Authentic, spiritual, and ethical leadership in organizational change

Organizational Behavior

Chapter 14 focuses on leadership, in particular with reference to organizational change and other challenging leadership situations. The initial section covers more leadership theories -- authentic leadership, which focuses on positive psychology elements such as self-efficacy, optimism and resilience. Spiritual leadership is introduced, and this concept reflects on leaders who rely on religion as a guiding and influencing force in their organizations. Servant leadership is a concept where the leader seeks to provide the workers with the support that they need to do their jobs -- the leader is serving the employees, because they will be doing the heavy lifting in the organization.

Ethical leadership cuts across all leadership theories, but the important takeaway is that the leader is the ethical compass for the organization. Setting clear ethical standards, and then upholding them, is the role of an ethical leader. In smaller work groups, leadership is sometimes shared. Work teams can emphasize collaboration, or using leaders who each have a unique (and preferably complementary) leadership style. Decision-making can even be shared in nature.

The chapter also discusses the role of leadership in the global workplace. Different cultures have conceptualized leadership differently. The GLOBE is a body that identifies leadership dimensions and nine cultural dimensions (p.328), and then evaluates different countries based on these. They have identified specific societal clusters based on the leadership dimensions most in evidence. Some aspects of leadership are universal, while others are more culture-specific.

Organizational change is a significant challenge for leaders. Leaders are needed at all times for an organization -- stability, crisis, dynamic equilibrium, and "near the edge of chaos," but the ideal leadership style might be quite different for each of these. Transformational change is one of the most celebrated tasks of leadership. Often coming from the edge of chaos, where there is motivation for change, a leader can alter the resources, the communications, the culture and other aspects of an organization in order to dramatically alter its strategic approach. Sometimes this is planned, other times it is forced upon the organization, but either way a transformation leader has to be able to guide the organization through a crisis with a vision that the organization buys into. This means having change targets and strategies to reach those targets.

The chapter covers a number of different change strategies. Force-coercion "uses authority, rewards and punishments" to force the change through (p.338). This change strategy is usually something that has been planned. A good example might be when a board brings in a new CEO who is essentially a "hatchet man," cutting the workforce, restructuring and otherwise ramming home a number of other changes to force change upon the organization. Rational persuasion is a rather softer version of this, where the leader is able to explain to the organization the need for the change, and get buy-in as a critical element of the change.

Resistance to change is a common thing for leaders to have to overcome. Resistance comes from anything from rational analysis to fear of the unknown. Sometimes it is more resistance to the messenger than tot the actual message. Sometimes resistance can be overcome with education and explanation, but in other situations there may need to be some negotiation with the people who are doing the resisting . The change agent should not assume that people only resist change for irrational, emotional reasons -- it is best to listen in order to diagnose the issue.

Chapter 15 Summary

Chapter 15 discusses organizational culture and the role it plays in fostering innovation. The text defines organizational culture as "the system of shared actions, values and beliefs that develops within an organization." Culture is something that helps provide context for what the organization does, and how it does it. Culture is thus an integral part of the organization. Internally, culture is used to create a "collective identity" the same as any other cultural group would have. Within an organizational culture, there might be subcultures, especially for certain departments and work teams. There may even be countercultures, though these are often less prevalent than in society at large, because of the active role that management plays in fostering the organizational culture.

One of the interesting elements of organizational culture is where it interplays with national culture. In the globalized business, individuals can belong to many distinctive cultures, but the organizational culture provides a cultural basis for the norms of behavior in the organization, regardless of whatever external cultures there might be. A firm can value diversity while still having a common organizational culture -- indeed a firm should have a strong enough organizational culture that not too many elements of external cultures make their way into the organization.

Stepping back a bit, the book explains what culture is and what it looks like. There is observable culture, which is what we see and hear -- so anything from the way people dress to the food that they eat, would be observable, tangible elements of a culture. Then there are the beliefs systems, rituals, and stories -- the intangible elements of culture. There are also rules and roles, so all of these are elements of the culture that govern how people function within that culture, their behavioral norms, and the structures and hierarchies that exist within that society.

