WE CAN’T KEEP MEETING LIKETHIS: DEVELOPING THE...

bout a year ago, I participated in aclimate change event in Johannes-

burg, South Africa. In the room wereone of the lead negotiators for theSouth African government on climatechange, key activists, a representativefrom a major energy company, a fewscientists, and about 40 others.The facil-itator opened the event by remindingthe group of Albert Einstein’s famousstatement,“No problem can be solvedfrom the same level of consciousnessthat created it.”The session then contin-ued with a series of PowerPoint presen-tations from the different constituencies,with no time for questions or dialogue.Several of the presentations were excel-lent, but my overriding feeling as Ilistened to speaker after speaker was“these people don’t speak each other’slanguage.”

At the end of the session, I com-mented with some emotion that “wecan’t solve this problem with the samelevel of communication that created it.”By that I meant not only the confer-ence setup. I meant the scientific lan-guage, the graphs, the acronyms, thedetached analysis, the corporate image-orientation, as well as the dismissiveactivist style and the very localized anddisconnected community perspective. Ifelt that what I had witnessed during

the session was not the solution, butrather the climate change problem com-ing into being. I left feeling discouragedabout our ability to address this monu-mental challenge.

Why We Must ChangeFrom climate change to AIDS, fromculture clashes to poverty, we are facedwith complex, global problems.Theseproblems have many causes and manymanifestations, and multiple differentplayers have different kinds of influenceover them. Cause and effect are distantin time and space and not easily dis-cernible. The causes themselves havemany causes of their own and are ofteninterlinked and reinforce each other:Poverty causes AIDS,AIDS causes poverty,and both poverty and AIDS are causes ofthe rise in the number of vulnerable chil-dren. Because of this complexity, solu-tions directed at one part of the system,without a view of the whole, can com-pound problems in another part: Theprospect of climate change increases use ofbiofuels which leads to food shortages whichlead to increased deforestation which in turncompounds carbon emissions and increasesclimate change.

This is the reality of the messes weare coping with in the globalized worldof the 21st century.There is no onebutton or leverage point that we canpress to make these problems go away.They require us to work out creativeand systemic solutions by not onlycommunicating but also learning andcollaborating across sectors, levels, andcultures.We just can’t get out of thesesituations separately.

For the past couple of years, I havehad the privilege to work intensively ona cross-sector collaboration projectcalled LINC (Leadership and InnovationNetwork for Collaboration in the Chil-

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WE CAN’T KEEP MEETING LIKE THIS: DEVELOPINGTHE CAPACITY FOR CROSS-SECTOR COLLABORATIONB Y M I L L E B O J E R

dren’s Sector), which addresses the diffi-cult situation currently faced by SouthAfrica’s children. Primarily as a result ofthe HIV/AIDS pandemic and com-pounded by other factors, over one mil-lion orphans under the age of 18currently live in the country. Manymore children subsist in difficult cir-cumstances. This unprecedented, heart-breaking situation is straining people,communities, and institutions.TheLINC project brings together seniorofficials from four government depart-ments, CEOs of NGOs and faith-basedorganizations, leaders of major businessfoundations and other business represen-tatives, as well as community members,academics, and international donors.These people participate in a series of“Innovation Labs,” combined with lead-ership coaching, project coaching, andnetworking support in order to developcollaborative leadership and innovative,systemic responses to the crisis.

Through this work and many otherrecent experiences, I have been payingattention to what I can learn aboutcross-sector collaboration aimed ataddressing complex problems and creat-ing systemic solutions.What are thequalities of the types of solutions weneed? What mindsets and capacities dowe need in order to be effective? Howdo we overcome the blockages we face?What processes and resources can sup-port this work? My intention with thisarticle is to share some of these ideas tocontribute to strengthening a wider dia-logue and practice, and to build ourcapacity to cope in these times.

Systemic SolutionsThere are many different understandingsof what it means to think or act “sys-temically.” For years, I used the word“systemic” because it sounded right,

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TEAM TIPDiscuss the following statement as itapplied to your organizational con-text: “We can’t solve this problemwith the same level of communicationthat created it.” How might youchange the ways in which you com-municate in order to tackle problemsin a profoundly new way?

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without having a clear picture in mymind of what it meant. I knew that ithad to do with seeing connections andrelationships, addressing root causes, andshifting our way of thinking. I didn’treally know how to recognize a “sys-temic solution” when I saw one.

As my colleagues and I in SouthAfrica started to work on high-stakesprojects with multistakeholder groups,challenging them to come up with “sys-temic solutions,” we had to get specificabout what that meant. On that journey,we encountered Elisabeth Dostal, co-author of Biomatrix:A Systems Approachto Organisational and Societal Change(African Sun Press, 2003), whose life hasbeen about applying systems thinking tocomplex social problems like povertyand unemployment.As we engagedwith Elisabeth and with each otheraround the deeper meaning of ourwork, we started to see the following:

Systemic Solutions Shift Logic. Theychange some of the underlying think-ing that is producing the problem situ-ation, thus going to the source of theproblem.As a result, systemic solutionsaim at problem-dissolving, as opposed toproblem-solving (which tries to “fix” aproblem within a current logic).This is,I suppose, what Einstein was also tryingto communicate: that the logic of thesolution is not the same as the logic ofthe problem.

Systemic Solutions Work on MultipleDimensions and Levels. Because com-plex problems are produced by manycauses, systemic solutions have to workon multiple dimensions (for example,technological, economic, and cultural)and levels (for example, global, societal,organizational, individual, and internal).These approaches embrace paradoxesand look for both/and instead ofeither/or. As an example, it is futile todiscuss whether AIDS is a health prob-lem or a poverty problem; it is bothand requires solutions working on boththese dimensions (and many others).

Systemic Solutions Harness Synergies.One of the core ideas of systems think-ing is that “the whole is more than thesum of the parts.” Systems display emer-gent properties that are unpredictable

outcomes of the interplay between theirparts, the relationships between theirparts, their context, and what could becalled their identity. Emergent propertiescan be either synergistic (more than thesum of the parts, with the parts reinforc-ing each other positively) or dissynergistic(less than the sum of the parts, with theparts undermining each other, leading toa dysfunctional whole). Ideally, a sys-temic solution shifts some of the“vicious” cycles among causal factors to“virtuous” cycles.

Systemic Solutions Are Iterative.Because cause and effect are so com-plex in these big messy problem situa-tions, we can’t predict all the outcomesof an intervention with certainty (Rus-sell Ackoff coined the term “mess” as itrelates to major complex societal prob-lems). This means that we can’t com-pletely separate planning fromimplementation. Rather, there has to bea constant communication and itera-tion between our conceptual reality andphysical reality. We need to work on re-perceiving and rethinking the situationat the level of the whole (shifting con-ceptual reality), and then act on thisbasis in physical reality at the locallevel.Then we need to attentivelyobserve what is happening, or emerg-ing, in the physical reality and considerwhether it has implications for chang-ing our thinking.

Talking Across SectorsTo act more on the level of “whole”problems and “whole” systems, wemust get together with people who arebased in a different part of that whole.We need to get better at talking toeach other across sectors and at work-ing in partnership where necessary.How we do so effectively is a vasttopic. For the purposes of this article,I’ve chosen to focus on four importantprinciples that stand out in reflectingon our recent practice in South Africa:– Becoming self-aware as sectors,– Understanding complementarities,– Iterating within microcosms, and– Seeing the system in the room.

Becoming Self-Aware as Sectors. Oneof the biggest reasons cross-sector col-laboration is difficult is because sectors

have different logics, values, priorities,and comfort zones, in short, differentcultures. People seldom invest inunderstanding these different identities,even though it is an integral part ofcross-sector partnership efforts.Theyfail to give attention to the need forthe cross-sector system to self-reflectand create a healthy foundation for itswork together.

