BUSINESS ETHICS AS AN ORGANIZING PRINCIPLE FOR COMPANIES
A reference to ethics can be found in all concepts and practical examples treating responsible leadership. It is most crucial to distinguish between two forms of dealing with ethics:
• as an add-on, a normative concept, as additional obligation, a personal value
• as an anchor in professional concepts of leadership and in the structures of the organization
It is, thus, vital, to question if ethics is a code of conduct which addresses individuals or if it is an integral part of the organizational structures, decision mechanisms, strategies, products, processes, and working conditions?
As long as it is an add-on, it must be essentially borne by the will of individuals and groups alone. In this case one needs to be aware of the necessity to implement ethical practice even though it might differ essentially from the organizational form and the strategic orientation of the company. Thus, ethics as a guideline for behavior remains very fragile, always connected to the fate of the person and prone to dissolve rapidly.
Ethical behavior in daily operations is always a personal question of value, because we, as professionals, managers, consultants and experts are always facing the challenge of deciding for or against something. This decision—although it can be driven by the dynamics in the market or the company—is always a value-based personal decision.
The sources from which such an ethical orientation is loaded are twofold:
• First, there is the base of a person's a biographical background, including family, culture, religion, spirituality, and politics.
• The second source is life and professional experience in which people are suddenly confronted with the impact of their actions on the environment and on their employees, which often causes a turnaround in their orientation (as cited in Mirvis et al., 2010).
People who have a broad awareness and who are socially oriented are key-players in this concept. This is, unfortunately, hardly ever mirrored in the average MBA program, which is often characterized by a narrowing of perspective and a focus on instrumental knowledge and on predefined case studies. Questions of participants' own values or experience are not addressed.
I consider the above-mentioned second form of dealing with ethics, that is, the integration of ethics into the processes, structures, and strategies of a company, the crucial precondition for responsible leadership to be lastingly effective. To take health industry as an example, surveys among patients and discussions with patients regarding their satisfaction with health facilities are an integral element of professional work and performance. Processes of this sort are undoubtedly more effective in achieving meaningful ethical orientation towards the needs of clients than purely individual-driven approaches.
Ethics, which embodies the attitudes of employees and executives and which is a constituent element of the corporate culture cannot be considered as an entity separated from the normal business day and corporate social responsibility projects. Ethics, thus, has to be anchored in the central processes of the company. This also presupposes that it is in line with the interests of the company's prospects.
The sustainability of ethical behavior cannot be ensured if it is associated with economic failure or if it is borne by individuals alone.
To exemplify these hypotheses I would like to refer to the internationally successful Austrian company Paar. In this company, the ethical orientation of the owners and managers is based on Christian values, including the design of the ownership structure, the strategic direction and the management processes, which are systematically structured around the employees and the environment (quoted from the company's image folder):
We are committed to our customers around the world—and realize our social responsibility for our employees, the society and the environment.
We are constantly working on developing new products and improving our portfolio in close cooperation with the scientific community.
Decades of experience, a love of the craft, the training of apprentices and consistent trust in the successful cooperation of all our employees— these elements are the basis of our company.
Regarding our products, infrastructure, relationship with employees, customers, suppliers.
Leadership From a Technical Standpoint
Leadership requires the incorporation and management of resources, as efficient as possible, high reliability at low cost.
• Leadership does not mean power/being at the top
• It means incorporating the existing forces, talents and skills and leading them in the right direction
• Creating a work environment in which employees can realize their potential
• Leadership as a task instead of a position.
In order to further exemplify the anchoring of ethics in professional concepts we can look at OD itself.
First of all it can be stated that change processes in organizations normally have a strong impact on people, employees and clients. Especially in the recent economic crises we could observe that change processes can affect a wide range of economic and social aspects—including whole branches and specific social sectors.
Second, the handling of changes within and between organizations has long become an everyday phenomenon.
Gone are the days in which companies—both profit and nonprofit— could persistently pursue their daily business and in which change processes appeared predominately in a cyclic way, often caused by specific changes in the environment, in the market, in research or by the development of new products.
Today, managers and employees in organizations are facing changes as continuous processes. The design and handling of these processes has long shifted from being the responsibility of the managers only, but also belongs to the tasks of employees. Thus, the choice of structures and concepts of organizational change has become of crucial importance.
Two ways of implementing change shall be highlighted at this point:
• New solutions can be implemented strictly top down and from outside without making use of the expertise of various different groups of managers and employees. This bears the risk of inappropriate solutions and a lack of acceptance.
• Solutions are collectively developed by the system, taking into account the expertise of both managers and employees and, thereby, increase the chance of finding appropriate solutions and of achieving acceptance.
One of the core elements in OD concepts is to integrate a variety of different groups of stakeholders in the development of organizational change processes, i.e. both the strategic guidelines of the top-management and the experience and the competence of important groups of staff members. Established systemic OD offers well-balanced processes and instruments to support processes of this sort.
The idea of participation has ethical roots. Today, this ethical orientation is embedded in the professionalization of organizational development. And the concept has become a proofed way to create effective organizations (Lawler & Worley, 2005, 2011). Organizational development can, thus, support the implementation of value based professional processes which are conducted beyond the values of the individuals.
I chose these four dimensions of management education for the introduction, because they steer the discussion and highlight the following:
• The concept of responsible leadership needs a solid theoretical foundation.
• The social and emotional dimension of learning has the same meaning and significance as the content level. Social skills have become key qualifications.
• The issue of organizational learning cannot be reduced to the educational aspects, but is at the same time crucial for the outcome of management education
• The ethical foundation of our work cannot be provided by ethical codes only, but depends on the professional ethical concepts with which we actually work.
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