STRATEGIC LEADERSHIP: Creating a Learning Organization and an Ethical

Organization

CBM 51 – Strategic Management

Submitted by:

GROUP-2 (IA-2)

Agol, Kristel Ann

Bukod, Decery

Butalid, Johanna Nicole

Eduave, Myra Nena Carol

Geli, Daisy Gay

Guibao, Charmhae

Magsubar, RJ

Samoranos, Jobille Mae

Suello, Coleen Gay

Tahanlangit, Daryl

Tadlip, Sigourney Niña

Waban, April Kay

Submitted to:

Mrs. Ma. Concepcion C. Sudaria

 Leadership in business is the capacity of a company's management to set and achieve
challenging goals, take fast and decisive action when needed, outperform the competition, and
inspire others to perform at the highest level they can. “Leadership is the process of transforming
organizations from what they are to what the leader would have them become.’’ With that,
employees need to know the direction in which the company is headed and who to follow to reach
the destination.

Leadership involves showing workers how to effectively perform their responsibilities and
regularly supervising the completion of their tasks. To be effective, a leader should exhibit a strong
character, honesty, integrity, trustworthiness, and ethics. Leaders act in line with how they speak
and earn the right to be responsible for others’ success in the company.

Individuals with strong leadership skills in the business world often rise to executive
positions such as CEO (chief executive officer), COO (chief operating officer), CFO (chief
financial officer), president, and chairman. They possess clear communication skills to speak with
and listen to staff members, respond to questions and concerns, and are empathetic. Additionally,
leaders can also speak to a more holistic approach. They are eager for moving the company forward
and achieving new levels of success.

THREE INDEPENDENT ACTIVITIES OF LEADERSHIP:

1. Setting a Direction

True leadership sees where the company is headed and plans the steps needed to get there.
Visualizing what is possible, following trends in the industry, and taking risks to grow the business
are all required of leaders. A leader must have the ability to scan the environment to develop a
knowledge of all of the company’s stakeholders (e.g., customers, suppliers, shareholders) and other
salient environmental trends and events and integrate this knowledge into a vision of what the
organization could become.

2. Designing the Organization

Organization design serves as the foundation on which all company operations are built,
including such vital factors as the grouping of employees within different departments and the
formal managerial hierarchies within a company. Savvy early stage organizational design choices
can create a foundation for success, allowing an organization to develop a strong company culture,
grow in response to increasing demands and adapt to changes in the marketplace.

Almost all leaders have difficulties in implementing their vision and strategies. Some of its
difficulties may arise due to lack of understanding of responsibilities and accountability, rewards
system that could not motivate individuals, inadequate budgeting and control systems. All leaders
are expected to create successful and efficient strategies to achieve and reach an entity’s goal. They
must be actively involved in building structures, teams, systems and organizational process.

3. Nurturing a culture dedicated to excellence and Ethical Behavior

Leaders play a key role in developing and sustaining as well as changing an organizations
culture. Leaders’ actions can also have a very detrimental effect on a firm’s culture and ethics. A
leader’s ethical standard would have a great impact on the organization for good or for bad.
Managers or people at the top must exercise strict and well behaved actions for people under the
structure would surely take their lead and follow them.

OVERCOMING BARRIERS TO CHANGE AND THE EFFECTIVE USE OF POWER

Barriers to change that leaders often encounter:

1. Many people having vested interest in the status quo.

- Here, individuals continue to throw “good money at bad decisions” despite negative
performance feedback
2. There are systematic barriers.
- Here, the organization’s structure, information processing, reporting relationships, and
so forth impede the proper flow and evaluation of information.
3. Behavioral barriers.
- Here, a manager’s way of solving issues are usually biased and the way they look at
issues are usually based on their limited perspective.
4. Political barriers.
 - Here, conflicts arise because of power relationship. Occurrence of political barriers
arises from different reasons, among those reasons are vested interest (escalation
problem), refusal to share information, conflicts over resources, conflicts between
departments and division, and petty interpersonal differences.

5. Personal time constraints.

- Here, there is a tendency for operational decisions to drive out the time necessary for
strategic thinking and reflection.

A LEADER’S BASES OF POWER

Power refers to leader’s ability to get things done in a way he or she wants it to be done. It
is also the ability to influence other people’s behavior, to persuade them to do things that they
otherwise would not do, and to overcome resistance and opposition to changing directions.