My favorite university course wasan interdisciplinary one on interna-tional development. For a year, Iworked in a team composed of a biolo-gist, a geographer, an engineer, ahumanities student, and myself—apolitical science student. Our joint taskwas to study development and to writea paper about shrimp-farming inBangladesh.The real genius of thecourse was that half the assignment—halfthe time, half the paper, and half of ourshared mark in the end—was based onour ability to become aware of the dif-ferences in logic across our disciplinesand to create a cross-disciplinary, sharedscientific methodology as a team.Though Ididn’t have the language for it at thetime, I think we were creating a sys-temic way of looking at the problemand its solutions because we had tofind a place for each of our disciplines,and in doing so, we had to look at theissue from the multiple dimensions rep-resented by our disciplines.

Until I participated in this course, Inever realized how disciplines are likecultures. Our team started out by try-ing to describe the assumptions andnorms of each of our disciplines, whichmost of us had never thought about.We drew on cross-cultural literature indesigning our group process and phi-losophy of science.The course offeredus a unique opportunity to self-reflecton our differences as a team, while stillhaving a clear collective goal of some-thing we all had a stake in producing.How often are we given a chance togive equal attention to our collectiveprocess and culture as to our product?

As with disciplines, professions andsectors are also like cultures. But whilea lot of attention goes into cross-cul-tural education, little seems to go intointerdisciplinary or cross-sectoralunderstanding.As part of our educa-tion, we generally don’t learn how to

become aware of the assumptions ofour disciplines and how they differfrom those of other fields.

At the first “Innovation Lab” of theLINC project, we had nearly 50 leadersfrom across sectors in the room. One ofthe tasks on the opening day was forthem to spend time with people fromtheir own sector in a dialogue aroundthe things that they were proud of andthe things that they were sorry aboutin relation to their sector’s response tothe situation of the country’s children.Each sector presented back to thelarger group while the others listenedand reflected.

This session proved to be one ofthe most powerful moments of theevent.Why? Because participants bene-fited from time for self-reflection toacknowledge the differences betweenthe sectors and to notice the variedways the sectors tackled the task andshared their stories.Also, the processdisarmed some of the negative dynam-ics across sectors, because each sectorhad a chance to name for itself its ownweaknesses and challenges.

Understanding Complementarities. Sur-facing the differences across sectoralcultures is only a first step.The path tocreating synergy lies in understandingthat there are complementarities acrossthese differences, seeing what thesecomplementarities are, and then findingways of harnessing them.

One of the major challenges indeveloping true cross-sector collabora-tion is that the sectors have perceptionsand judgments of each other.At therisk of being simplistic, I would evendare to venture that sometimes peoplein a sector just want the others to “goaway.” Government and corporations attimes want civil society to go away sothey can get on with their jobs. NGOswant corporations and government togo away, and corporations want NGOsand government to go away. Or, theywish that the other sectors could bemore like themselves, think like theydo, and operate from the same logic.

I experienced a powerful momentof shifting such perceptions and discov-ering complementarity in the LINCproject. In the first phase of the initia-tive, we interviewed 40 stakeholders,

and we were struck that many of themwere struggling with the same burningquestion: Given that millions of children inSouth Africa are in need of care, should we begoing for a “Woolworths” solution or a“Checkers” solution? In South Africa,Woolworths is a high-end supermarketthat provides expensive but healthy,high-quality products to a small portionof the population, while Checkers is alow-end supermarket that providescheap products to the masses. So thequestion was: Do we provide a basic pack-age of services to the largest number of chil-dren possible, or do we focus on a smallernumber of children that we can give personalattention to and provide with everything theyneed? One of the interviewees told us,“I always think of the five kids we fedtoday, I don’t think about the 5,000 wecouldn’t feed. Otherwise I wouldn’t beable to handle it.”

At the time of doing and analyzingthe interviews, I didn’t even notice thatthis question of quantity versus quality,which seemed valid, was coming onlyfrom the NGOs and business stakehold-ers. When I raised it at the workshopwith an academic participant who workswith government, she became frustratedand said she was tired of hearing thisquestion because “It’s a false choice. It’s abasic rights issue.” From her perspective,you can’t take a few kids, give themeverything, and provide nothing to therest. It’s simply unjust.

In that moment, I realized that theproblem the South African governmentfaces every day is in some ways com-pletely different from the problem theNGOs deal with.The governmentstruggles with how to provide for mil-lions of children equally, to deliver ontheir rights, and to deliver on justice.They don’t have the luxury to choosenot to think of the 5,000, or 50,000,that weren’t fed that day.The NGOsand community workers, on the otherhand, look into the eyes of specificchildren, children who need muchmore than the level of care and supportthat is possible if you spread yourresources evenly and thinly.

In his book, Shaping Globalization:Civil Society, Cultural Power and Three-folding (New Society Publishers, 2003),Nicanor Perlas posits that in a healthysociety,

The three key institutions [govern-ment, business, and civil society] areaware that they have consciouslyentered into a social process thatmobilizes the unique perspectives,strengths, resources, and capacitiesof the cultural, political, and eco-nomic realms of society.The threekey institutions . . . place theirrespective talents towards the pur-suit of comprehensive sustainabledevelopment, balancing economic,political, and cultural, social, ecolog-ical, human, and spiritual impera-tives of development.” (p. 13)

Each of these powerful institutionshas the potential to “represent,” in itsown way, the realm of society fromwhich each is active—civil society rep-resents culture; government representspolity; and business, the economy….business, government, and civil societywill naturally emphasize differentaspects of society as a whole.” (p.4)

In the Woolworths versus Checkersquestion, the shift happens when gov-ernment and NGOs start to see thatthey each represent different impera-tives. Part of the reason governmentstruggles with bureaucracy is becausethey have to cope with the reality ofmillions of children every day. Part ofthe reason NGOs seem sentimental orstruggle to prioritize is because theylook into the eyes of the individualchild every day.

With that realization, we can startto ask the questions,“What is the valuethat each of these positions in the sys-tem can offer to the collective work ofimproving quality and quantity of care forchildren? What are the different dimen-sions and levels that they can bring tothe systemic solutions?” Some decisionscan only be taken at a distance by thegovernment, which has to prioritize jus-tice, and at the same time, some insightscan only be had at the local level.Thetwo need each other.The original ques-tion dissolves and changes from either/orto both/and. The logic shifts.

Iterating Within “Microcosms.” We usethe term “social complexity” todescribe a problem situation in whichthe players involved have contrastinglogics or frames of mind, and therefore



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sometimes conflicting perceptions andexplanations of what the problem isand how it should be addressed.This isusually the case with the kinds of com-plex problems that require cross-sectorintervention. One of the most eye-opening things I have learned aboutintervening in social complexity is thatall the players do not have to share thesame perspectives and imperatives. Ifyou insist that they must, then you mayspend a lot of time creating a plan thatno one is excited about implementing.Furthermore, by getting a group ofpeople in a room to agree to the lowestcommon denominator, you lose impor-tant details that are crucial to successfulimplementation.

For systemic solutions, instead ofgetting everyone to agree on what theproblem is and on one frame of mind,we need to think “both/and.” Buildingon the deeper sense of complementar-ity described above—respecting thatdifferent institutions represent diversedimensions and levels of society—wecan seek out systemic solutions thatmake sense in multiple frames of mind.

A powerful way to create suchsolutions is to bring diverse stakehold-ers together to generate and test ideasfor intervention.This is what is meantby convening a “microcosm” of thesystem.The idea of convening a micro-cosm is that you create a group thattogether has the power to see thewhole situation and to act on or influ-ence it.The primary requirement informing the microcosm when address-ing societal issues is to have balancebetween government, business, civilsociety, and/or the other major group-ings related to a problem. It is of courseimpossible to literally get the “wholesystem” in the room.There will alwaysbe voices missing, but it is possible toget a group of people together whoreflect the major parts of the system.