For an organization, it is important that the organizational culture contains all of these elements. Many companies will have outward manifestations of culture, but they will also will create organizational myths and lore that are learning moments for the people within the organization. A service-oriented organization might have myths that focus on people who went out of their way to deliver superior service, in order to pass on that value. Another organization's heroes might be innovators, in order to highlight the importance of that in the culture. Such myths not only become part of the common dialogue within the organization, but they also establish norms of behavior, hint at rewards systems.

But there are other kinds of myths as well, ones that are held to be true when they simply are not. The text sort of jumbles the idea of a myth in the OB context -- organizational myths do not need to be unproven or accepted uncritically. They just need to be established lore that promotes aspects of the organizational culture.

The second part of the chapter switches focus, towards innovation. The process of innovation is idea creation, initial experimentation, feasibility determination and final application. The first part is one of most difficult, and an area where organizational culture can play a significant role, in promoting free flowing thought. But the other areas are where innovation can be stifled in a firm, if the culture has too much bureaucracy or too much risk aversion. Innovations can be new products, new services, or new processes. A new process is "exploitation" while new products/services are "exploration."

An organizational culture can play an important role in innovation. Management needs to not only encourage creativity, in part by removing barriers to communication flows, but it also needs to create an environment where new ideas can gain traction, be tested, and brought to market. Rewards systems often play a significant role in fostering innovation.

Chapter 16 Summary

This chapter discusses organizational goals, and the role that structures and workflow play in helping the organization to meet its goals. The mission statement is often the starting point for expressing the organization's goals, because it provides an overview of what the organization hopes to accomplish by virtue of its existence. From there, leadership of the organization can operationalize the mission statement into different types and levels of individual goals -- output goals, systems goals. So what does the organization do, and what systems need to be in place to allow it to do that.

Structurally, all organizations have some sort of hierarchy. There are some very flat organizations, but even they have a little bit of hierarchy. An organizational chart is a visual aid that outlines the structure of an organization. There are both line and staff units under a traditional org chart. This way of thinking has line positions being conceptualized as direct contributors to organizational wealth, and staff positions as supporting the line positions. It should be noted that these distinctions are somewhat archaic. The span of control reflects what each unit does within the organization, and the same concept is applied to each individual supervisor as well. Control reflects getting the people within the organization to perform specific tasks. A bureaucracy is how the elements of organizing resources and tasks, and establishing controls, is done within an organization. A mechanistic bureaucracy is heavily formalized, an organic bureaucracy is a less formalized form, where members have more informal authority and are relied upon to perform bureaucratic tasks in an ad hoc manner.

Output controls are those that "focus on desired targets" -- managers find different combinations of structure, resource allocation and incentivization to direct the outputs of the organization. Usually output controls are discretionary on the part of managers, something that can work well when a manager knows how to motivate the workforce. This is different from process controls, which are things like job descriptions, best practices and other means by which the organization tells people who certain tasks are to be done. Usually, process controls are formalized -- the policies and rules are written out, and standardized. Sometimes, however, they are not. There are a lot of different methodologies for formalization and standardization, and the book talks about total quality management (p.382). The more the formalization and standardization an organization has, the more centralized the organization is said to be. A decentralized organization puts more power in the hands of the workers with respect to how they are going to do their jobs. Decision-making and resource allocation are usually the two areas where the centralization/decentralization divide manifests the most.

The chapter then begins to cover how work is organized, something that determines how an organization will reach its goals. Concepts such as specialization and coordination are discussed -- each person has their own speciality, and the methods by which their work is coordinated are an integral part of strategy. Organizational structure is discussed here -- functional structures break the organization down by function, geographical structures by geography, and divisional structures often reflect product breakdowns.

There are a number of methods by which coordination is achieved in an organization. There are formal methods, including committees, work teams and meetings, where employees with different specializations discuss matters within the team. Sometimes there are even schedules by which different team members will communicate, and coordinate certain tasks. There are also informal methods as well, ad hoc means by which people within the organization talk to each other, usually coming together to solve a specific problem that has been identified, in many cases a time sensitive issue that should not wait until the next formal coordination.

