CHAPTER 4

Leading Change ‘n Innovation

TYPE OF CHANGE IN TEAMS
AND ORGANIZATION
1. Roles or Attitude
2. Technology
3. Strategy
4. Economics or People
 “ CHANGE PROCESSES

1. stages in the change process

2. stages in reaction to a change
3. prior experience and reaction

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REASONS FOR ACCEPTING OR
REJECTING CHANGE
✘ Proposed change is not necessary
✘ Proposed change is not feasible
✘ Change is not effective
✘ Change would cause personal losses
✘ Proposed change is inconsistent with value
✘ Leader not trusted
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IMPLEMENT CHANGE
1. determining what to change
2. understanding systems dynamic
3. responsibility for implementing major change
4. the pace and sequencing of change

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GUIDELINES FOR IMPLEMENTING CHANGE
1. create a sense of urgency about the need for change
2. communicate a clear vision of the benefit to be gained from change
3. identify likely supporters, opponents, and reasons for resistance
4. build a board coalition to support the change
5. use task forces to guide implementation of change
6. fill key positions with competence change agents
7. empower competence change agent

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GUIDELINES FOR IMPLEMENTING CHANGE
8. make dramatic, symbolic change that affect the work
9. prepare people for change by explaining how it will affect them
10. help people deal with the stress and difficulties of major change
11. provide opportunities for early sucesses to build confidence
12. monitor the progress of changeand make any necessary adjustment
13. keep people informed about the progress of change
14. demonstrate optimism and continued commitment to the change

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 HOW VISIONS INFLUNCE
CHANGE ?
1. Desirable characteristic for a vision
2. Element of a vision

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GUIDELINES FOR
DEVELOPING A VISION
1. involve the key stakeholder
2. identify shared values and ideals
3. identify strategic objective with wide appeal
4. identify relevant elements in the old ideology

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 COLLECTIVE LEARNING
AND INNOVATION
1. internal creation of new knowledge
2. external acquisition of new knowledge
3. exploration and exploitation
4. knowledge diffusions and application
5. Learning organization

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 HOW TO ENHANCE LEARNING
AND INNOVATION ?
1. recruit talented, creative people and empower them to be
innovative
2. encourage appreciation for flexibility and innovation
3. encourage and facilitate learning by individuals and team
4. help people improve their mental models
5. evaluate new ideas with small scale experiments

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 HOW TO ENHANCE LEARNING
AND INNOVATION ?
6. leverage from surprise and failures
7. encourage and facilitate sharing of knowledge and ideas
8. preserve past learning and ensure continued use of relevant
knowledge
9. set innovation goals
10. reward entrepreneurial behavior

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The Corporate
Culture—Impact and
Implications

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Chapter Objectives
✘ After reading this chapter, you will be able to:
✘ Define corporate culture.
✘ Explain how corporate culture impacts ethical decision making.
✘ Discuss the differences between a compliance-based culture and a
values based culture.

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✘ Discuss the role of corporate leadership in establishing the culture.
✘ Explain the difference between effective leaders and ethical leaders.
✘ Discuss the role of mission statements and codes in creating an
ethical corporate culture.
✘ Explain how various reporting mechanisms such as ethics hotlines
and ombudspersons can help integrate ethics within a firm.
✘ Discuss the role of assessing, monitoring, and auditing the culture
and ethics program.
✘ Explain how culture can be enforced via governmental regulation.

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What Is Corporate Culture?
✘ This chapter examines the ways in which
corporations develop ethical cultures. Cultures in
organizations encourage and support individuals in
making ethi- cally responsible decisions—or they
do not!

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✘ culture
✘ A shared pattern of beliefs, expectations, and
meanings that influ- ences and guides the thinking
and behaviors of the members of a particular
group.