In the case of the LINC project, ittook us over a year just to convene theplayers, through a process of dialogueinterviewing and ongoing advocacywork and consultation. In the end, wehad 50 high-level participants repre-senting most of the key groupings fromgovernment, civil society (NGOs, faith-based groups, and community-basedorganizations), business, academics, and

donors.The convening process had topay attention both to who the individ-uals were and to the composition ofthe group as a whole. Still, it was not acomplete microcosm in that the chil-dren themselves and the grannies whotake care of them were not present inthe room, though people close to themwere.

As the participants started to formcross-sector teams to generate initia-tives to work on, they were explicitlyencouraged to provide constructiveperspective across teams from theirplace in the system.What can you seefrom where you stand that the largergroup might not?

Seeing the System in the Room. Whenyou bring together a microcosm, youessentially get the “system in theroom.” Over time, the dynamics of theproblem situation manifest in thegroup, which leads to extremely pow-erful learning.The problem shifts frombeing “out there” to being “in here.”Of course, when convening micro-cosms, we look for different kinds ofdiversity—not only sectoral diversity,but also gender diversity, cultural diver-sity, social diversity, and so on.Whatalways results from including theseother types is diversity of power.

There is nothing radical about cre-ating a situation of diversity of power byinviting some young people or poorpeople to a conference. It is extremelyradical, on the other hand, to create thekind of set-up where the more powerfuland the less powerful can participate onan equal footing or to shift the powerdynamics as an integral part of theprocess. In my experience, doing sorequires pointing out the power differ-ences in the room, which are reflectiveof the power differences in the largersociety, and not pretending they don’texist.

In the LINC project, as one of thefirst activities we introduced a briefpower dynamics game that brought theissue to light and set the intentionamong participants of “changing therules of the game.”This, along with thedialogue-based design of all the activi-ties, helped to level the playing fieldand allow community members to par-ticipate on a relatively equal footing.The interesting thing is that becausewe have now introduced power as alegitimate area of work, participantshave started to request more directwork on the power and race dynamicsin the room.

Myrna Lewis is a psychotherapistand facilitator of group processes usinga methodology called “Deep Democ-racy” (see www.deepdemocracy.com).One of her main beliefs is that a systemis healthy when there is “role fluidity”and unhealthy when “roles are stuck.”Roles in this sense are not simply posi-tions, but can also include opinions,emotions, attitudes, and so on.A role isstuck when someone feels they are theonly one in a certain situation or witha certain opinion or emotion (“I amdoing all the work, and I am so over-whelmed”), or when a certain charac-teristic is being projected ontosomeone and disowned by those pro-jecting it (“The government is so inef-ficient and out of touch”).

Role fluidity can develop in manyways.What struck me in our LINCInnovation Lab was the realization ofshared overwhelm. In one group, oneof the government representatives sheda tear and said how overwhelmed shewas when she thought about the chil-dren. Government had been perceivedas distant, cold, and out of touch, butwith that display of emotion, othersrealized that government workers are inthe same situation that they are. In thatmoment, roles became more fluid, andsome of the kind of trust needed forcollaboration was established.

This idea raises a paradox.Youneed role clarity for the sectors, interms of understanding the differentpositions they are in, the differentdemands on them, and the differentimperatives they represent.This trans-parency is what enables us to harnesswhat each grouping brings to the task.

http://www.deepdemocracy.com

At the same time, you need role fluid-ity when it comes to the judgments,the “they are like this, and we are likethat” statements, in order to overcomethe stuckness of the situation andrelease true collaboration.

The Journey AheadMy intention with this article is to stressthe importance of systemic solutions tocomplex problems and of attentivecross-sector collaboration for systemicsolutions. I have not tried to outline allthe tools, practices, and capacities relatedto cross-sector partnerships, as I knowthis has been done well elsewhere (forexample, see the Prince of Wales Inter-national Business Leaders Forum atwww.iblf.org). Rather, my intention isto contribute to deepening this field,specifically in relation to addressingcomplex social problems. I have focusedon four principles that I think are cen-tral to this deepening.

The LINC project is ongoing.Thestakeholders periodically meet in Inno-vation Labs, where they work on seeingand designing together, and outside of

the Labs, where they test their ideasagainst reality, work in project teams,participate in leadership coaching, anddo what they can to contribute in theirdaily jobs to serving the children. Mean-while, the search for insights on how tocreate systemic change continues. •


Marianne “Mille” Bojer is an experiencedfacilitator and designer of group dialogue and changeprocesses. She is a co-founder of Reos Partners,an international group of organizations dedicatedto supporting and building capacity for innovationin complex social systems. She is also one ofthe founders of Pioneers of Change(www.pioneersofchange.net), a learning communityof young change agents across the world. Millerecently relocated to São Paulo to set up Reos inBrazil.

Although Mille Bojer focuses on the social sector in this article, the principles can applyto any complex systems challenge.

Become Self-aware as Sectors or Functions: Have people spend time with others fromtheir own function area in a dialogue around the things that they have done well and thethings that they can improve in relation to their function’s response to the challenge.Each function then presents back to the larger group while the others listen and reflect.

Understand Complementarities: Ask the questions,“What is the value that each of thesepositions in the system can offer to the collective work? What are the different dimen-sions and levels that they can bring to the systemic solutions?”

Iterate Within Microcosms: Seek out systemic solutions that make sense in multipleframes of mind. Bring diverse stakeholders together to generate and test ideas for inter-vention.

See the System in the Room. When convening microcosms, look for different kinds ofdiversity—not only sectoral diversity, but also gender diversity, cultural diversity, socialdiversity, and so on.What always results from including these other types is diversity ofpower. Over time, the dynamics of the problem situation manifest in the group, whichleads to extremely powerful learning.

NEXT STEPS

http://www.iblf.org

http://www.pioneersofchange.net


62 Harvard Business Review | July–August 2009 | hbr.org

LEADERSHIPNEW WORLD

in theSPECIAL ISSUE

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Leadership in a(Permanent) Crisis

When the economy recovers, things won’t return to normal – and a different mode of leadership will be required. | by Ronald Heifetz, Alexander Grashow, and Marty Linsky

IT WOULD BE PROFOUNDLY REASSURING to view the current economic crisis as simply another rough spell that we need to get through. Unfortunately, though, today’s mix of urgency, high stakes, and uncertainty will continue as the norm even aft er the recession ends. Economies cannot erect a fi rewall against intensifying global competition, energy constraints, climate change, and political instability. The immediate cri-sis – which we will get through, with the help of policy makers’ expert technical adjustments – merely sets the stage for a sustained or even permanent crisis of serious and unfamiliar challenges.

Consider the heart attack that strikes in the middle of the night. EMTs rush the victim to the hospital, where expert trauma and surgical teams -- executing established procedures

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LEADERSHIP in the NEW WORLD.

because there is little time for creative improvisa-tion -- stabilize the patient and then provide new vessels for the heart. The emergency has passed, but a high-stakes, if somewhat less urgent, set of challenges remains. Having recovered from the surgery, how does the patient prevent another at-

tack? Having survived, how does he adapt to the uncertainties of a new reality in order to thrive? The crisis is far from over.

