ASSIGNMENT ON

BEHAVIOURAL ISSUES IN
STRATEGIC
IMPLEMENTATION

COMPILED BYVARSHA PANDEY

CUJ/I/2010/IMBA/38

MATCHING CULTURE WITH STRATEGY

Culture is the set of beliefs that drive employee behaviors. These can be things everybody in
the company knows and shares, as well as unspoken rules. The range of acceptable employee
behaviors is based on these underlying beliefs. Sometimes these behaviors align well with the
business strategy, but this isn't a given.
For example, some organizations have a strategic focus on innovation: They want employees
to think creatively and share new ideas. If the culture is aligned with innovation, employees
are rewarded when their new ideas hit the jackpot, and they aren't penalized for constructive
failures. Google and Apple are two companies that promote this kind of culture.
However, that's not the kind of culture you would want for an organization like Wal-Mart that
competes using a strategy that's highly focused on efficiency. In Wal-Marts case, it's
important to have clearly defined job roles and for everyone to know their marching orders.
Walmart, Apple and Google are all tremendously successful companies, but have very
different cultures. That's why we say there's no such thing as a good or bad culture, just an
effective or ineffective one. Ultimately, effectiveness depends largely on how well the culture
aligns with the business strategy.

Corporate culture and strategy are linked together inseparably, in two important ways:
1. Establishing strategy is the easy part; the hard part is creating clarity and alignment
within dynamic, faster-moving, global, diverse workforces. Culture is the wheel base
and grease of your strategy the car moves faster and better when aligned and
optimized.
2. Most businesses are in a state of continuous change and greater uncertainty. Corporate
culture becomes an internal brand to foster a unified sense of order and stability,
and align people toward simpler, easier ways of working that are friendly to change.

What We Do-

Corporate Culture Pros provides 2 decades of experience facilitating and coaching executives
to align organizational strategy, leadership and corporate culture to support growth,
innovation, and ROI during changes in strategy, such as a merger or new leadership team.
Aligning these elements of business performance is not easy if it were, everyone
would have it right by now! There is no shortage of effort; billions of dollars are
spent each year on change management.
Aligning corporate culture with clear strategy is the secret sauce of companies with
the biggest growth and effective, high-performing workplaces. Less is more its not
about changing corporate culture at the fundamental level that takes many, many
years and often fails.
The power of tapping corporate culture to accelerate strategy is the key to speeding up
and competing effectively.
When you show executives that culture alignment (versus true cultural change) is the
goal tying culture actions directly to business performance this helps the executive
team see culture as an imperative, rather than a nice-to-have.
Results You Can ExpectAs a result of our Strategy-Culture Alignment process, you will see visible and measurable
development in the organizations capability in four areas of mastery:
1. Alignment of the organization and its resources toward a clear, compelling mission,
business case for culture change, and behavioural values.
2. Ensuring a bias for action through clarifying decision rights and pushing them
down.
3. Fostering cultural change toward innovation by breaking down silos and showing
executives how to support effective cross-functional teamwork.
4. Developing leaders who are accountable to business results AND who understand the
emotional and motivation territory of leading change.
Companies who get culture right are learning that it differentiates them in their customers
minds, customers, speeds up execution, makes them more competitive for top talent.
An organizations capacity to execute its strategy depends on its hard
infrastructure--its organization structure and systems--and on its soft infrastructure-its culture and norms.
Building a Strategy-Supportive Corporate Culture Where Does Corporate Culture Come From?
Culture and Strategy Execution
Types of Cultures
Creating a Fit Between Strategy and Culture
Establishing Ethical Standards
Building a Spirit of High Performance
Exerting Strategic Leadership Staying on Top of How Well Things are Going
Establishing a Strategy-Supportive Culture
Keeping Internal Organization Innovative
Exercising Ethics Leadership
Making Corrective Adjustments
What Makes Up a Companys Culture? Beliefs about how business ought to be conducted
Values and principles of management
Work climate and atmosphere
Patterns of how we do things around here

 Oft-told stories illustrating companys values

Taboos and political donts
Traditions and Ethical standards
Where Does Corporate Culture Come From?
Founder or early leader
Influential individual or work group
Policies, vision, or strategies
Traditions, supervisory practices, employee attitudes
Organizational politics
Relationships with stakeholders and Internal sociological forces
Culture and Strategy ExecutionCulture can contribute to -- or hinder -- successful strategy execution.
Requirements for successful strategy execution may -- or may not -- be compatible
with culture.
A close match between culture and strategy promotes effective
strategy
execution
Why
Culture
Matters:
Benefits of
a
Good
Culture-Strategy
Fit
Strategy-supportive cultures
Shape mood and temperament of the work force, positively affecting
organizational energy, work habits, and operating practices
Provide standards, values, informal rules and peer pressures that nurture and
motivate people to do their jobs in ways that promote
good strategy execution
Strengthen employee identification with the company, its performance targets,
and strategy
Strategy-Supportive cultures Stimulate people to take on the challenge of realizing the companys vision, do their
jobs competently and with enthusiasm, and collaborate with others to execute the
strategy
Optimal condition: A work environment that Promotes can do attitudes, Accepts
change, Breeds needed capabilities.
Forces and Factors Causing Culture to Evolve Internal crises
Revolutionary technologies
New challenges
Arrival of new leaders
Turnover of key employees
Diversification into new businesses
Expansion into different geographic areas
Rapid growth adding new employees
Merger with or acquisition of another company
Globalization