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✘ If culture involved a shared pattern of beliefs, expectations, and
meanings, then we will find it at different levels including:
✘ ∙  religious, ethnic, linguistic affiliation
✘ ∙  generation
✘ ∙  gender
✘ ∙  social class
✘ ∙  organization/corporate
✘ ∙  family

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✘ Though somewhat controversial, he organized
national cultures into six “dimensions” or
categories of predispositions.
✘ 1. Power distance: The distance between
individuals at different levels of a hierarchy (more
equal = low power distance).
✘ 2. Individualism vs. collectivism: The degree to
which people prefer to act individually or in
groups.

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✘ Uncertainty avoidance: The extent to which people are comfortable
with
✘ uncertainty, ambiguity, change, and risks.
✘ Time and order orientation: A high long-term orientation (LTO)
suggests a comfort with long-term commitments, traditions, and
rewards linked to hard work, strong relationships, and status. A low
LTO indicates that change may occur more rapidly.
✘ Masculinity vs. femininity: A low masculinity score indicates
greater equal- ity, stronger maintenance of warm personal
relationships, service, care for the weak, solidarity. A high
masculinity score suggests a strong culture of asser- tiveness,
success, and competition.
✘ Indulgent vs. restrained: The extent to which people try to control
their desires and impulses.

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✘ In addition, culture is present in and can be determined by
exploring any of the following, among others:
✘ ∙  tempo of work
✘ ∙  the organization’s approach to humor
✘ ∙  methods of problem solving
✘ ∙  the competitive environment
✘ ∙  incentives
✘ ∙  individual autonomy
✘ ∙  hierarchical structure

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Culture and Ethics
✘ compliance-based culture
A corporate culture in which obedience to laws
and regulations is the prevailing model for ethical
behavior.

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Compliance and Values-Based
Cultures
✘ values-based culture
A corporate culture in which conformity to a
statement of values and principles rather than
simple obedience to laws and regulations is the
prevailing model for ethical behavior.

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Ethical Leadership and
Corporate Culture
✘ ethics officers
✘ Individuals within an organization charged with
managerial over- sight of ethical compli- ance and
enforcement within the organization.

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Effective Leadership and
Ethical, Effective Leadership
✘ As we have discussed, being perceived as a leader
plays an important role in a leader’s ability to
create and transform an ethical corporate culture.
Key execu- tives have the capability of
transforming a business culture, for better or for
worse.

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✘ Imagine a business leader who empowers her or
his subordinates, respects their autonomy by
consulting and listening, but who leads a business
that publishes child pornography or pollutes the
environment or sells weapons to radical
organizations.

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Building a Values-Based
Corporate Culture
✘ Mission Statements, Credos, Codes of Conduct,
and Statements of Values
code of conduct
✘ A set of behavioral guidelines and expecta- tions
that govern all members of a business firm.

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✘ mission statement
✘ A formal summary statement that describes the
goals, values, and institutional aim of an
organization.
✘ Developing the Mission and Code

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✘ Culture Integration: Ethics Hotlines,
Ombudspersons, and Reporting
✘ Recalling Gilman’s warning not to “print, post and pray,” many
business firms must have mechanisms in place that allow
employees to come forward with ques- tions, concerns, and
information about unethical behavior. Integrating an ethical culture
throughout a firm and providing means for enforcement is vitally
critical both to the success of any cultural shift and to the impact on
all stakeholders. Integration can take a number of different forms,
depending both on the organiza- tional culture and the ultimate
goals of the process.

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✘ whistle-blowing
✘ A practice in which an individual within an
organization reports organizational wrong- doing
to the public or to others in position of authority.

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✘ There are methods by which firms might actively curtail these
negative influences, as follows:
✗ ∙  Leaders should model the act of reporting wrongdoing, in an
obvious manner, so that everyone throughout the organization
can see that reporting is the high- est priority—not covering up
malfeasance.
✗ ∙  Leaders can explain the process of decision making that led
to their conclusion.
✗ ∙  While “crisis management” teams or plans are often
unsuccessful (since they
✗ are so seldom used, there is no habit formed at all), practicing
reports is a valu- able exercise. Running drills or rehearsals of
challenging events will allow for much greater comfort and
generate a level of expectation among workers that might not
otherwise exist.