The task of leading during a sustained crisis – whether you are the CEO of a major corporation or a manager heading up an im-promptu company initiative – is treacherous. Crisis leadership has two distinct phases. First is that emergency phase, when your task is to stabilize the situation and buy time. Second is the adaptive phase, when you tackle the un-derlying causes of the crisis and build the capacity to thrive in a new reality. The adaptive phase is especially tricky: People put enormous pressure on you to respond to their anxieties with authoritative certainty, even if doing so means overselling what you know and discounting what you don’t. As you ask them to make necessary but uncomfort-able adaptive changes in their be-havior or work, they may try to bring you down. People clamor for direction, while you are faced with a way forward that isn’t at all obvious. Twists and turns are the only certainty.

Yet you still have to lead.

Hunker Down – or Press “Reset”The danger in the current economic situation is that people in positions of authority will hunker down. They will try to solve the problem with short-term fi xes: tightened controls, across-the-board cuts, restructuring plans. They’ll default to what they know how to do in order to reduce frustration and quell their own and others’ fears. Their primary mode will be drawing on familiar expertise to help their organizations weather the storm.

That is understandable. It’s natural for author-ity fi gures to try to protect their people from ex-

ternal threats so that everyone can quickly return to business as usual. But in these times, even the most competent authority will be unable to off er this protection. The organizational adaptability re-quired to meet a relentless succession of challenges is beyond anyone’s current expertise. No one in a position of authority – none of us, in fact – has been here before. (The expertise we relied on in the past got us to this point, aft er all.) An organization that depends solely on its senior managers to deal with the challenges risks failure.

That risk increases if we draw the wrong conclu-sions from our likely recovery from the current economic downturn. Many people survive heart attacks, but most cardiac surgery patients soon re-sume their old ways: Only about 20% give up smok-ing, change their diet, or get more exercise. In fact, by reducing the sense of urgency, the very success of the initial treatment creates the illusion of a return to normalcy. The medical experts’ technical prowess, which solves the immediate problem of survival, inadvertently lets patients off the hook for changing their lives to thrive in the long term. High stakes and uncertainty remain, but the dimin-ished sense of urgency keeps most patients from focusing on the need for adaptation.

People who practice what we call adaptive lead-ership do not make this mistake. Instead of hunker-ing down, they seize the opportunity of moments like the current one to hit the organization’s reset button. They use the turbulence of the present to build on and bring closure to the past. In the pro-cess, they change key rules of the game, reshape parts of the organization, and redefi ne the work people do.

We are not talking here about shaking up an organization so that nothing makes sense anymore. The process of adaptation is at least as much a pro-cess of conservation as it is of reinvention. Targeted modifi cations in specifi c strands of the organiza-tional DNA will make the critical diff erence. (Con-sider that human beings share more than 90% of their DNA with chimpanzees.)

Still, people will experience loss. Some parts of the organization will have to die, and some jobs and familiar ways of working will be eliminated. As people try to develop new competencies, they’ll oft en feel ashamed of their incompetence. Many will need to renegotiate loyalties with the mentors and colleagues whose teachings no longer apply.

Your empathy will be as essential for success as the strategic decisions you make about what ele-ments of the organizational DNA to discard. That

Are you waiting for things to »return to normal in your organiza-tion? Sorry. Leadership will require new skills tailored to an environ-ment of urgency, high stakes, and uncertainty – even after the cur-rent economic crisis is over.

You’ll have to: » Foster adaptation, helping people develop the “next practices” that will enable the organization to thrive in a new world, even as they continue with the best practices neces-sary for current success. Embrace disequilibrium, keeping people in a state that creates enough discomfort to induce change but not so much that they fi ght, fl ee, or freeze. Generate leadership, giving people at all levels of the orga-nization the opportunity to lead experiments that will help it adapt to changing times.

You won’t achieve your leader- »ship aims if you sacrifi ce yourself by neglecting your needs.

IN BRIEFIDEA



is because you will need people’s help – not their blind loyalty as they follow you on a path to the future but their enthusiastic help in discovering that path. And if they are to assist you, you must equip them with the ability to perform in an envi-ronment of continuing uncertainty and uncontrol-lable change.

Today’s Leadership Tasks In this context, leadership is an improvisational and experimental art. The skills that enabled most executives to reach their positions of com-mand – analytical problem solving, crisp decision making, the articulation of clear direction – can get in the way of success. Although these skills will at times still be appropriate, the adaptive phase of a crisis requires some new leadership practices.

Foster adaptation. Executives today face two competing demands. They must execute in order to meet today’s challenges. And they must adapt what and how things get done in order to thrive in tomorrow’s world. They must develop “next prac-tices” while excelling at today’s best practices.

Julie Gilbert is evidence that these dual tasks can – indeed, should – be practiced by people who do not happen to be at the very top of an orga-nization. As a vice president and then senior VP at retailer Best Buy from 2000 to early 2009, she saw a looming crisis in the company’s failure to profi t from the greater involvement of women in the male-oriented world of consumer electron-ics. Women were becoming more infl uential in purchasing decisions, directly and indirectly. But capitalizing on this trend would require something beyond a smart marketing plan. It would demand a change in the company’s orientation.

Getting an organization to adapt to changes in the environment is not easy. You need to confront loyalty to legacy practices and understand that your desire to change them makes you a target of at-tack. Gilbert believed that instead of simply sell-ing technology products to mostly male customers, Best Buy needed to appeal to women by refl ecting the increasing integration of consumer electronics into family life. So Gilbert headed up an initia-tive to establish in-store boutiques that sold home theater systems along with coordinated furniture and accessories. Stores set up living-room displays to showcase not just the electronics but also the entertainment environment. Salespeople were trained to interact with the previously ignored fe-male customers who came in with men to look at systems.

Gilbert says that championing this approach subjected her to some nasty criticism from manag-ers who viewed Best Buy as a retailer of technology products, not experiences. But focusing on the fe-male purchaser when a man and a woman walked into the store – making eye contact and greeting her, asking about her favorite movies and demon-strating them on the systems – oft en resulted in the couple’s purchasing a higher-end product than they had originally considered. According to Gil-bert, returns and exchanges of purchases made by couples were 60% lower than those made by men. With the rethinking of traditional practices, Best Buy’s home theater business fl ourished, growing

from two pilot in-store boutiques in mid-2004 to more than 350 fi ve years later.

As you consider eliminating practices that seem ill suited to a changing environment, you must dis-tinguish the essential from the expendable. What is so precious and central to an organization’s identity and capacity that it must be preserved? What, even if valued by many, must be left behind in order to move forward?

Gilbert wanted to preserve Best Buy’s strong culture of responding to customers’ needs. But the company’s almost exclusively male culture –

“guys selling to guys” – seemed to her a barrier to success. For example, the phrase “the jets are up” meant that the top male executives were aboard

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corporate aircraft on a tour of Best Buy stores. The fl ights gave them a chance to huddle on important issues and bond with one another. Big decisions were oft en announced following one of these trips. Aft er getting a call with a question about female customers from one such group visiting a Best Buy home theater boutique, Gilbert persuaded senior executives never to let the jets go up without at least one woman on board.

Because you don’t know quite where you are headed as you build an organization’s adaptability, it’s prudent to avoid grand and detailed strategic

plans. Instead, run numerous experiments. Many will fail, of course, and the way forward will be characterized by constant midcourse corrections. But that zigzagging path will be emblematic of your company’s ability to discover better products and processes. Take a page out of the technology industry’s playbook: Version 2.0 is an explicit ac-knowledgment that products coming to market are experiments, prototypes to be improved in the next iteration.

Best Buy’s home theater business was one exper-iment. A much broader one at the company grew out of Gilbert’s belief that in order to adapt to an increasingly female customer base, Best Buy would need to change the role of women within the orga-nization. The company had traditionally looked to

senior executives for direction and innovation. But, as Gilbert explained to us, a defi nition of consumer electronics retailing that included women would ultimately have to come from the bottom up. Ap-pealing to female customers required empowering female employees at all levels of the company.