Creating a Strong Fit between Strategy and Culture-

HUMAN SIDE OF MERGER AND ACQUISITION

Rise in mergers and acquisitions (M&A), acquisitive firms are sharpening their pencils for
ways to expand market share and escalate their entrances into new geographic regions. Often
an afterthought in growth strategies is the creation of a clear plan for managing the effects of
rapid expansion on every companys No. 1 resource: people.
Taking a proactive stance on people issues is crucial:
Document essential processes and be honest about what is known and unknown.
Information sharing can be a significant problem. Whether based on an unconscious desire to
protect turf and make one indispensable, or rooted in an honest lack of knowledge and
existing documentation, getting information out of people can be difficult. It is even more
challenging in a merger of equal transaction, where both parties may be competing for
longer-term roles and therefore be less willing to engage. Similarly, in an acquisition
environment, the acquired entity may feel slighted, and the acquiring entity may be perceived
as acting imperiously or without regard to the full set of corporate needs. None of these
behaviors drives open and honest information exchange, so it is critical to build an
environment of collaboration. Document key processes to ensure clear descriptions exist that
anyone can follow. The integrated company should not find itself dependent upon resources
who have it all in their heads. Focusing on process documentation serves as an insurance
policy against unexpected transitions. A side benefit of these proactive efforts is uncovering
opportunities for efficiency gains through process improvement and comparative role
assessments as integration efforts progress.
Map key personnel into the new organization, and develop an individual plan to attract and
retain those resources. Build different motivators into select integration workstreams,
including job opportunities, visibility, involvement in integration activities, and retention and
performance bonuses. Share the fact that these incentives exist, and create a culture of want
instead of fear by making it clear that opportunities exist to become integral to the
organizations future success. Develop and execute a communication plan that includes
multiple methods for conveying the opportunities and incentives to a broad audience within
both organizations involved in the merger or acquisition.
Plan for the unexpected. Despite retention bonuses, engagement programs, and specific
focus on individuals considered to be indispensable, people WILL leave. Managements
handling of such transition will say a great deal about the emotional maturity of the company,
and contribute to other resources decisions to stay or go. It is imperative to create succession
plans below the executive level. Often only the most senior people have well-developed
transition plans. In times of great change, it is particularly important that organizations have

these same succession plans in place for all critical roles across the organization to ensure that
key functions will not face risk.
Train managers across the board on driving retention and employee engagement. Tone is
important not just from the top, but throughout the organization. Demonstrate interest, care,
and support of the transition at all levels. Remember that people management is, at its heart, a
series of individual human relationships. Studies show that individuals are more apt to stay at
jobs longer if they like and trust the managers they directly report to. Therefore, tone at the
middle becomes a defining tactic for holding on to essential employees.
Pay attention to the little things. Years ago, a major software company bought another major
software company after an extended battle for control that created great fears on both sides.
The acquiring company announced plans to shutter a local office, but never provided
directions for the new office location. On day one, security at the new HQ (apparently also
not informed of the deal) was surprised to find approximately 100 new faces looking for their
cubes, expecting badges, and milling about the lobby. Nothing malicious was intended, and
all was worked out, but personnel wondered unnecessarily about whether this misstep was the
first shot in an unintended war.
People are the least predictable component when setting up an acquisition strategy. They can
make or break a well-matched merger. To succeed with the human dimension of integration,
it is imperative that organizations understand and plan for the people risks that are created
during the life cycle of mergers and acquisitions.
Issues That can be handled by HR-Managers Underestimation of the difficulties of merging two cultures.
Underestimation of the problems of skill transfer.
De-motivation of employees of acquired company.
Departure of key people in acquired company.
Too much energy devoted to doing the deal, not enough to post-acquisition planning
and integration.
Decision-making delayed by unclear responsibilities and post-acquisition conflicts.
Neglecting employee welfares of existing business due to the amount of attention
going into the acquired company.
Impact of M&A on Employees-

Actions from HR-

If people issues are so critical, why are they neglected? Possible reasons include:Executives believe that they are too soft and, therefore, too hard to manage.
Social costs and benefits are regarded as secondary.
There is a lack of awareness or consensus that people issues are critical.
There is no spokesperson to articulate these issues.
There is no model or framework that can serve as a tool for us systematically to
understand and manage the people issues.
Therefore, the focus of attention in M&A activity is on other business aspects such as
finance, accounting, strategy, and manufacturing.
Issues to be handled by HRM Preparation of Due Diligence Report.- recruitment, training, performance appraisal,
compensation, labor relations & legal compliance.
Creation of Manpower Plan-delineate roles & reporting relationships.
Communication
Retention Strategy- Retention Bonus Plans.
HR Integration HR Systems, Policies &Practices
Cultural Integration.
EXAMPLE1.Satyam Acquisition by Tech Mahindra Tech Mahindra-23,000 employees.
Satyam 45,000 employees.
HR-Department faced challenge to retain the Employees & their Clients.
-Sales Reboot Campaign.
-Special Induction Programmes.
-Recognition & Reward Schemes.
-Communication Channel.
2.TCS- Tata InfoTech Merger Consideration of prior experience.
Designation, fitment & pay scales.
Joining dates.
Legal issues, promotions & policies.
Induction & Project Allocation.

