Executive Summary:
Firms such as Google, Shell Oil, NEC Corp., and Procter & Gamble are experimenting with new business models and adopting sustainable business strategies that have positive economic, social, and environmental impacts-the triple bottom line. Ethical values, leadership, and trust are key issues confronting executives. In new research, management professor John Slocum and co-author Louis Fry frame and analyze how companies are addressing the triple bottom line of "people, planet, and profit" through universal values.
People bring to work values and attitudes that drive their behavior, thus forming an organization's ethical system. Cultures that are based on values of dishonesty, deceit, favoritism, and greed (e.g., Enron, WorldCom and Tyco International) can lead top managers to make bad choices. When altruistic values such as respect, fairness, honesty, care, compassion are integral parts to an organization's culture, a culture of trust emerges. The Container Store, Stride-Rite and Johnson & Johnson, among others, have such cultural values. Senior managers in these organizations have made decisions based on moral principles - and the foundation of all the world's major religions. The Dalai Lama, in Ethics for the New Millennium, notes that at no time in human history has it been more essential that we reach a consensus about what constitutes positive and negative conduct.
Once formed, a corporate culture is tenacious and difficult to change. This was evident in the National Aeronautics and Space Administration's (NASA's) Challenger and Columbia disasters, as well as the Enron and Arthur Andersen debacles. Yet NASA's bureaucratic culture and cost-cutting decision protocols overrode their decision-making.
Leaders play a major role in creating and sustaining an organization's culture. Ethical leadership rests upon: the leader's moral character; the ethical legitimacy of the leader's vision and values; and the morality of the choices and actions that leaders engage in and collectively pursue. Additionally, leaders and followers must be willing to have their behavior evaluated against the generally accepted values of society.
A Higher Calling
Corporate performance is linked to strong ethical leadership. Perhaps the best evidence so far comes from Jim Collins's Good to Great, a study of 11 organizations and their leaders about what creates great high-performance organizations. Collins defines Level 5 leadership as leadership that transcends self-interest through a paradoxical mix of humility and professional will. Yet these leaders are fanatically driven to produce sustained performance excellence. They establish their organization's culture by creating an environment of inclusion, personal responsibility and open and honest communication among employees, so that they feel empowered to raise issues and make decisions. Level 5 leaders also create and sustain high performance cultures where truth is heard and the brutal facts (e.g., return on investment, market share) confronted.
These leaders do this by first getting the right people on the bus (and the wrong people off) and then worry about developing the vision of where to drive it. In doing so, they place greater weight on ethical thinking, integrity, the quality of a person's character and values and his or her fit with the core cultural values of the organization than on a person's educational background, managerial competencies, expertise or work experience.
Leaders of admired organizations, such as General Electric, Starbucks, and Southwest Airlines, have adopted a stakeholder approach, acknowledging that various stakeholders have a legitimate moral stake in the organization's performance. Key stakeholders can sometimes negatively affect organizational performance if their expectations are not met.
Slocum says this form of social responsibility is "about a higher calling and understanding others." He continues, "Herb Keller of Southwest Airlines is a leader of this stature, as well as David Needleman who started Jet Blue to democratize the skies, and serve those groups which were underserved. These firms and their leaders have a 'higher calling.'"
A business model is a description of the value a company offers to its customers-the architecture of the firm and the network of partners/stakeholders. The authors believe there is a need for developing new business models that accentuate ethical leadership, employee well-being, sustainability and social responsibility without sacrificing profitability or performance. This means developing and adopting business models with strategies that have a positive economic, social, and environmental impacts, ie., the triple bottom line. "People, planet, profit" encompasses an explicit set of moral values and criteria for measuring organizational (and societal) success and with it a need to institute triple bottom line assessment and reporting.
Unfortunately, traditional financial measures like return on investment or equity do not fully reflect a company's performance in the environmental and social arenas. Many companies, including Unilever PLC, General Motors, Dow Chemical, Amoco Corp. and Ford Motor Company, are taking in-depth examinations of how they view their triple bottom line. They've created education programs and new executive positions, such as vice president for sustainable development, to implement the triple bottom line, according to a noted professor of sustainable enterprise at a prominent university.
