Is Ethics important for Organisational Effectiveness?

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We usually keep hearing about McGregor’s Theory X and Y management styles but there is a third style of management which is also significant (Mullins, 2013). Developed by Dr. Williams Ouchi, Theory Z of Ouchi suggests that apart from the monetary and physical benefits, the Theory Z organisation focuses on characteristics such as employee loyalty, decision making by consensus but individual responsibility, all-encompassing concern for subordinates and employees as a natural part of management, etc. (Mullins, 2013). These points suggest the importance of interpersonal relationships within the along with the monetary motivational methods. Since the commencement of industrialisation in the 18th century, organisations had become extremely focused on the profit motive, mass production and specialisation, without focusing on the effects on employees, morale and effectiveness of leadership (Nash & Patricia, 1983). But now there has been extensive research and work done on how to improve working conditions and employee satisfaction in the workplace as it has become apparent that humans in the workplace need to be treated like humans.

Importance of Managerial Effectiveness

Managerial ‘effectiveness’ stresses upon doing the ‘right things’ to get work done which differs from ‘efficiency’ because efficiency is related to productivity. If an organisation has an ethical leader, it is quite obvious that the mission, vision and values of that organisation will most probably be in line with their ethical beliefs. We have to realise the difference between ethics and morals. Ethics is a set of rules from and external source that are made available to an individual but morals are how an individual actually perceives right from wrong.

You will see that most of the companies’ mission statements now mostly revolve around ‘doing good business’ and that means that the importance of the environment and stakeholders are increasingly being made aware of to the population. A leader is considered to be ethical when the inward virtues of that leader reflects their decision making (Kar, 2005). The 4-V Model of Ethical Leadership suggests that the leader should follow the subsequent model:

  • Committing and understanding individual core values
  • Framing actions and creating a vision for stakeholders
  • Voicing the created vision
  • Understanding that we become what we practice

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(Kar, 2005)

The profits of an ethical leader are enhanced public image of the organisation, rebuilding or improvement of investor confidence, avoidance and decrease of criminal penalties, enhanced employee retention, and better customer satisfaction. This all adds up the effectiveness of management in an organisation. Leadership based on ethical values means that the goal and objective setting in an organisation and strategic decisions would be oriented towards values of the leader (Eisenbeiss, 2012).

Are there any downsides to ethical leadership?

We have seen all the benefits that an organisation can gain from an ethical leader but let us see some things that may impact it negatively.

Ethical leadership means that all the processes within and outside the organisation would all have to go through the proper steps and procedures. In some countries that can really slow down the organisation due to the long bureaucratic procedures in almost everything. Ethical Leadership is only effective when there is trust created with stakeholders and thereby creating a follower attitude among the employees and representatives of the organisation and the leader needs to make sure that the stakeholders think that the leader acts while considering their well-being (Eisenbeiss, 2012). This can be a difficult task and creating and monitoring that culture in the organisation is a tremendous challenge.

Ethics – A Set of Rules

Almost every organisation has a code of conduct that they should follow. In some countries this is a strict business, but in others things such as bribery are a common doing. The top ten unethical companies according to an activist group states their unethical activities and their consequences that in turn affected their effectiveness. For example, Halliburton was charged with a fine of bribery to the Nigerian officials of $559mn which created bad publicity for the organisation and may have affected employees’ faith in the company (Action for our Planet, 2014). On the contrary, having ethical leadership like Accenture, Adobe Systems etc. proves that companies can gain competitive advantage when it comes to hiring staff and studies show that these ethical companies are able to recruit staff that is more loyal to them (Forbes, 2012).

Choice of Leadership?

The choice depends on what leaders set the vision and mission for their companies. If companies stress on the fact that they need to adopt the right code of conduct, then they will naturally want to employ staff that is loyal and honest. However companies that need to carry out dirty work, especially the oil and gas companies, will obviously want to employ someone who would get the job done. Ethical leadership is an objective concept and ethics may not be the same for everyone. Unethical companies may also have effectiveness, no doubt, but we should be able to sleep at night, right?

References

Action for our Planet, 2014. AFOP. [Online]
Available at: http://www.actionforourplanet.com/#/top-10-unethical-companies/4545796858
[Accessed 23 June 2014].

Eisenbeiss, S. A., 2012. Re-thinking ethical leadership: An interdisciplinary integrative approach. The Leadership Quarterly, 23(5), pp. 791-808.