LEADERSHIP, POWER AND POLITICS

Followership as a Component of Leadership-Although some leaders do not like to think of
themselves as followers usually because being a follower can have a connotation for passive,
submissive or weak (Chaleff, 1996). However, all leaders are followers regardless of their
leadership position or power. Even the president of the United States is a follower and has a
relationship of followership with members of his political party, Congress and the American
people.
A component of leadership definition is the leader-follower relationship. Followership
as a discipline of management and leadership has been studied as far back as 1933, but more
and more scholars began talking a closer look at followership during more recent years,
although there is still a lack of relevant empirical research on followership, in contrast to
leadership, where the leadership to followership book ratio has been of 120:1 books
(Bjugstad, 2006).
Followership is referred to as the capacity or willingness to a leader by
the Merriam-Webster Online Dictionary (Followership, 2011) or as the ability to effectively
follow the directives and support the efforts of a leader to maximize a structured
organization (Bjugstad, 2006, p. 304). According to followership model developed by
Kelley (1998), there are two dimensions to followership. These are: 1) the extent followers
show signs of critical thinking and independent decision making, and 2) the followers
passivity vs. activity in organizational commitments. As pointed before, no matter the
position the employee holds, he/she is still a follower in the organizational structure, even if
they are leaders within their organizations (Montesino, 2003).
Power as a Path to Influence
Power, according to Yulk (2006), can be used for understanding and dealing with
people, as a way to influence them and reach organizational goals. It involves an agent of
power, i.e.: a manager, leaders, organization, group, and the target party to be influenced, i.e.:
people, things, attitudes, behaviors. Power can also be described in terms of how much
influence an agent can have on the target(s). Power affects leadership and its component of
followership, as individuals have a tendency to follow those with power. But leaders sources
of power come from different means. Some have power because they may have the ability to
give out raises, fire someone, or assigned work; while others have power because they are
subject matters experts in a field, or are admired by their followers.
The power taxonomy developed by French and Raven (1959) highlights five sources
of individual power (Yulk, 2006). These are:
Legitimate power: This source of power comes from a formal position, where others
comply simply because they accept the legitimacy of the position the manager has.
Reward power: The target complies as a way to get rewards from the agent.
Coercive power: Compliance is reached in order to avoid punishments by the agent.
Expert Power: Based on an individuals level of knowledge, expertise and information in
a particular field.
Referent power: The target person complies because they admire and like the agent,
identify themselves with the agent, or want the agents approval.
o More recently, others sources of power have been discussed by researchers (Bal,
Campbell, Steed & Meddings, 2008). These include:
Charisma power: This is the influenced generated by the agents style or persona.
Relationships power: In which the agents influence is gain through their formal and
informal networks in and out of their organizations.
Information power: This is the control that is generated by using factual evidence to make
arguments.

Position power: The formal authority, control, over rewards, punishments, information,
and ecological control. This one is a combination of legitimate, reward and coercive
powers.
Personal power: This one combines expertise, friendship, loyalty and charisma.
Political power: Entails the control over decisions processes, coalition, and
institutionalizations.

It is important to note that sources of power like legitimate, reward, and coercive are all part
of the position powers, which in general terms all managers hold. While expert, referent,
relationships, and charisma powers are personal powers and can be possessed by both leaders
and followers. Power conditions can vary and change over time, and organizational leaders
can either win or lose power based on individual and organizational conditions affected by
internal and external sources (Yulk, 2006).
The Followership and Power Relationship and its Effects on Leadership-The potential
relationship between power and followership have to do with how the individual sources of
powers can be put to use in the influence process of leadership. Thus, as explained above,
position power is generally retained by manager; follower can also use personal power to
influence decision makers and shape policies, and norms in organizations. All sources of
powers can be used by managers and followers to influence their organizations. As far as that
source of power has the most influence; I will have to say that as a follower, it will depend of
the level of expertise the follower has in his/her field, how liked he/she may be liked by
supervisors, peers, and subordinates, and the networking he/she has acquired while at the
organization. For leaders, all of these would apply; however, where they managers are in their
chain of command would have a greater impact on the power and ability to influence decision
in their organizations, more so, than the level of charisma, or personal power they have.
Furthermore, political power could be the foundation that can bring a manager a greater deal
of influence from within the organization.
In conclusion, the essence of leadership is influence over followers and followership
can is a part of leadership. Leaders use power as a method to affect the effectiveness of
followership, as power, formal or informal, and its relationship to leadership and
followership, is the engine the leaders use to influence others. Moreover, power is not
exclusive to leaders and managers, and followers can also have also use different sources of
power to exert leadership, even in a follower capacity.
Now corporate politics, it is also known as organizational politics. all corporate culture
include a political component and, therefore all organization are political in
nature.organisational members bring with them their likes,dislikes,views and opinions,
prejudices and inclinations when they enter organizations. Managerial behavior can not be
purely rational and an understanding is to be acquired of how corporate politics work and use
of power is to be made for effective strategic management.
Understanding Politics and Use of Power Reward Power
Coercive Power
Legitimate Power
Reference Power
Expert Power
Strategic use of power and politicsStrategic use of power and politics may involve one or more of the tactics which are mention
here.
Accept the inevitability of politics being there in the organization