This led to the creation of “WoLF (Women’s Lead-ership Forum) packs,” in which women, from store cashiers to corporate executives, came together to support one another and to generate innovative projects by drawing on their collective experience. In an unorthodox attempt to neutralize the threat

to Best Buy’s traditionally male culture, two men paired up with two women to lead each group.

More than 30,000 employees joined WoLF packs. The company says the ini-tiative strengthened its pipeline of high-potential leaders, led to a surge in the number of female job applicants, and improved the bottom line by reducing turnover among female employees. Gil-bert, who recently left Best Buy to help other companies establish similar pro-grams, was able to realize the dual goal of adaptive leadership: tackling the current challenge and building adapt-ability. She had an immediate positive impact on the company’s fi nancial per-formance while positioning the organi-zation to deploy more of its people to reach wider markets.

Embrace disequilibrium. Without urgency, diffi cult change becomes far less likely. But if people feel too much distress, they will fi ght, fl ee, or freeze. The art of leadership in today’s world

involves orchestrating the inevitable confl ict, chaos, and confusion of change so that the disturbance is productive rather than destructive.

Health care is in some ways a microcosm of the turbulence and uncertainty facing the entire econ-omy. Paul Levy, the CEO of Beth Israel Deaconess Medical Center, in Boston, is trying to help his orga-nization adapt to the industry’s constant changes.

When Levy took over, in 2002, Beth Israel Dea-coness was a dysfunctional organization in serious fi nancial trouble. Created several years previously through the hasty merger of two Harvard Medi-cal School teaching hospitals, it had struggled to integrate their very diff erent cultures. Now it was bleeding red ink and faced the likelihood of being acquired by a for-profi t company, relinquishing its



status as a prestigious research institu-tion. Levy quickly made changes that put the hospital on a stronger fi nancial footing and eased the cultural tensions.

To rescue the medical center, Levy had to create discomfort. He forced people to confront the potentially disas-trous consequences of maintaining the status quo – continued fi nancial losses, massive layoff s, an outright sale – stat-ing in a memo to all employees that

“this is our last chance” to save the insti-tution. He publicly challenged power-ful medical factions within the hospital and made clear he’d no longer tolerate clashes between the two cultures.

But a successful turnaround was no guarantee of long-term success in an environment clouded by uncertainty. In fact, the stability that resulted from Levy’s initial achievements threatened the hospital’s ability to adapt to the succession of chal-lenges that lay ahead.

Keeping an organization in a productive zone of disequilibrium is a delicate task; in the practice of leadership, you must keep your hand on the ther-mostat. If the heat is consistently too low, people won’t feel the need to ask uncomfortable questions or make diffi cult decisions. If it’s consistently too high, the organization risks a meltdown: People are likely to panic and hunker down.

Levy kept the heat up aft er the fi nancial emer-gency passed. In a move virtually unprecedented for a hospital, he released public quarterly reports on medical errors and set a goal of eliminating those errors within four years. Although the dis-closures generated embarrassing publicity, Levy believed that acknowledging and learning from serious mistakes would lead to improved patient care, greater trust in the institution, and long-term viability.

Maintaining the right level of disequilibrium re-quires that you depersonalize confl ict, which natu-rally arises as people experiment and shift course in an environment of uncertainty and turbulence. The aim is to focus the disagreement on issues, in-cluding some of your own perspectives, rather than on the interested parties. But the issues themselves are more than disembodied facts and analysis. Peo-ple’s competencies, loyalties, and direct stakes lie behind them. So you need to act politically as well as analytically. In a period of turmoil, you must look beyond the merits of an issue to understand the interests, fears, aspirations, and loyalties of the

factions that have formed around it. Orchestrating confl icts and losses and negotiating among various interests are the name of the game.

That game requires you to create a culture of courageous conversations. In a period of sustained uncertainty, the most diffi cult topics must be dis-cussed. Dissenters who can provide crucial insights need to be protected from the organizational pres-sure to remain silent. Executives need to listen to unfamiliar voices and set the tone for candor and risk taking.

Early in 2009, with Beth Israel Deaconess facing a projected $20 million annual loss aft er several years of profi tability, Paul Levy held an employee meeting to discuss layoff s. He expressed concern about how cutbacks would aff ect low-wage em-ployees, such as house-keepers, and somewhat cautiously fl oated what seemed likely to be an unpopular idea: protect-ing some of those low-paying jobs by reducing the salary and benefi ts of higher-paid employ-ees – including many sit-ting in the auditorium. To his surprise, the room erupted in applause.

His candid request for help led to countless sug-gestions for cost savings, including an off er by the 13 medical department heads to save 10 jobs through personal dona-tions totaling $350,000. These eff orts ultimately reduced the number of planned layoff s by 75%.

Keep your hand on the thermostat. If the heat’s too low, people won’t make diffi cult decisions. If it’s too high, they might panic.

Adaptive Leadership in Practice

BEST BUY | A senior vice president helped the company adapt to the reality that women increasingly make consumer electronics purchasing decisions.

BETH ISRAEL DEACONESS MEDICAL CENTER | The new CEO helped a dys-functional organization created through the hasty merger of two Harvard teaching hospitals adapt to modern health care challenges.

EGON ZEHNDER INTERNATIONAL | The founder fostered a leadership style that helped the executive search fi rm adapt to the rise of online recruiting and competi-tors’ IPOs.




Generate leadership. Corporate adaptability usually comes not from some sweeping new ini-tiative dreamed up at headquarters but from the accumulation of microadaptations originating throughout the company in response to its many microenvironments. Even the successful big play is typically a product of many experiments, one of which fi nally proves pathbreaking.

To foster such experiments, you have to acknowl-edge the interdependence of people throughout the organization, just as companies increasingly acknowledge the interdependence of players – sup-pliers, customers, even rivals – beyond their bound-aries. It is an illusion to expect that an executive

team on its own will fi nd the best way into the fu-ture. So you must use leadership to generate more leadership deep in the organization.

At a worldwide partners’ meeting in June 2000, Egon Zehnder, the founder of the executive search fi rm bearing his name, announced his retirement. Instead of refl ecting on the 36-year-old fi rm’s steady growth under his leadership, he issued a warning: Stability “is a liability, not an asset, in today’s world,” he said. “Each new view of the horizon is a glance through a diff erent turn of the kaleidoscope” (a symbol of disequilibrium, if there ever was one).

“The future of this fi rm,” Zehnder continued, “is to-tally in the hands of the men and women here in this room.”

From someone else, the statement might have come across as obligatory pap. But Egon Zehnder built his fi rm on the conviction that changes in internal and external environments require a new kind of leadership. He saw early on that his start-up could not realize its full potential if he made himself solely responsible for its success.

Individual executives just don’t have the per-sonal capacity to sense and make sense of all the change swirling around them. They need to dis-

tribute leadership responsibility, replacing hierarchy and formal authority with organizational band-width, which draws on collective intelligence. Ex-ecutives need to relax their sense of obligation to be all and do all and instead become comfortable sharing their burden with people operating in di-verse functions and locations throughout the or-ganization. By pushing responsibility for adaptive work down into the organization, you clear space for yourself to think, probe, and identify the next challenge on the horizon.

To distribute leadership responsibility more broadly, you need to mobilize everyone to generate solutions by increasing the information fl ow that al-

lows people across the organization to make independent decisions and share the lessons they learn from innovative eff orts.

To generate new leadership and innovative ideas, you need to lever-age diversity – which, of course, is easier said than done. We all tend to spend time with people who are similar to us. Listening and learning across divides is taxing work. But if you do not engage the widest pos-sible range of life experiences and views – including those of younger

employees – you risk operating without a nuanced picture of the shift ing realities facing the business internally and externally.