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✘ In addition, a culture that allows sufficient time for
reflection in order to reach responsible decisions is
most likely to encourage consideration of
appropriate implications.
✘ Finally, the most effective way to ensure clarity
and thereby ensure a success- ful reporting scheme
is to consistently and continuously communicate
the organization’s values and expectations to all
stakeholders, and to reinforce these values through
the firm’s compensation and reward structure.

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✘ Assessing and Monitoring the Corporate
Culture: Audits
✘ Unfortunately, if one does not measure something,
people often perceive a decline in its importance.
The same result occurs with regard to culture. If
we cannot or do not measure, assess, or monitor
culture, it is difficult to encourage others
throughout the organization to pay attention to it.

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Culture: The Federal Sentencing Guid
Mandating and Enforcing elines for
Organizations
✘ United States Sentencing Commission (USSC)
An independent agency in the United States
judiciary created in 1984 to regulate sen- tencing
policy in the federal court system.

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✘ Federal Sentencing Guidelines for Organizations (FSGO)
✘ Developed by the United States Sentencing Commission and
implemented in 1991, originally as mandatory parameters for
judges
to use during organizational sentencing cases. By connecting
punishment to prior business practices, the guidelines establish
legal norms for ethical business behavior. However, since a 2005
Supreme Court decision, the FSG are now considered to be
discretionary in nature and offer some specifics for organizations
about ways to mitigate even- tual fines and sentences by integrating
bona fide ethics and compliance programs throughout their
organizations.

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✘ due diligence in preventing crime and the minimal
requirements for an effective com- pliance and
ethics program. These include the following
actions:
✗ Standards and Procedures. The organization
shall establish standards and procedures to
prevent and detect criminal conduct.
✗ Responsibility of Board and Other
Executives; Adequate Resources and
Authority.

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✘ (A)  The organization’s board shall be knowledgeable about the
compliance and ethics program and shall exercise reasonable
oversight with respect to its implementation and effectiveness.
✘ (B)  High-level personnel must be assigned to have responsibility
for the pro- gram and must then ensure its effectiveness.
✘ (C)  Specific individual(s) within the organization shall be
delegated day-to-day operational responsibility for the program and
shall report periodically to these high-level personnel and, as
appropriate, to the governing authority, or an appropriate subgroup
of the governing authority, on the effectiveness of the compliance
and ethics program. They shall also be given adequate resources,
appropriate authority, and direct access to the governing authority.

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✘ Preclusion from Authority: Prior Misconduct.
The organization shall avoid placing people in
charge of the program who have previously
engaged in illegal activities or other conduct
inconsistent with an effective compliance and
ethics program.
✘ Communication and Training. The organization
shall communicate its stan- dards and procedures
to all members of the organization through training
or other means appropriate to such individuals’
respective roles and responsibilities.
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✘ Monitoring, Evaluation, Reporting Processes.
The organization shall take reasonable steps:
✗ (A)  to ensure that the organization’s compliance and ethics
program is followed, including monitoring and auditing to
detect criminal conduct;
✗ (B)  to evaluate periodically the effectiveness of the
organization’s compliance and ethics program; and
✗ (C)  to have and publicize a system, which may include
mechanisms that allow for anonymity or confidentiality,
whereby the organization’s employees and agents may report
or seek guidance regarding potential or actual crim- inal
conduct without fear of retaliation.

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✘ Incentive and Disciplinary Structures. The organization’s
compliance and ethics program shall be promoted and
enforced consistently throughout the organization through
✘ (A) appropriate incentives to perform in accordance with the
compliance and ethics program; and
✘ (B) appropriate disciplinary measures for engaging in
criminal conduct and for failing to take reasonable steps to
prevent or detect criminal conduct.

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✘ 7. Response and Modification Mechanisms.
After criminal conduct has been detected, the
organization shall take reasonable steps to respond
appropriately to the criminal conduct and to
prevent further similar criminal conduct, includ-
ing making any necessary modifications to the
organization’s compliance and ethics program.

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THANK YOU