 Understanding the power structure

Lead strategy
Be sensitive and alert to political signals
Reward organizational commitment
Use openness and honesty
The presence of politics and use of power are, perhaps, more visible than in other culture.
This is due to first two factors.
These means that while organization in India have adopted bureaucracy, the personoriented nature of Indian society suggests an emphasizes on particularistic rather than
universalistic treatment of employees, leading
To reliance on personal characteristics in hiring, promoting and rewarding employee.
Enviousness: a feeling of grudging admiration and desire to have something that is
posses by another.
Pervasive: everywhere.
In the organization managers do not have to deal with
Power, Politics and Influence within OrganizationsThe use of power and politics creating influence is an integral part of human interaction. The
use of various strategies can be dated back to as early as 2500 BC within both Indian and
Chinese society. The use of religion has historically been the lynch pin in generating
obedience using all forms of power through communication with Gods, to ensure wishes
were met. All societies in existence must therefore be acknowledged as being founded on the
utilizing of power, politics and influence in order to shape the culture as intended by the
King figure. The rapid expansion of such societies, combined with technologies leading to
events such as the industrial revolution has now seen power strategies more developed. The
purpose of this paper is to review the culture of business in order to examine the progression
and use of power, politics and influence as used in the workplace. Multiple theories will be
examined as per the academic standards proposed by multiple experts. In order to gauge the
feasibility of the theories, a situational analysis of Specialty Cereals will be used to highlight
any discrepancies between the proposed and actual use of power in all forms. The contrast
drawn is believed to indicate the potential misuse or dysfunctional workplace activities,
allowing for recommendations to be made providing solutions into better advised
manager/employee relations.
Workplace ExampleGiven the view that power and politics are considered by most theorists as a held of growing
value and relevance for understanding managerial processes.It is necessary to analyze a
work environment which provides a varied and extensive example of power and politics. The
chosen business is food manufacturer Specialty Cereals a Kellogg Company subsidiary, based
(prior to closing in March 2013) within Sydneys Northern Beaches. The business provides
insight into the inner workings of cross cultures, combining multiple class types and varied
roles. Focus will be placed on three different levels which are employees, supervisors and
management in order to establish as wider understanding of power and politics as possible.
Power is an important dynamic (concept or variable) in organizational behavior.
POWERMax Weber: "The probability that one actor within a social relationship will be in a position to
carry out his own will despite resistance."
Pfeffer: "The potential ability to influence behavior, to change the course of events, to overcome
resistance, and to get people to do things that they would not otherwise do." The concept of power
needs to be distinguished from authority and influence.

Authority is the right to direct others and ask them to do things which they would not otherwise
do, but it is legitimate and is exercised in the working of organizations. Influence is conceived as
broader and it is the ability to alter actions of other people in general ways by changing their
satisfaction criteria and thus improve their performance. Authority is different from power because
of its legitimacy and acceptance in an organizational context and leadership is broader than power
and indicates a willingness on the part of the follower to follow in the absence of authority.
Luthans
remarked
that
operational
definition
of
power
is
still
lacking.
The classifications of Power-Psychologists John French and Bertram Raven provided five
categories
1. Reward power
2. Coercive power (punishment power)
3. Legitimate power
4. Referent power
5. Expert power
Pfeffer (1981) defined organizational politics as: activities taken within organizations to
acquire, develop, and use power and other resources to obtain ones preferred outcomes in a
situation in which there is uncertainty or dis-sensus about choices
Kurchner-Hawkins and Miller (2006) considered organizational politics as "an exercise
of power and influence that primarily occurs outside of formal organizational processes and
procedures. Political behaviors consist of influence tactics designed to further self and/or
organizational interests, and its basic aim is to reconcile and effectively manage such
potentially competing interests"
Politics in organization and its perception within organization
EMPLOYEE MORALE
One constant and never-ending battle faced by several managers and bosses is that of keeping
their employees happy, not only with cash grants but also with providing the right working
environment for them to feel happy when coming to work.
It is useless to deny that the unemployed person develops a feeling of powerlessness that
becomes a fiercer foe as time wears on. The feeling begins when one loses a job. One's
emotional and material power base has been removed. After all, money is power. Having a
reason to get up and go out the door is power. Being in a position in which people are
dependent on the services one renders is power.
Suddenly, one's income, motivation and influence are all gone. Furthermore, one discovers
that the feeling of powerlessness is compounded when one has to conform to the demands
and schedules of possible employers. The pressure of a work-oriented society combined with
the relational dynamics of feelings of rejection and powerlessness pose a real danger to the
emotional health of all unemployed people.
Many companies think that the best way to solve morale problems is to offer employees more
money. However, this is not all it takes because morale problems are seldom related to
money.Financial motivation can take the form of bonuses, salary hikes and overtime or
increased benefits and perks.
The main reason why employees leave an organization or become disillusioned on the job is
related to the way they are treated on a day-to-day basis at their workplace. The best job one
can ever have in his life (and one which is almost impossible to have) is one where you know
how you have performed each day and feel appreciated for your accomplishments that day.