Chapter 17 Summary

This chapter discusses the confluence of strategy, organizational design and technology. Organizational design supports the strategy, and technology can influence the type of organizational design. Strategy is the process by which the company seeks to achieve its goals. There are a number of ways to understand strategy, but it is best understood as a pattern of decisions. The pattern has to be coherent, each decision leading to the same outcome in a complementary manner. The pattern of decisions will constantly be updated, and this is the process of organizational learning, where past experience and new inputs will change the decisions that are intended to take the organization to its chosen strategy. There are different ways that organizations learn -- scanning, vicariously and grafting, so learning from others and from within, and adapting strategy or adopting new strategy in response to what has been learned.

Organizational design is how the organization determines its optimal structure -- as the organizational chart shows this structure. There are elements to org design as well, such as the methods by which communication occurs and by which the elements of the organization are linked in their activities. Organizations are faced with challenges as they evolve, such as inertia, and a change in the design can help to realign the organization with its strategic objectives. Some innovative companies have rethought the traditional ideas of organizational design. The basic designs for large companies are either functional or geographic, a matrix structure for the most complex. Smaller companies can be quite flat -- entrepreneurial firms often have a very fuzzy notion of organizational design that is only formalized as the company grows.

Technology affects organizational design in a few ways. First, there is operations technology, which reflects the "resources, knowledge and techniques that create a product or service output," and then there is information technology, which is the combination of hardware and software that allows for the flow of data and information throughout the organization (p.408). These structures will determine how an organization can be structured, but also what the optimal organizational design might be. The chapter touches on adhocracy, an org structure that focuses on decentralized decision making. Presumably this is related to information technology, which can promote such a structure, and indeed can allow for entirely virtual organizations. A virtual organization has lead people, pools of skills and everything is connected in the virtual realm, rather than the physical one.

Organizational design should also be influenced by other factors, such as the operating environment. Sometimes a foreign subsidiary is required by law -- if you want to sell cars in China, you have to build them in China, or pay steep duties. Environmental complexity may dictate certain styles of design and leadership -- a highly fluid, rapidly-changing environment demands decentralized decision-making, for example, but there environmental factors have a high degree of interdependence, centralized authority that can understand the complex environment is also required -- that is the role of the leader of the organization, regardless of its structure.

Networks and alliances are also discussed, as elements of structure. Often, these are informal, but they are channels by which information an resources are transmitted through the organization. Such alliances can be quite powerful, because they allow information to flow where it needs to go, rather than relying strictly on formalized channels.

The role of leadership is also discussed. Strategy is important, and leaders need to set it. A higher level of organizational competence allows for more decentralization, where leaders can be more supportive and less directive. The role that leadership plays will also change at different levels of the organization.

Case Study #14 -- Novo Nordisk

1. The case does not discuss leadership style at Novo Nordisk. The company definitely has a transactional bent, being that it is focused on repetitive processes and process improvements. It could be mandating its TBL and BSC objectives from head office, or these could have been developed collaboratively. Being Danish, they fit with GLOBE's "Germanic" cultural style, which is value-based and participative. Both are reasonable conjectures based on the information provided.

2. Leadership sets the organizational design and competitive strategy. The company's culture also seems to originate from leadership, though that is a conjectural assessment. The org design is not really discussed, but the strategy is that Novo Nordisk wishes to be a differentiated producer, in particular touting non-financial objectives and seeking to innovate its way to product leadership. That points to being more differentiated, than low cost, especially given the research into synthetic insulin.

3. The company is not really transformational. It has built its philosophies into its business, and today is in mature markets, focusing on incremental improvements to existing processes and strategies. That is transactional. Planned change is reflected in the incremental improvements. Unplanned change will be more interesting, because Novo seems very oriented towards planning its changes, and moving slowly. Unplanned change might throw the company, but the case does not present a scenario where it had to react to a sudden change in the external environment. The company -- if we are talking about change from a long time ago -- built its philosophy of TBL and BCS into all aspects of its business. This means that it created the culture, the mantras, the systems -- the concepts that it wanted to instill into its business have been implemented from the board on down, so that they have permeated the organization at all levels by this point.

4. Self-leadership techniques seem to fit quite well with what Novo wants to do. If has created an entire organizational culture based on the elements of its strategy. Each person within the organization can be empowered through self-leadership to take responsibility for his or her own contributions to these goals. Self-leadership would involve everybody in the organization as a leader, sharing their own experiences and expertise with each other, working collaboratively to bring about the change that the organization wants to bring about. There is definitely a role for self-leadership within Novo Nordisk to help it achieve its goals, and that is part of the overall strategy of empowerment that is part of the balanced scorecard.