Bases of Power

Organizational- the power that a person wields because of holding a formal management position

1. Legitimate power- derived from organizationally conferred decision-making authority

and is exercised by virtue of a manager's position in the organization

2. Reward power- depends on the ability of the leader or manager to confer rewards for
positive behaviors or outcomes

3. Coercive Power- is the power a manager exercises over employees using fear of
punishment for errors of omission or commission

4. Information power- arises from a manager's access, control, and distribution of

information that is not freely available to everyone in an organization

Personal- a basis of power that enables a person to influence others because of his/her personality

1. Referent Power- comes from being trusted and respected by subordinates because of
his/her personal attributes or charisma.
 2. Expert Power- derived from possessing knowledge or expertise in a particular area

EMOTIONAL INTELLIGENCE

In the previous section, we discussed activities that focuses on "what leaders do". In this
section, the issue becomes "who leaders are". That is, their capabilities and traits.

These traits are divided into three broad sets of capabilities:

• Technical Skill - knowledge and expertise of a certaon field

• Cognitive Ability - analytical reasoning/ IQ

• Emotional Intelligence - the capacity for recognizing one's own emotions and those of others
(Goleman)

Emotional Intelligence - is the attribute that successful leaders possess and gained popularity in
both literature and management. Recent studies of successful managers found out that effective
leaders comsistently have a high level of EI.

"IQ gets you hired, but EQ gets you promoted."

However, this does not mean that IQ and technical skills are irrelevant. They should be viewed as
"threshold capabilities". It means that they are necessary for attaining higher-level managerial
positions.
 5 COMPONENTS OF
EMOTIONAL DEFINITION
INTELLIGENCE
 SELF-MANAGEMENT SKILLS:
SELF-AWARENESS  The ability to
recognize and
understand your
moods, emotions, and
drives, as well as their
effect on others.
SELF-REGULATION  The ability to control
or redirect disruptive
impulses and moods.
 The propensity to
suspend judgment – to
think before acting.
MOTIVATION  A passion to work for
reasons that go
beyond money or
status.
 A propensity to
pursue goals with
energy and
persistence.
 MANAGING RELATIONSHIPS:
EMPATHY  The ability to
understand the
emotional makeup of
other people.
 Skill in treating
people according to
their emotional
reactions.
SOCIAL SKILL  Proficiency in
managing
relationships and
building networks.
 An ability to find
common ground and
build rapport.
EMOTIONAL INTELLIGENCE: Some Potential Drawbacks and Cautionary Notes
HALMARK
 Self-confidence
 Realistic self-
assessment
 Self-deprecating sense
of humor
 Trustworthiness and
integrity
 Comfort with
ambiguity
 Openness to change
 Strong drive to
achieve
 Optimism, even in the
face of failure
 Organizational
commitment
 Expertise in building
and retaining talent
 Cross-cultural
sensitivity
 Service to clients and
customers
 Effectiveness in
leading change
 Persuasiveness
 Expertise in building
and leading teams
Self-regulation - the key element to achieve the best benefits of Emotional Intelligence.

Balance is essential to Potential drawbacks that are geared from the flipside of the benefits from
some of its essential components.

EFFECTIVE LEADERS HAVE EMPATHY FOR OTHERS

Leaders may be able to appeal to logic and reason and acknowledge other people's feelings
so that people feel the decisions are correct. Confusion from empathy with sympathy makes it
more difficult to make tough decisions.

EFFECTIVE LEADERS ARE ASTUTE JUDGES OF PEOPLE

A danger is that leaders may become judgmental and critical about the shortcomings they
perceived in others.

EFFECTIVE LEADERS ARE PASSIONATE ABOUT WHAT THEY DI AND THEY

SHOW IT
They may express their passion as persistence in pursuing objective on relentless focus on
a valued principle.

EFFECTIVE LEADERS CREATE PERSONAL CONNECTIONS WITH PEOPLE

Effective leaders take time to engage employees individually or as a group . The downside
of such visibility is that if the leader makes to many unannounced visits, it may create a culture
LG fear ang micromanagement.