Matters of the Human Spirit
In a recent book Megatrends 2010, Patricia Aburdene states that the focus on spirituality in business is becoming so pervasive that it stands as "today's greatest megatrend." She contends that the power of spirituality is increasingly impacting our personal lives and is spreading into organizations to foster a moral transformation. More and more people are making choices in the marketplace as "values-driven consumers." Feature articles from Newsweek, Time, Fortune, and BusinessWeek have chronicled the growing presence of spirituality in corporate America. A major change is taking place in the personal and professional lives of many CEOs and leaders, as they aspire to integrate their spirituality with their work.
Spiritual leadership involves motivating and inspiring workers through a vision and a culture based in altruistic values, creating a more motivated, committed and productive workforce. This higher motivation, commitment and productivity have a direct impact on the bottom line.
There is emerging evidence that spirituality provides competitive advantage with respect to organizational performance. Workplace spirituality incorporates those values that lead to a sense of transcendence and interconnectedness. Workers then experience personal fulfillment on the job and can satisfy the need of having a calling through one's work or vocation - and the need for membership, community, or social connection.
It is important, however, to note that there is a distinction between spirituality and religion. Religion is concerned with a system of beliefs, ritual prayers, rites and ceremonies and related formalized practices, whereas spirituality is concerned with qualities of the human spirit. This includes positive psychological concepts, such as love and compassion, patience, tolerance, forgiveness, contentment, personal responsibility, and a sense of harmony with one's environment. Spirituality encompasses a vision of service to others. Consequently, workplace spirituality can be inclusive or exclusive of religious theory and practice.
This research looked at CEO Norm Miller's Dallas-based Interstate Batteries. In his recent book, Miller writes, "The bottom line of Interstate is to love people and try to meet their needs, all in the context of top performance and reasonable profitability." At Interstate, Miller and Interstate's workers do not hide their faith (predominately Christian) but, he insists, neither do they want to "cram religion down anyone's throat."
The authors' analysis of Interstate Batteries revealed that meaning/calling and membership explained 13 percent of their distributor sales growth, 94 percent of an employee's commitment to the company, and 73 percent of distributorship productivity. Distributorships with higher levels of spiritual leadership subsequently had employees who reported higher levels of spiritual well-being through calling and membership that in turn positively impacted organizational commitment, productivity, and sales growth. Spiritual leadership was seen as a significant source of competitive advantage.
Concluding Remarks
By establishing a compelling vision, purpose, and mission, management has a major impact on their organization, offering a significant source of competitive advantage. The vision directs the internal assessment of strengths and weaknesses and the external analysis of threats and opportunities. This analysis leads to the strategic action plans and objectives that a firm wishes to pursue. CEOs and managers must also provide employees with the knowledge of how their jobs are relevant to the organization's performance and vision/mission. This understanding is necessary to integrate individual jobs, teams, and business units with the company's vision/mission and thus implement strategies to thrive in the global economy of today.
Like the Level 5 leaders, spiritual leaders build high performance companies that are personal and human with a focus on the importance of the individual; every member feels empowered and responsible for the reputation of the company. The authors caution: it is important to avoid the negative consequences when employers emphasize a particular religion in the workplace. Imbuing religion into workplace spirituality can foster zealotry at the expense of organizational goals, offend constituents and customers, and decrease morale and employee well being.
Establishing a culture where the core values represent an organization's "essential and enduring tenets," provides the context for intrinsic motivation and for spiritual leadership. Spiritual leaders make everyone understand that the organization's future is dependent on its reputation and demonstrate perseverance in uncovering problems and finding solutions.
"Managing the Triple Bottom Line Through Spiritual Leadership" by John Slocum of SMU Cox and Louis Fry of Tarleton State University is forthcoming in Organizational Dynamics, March 2008.
By Jennifer Warren. |