5. Novo Nordisk, being a leading provider of insulin, should have an eat at the table in the fight against diabetes. It plays a role, in particular because of the knowledge that it has about the biochemistry of diabetes. There are probably medical contributions that Novo Nordisk can make towards diabetes. Novo has some political power in particular, as well as expertise power. The culture within the company is such that they are expected to contribute to the fight against diabetes, not just profit from it. Leadership can take this mantle or maybe hide from it, but it sounds like they have taken the mantle, in line with the organization's culture.

Article Analysis

The article "How to overcome the "analysis-paralysis of decision-making" appeared in Forbes March 20, 2015. This article outlines one of the ways in which decision-making becomes challenging -- analysis paralysis. This is where a leader has to make a decision in an environment characterized by significant complexity and sometimes fluidity as well. They become paralyzed trying to parse all of the information, and the ultimate result is that they do not make a decision.

The author provides a number of tips for breaking the analysis paralysis. These include setting a "drop dead" date for the decision, curbing one's curiosity, recognizing that the decision must be made with at least some uncertainty or to structure the decision as a series of small decisions. Each of these can be used on its own, or sometimes in conjunction with other techniques, as a means of bringing about a decision more quickly.

The article has some merit in that this is a real problem, and sometimes some common sense advice is needed to help people suffering from this situation. The advice is not peer reviewed or anything like that, but it certainly seems reasonable. I have been down that road (analysis paralysis) and based on my experience the article has merit.

The article is important because it discusses two key elements of organizational behavior -- leadership and decision-making. The organization takes its cues from its leaders, and inertia can easily follow an environment where important decisions are not being made. Too much caution can trickle through an organization, the same as too much impulsivity. The author touches on an important element of leadership, and that is the courage to actually take the risks that a leader is supposed to take, because that is an element of culture that can translate well across an entire organization.

Case Study #17 -- Mission Management and Trust

1. Most competing firms are strictly oriented towards profit, whereas mission has other mission elements. The trust's mission also encompasses elements of social justice, and those are not usually a part of the mission elements of the customers. Thus, Mission had to make a case that these are important elements, and that they do not need to detract from the primary mission of earning healthy returns on investments.

2. Financial prudence should always be examined with the big picture in mind. As an isolated transaction, charity is never really a good deal, especially for a corporation. But as part of a greater expression of its mission, the charitable donation was ultimately sound financial practice. It set a tone for the organization, one that the organization can point to and leverage with its customers. That donation will always be a part of the company's lore, and will attract customers work far more in the long run than the cost of that original donation. It was simply an investment in future business, something that established the company's charitable and ethical credentials.

3. The mission is a binding force, because it is the bedrock of strategy. This has significant implications for coordination. As a binding force, the mission can be a factor is just about any decision that the company makes. Moreover, the mission can serve as a dispute resolution mechanism as well, because it is understood that everybody at the organization has bought into the mission. So there is tremendous value in the mission in terms of its ability to coordinate people -- it is the means by which the coordination occurs. Further, adjusting to the market is helped by the mission. As a new trust, Mission was always going to struggle to build a niche for itself. Many trust customers might not care about the mission, but many did, and that is how the company built its market. Adjusting to market conditions means understanding where there are gaps in the market, customers who maybe are not being served as effectively as they would like to be served. As it turned out, these customers were often religious or charitable foundations, organization that were investing with companies while holding their noses. The opportunity to invest with a company that shared their values was a market unserved, and Mission Trust was able to find a way to serve that market, on the basis of having such a unique mission.

4. The unique mission still exists, and therefore should still yield success. I love the use of the word yield there, since that is what investors want first and foremost. If Mission can make the case that its strategy will deliver yield, that will sway investors who may previously have been skeptical. Those traditional investors may be more oriented towards the bottom line, but if the case can be made by Mission that with its unique mission it is performing as well as anybody else, then it can get into the conversation for the traditional market. Certainly, the unique mission has given Mission a chance to build its share. Further, the unique mission might resonate better with the traditional market when the word "sacrifice" no longer needs to be attached to it -- I think Mission's unique mission will serve them quite well in moving into the traditional investment market.

Article Review