DEVELOP A LEARNING ORGANIZATION

“Accumulating and sharing internal knowledge”
Effective organization must redistribute information, knowledge and rewards.

The company needs to disseminate information by sharing customer feedback as well as

financial information.

The employees must know about the goals of the business as well as how key value-
creating activities in the organization are related to each other.
 Organizations should allocate rewards on how effectively employees use information,
knowledge and power to improve customer service quality and company’s overall performance.
Enhancing the sharing of company information

EMPOWERING EMPLOYEES AT ALL LEVEL

“The great leader is a great servant”

Managers create environment where employees achieve their potential as they help move
the organization towards its goals. They must envision themselves as flexible resources willing to
assume various roles as coaches, teachers, decision makers, facilitators and supporters depending
on the needs of their employees.
Effective leadership is the central key to empowerment. There are two diametrically
opposite perspective of empowerment. In top-down perspective, empowerment is about delegation
and accountability. This strategy for empowerment encompasses the following:

 Start at the top.

 Clarify the organization’s mission, vision and values.
 Clearly specify the task, roles and rewards for employee.
 Delegate responsibility.
 Hold people accountable for results.
In contrast, the bottom-up view looks at empowerment as concerned with the risk taking
growth, and change. It involves trusting people to “do the right thing” and encourages employees
to act with a sense of ownership. The salient elements of empowerment are:

 Start at the bottom by understanding the needs of employees.

 Teach employees self-management skills.
 Build teams to encourage cooperative behavior.
 Encourage intelligent risk taking.
 Trust people to perform.

GATHERING AND INTEGRATING EXTERNAL INFORMATION

Recognizing opportunities, as well as the threats, in the external environment is vital to a
firm’s success. Focusing exclusively on the efficiency of internal operations may result in a firm
becoming the world’s most efficient producer of manual typewriters or leisure suits.

Organizations and environment become more complex, it is far more critical for employees
and managers to become more aware of environmental trends and events both general and
industry-specific.
IDEAS ON HOW TO BE MORE KNOWLEDGEABLE ABOUT THEIR FIRM’S
COMPETITORS AND COSTUMER.
INTERNET – Dramatically accelerated the speed with which anyone can track down useful
information or locate people who might have useful information.

GARDEN VARIETY – Traditional sources to acquire external information. Much can be gleaned
by reading trade and professional journals, books and popular magazines.

BENCHMARKING – Useful means of employing external information. Managers seek out the
best examples of a particular practice in their own organization. Industry-specific standards are
typically best handled through competitive benchmarking, whereas more generic processes lend
themselves to functional benchmarking because the function is essentially the same in industry.

Two primary types:

Competitive Benchmarking – Restricts the search for best practices to competitors.

Functional Benchmarking - Endeavors to determine best practices regardless industry

Costumers for information

CHALLENGING THE STATUS QUO AND ENABLING CREATIVITY

For a firm to become a “learning organization” it must overcome such barriers in order to
foster creativity and enable it to permeate the firm. This become quite a challenge of course if the
firm is entrenched in a status quo mentality.

The primary means to directly challenge the status quo is for the leader to forcefully create
a sense of urgency.

Establishing a “culture of dissent” can be another effective means of questioning the status
quo and serving as a spur toward creativity. Norms are established whereby dissenters can openly
question a superior’s perspective without fear of retaliation or retribution.

Fostering of a culture that encourages risk taking is related to the culture of dissent.
Companies that cultivate cultures of experimentation and curiosity make sure that failure is not, in
essence, an obscene word. They encourage mistakes as a key part of their competitive advantage.
Creating an Ethical Organization

Define ‘ethics’- it is a system of right and wrong and assists individuals in deciding when
an act is moral or immoral, socially desirable or not. Sources of an individual’s ethics - religious
beliefs, national and ethical heritage, family practices, community standards and expectations,
educational experiences, and friends and neighbors. Business ethics is an application of ethical
standards to commercial enterprise

Individual Ethics vs. Organizational Ethics

Bluffs:

 question of personal scruples

 confidential matter between employees and their consciences

Fact:

 Ethics has everything to do with leadership

 Ergo, ethics is as much an organizational as a personal issue.