The company that knows and keeps a record of the accomplishments of each of its employees
and give some form of appreciation for them will not only keep its employees happy and
satisfied in the workplace, but will outperform their competitors who do not have this
approach towards their staff.
It must be remembered that accomplishments do not need to be rewarded with lavish gifts or
perks. What they need to be rewarded with is a form of recognition that the company
appreciates what the specific employee did for it that day.
While one employee may relish tickets to a concert or to the cinema, others may dislike these
things and prefer weekend breaks or discount cards. Taking the time to know your employees'
likes and dislikes is probably the best secret to providing the right positive reinforcement at
the right time. Showing your employees that you appreciate them is a very important and
effective tool to keep your employees happy.
Rewards could vary from person to person. For some it may be a fresh bouquet of flowers.
For others it may be more time off work or being taken out for lunch. These things are useful
to reinforce employees and acknowledge them for contributing to the success of the company.
These forms of reinforcement are morale boosters but they should be accompanied by
positive reinforcement that is delivered on a daily basis. While money alone will not solve
problems, delivering day-to-day positive reinforcement will. This daily reinforcement can
take the form of verbal comments, hand-written notes or peer-to-peer interaction that lets
fellow workers know they are valued members of the organization.
Must you be a naturally gifted leader to inspire your employees to give their maximum on the
job? Truly inspired workers will do that regardless of how much charm the manager has. The
bad news is that if employees do not give their 100 per cent on the job, the business is losing
money.
Businesses pay a high price if as much as 30 per cent of an uninspired employee's potential
energy is left on the table, untapped.
Negativity at the workplace may be the result of several factors. Perhaps the organization
made a decision that adversely affected the workers or perhaps the manager held a staff
meeting and gave the impression that he was not interested in the staff's input. These are all
things that create a negative feeling in the workplace and employees will lose interest in
giving their maximum to the organization.
One thing is certain: whatever the cause of this negativity, it is in the interest of the managers
of the organization - and even, to an extent, the staff - to immediately address the issues
which seem to be causing the problems. Otherwise, like many other things in life, the
problem will grow to resemble a dormant volcano - the employees will be boiling beneath the
surface and all of a sudden this will erupt, causing fresh problems which add up to the ones
which already exist!
There is a widespread assumption that many unemployed people are avoiding employment,
and that an over-generous benefit system encourages this. This may well be true. However,
there is also the reality that a number of unemployed people in Malta are really trying to look
for a decent job with which they can look after their families.
What is remarkable is that if one had to study the attitudes of unemployed people, they would
most probably reach the opposite conclusion - the vast majority of unemployed people
desperately want jobs, and are doing everything they can to get them.
If one had to look at the extent to which unemployed people are, by their attitudes and
behavior, responsible for their unemployment, what would the result be? This can be
discussed in detail and opinion will surely differ. But the most common result is that for the
greater part of the unemployed, unemployment motivation or the flexibility of attitudes when
it comes to job search affects the time that it takes people to find work again.

It may be also interesting to look at whether unemployed people do in fact become

demotivated over time and therefore require added incentives to look for work. The
stereotyped 'motivation problem' is also refuted by international research.
Improve Employee MoraleFactors that can contribute to positive employee morale include, but are not limited, to
these. Almost anything you do that contributes to a positive work environment for
employees helps to build employee morale. When you take care of factors such as these,
employee morale can remain high even in turbulent, uncertain times.

treating employees with respect,

providing regular employee recognition,
empowering employees,
offering open and regular communication about factors important to employees,
providing feedback and coaching,
offering above industry-average benefits and compensation,
providing employee perks and company activities, and
Positively managing employees within a success framework of goals, measurements,
and clear expectations.

You can measure your organization's success in developing and fostering positive employee
morale by using the methods described in measuring employee satisfaction. Building positive
employee morale is not difficult, but it takes desire, commitment, and attention on the part of
management and the organization.
PERSONAL VALUES AND BUSINESS ETHICS
Values and ethics are central to any organization; those operating in the national security
arena are no exception. What exactly do we mean by values and ethics? Both are extremely
broad terms, and we need to focus in on the aspects most relevant for strategic leaders and
decision makers. What we will first discuss is the distinctive nature of ethics for public
officials; second, the forces which influence the ethical behaviour of individuals in
organizations; and third, explore the actions strategic leaders can take to build ethical
climates in their organizations.
THE CHARACTER OF VALUES AND ETHICS
Values can be defined as those things that are important to or valued by someone. That
someone can be an individual or, collectively, an organization. One place where values are
important is in relation to vision. One of the imperatives for organizational vision is that it
must be based on and consistent with the organization's core values. In one example of a
vision statement we'll look at later, the organization's core values - in this case, integrity,
professionalism, caring, teamwork, and stewardship- were deemed important enough to
be included with the statement of the organization's vision. Dr. John Johns, in an article
entitled "The Ethical Dimensions of National Security," mentions honesty and loyalty as
values that are the ingredients of integrity. When values are shared by all members of an
organization, they are extraordinarily important tools for making judgments, assessing
probable outcomes of contemplated actions, and choosing among alternatives. Perhaps more
important, they put all members "on the same sheet of music" with regard to what all
members as a body consider important.