Creating this kind of environment involves giv-ing up some authority usually associated with lead-ership and even some ownership, whether legal or psychological, in the organization. The aim, of course, is for everyone to “act like they own the place” and thus be motivated to come up with inno-vations or take the lead in creating value for their company from wherever they sit.

Zehnder did in fact convert the fi rm into a cor-poration in which every partner, including himself, held an equal share of equity and had an equal vote at partners’ meetings. Everyone’s compensa-tion rose or fell with the fi rm’s overall performance. The aim was to make all the partners “intertwined in substance and purpose.”

Zehnder’s collaborative and distributed leader-ship model informed a strategic review that the fi rm undertook just aft er his retirement. In the short term, the partners faced a dramatic collapse in the executive search market; their long-term challenge was a shift ing competitive landscape, in-cluding the rise of online recruiting and the initial

An executive team on its own can’t fi nd the best solutions. But leadership can generate more leadership deep in the organization.



public off erings of several major competitors. As the fi rm tried to fi gure out how to adapt and thrive in this environment, Zehnder’s words hung in the air: “How we deal with change diff erentiates the top performers from the laggards. But fi rst we must know what should never change. We must grasp the diff erence between timeless principles and daily practices.” Again, most sustainable change is not about change at all but about discerning and conserving what is precious and essential.

The fi rm took a bottom-up approach to sketch-ing out its future, involving every partner, from junior to senior, in the process. It chose to remain a private partnership. Unlike rivals that were or-dering massive downsizing, the fi rm decided there would be virtually no layoff s: Preserving the social fabric of the organization, crucial to long-term suc-cess, was deemed more important than short-term fi nancial results. In fact, the fi rm opted to continue hiring and electing partners even during the down market.

Rooted in its culture of interdependence, the fi rm adapted to a changing environment, produc-ing excellent results, even in the short term, as it gained market share, maintained healthy margins, and sustained morale – a major source of ongoing success. Adaptive work enabled the fi rm to take the best of its history into the future.

Taking Care of Yourself To keep yourself from being corralled by the forces that generated the crisis in the fi rst place, you must be able to depart from the default habits of author-itative certainty. The work of leadership demands that you manage not only the critical adaptive re-sponses within and surrounding your business but also your own thinking and emotions.

This will test your limits. Taking care of yourself both physically and emotionally will be crucial to your success. You can achieve none of your leader-ship aims if you sacrifi ce yourself to the cause.

First, give yourself permission to be both optimis-tic and realistic. This will create a healthy tension that keeps optimism from turning into denial and realism from devolving into cynicism.

Second, fi nd sanctuaries where you can refl ect on events and regain perspective. A sanctuary may be a place or an activity that allows you to step away and recalibrate your internal responses. For example, if you tend to demand too much from your organization, you might use the time to ask yourself, “Am I pushing too hard? Am I at risk of grinding people into the ground, including my-

self? Do I fully appreciate the sacrifi ces I’m asking people to make?”

Third, reach out to confi dants with whom you can debrief your workdays and articulate your rea-sons for taking certain actions. Ideally, a confi dant is not a current ally within your organization – who may someday end up on the opposite side of an issue – but someone external to it. The most im-portant criterion is that your confi dant care more about you than about the issues at stake.

Fourth, bring more of your emotional self to the workplace. Appropriate displays of emotion can be an eff ective tool for change, especially when balanced with poise. Maintaining this balance lets people know that although the situation is fraught with feelings, it is containable. This is a tricky tight-rope to walk, especially for women, who may worry about being dismissed as too emotional.

Finally, don’t lose yourself in your role. Defi ning your life through a single endeavor, no matter how important your work is to you and to others, makes you vulnerable when the environment shift s. It also denies you other opportunities for fulfi llment.

Achieving your highest and most noble aspira-tions for your organization may take more than a lifetime. Your eff orts may only begin this work. But you can accomplish something worthwhile every day in the interactions you have with the people at work, with your family, and with those you en-counter by chance. Adaptive leadership is a daily opportunity to mobilize the resources of people to thrive in a changing and challenging world.

Note: Some of the information in this article was

drawn from “Paul Levy: Taking Charge of the Beth Israel

Deaconess Medical Center,” HBS case no. 9-303-008 and

“Strategic Review at Egon Zehnder International,” HBS case

no. 9-904-071.

Ronald Heifetz ([email protected]), Alexander Grashow ([email protected]), and Marty Linsky ([email protected]) are partners of Cam-bridge Leadership Associates and the coauthors of The Practice of Adaptive Leadership (Harvard Business Press, 2009). Heifetz, the founder of the Center for Public Leadership at Harvard University’s John F. Kennedy School of Government, and Linsky, a member of the Kennedy School faculty, are the coauthors of “A Survival Guide for Leaders” (HBR June 2002).

Reprint R0907F To order, see page 158.


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Douglas Alexander recently described climate change as an issue of ‘global social justice’. How does this concept relate to other values espoused by

ministers and by the international community, and what are the implications for policy and programming?

Start with ‘social justice’, as opposed to ‘glo-bal social justice’. David Miller, from Nuffield College, Oxford, has identified four ‘principles’ of social justice: equal citizenship; entitlement to a social minimum; equality of opportunity; and fair distribution.

In development, our starting point would probably be the work of Amartya Sen and the human development paradigm his work inspired. The centrality of rights and freedom in Sen’s work links individual entitlements to wider conceptions of justice. In this vision, individuals and collectivities (communities, governments, businesses) share the obligation to deliver human rights.

This shift in thinking is reflected in the Millennium Declaration, agreed by the General Assembly in September 2000. The Declaration is generally remembered for the MDGs, but actually located these in a more general frame-work of rights and justice, viz freedom, equal-ity, solidarity, tolerance, respect for nature, and shared responsibility.

Similar themes have been picked by David Held and David Mepham, in their book, Progressive Foreign Policy. They say that ‘pro-gressives can be thought of as those committed to human rights, social justice, sustainability, democracy, the international rule of law and multilateralism.’

I don’t pretend that we can draw a perfect cir-cle encompassing Miller, Sen, the Millennium Declaration, Held and Mepham. Distributional issues, for example, are treated differently in the different formulations. Nevertheless, these contributions provide a platform for discussion.

Where do UK ministers stand? Speaking in Washington DC last year, Douglas Alexander said ‘we must now advance the case for change by better articulating the commonly held values around which we must rally the whole international community ... we must be driven by core values, not special interests. Our place in the world depends on us making choices based on values – values like opportu-nity, responsibility, justice.’

In November 2007, Prime Minister Gordon Brown spoke about ‘the timeless values that underpin our policies at home – our belief in the liberty of all, in security and justice for all, in economic opportunity and environmental pro-tection shared by all’. Speaking at the Mansion House in London, he said ‘it is possible for the first time in human history, to contemplate and create a global society that empowers people’.

In the same month, David Miliband told an audience in Bruges that ‘across Europe, people are feeling a divergence between the freedom and control they have in their personal lives, and the sense of powerlessness they face against the great global challenges we face: from preventing conflict and terrorism, to addressing climate change, energy security, and religious extremism. They are confident about personal progress, but pessimistic about societal progress’.

What does this mean for global social justice?I conclude that concern for social justice is a driver of progressive development policy – domestically and internationally. However, we have some work to do in thinking through what global social justice might mean. It is a chal-lenging enough concept as a rallying-cry for domestic progressive politics, but much more so if tackled globally. Five points:• First, ‘global social justice’ surely has to mean

more than simply ‘achieving income, health

Global social justice as a new focus for development policy?

Opinion 96March 2008

Simon Maxwell

‘Concern for social justice is an

important driver of progressive

development policy – in the UK and also internationally. We

have some work to do, however, in

thinking through what global social

justice might mean in practice.’