Forbes, 2012. Forbes. [Online]
Available at: http://www.forbes.com/sites/jacquelynsmith/2012/03/15/the-worlds-most-ethical-companies/
[Accessed 20 June 2014].

Kar, D. S., 2005. Ethical Leadership: Best Practice for Success. IOSR Journal of Business and Management, 1(14), pp. 112-116.

Mullins, L. J., 2013. Management and Organisational Behaviour. 10th ed. s.l.:Pearson.

Nash, J. & Patricia, M., 1983. Women, Men, and the International Division of Labor. s.l.:State University of New York Press.

Can Managers actually Manage?

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“The secret of change is to focus all of your energy, not on fighting the old, but on building the new” – Socrates

We all know that change is something that we have to deal with on an everyday basis, be it a bad breakup or a hurdle in our daily routines. We usually have a habit of resisting anything that is different from what we are used to and in today’s fast changing technological world it may be one of the very difficult tasks for managers to create acceptance among their workforce to adapt to changes in internal processes of organisations.

Resistance to Change

The first thing managers need to acknowledge is the fact that not everybody has the same perceptions and frequency in reacting to changes. Differences in perception among individuals and personality can be caused due to their cultural background, family upbringing, income class, and their own intelligence and abilities (of course this is not the end of the list). According to Lisa Quast, a contributor to Forbes, people may resist to change because of the following reasons:

  1. The need for employees to accept too much change in a short period of time may make them resistant to change especially if there is a large element of surprise
  2. New management may not be fully trusted and respected by employees as compared to a management that has been able to earn respect over the years
  3. The sense of job insecurity may also cause resistance
  4. Some people just simply enjoy learning new things so that they can grow personally and professionally but others just prefer to follow a certain routine that they have created for themselves

(Quast, 2012)

Dr. John Kotter’s ideas about people resisting to change

Acknowledging change

There are managers who can adopt the “idiographic approach” if they want to focus on understanding motivation, career development and team relationships (Mullins, 2013). This approach regards individuals as responding to the people and their environments as they change. The following video shows different personalities that managers have to deal with on a day to day basis:

(Melkonian, 2011)

Open-minded and extroverted people are usually which are more open to change in organisations (Mullins, 2013) and it does not take much effort for managers to convince and motivate them to keep working. These people can even deal with neurotic bosses!

How Managers can overcome resistance to change (with example)

Telecommunications industry and their dependent companies (where I also intend on working in) is one that requires constant updating to technology due to its fast-changing demands and can be a perfect example to explore companies that have to deal with constant change. Newer and better technology persistently puts pressure to make employees think that they maybe soon replaced. Cisco showed effective results when introducing new operational frameworks into the companies within a span of 2 years (Cisco, 2008). This makes it apparent that Cisco realised that individuals in their organisation are different and therefore they created a complete step by step, vivid and clear cut transition into their new system. This is what is called effective leadership.

A Pakistani company, PTCL had to go through a major change when Etisalat took over majority of the shares in 2005 (Etisalat, 2007). There was a change in management and operational processes and due to this there was a significant improvement in employees’ satisfaction in the workplace and revenue boost because of effective communication and implementation (Etisalat, 2007).

Effective Leadership

Lewin’s Change Management Model of unfreeze, transition and refreeze and Kotter’s 8 Step Change Model are some models that organisations can develop for transitioning an organisation. Overcoming resistance to change can be a difficult task but applying the right method of communicating change to the parties involved with this transformation in an organisation. This fun video illustrates how change can be implemented in an effective way.

Coming to a conclusion, the reason why people resist to change is because they see that the risk is too high, requires too much effort and because they cannot see the fruits of the end result like the upper management can. In order to overcome this scenario, managers and leaders need to show the benefit to their subordinates as to how they will benefit from this change and not how the organisation will benefit from it. This is the point where miscommunication arises and the subordinates cannot see what the advantages will be. Therefore, managers need to be able to show that the gains from change is much larger than staying stationary in that position.

References

Cisco, (2008). How Cisco IT Implemented Organizational Change and Advanced Services for Operational Success

Etisalat, (2007). Annual Report 2007

Melkonian, E., (2011). 5-factor Model for Personality OCEAN.