The Army, in 1986, had as the theme for the year "values," and listed four
organizational values-loyalty, duty, selfless service, and integrity-and four individual valuescommitment, competence, candour, and courage. A Department of the Army pamphlet
entitled Values: The Bedrock of Our Profession spent some time talking about the importance
of values, and included this definition:
Values are what we, as a profession, judge to be right. They are more than words-they are the
moral, ethical, and professional attributes of character . . . there are certain core values that
must be instilled in members of the U.S. Army-civilian and uniformed soldier alike. These
are not the only values that should determine our character, but they are ones that are central
to our profession and should guide our lives as we serve our Nation.
Values are the embodiment of what an organization stands for, and should be the basis for the
behavior of its members. However, what if members of the organization do not share and
have not internalized the organization's values? Obviously, a disconnect between individual
and organizational values will be dysfunctional. Additionally, an organization may publish
one set of values, perhaps in an effort to push forward a positive image, while the values that
really guide organizational behaviour are very different. When there is a disconnect
between stated and operating values, it may be difficult to determine what is "acceptable."
For example, two of the Army's organizational values include candour and courage. One
might infer that officers are encouraged to "have the courage of their convictions" and speak
their disagreements openly. In some cases, this does work; in others it does not.
The same thing works at the level of the society. The principles by which the society
functions do not necessarily conform to the principles stated. Those in power may covertly
allow the use of force to suppress debate in order to remain in power. ("death squads" are an
example.) In some organizations, dissent may be rewarded by termination-the organizational
equivalent of "death squad" action. In others, a group member may be ostracized or expelled.
Group members quickly learn the operating values, or they don't survive for long. To the
extent they differ from stated values, the organization will not only suffer from doing things
less effectively, but also from the cynicism of its members, who have yet another reason for
mistrusting the leadership, or doubting its wisdom.
THE PUBLIC TRUSTIf ethics and morality are important for groups and organizations, they should also be
important for public officials, and for very much the same reasons. York Willbern, in an
article entitled "Types and Levels of Public Morality," argues for six types or levels of
morality (or ethics) for public officials. By public officials, he means those who are in policy
making positions in public institutions; in other words, strategic decision makers in the
government, including the national security arena. The six levels he differentiates are: basic
honesty and conformity to law; conflicts of interest; service orientation and procedural
fairness; the ethic of democratic responsibility; the ethic of public policy determination; and
the ethic of compromise and social integration.
WILLBERN'S LEVEL OF PUBLIC MORALITY ETHIC OF COMPROMISE AND SOCIAL INTEGRATION
ETHIC OF PUBLIC POLICY DETERMINATION
ETHIC OF DEMOCRATIC RESPONSIBILITY
SERVICE ORIENTATION AND PROCEDURAL FAIRNESS
CONFLICT OF INTEREST
BASIC HONESTY AND CONFORMITY TO LAW
BASIC HONESTY AND CONFORMITY TO LAW-"The public servant is morally bound,
just as are other persons, to tell the truth, to keep promises, to respect the person and the
property of others, and to abide by the requirements of the law" (Willbern). In many ways,
this level only describes the basic adherence to moral codes that is expected of all members

of a group or society. There are some basics of behaviour that are expected of all if a society
is to function for the collective good. For public officials, there is an additional reason why it
is important to adhere to these basic moral codes and laws: they have more power than the
average member of the society, and hence more opportunity for violation of those codes or
laws. There also is the negative example that misconduct by public officials provides.
CONFLICT OF INTEREST-This relates to public officials, because it deals with the
conflict between advancing the public interest, which a public official is charged to do, and
advancing one's self-interest. The duty here is to ensure that the public interest comes first,
and that one does not advance his own personal interest at the expense of the public.
Willbern uses embezzlement of public funds, bribery, and contract kickbacks as examples of
pursuing personal interests at the expense of those of the public. The requirements for public
officials to divest themselves of investments that might be influenced by the performance of
their duties (or put them in trust) and to recues themselves in situations where they have a
personal interest are designed to help public officials avoid conflicts of interest. Ultimately, it
still comes down to the individual making an ethical decision.
Avoidance of conflict of interest is often difficult because it is often hard to separate personal
and public interests, and because individuals as private citizens are encouraged to pursue
private interests through any legal means. One of the areas where there is the greatest
potential for conflicts of interest is where public officials deal with private organizations
which are pursuing their private interests, and where any decision by a public official on
allocation of resources will favour some private interest. The fields of government
contracting and acquisition are two areas where the possibility of conflicts of interest is high.
CAUSES OF UNETHICAL BEHAVIORINDIVIDUAL
COMPLEXITY OF STRATEGIC ISSUES OBSCURES ETHICS
COMPETITION FOR SCARCE RESOURCES/ POWER/POSITION
CONFLICTING LOYALTIES
GROUP
GROUPTHINK
PRESENCE OF IDEALOGUES
NEGATIVE ORGANIZATIONAL RESPONSE TO DISSENT
ETHICS IN PRACTICEKenneth R. Andrews, in "Ethics in Practice," contends that there are three aspects to ethical
behaviour in organizations: the development of the individual as an ethical person, the effect
of the organization as an ethical or unethical environment, and the actions or procedures
developed by the organization to encourage ethical behaviour and discourage unethical
behaviour.
INFLUENCES ON ETHICAL BEHAVIOR PRIOR DEVELOPMENT OF INDIVIDUAL AS ETHICAL PERSON.
THE ORGANIZATION AS AN ETHICAL ENVIRONMENT.
PROCEDURES THAT ENCOURAGE ETHICAL BEHAVIOR.
Most of an individual's ethical development occurs before entering an organization. The
influence of family, church, community, and school will determine individual values. The
organization, to a large extent, is dealing with individuals whose value base has been
established. This might imply that ethical organizations are those fortunate enough to bring in
ethical individuals, while unethical organizations brought in unethical people. But it is not
that simple. While the internalized values of individuals are important, the organization has a
major impact on the behaviour of its members, and can have a positive or negative influence
on their values. One example of the development of ethical individuals is the service
academies. In their admissions processes, the academies attempt to get individuals of good

