona onall

and/or and/or

outside stakehold stakeholder er interests interests above

ones onesel elff

reduc educes es

serving

actions

self self-- self self inter interest ests. s. Identi Identifyi fying ng a and per personal

purpo rpose

that

is

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increases humility.

aligned with organizational mission.

Love

and Tr Treati eating ng

Kindness

peop people le

with withRecognizing

a nd

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

Courag Courage e and Ethics Integrity

requires

the Making Making unpopul unpopular ar decisi decisions ons

courage to do the right based based on fair fair consid considera eratio tion n 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 explains various reasons reasons for ethical ethical transgress transgressions, ions, including that people just rationalize rationalize their choices 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

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their their values values is as import important ant as select selecting ing for skill skill sets. sets. Jim Collins 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, 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 inally,, manage manageria riall leader leaders s can positi positivel vely y impact impact the practic practice e of ethica ethicall beha behavi vior or by fair fairly ly allo alloca cati ting ng orga organi niza zati tion onal al reso resour urce ces s and and linki linking ng them them appropriat appropriately ely.. All managerial managerial leaders have five key resourc resources es to manage: manage: people people,, money, money, capital capital asset assets, s, infor informat mation ion,, and time. time. All Alloca ocatio tion n of these these resources and the process managers use to accomplish such distribution can crea create te perce percept ptio ions ns of equi equity ty and and fairn fairnes ess, s, or ineq inequi uity ty and and unfa unfair irne ness ss.. 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.

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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 f rom 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 virtuous values values and promote promote ethical ethical organizat organizational ional behavior 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 Type 1: Inspirational-Idealistic codes codes of conduc conductt specif specify y global global theme themes s such as "Be honest," "Show integrity in all matters," "Practice "Practice wise decision decision maki making ng," ," etc. etc. Such Such them themes es are are not not anch anchor ored ed to sp spec ecif ific ic beha behavi vior or 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. 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 bonu bonus s pool. pool. Mana Manage geri rial al lead leader ers s resp respon onsi sible ble for this this proc proces ess s coul could d 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

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thing to do--an "outside in" process for ethical behavior management. These stan standa dard rds s and and code codes s trig trigge gerr peopl peoples es'' inte intern rnal aliz ized ed value values, s, thus thus gain gainin ing g 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 likelihood of ethical organizational behavior:

Virtuous Values + Aligned Action + Behavioral Standards/Codes --> Increased Ethical Behavior Cons Consid ider er adap adapti ting ng the the six six virt virtuo uous us value values s and and alig aligni ning ng them them with with key managerial

leadership

actions

such

as

selection,

employee

orientation/ orientation/socia socializa lization, tion, and allocation allocation of resourc resources. es. Behavioral Behavioral standards standards and/or codes of ethical conduct can be added as appropriate. Acting on these three three formul formula a compon component ents s may serve serve to incre increase ase the dis displa play y of ethic ethical al organizational behavior. behavior.

Three Good Reasons to Apply the Form Formula ula 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. 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 allowi allowing ng unethi unethical cal behavi behavior or can bree breed d all manner manner of damagi damaging ng and even even criminal activity. Second, it makes economic sense. A mounting body of evidence shows that an empha emphasis sis on the softer softer sid sides es of busine business, ss, includ including ing ethics ethics,, positiv positively ely influe influence nces s the harder harder tradit tradition ional al bottom bottom line. line. By lis listen tening ing to employ employee ees, s, effect effective ively ly recogn recognizi izing ng their their work, work, and practi practicin cing g good good ethica ethicall behavio behavior, r, managers have given a boost to such hard measures as operating earnings, ROI, and stock price.

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Third, in line with a growing trend to look beyond shareholder value to a broader broader stakehold stakeholder er perspectiv perspective, e, organizatio organizational nal ethical ethical behavior behavior becomes 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.

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ARTICLE

A Model of Business Ethics

Learning Organization

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