Mullins, L. J., (2013). Management and Organisational Behavious. 10th ed. :Pearson.

Quast, L., (2012). Overcome The 5 Main Reasons People Resist Change

Diversity and Team Management. Problem or Solution?

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Embrace Diversity

I have travelled more than an average person around the world, have met with people of different ethnicities, have met with people who speak languages such as Russian, English, Italian, Urdu, Kazakh, Uzbek, etc., and have worked with people of not my nationality. It is a relatively easy task for me to communicate with people from other cultures as I have lived in four different countries (Pakistan, Kazakhstan, Kyrgyzstan, and Azerbaijan) in my childhood. When you become used to shifting to different places at such a young age, it becomes a need to change your location of residence. You develop that need to communicate with different people, and move to a different place. However, communication can become quite difficult, especially in a culturally diverse workplace, if you have lived in one place your whole life.

An Example Portraying Diversity  

Diverse teams usually suffer because it may be difficult to relate, trust or comprehend people from different backgrounds (Klein, 2007). In the following video, for example, it shows the difficulty that a culturally diverse team has to face when trying to communicate for a meeting.

Building the multicultural team:

(LearningCom, 2009)

Here we can see that there have been numerous misunderstandings between the leader of the marketing team and the rest of the subordinates. He failed to recognise the differences in their cultures and the differences in their professionalism. It is quite apparent that different countries have different styles of being professional (Pita, et al., 1999). We can see that the Asian woman needed more instructions and not just the team leader saying “I asked you to prepare something for the meeting”. Also, the Middle Eastern man thought that there was a more important event that he had to attend to and therefore, he thought that he would not work in this team for long because his personal needs were not met. This video has made it quite apparent that because of the major cultural differences between these individuals, there has been a significant detrimental effect on their productivity because every individual had a different way to perceive instructions.

Advantages and Challenges of a Diverse Team

The following video will show you the challenges and the advantages of working in diverse teams and how team leaders need to be in order to handle these teams.

Multi-cultural team management:

(CommLab India, 2010)

This video highlights the fact that leaders need to familiarise with four points which are, adapting to the team members’ characteristics, physically intervening into shaping the team appropriately, creating sets and rules beforehand in order for the team members to understand clearly what they have to and what they do not have to do, and identifying potential areas of conflict that may arise between different cultures (CommLab India, 2010). If some countries have a large difference in the way males and females are portrayed in the society, it would be wise for the team leaders to assign teams carefully. Even though overcoming some challenges may be a difficult task, the advantages of diverse teams can be noteworthy as well. For example, a culturally diverse team may be more tolerant towards each other, be more innovative, be more flexible etc.

Differences in Personalities in Different Cultures

According to Hans Eysenck, there are four defined personality types which are stable extraverts (talkative, carefree), unstable extraverts (impulsive, restless), stable introverts (calm, thoughtful) and unstable introverts (anxious, moody), and it can be quite apparent that some cultures depict one or more of these traits in their behaviours (Mullins, 2013). This makes it obvious that working with different cultures means that the leader has to be effective in their communication and empathise/sympathise with each individual so that the team members have a feeling of belonging to the team. This is because the team members will understand that their bosses have appreciated their differences. This can directly affect the productivity of these team members if they do not feel that they belong.

Conclusion: Which Type of Management Styles to adopt? Let us focus on McGregor’s Theory X and Y styles of management. We all know that ‘X’ style of management is for lazy individuals who need to be forced to work as their motivation levels are physiological and security needs but ‘Y’ style of management is for innovative, creative and responsible individuals who want to achieve their goals (Mullins, 2013). Effective communication may be the key to achieving high productivity among diverse teams. And not only that, a different style of management needs to be adopted for different team members. Some members need to be directed and given comprehensive instructions to in order to show results, but others just need a tiny nudge and they are good to go!

References

CommLab India, (2010). Multi-Cultural Team Management

Klein, K., (2007). Culturally Diverse Teams that Work.: University of California.

LearningCom, (2009). Building the Multicultural Team. s.l.: Learning Communications.

Mullins, L. J., (2013). Management and Organisational Behaviour. 10th ed.:Pearson.

Pita, D. A., Fung, H.-G. & Isberg, S., (1999). Ethical issues across cultures: Managing the Differing Perspective of China and the USA. Journal of Consumer Marketing, 16(3), pp. 240-256.