character with the values integral to the military profession. However, the academies also
recognize that their core values may be different than those prevalent in society, and they
devote considerable effort to the development and internalization of their core values. As is
evident from periodic breaches of integrity at the academies, e.g., cheating scandals, these
attempts to instil core values do not always succeed.
There are three qualities individuals must possess to make ethical decisions. The first is the
ability to recognize ethical issues and to reason through the ethical consequences of
decisions. The ability to see second and third order effects, one of the elements of strategic
thinking, is very important. The second is the ability to look at alternative points of view,
deciding what is right in a particular set of circumstances. This is similar to the ability to
reframe. And the third is the ability to deal with ambiguity and uncertainty; making a decision
on the best information available.
ATTRIBUTES FOR ETHICAL DECISIONS SEEING SECOND- AND THIRD-ORDER CONSEQUENCES-"WARGAMING"
ETHICAL CONSEQUENCES OF DECISIONS
SEEING ALTERNATIVE POINTS OF VIEW-REFRAMING
DEALING WITH AMBIGUITY AND UNCERTAINTY-MAKING DECISIONS
WITH BEST INFORMATION AVAILABLE
As important as these individual characteristics are, the influence of the organization is
equally important. The ethical standards that one observes in the organization will have a
significant effect on individual behaviour. "People will do what they are rewarded for doing"
(Andrews). The organization has its greatest impact in the standards it establishes for ethical
and unethical conduct in its formal reward systems. Informal norms also have a strong
influence on individuals' behaviour as do the actions of the leaders of the organization.
Strategic leaders must understand that their actions, more than words alone, will determine
the operating values in the organization.
The influence of the organizational context is underscored in "Why Be Honest If Honesty
Doesn't Pay?" In this article, Bhide and Stevenson note that there often are no economic or
other incentives to encourage ethical behaviour and discourage unethical behaviour. They
contend that it most often is the dishonest individual who gets ahead, and that cases where
unethical behaviour was punished are far outweighed by those in which there either were no
consequences or unethical behaviour was rewarded. The Gordon Ghekkos of the world (the
unethical corporate executive played by Michael Douglas in the movie "Wall Street") often
get ahead, because they rarely are held to account for their actions.
While these observations might lead one to a cynical view of ethics in organizations, Bhide
and Stevenson come to a different conclusion. They see room for optimism despite the lack
of financial gain for ethical behaviour, or the absence of negative consequences for unethical
behaviour. Their reasoning is based in the fact that so many people do behave ethically, in
spite of the apparent lack of gain. Ethical behaviour must be intrinsically rewarding; and most
people behave ethically because it's the right thing to do. People are guided by their personal
value systems. They often "choose the harder right instead of the easier wrong" specifically
because of their intrinsic values of what is right.
Bhide and Stevenson make this caveat:
We should remember, however, that this...works only as long as most of us live by an
honourable moral compass. Since our trust isn't grounded in self-interest, it is fragile. And,
indeed, we all know of organizations, industries, and even whole societies in which trust has
given way either to a destructive free-for-all or to inflexible rules and bureaucracy. Only our
individual wills, our determination to do what is right, whether or not it is profitable, save us
from choosing between chaos and stagnation.
ETHICAL RESPONSES-

"Ethical Responses: How to Influence One's Organization," asserts that organization

members have only three choices when confronted with unethical behaviour: exit, voice, or
loyalty.
Exit is the most direct response: if you can't live with behaviour that does not meet your own
ethical standards, leave. However, exit is not only a direct response, it is a final one, so the
personal and organizational consequences must be considered. The most important personal
consequences are the costs. Where do you go from there? What other options are available?
How marketable are you? Can you afford the financial loss?
There are specific organizational consequences as well. Will the ethics of the organization's
leaders change? Will they do business with someone else who doesn't have the high standards
you do? In leaving, one gives up the ability to influence the organization directly. When
considering exit, one must ask, "Could I have had more of an impact by remaining in the
organization and trying to change it from within?"
Voice. This means expressing discomfort with and opposition to the observed unethical
behaviour. To whom do you voice your objections? The obvious choice is your supervisor.
But what if your supervisor condones the unethical behaviour, or worse, is its source? You
may be jeopardizing your position, and maybe your membership in the organization. A
second choice is to go to senior management. This also has potential risk. The senior
leadership may be condoning or even directing the unethical behaviour. This action may
bring your loyalty into question. If so, your objections may be covered up or ignored, and you
may end up being forced out of the organization.
On the other hand, it may be that the senior leadership is unaware of the unethical behaviour,
and you may have initiated an organizational response eliminating unethical behaviour and
restoring ethical standards. A third option is to go public, to engage in "whistle blowing."
This is also risky, because it can lead to reprisals with negative consequences. The level of
risk depends on the commitment of the organization to high ethical standards and on its
willingness to encourage whistle blowing in its own best interests. Many organizations have
shown commitment to ferreting out unethical individuals and maintaining high ethical
standards by establishing procedures for anonymous reporting of ethical breaches and
safeguards to protect whistleblowers.
Exit and voice may be combined. An individual resigns in protest and goes public with his or
her reasons for leaving. This leaves the individual vulnerable to the label of an employee who
quit before being fired, but it also can lead to increased credibility as someone acting on
conviction in spite of personal cost. Exit combined with voice is most effective if taken by
someone at the upper levels of the organization. An organization can more easily ignore the
"exit + voice" of a lower level employee than it can the resignation of a strategic leader,
followed immediately by a press conference. The widely publicized resignation of former
President Bush from the National Rifle Association over what he viewed as extreme actions
is an example of exit combined with voice. It undoubtedly had a much greater effect on the
NRA than the resignation of someone less well known and respected. The resignation of
James Webb as Secretary of the Navy is another example of effective exit combined with
voice.
Loyalty. The final response to unethical behaviour in an organization is loyalty. This is the
alternative to exit. Instead of leaving, the individual remains and tries to change the
organization from within. Loyalty thus discourages or delays exit. Loyalty also may
discourage public voice, since being loyal to the organization means trying to solve problems
from within without causing public embarrassment or damage. Loyalty can also encourage
unethical behaviour, particularly in organizations which promote loyalty above all. These
organizations discourage exit and voice, and basically want their members to "go along" with

organizational practices. An interesting question is, "Can an individual be loyal to an