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Opinion

and education targets as defined by the MDGs’. The net is cast much wider in the Millennium Declaration (freedom, equality, solidarity etc. ...), and this is reflected in the current emphasis on ensuring a voice for stakeholders, as well as the accountability of public institutions. These are critical, not just as routes to good government, but also, at least in the case of ‘voice’, as goods in their own right.

• Second, rights are central – especially economic, social and cultural rights. Having the right to education or health, is about more than access to schooling or treatment. Having a right to education means not only being able to go to school, it also means having recourse, through the administration or the courts, if a school is not provided. In other words, somebody, somewhere, is accountable.

• Third the guarantee of a ‘social minimum’, in Miller’s phrase, implies substantially greater investments in social protection than are currently managed. Internationally, this is a challenging agenda, especially if cast in a rights framework.

• Fourth, and again following Miller, there is the positioning of distribution issues as central to the social justice agenda. This is a fraught topic at national level, as we see in the UK, and also in the international debate on income and assets in the development process. Global distribution is very little discussed, yet we know that the global gini-coefficient (for income) is around

0.65, higher than for any national gini, a level which, if seen in a single country, would pretty well guarantee social unrest. What would those who campaign for global social justice see as a reasonable global gini? And what measures would they recommend, and over what time scale, to achieve it?

• Finally, mutual accountability needs to come to centre stage. Rich countries and poor countries need to be accountable to each other. There are many ways forward, ranging from the Cotonou Convention to the Paris Declaration on Aid Effectiveness. Within the Cotonou Convention, for example, there is provision for a joint Council of Ministers, a joint parliamentary assembly, and also an aribtration procedure in case of disagreement. This is very different to the usual partnership between rich and poor countries.

It is easy to see how a focus on ‘global social justice’ could provide a framework to think interesting and possibly dangerous thoughts about how to take the international development agenda beyond the rela-tively instrumental approach of the MDGs. How can such thoughts be translated into action?

Written by Simon Maxwell, ODI Director ([email protected]). A longer version of this Opinion, and an open discussion of the issues, can be found on the ODI blog at http://blogs.odi.org.uk/blogs/main/archive/2008/02/13/5505.aspx.

http://blogs.odi.org.uk/blogs/main/archive/2008/02/13/5505.aspx

http://blogs.odi.org.uk/blogs/main/archive/2008/02/13/5505.aspx

Integrity and Global LeadershipAuthor(s): Allen MorrisonSource: Journal of Business Ethics, Vol. 31, No. 1, International Business Ethics (May, 2001),pp. 65-76Published by: SpringerStable URL: http://www.jstor.org/stable/25074517Accessed: 28/09/2009 13:51

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Integrity and Global Leadership Allen Morrison

ABSTRACT. This paper addresses the role of

integrity in global leadership. It reviews the philos

ophy of ethics and suggests that both contractarianism

and pluralism are particularly helpful in understanding ethics from a global leadership perspective. It also

reviews the challenges to integrity that come through interactions that are both external and internal to

the company. Finally, the paper provides helpful

suggestions on how global leaders can define appro

priate ethical standards for themselves and their

organizations.

KEY WORDS: business ethics, corruption, cross

cultural management, globalization, global leadership

Integrity forms the bedrock of character and is

essential in sustainable global leadership. Without

integrity, managers will never engender the

goodwill and trust of the organization, both

essential for effective leadership. While all

managers inevitably confront ethical issues, global leaders confront them on a regular basis. Because

of the frequency and depth of ethical challenges

they face, global leaders need a unique set of

competencies in order to maintain their personal

integrity and build a consistent set of values for

the global organization. This paper focuses on the role of integrity

in global leadership. Global leaders are those

who successfully impact the actions and beliefs

of others on a worldwide basis. As trade and

foreign direct investment have sky-rocketed over

Allen Morrison is Associate Dean, Executive Development at the Ivey Business School, University of Western

Ontario. His research interests focus on global leader

ship, global strategy, and the management of multina

tional companies.

the past decade, interest in global leadership has taken center stage. However, while much

has been written about the need for more

and better global leaders, little has been said

about how effective global leaders manage the

enormous ethical dilemmas they face as they conduct business across multiple national

boundaries.

This paper draws extensively from the

ground-breaking research on the competencies of effective global leaders conducted by Black,

Morrison and Gregersen (1999). Their research

includes interviews with over 130 senior-line

and human-resource executives in 50 companies

throughout Europe, North America, and Asia, as

well as an extensive database that comprises over

100 Fortune 500 companies. From this research,

insights are provided on why integrity plays such

a critical role in global leadership. Suggestions are

also made to assist managers in defining and

maintaining high ethical standards in their

personal activities and throughout their organi zations.

Ethics and philosophy

Philosophers throughout the ages have promoted critical thinking on ethics. Most of this thinking has focused on three major perspectives of ethics

(Brandt, 1979; Hare, 1981). As described in

Goodpaster (1982), each of these three perspec tives provides a different way of evaluating ethics

and may be helpful to managers as they establish

ethical standards.

Utilitarianism has become a popular tool in

modern times for evaluating normative ethics. It

is based on a foundation belief in "maximizing

?? Journal of Business Ethics 31: 65-76, 2001. r ? 2001 Kluwer Academic Publishers. Printed in the Netherlands.

66 Allen Morrison

net expectable utility . . . for all parties affected

by a decision or action" (Goodpaster, 1982,

p. 5). Expectable utility is a measure of overall

welfare for the participants. Under utilitarianism, the costs and benefits of possible business

outcomes are weighed and decisions are formed

with the interests of all participants at heart.

Under this perspective, global leaders demon

strate integrity when expectable utility is maxi

mized.

Contractarianism is the belief that normative

ethics are determined by overall fairness. Fairness

occurs when all participants are accorded equal

respect and deference. As a result, ethical decision

making recognizes individual rights: the rights of

employees to be treated fairly, the rights of con

sumers to safe and effective products, and so on.

Under contractarianism, global leaders demon

strate integrity when they reduce or eliminate

actions that infringe on the rights of interest

groups. Pluralism is the third major perspective of

ethics. It is based on the assumed duty of indi

viduals to act morally. According to Goodpaster

(1992, pp. 5-6), "the pluralist focuses on the

rightness or wrongness of actions as moral qual ities that are distinct from extrinsic concerns such

as consequences or rights. Fidelity and honesty are obligations not because they lead to more

welfare or because others have a right to expect

them, they are just basic duties." Under this per

spective, global leaders demonstrate integrity when they show moral common sense that is

independent of extrinsic pressures. Each of these perspectives contributes enor

mously to our understanding of ethics and by

extension, integrity. However, in the context of

global leadership, not all are equally valuable. A

major problem with utilitarianism is in assessing welfare maximization. In a global context, mea

suring net contributions to social welfare is essen

tially impossible. Take the issue of compensation, for example. Assume that a company has two

managers: Manager A is based in a developed

country and makes $200 000 per year; Manager B works in a developing country and makes just

$2000 per year. If the objective is the maxi

mization of social welfare, the ethical decision

would be to give all pay raises to Manager B

because Manager B's happiness will be increased

more by a $1000 pay raise. In fact, to accelerate

the leveling of compensation, the company would actually make draconian cuts to Manager A's salary. If utilitarianism is pursued to its logical

end, employee compensation would ultimately be equalized worldwide and customers would pay identical prices, irrespective of local market con

ditions. While the company's internal compen sation system would be globally equalized, within

country compensation would be completely out

of line with national norms.

While contractariansm and pluralism also

have problems, they are more robust in a global context. While contractarianism recognizes

rights, it is difficult to come to an agreement on

whose rights to embrace when national borders

are crossed and legal jurisdictions are straddled.