Ethical Organization of a leader

 key factor in promoting ethical behavior among employees

 take personal and ethical responsibility in decision making
 characterized by a conception of ethical values and integrity as a driving force of the
enterprise

Ethical Values

 shape the search for opportunities, design of organizational systems, and the decision-
making process used by individuals and groups.
 provide a common frame of reference that serves as a unifying force across different
functions, lines of business, and employee groups.
- Organizational Ethics helps to define what a company is and what is stands for.
- Ergo, leaders who exhibit high ethical standards become role models for others in the
organization and raise its overall level of ethical behavior.
- Some Reasons for the Growing Interest in Corporate Ethical Performance
 - Increasing lack of confidence regarding corporate activities
- Growing emphasis on quality of life issues
- Spate of recent corporate scandals at firms
- Ergo, concerns about protecting the environment, fair employment practices, and the
distribution of unsafe products have served to create powerful regulatory agencies.
- These are the reasons why CEP was strengthened and enhanced to mitigate, at least, salient
problems.

Examples of corporate executives that showed unethical and illegal behavior:

(1) Enron, (2) Tyco, (3) Worldcom, Inc., (4) Adelphia, (5) Healthsouth Corp.

Consequently, all were forced to resign and are facing (convicted of) criminal charges.
Ethical crisis can be pretty expensive – both in terms of financial costs and in the erosion of human
capital and overall firm reputation.

There are many potential benefits of an ethical organization, but they are often indirect.
Inconsistency was evident concerning the overall relationship between ethical performance and
measures of financial performance

However, positive relationship have generally been found between ethical performance
and strong organizational culture, increased employee efforts, lower turnover, higher
organizational commitment, and enhanced social responsibility.

Strong Ethical Orientation has a positive effect on employee commitment and motivation
to excel. Particularly, it’s important in today’s knowledge–intensive organization, where human
capital is critical in creating value and competitive advantage.

INTEGRITY-BASED VERSUS COMPLIANCE-BASED APPROACH TO

ORGANIZATIONAL ETHICS
Organizational integrity rests on a concept of purpose, responsibility and ideas for being
organization as a whole. An important responsibility of leadership in building organizational
integrity is to create this ethical framework and develop the organizational capabilities to make it
operational.

Compliance-based programs are typically designed by a corporate council with the goal
of preventing, detecting and punishing legal violations. Compliance-based approach are externally
motivated-that is based on fear of punishment for doing something awful.
 Integrity-based approach combines a concern for law with an emphasis on managerial
responsibility for ethical behavior. It seeks to enable responsible conduct. It is more demanding
because it requires an active effort to define the responsibilities and aspirations thay consitute an
organization's ethical compass. Integrity based approach are driven by a personal and
organizational commitment to ethical behaviors.

KEY ELEMENTS TO BECOME HIGHLY ETHICAL ORGANIZATION

1. Role Models
2. Corporate Credos and Code of Conduct
3. Reward and Evaluation System
4. Policies and Procedure

ROLE MODELS
Leaders are role models of organizations. Leaders must 'walk the talk', that is, they must
be consistent in their word and deeds. When leaders do not believe in the ethical standard that
they are trying to inspire, they will not be effective as good role models. Effective leader often
includes taking responsibility for ethical lapses within the organization.

CORPORATE CREDOS AND CODES OF CONDUCT

Corporate Credos or codes of conduct are important element of an ethical organization
for such mechanisms provide guidelines for decision making. They provide clear understanding
of the company's position in terms of employee behavior. The effectivity of these codes will be
observed when the organization members are aware of these codes and what guidelines they
contain.
- Reward and Evaluation Systems

There are instances that an ethical leader is presiding an organization that commits several
unethical acts, thus a reflection of a flawed organization's reward structure. A reward and
evaluation system may cause individuals to act in an unethical manner if rewards are conceived to
be distributed based on the outcome rather than the means of achieving the goals and objectives.

-Policies and Procedures

Firm leaders typically handles different situations that may arise in the company by
establishing policies and procedures that can be applied rather uniformly to each occurrence. These
guidelines can be used to classify the proper relationships between the firm's customers and
suppliers. Careful development of the firm's policy and procedure in guiding behavior is important
so that the employees will be encouraged to behave in an ethical manner. These guidelines should
not only be present on the books, but rather reinforced with effective communication, enforcement,
and monitoring, as well as sound corporate governance practices.