organization by engaging in exit or voice as a response to unethical behaviour?"
Chaloupka maintains that both exit and voice must exist for continued organizational
effectiveness. Additionally, an organization cannot maintain high ethical standards without
mechanisms for eliminating unethical behaviour. Also, loyalty is not always a virtue. Loyalty
should be predicated on the organization's ethical demonstration that it is worthy of loyalty. If
the organization condones unethical behaviour, it relieves the individual of any responsibility
to be loyal.
BUILDING AN ETHICAL CLIMATEHow can the strategic leaders of an organization build an ethical climate? Andrews suggests a
number of steps that foster corporate ethics. First are the actions of the strategic leadership
and the way they deal with ethical issues. The pattern of top leaders' behaviour determines
organizational values. A second step is to make explicit ethics policies. Ethical codes are one
common example. The next step is to increase awareness of how to apply those ethical codes.
Training on how to deal with situations with an ethical dimension, and how to anticipate
situations that involve ethical choices, can go a long way toward ethical institutional
practices.
Another step to increase the salience of ethics is to expand the information system to focus on
areas where ethics may come into play. Knowing what actually is going on in the
organization is essential to understanding the ethical principles which govern behaviour. The
information system should also support ethical behaviour, and allow the strategic leader to
know when or where there are potential ethical breaches so that corrective action can be
taken. The real danger is that when unethical behaviour is unnoticed, or not punished,
members will assume it is condoned by the organization's leadership.
ULTIMATELY, THE QUEST FOR ORGANIZATIONAL TRANSFORMATION MUST
BEGIN WITH A PERSONAL COMMITMENT WITHIN EACH INDIVIDUAL TO
PURSUE MORAL EXCELLENCE.
O'BRIEN
Encouraging leaders to pursue their own moral development is critical at higher levels
because strategic leaders set the moral climate for the organization. O'Brien believes that
moral development is even more important than professional development. "Creating a
culture based on moral excellence requires a commitment among managers to embody and
develop two qualities in their leadership: virtue and wisdom." Ethics is based on a set of
moral and ethical values. These values must be absolute - that is, you must take them
seriously enough to override any human rationalization, weakness, ego, or personal faults.
When all else fails, you will always look back to these core values to guide you.
Unfortunately, life is not that easy and there's always disagreement about what values should
reign
supreme.
Luckily, in the world of business ethics, your employer helps you. In a nutshell, their values
are your values (in the context of work). Your freedom to choose your own ethical values is
somewhat limited. Considering the rash of corporate scandals these days, the thought of
following the corporation's values might not be too comforting. Problem: Whose or what
values can you trust? Look behind successful, honest businesses and you will see a set of
values that have stood the test of time. Think about how these values are communicated in
your
organization
and
what
you
can
do
to
support
them
Honesty-The old adage, "honesty is the best policy" is true today more than ever. It's not just
lip service. Employee manuals from most scandalized corporations are likely to contain
slogans touting its commitment to honesty. Claiming to be honest in an employee manual is
pass. You're either honest or not. Even if you haven't got caught yet, most people know who
is and who isn't.

Integrity- Integrity connotes strength and stability. It means taking the high road by
practicing the highest ethical standards. Demonstrating integrity shows completeness and
soundness in your character and in your organization.
Responsibility-Blaming others, claiming victimhood, or passing the buck may solve shortterm crises, but refusal to take responsibility erodes respect and cohesion in an organization.
Ethical people take responsibility for their actions. Likewise, actions show the ability to be
responsible
both
in
the
little
and
big
things.
Quality-Quality should be more than making the best product, but should extend to every
aspect of your work. A person who recognizes quality and strives for it daily has a profound
sense of self-respect, pride in accomplishment, and attentiveness that affects everything.
From your memos to your presentations, everything you touch should communicate
professionalism and quality.
Trust- There's no free ride. Trust is hard to earn and even harder to get back after you've lost
it. Everyone who comes in contact with you or your company must have trust and confidence
in how you do business.
Respect-Respect is more than a feeling, but a demonstration of honour, value, and reverence
for something or someone. We respect the laws, the people we work with, the company and
its assets, and ourselves.
Teamwork-Two or more employees together make a team. It is a business necessity to work
openly and supportively in teams whether formal or informal.
Leadership-How many hardworking, honest employees have been tainted and led astray by
corporate leadership failings? Managers and executives should uphold the ethical standards
for the entire organization. A leader is out front providing an example that others will follow.
Corporate Citizenship-A foundational principle for every company should be to provide a
safe workplace, to protect the environment, and to become good citizens in the community.
Shareholder Value-Without profitability, there is no company. Every employee should
understand how he or she fits into the profitability picture. Everyone's common goal should
be
to
build
a
strong,
profitable
company
that
will
last.
The real test of these values comes from the resulting action. It takes a concerted, companywide effort, beyond inserting these words in an employee manual, to make it happen.
First, management must lead by example. Good ethics should be most noticeable at the top.
Every employee must be accountable to the same rules. Second, a corporate values or ethics
initiative must be "sold" and "marketed" aggressively throughout a company. Every forum
and medium should be used to spread the good message. Of course, it will only be credible if
the company is practicing what it preaches. Third, training must be provided to get everyone
on the same page. It's easy to ignore a motivational speech or pass by a poster, but spending
time
learning
about
the
issues
will
have
a
lasting
impact.
Fourth, both you and the company must be in it for the long haul. The ethics fervour should
extend to the next generation of employees. The longer it lasts, the more ingrained the
principles will become. Despite failings of some, there are plenty of room at the table for
good ethics and profitable business to reside. Together they can lay the cornerstone for a
secure and prosperous society. These ten values you can put in the employee manual and
mean it.