Similarly, duty, as addressed by pluralism, can also

be context-dependent. Moral integrity is diffi

cult to define in a world in which duty to others

is often valued very differently depending on

which country you are from.

Global leaders ultimately have the responsi

bility of defining many aspects of ethical behavior

for themselves and the broader organization,

including subordinates. Under a contractarian

perspective, global leaders recognize and effec

tively define company-specific rights that tran

scend national legal rights. While these rights extend to all stakeholders, they are typically limited to a narrow set of issues consistent with

broader company strategy. Similarly, under a plu ralistic perspective, global leaders embrace moral

absolutes in their dealings with others. These

absolutes are independent of country norms and

in many cases are higher than current country norms of conduct.

Drawing on both contractarian and pluralistic

perspectives of ethics, integrity is defined herein

as having and demonstrating a strong commitment to

personal morals and company standards. This

definition reflects the need for both absolute

standards (personal morals) that are independent of company context, and relative standards

(company policies and norms). In practical terms

it means that employees are bound by company standards only when these standards exceed their

own personal standards. When personal standards

Integrity and Global Leadership 67

are higher than company standards, the employee is able to act as a leader in changing company

policies and norms around ethical issues. The

definition is also broad enough to accommodate

company standards that are ethically neutral. Take

a simple example. If a company has a standard

for customer service, employees who refuse to

commit to this standard - either by publicly crit

icizing the standard or by acting in ways that

undermine the standard -

demonstrate a serious

lack of integrity. For global leaders, integrity is demonstrated at

two levels: interactions that are external to the

company and interactions that are internal to it.

External interactions include those activities

through which the company is represented to the

outside world. They can involve negotiations with suppliers or customers, interactions with

government officials, relationships with com

petitors, and so on. Internal interactions are those

that involve individuals or groups within the

company.

Integrity in external interactions

Demonstrating integrity in relationships outside

the firm pose particularly difficult challenges in

a global context. Some help is provided to U.S.

companies by the provisions of the Foreign

Corrupt Practices Act (FCPA). The FCPA pro hibits U.S. companies from bribing foreign gov ernment officials or officers of political parties.

While the FCPA does not technically apply to

foreign subsidiaries, in practice it does to the

degree that policies or money can be traced back

to the U.S. parent. In November 1997, the

OECD approved a ban on bribery in the group's 29 member countries. The rules, while in many

ways similar to those covered by the FCPA, were

extended to include executives at state-owned

enterprises as well as members of parliament.

Despite government direction, most managers know that there are abundant gray areas not

formally covered by the FCPA or the new

OECD regulations. For example, are so-called

grease payments ethical, and if so under what cir

cumstances? Also, where does one draw the line

between a gift and a bribe? In countries like

China and Saudi Arabia, where does the gov ernment end and the private sector begin? Further, while the FCPA and OECD regulations

apply to agents, their coverage of joint venture

partners is subject to interpretation. In the final

analysis, most government defined ethical stan

dards have serious limitations.

Demonstrating integrity becomes a huge chal

lenge as the differences increase between

dominant behaviors within the national culture

(i.e., descriptive ethics) and the leader's judgments of what behaviors should be, irrespective of

culture (i.e., normative ethics) (Goodpaster, 1982).

Clearly, managers need to understand the ethical

norms in the country and markets where the

company operates; not surprisingly, these ethics

differ significantly. For example, in one note

worthy case in April 1996, Malaysia's trade

minister, Rafidah Aziz, told a conference that

bribery and other forms of corruption were

normal business practices in her country. While

the minister's statement surprised some confer

ence participants, it described fairly well

Malaysian business practices. Differences in stan

dards over environmental degradation, employ ment rights and benefits, product and service

quality, and so on, can vary enormously from

country to country.

Possible actions

When ethical standards are different from the

norms of behavior in a particular country, global leaders face three basic choices:

the leader can avoid doing business in that

particular country, or

the leader can maintain his/her standards

and risk placing the company at a compet itive disadvantage versus firms that follow

the prevailing norms, or

the leader can change his/her standards and

play the game the way the locals do. As

Rafidah Aziz explained at the April 1996

conference, "What is corruption to one

person, may be the norm for the other."

Research suggests that this last option, main

taining a checkerboard approach to ethical stan

68 Allen Morrison

dards, is not sustainable in global companies nor

should it be advocated by global leaders (Black et al., 1999). As discussed later in the paper, the consequences of a mixed approach to ethics

are not only financial, but also impact the work

environment for employees including their

morale, as well as the company's reputation in the

community. Once ethical boundaries have been crossed,

others outside the company may well exploit them. It is not uncommon to find examples of

attempted blackmail or other questionable prac tices based on the mis-adventures of senior

managers in countries where local standards were

different than those prevalent in the company's home country. Particularly in emerging coun

tries, many view global leaders and large multinational companies as high profile, deep

pocketed targets. Furthermore, questionable behavior in one country can rarely be contained.

In many cases, the entire world eventually finds

out. Inappropriate activities in one part of the

world can be the leader's or company's undoing in other parts of the world.

Areas of focus

Because of increasing globalization, leaders must

develop ?

for themselves and their companies ?

global standards of conduct governing interac

tions between the company and external inter

ests. Without universal standards that are rigidly

enforced, multinational companies risk jeopar

dizing their reputations in their home countries, and other markets that are important to them. As

well, individual leaders risk derailing their careers

when they engage in activities that would be

unacceptable on a multi-country basis. They may lead in Country A where their conduct is

accepted, but will never lead in Country B, or

Country C.

What should be included in these standards?

Two primary areas of focus were uncovered

in our research: (1) standards involving the

company's impact on the ecological environment, and (2) standards involving gifts and gratuities.

Companies impact the environment through

essentially everything they do. Whether it is

job creation, taxation, knowledge generation,

working conditions, pollution or ecological

damage, companies leave a significant imprint on the environment. In most cases, short-term

benefits can be gained by embracing the lowest

ethical standards - or even none at all. For

example, if a host company has no laws gov

erning minimum wages, a company can almost

always benefit by paying people the lowest

possible wage. Similarly, if a country has no stan

dards with regards to pollution control, it is

almost always in the company's best immediate

interest to pollute freely. However, short-term

benefits often produce disastrous long-term con

sequences. David Colton, Chief Legal Counsel

at Phelps Dodge, one of the world's largest pro ducers of copper, had this to say about adherence

to standards:

Some in our industry might believe there are short

term benefits working in a country with weak

environmental standards. However, in the long term, it hurts them. As a

general rule, senior gov

ernment employees in developing countries are

smart. They do their homework when negotiating with foreign companies. When a company chooses

not to follow standards, the world knows. In this

business, reputations are global and last for decades.

It is far easier to stay on the high ground than to

have to climb back up. From my experience, I

strongly believe that if a company is going to be

global, it has no choice but to adopt consistent

global standards of conduct. These standards should

be equal to or greater than those set in the country

that has the highest standards and not the lowest common denominator.

Adhering to stringent global standards is no

doubt costly. In countries that have adopted lower environmental standards than are the norms

in OECD nations (typically developing nations), the temptation is to cut corners in order to

maintain the subsidiary's local competitiveness.

However, a strong case can be made that local

competitiveness may actually be strengthened by

adhering to global standards. Aditya Narayan, President of ICI India, explains:

At ICI, standards involving ethics, safety, health, and environment policies are established by head

quarters but are adapted to meet national laws. I


can benefit by drawing on these corporate policies and in some case we do far more than required by Indian laws. For example, our safety and health

standards exceed Indian national standards. In these

matters we follow the ICI corporate standards even

though headquarters would allow us to follow

lower Indian standards. We do this because MNCs

here are expected to operate at higher standards.

Even though it costs us extra money, our P/E

multiple is higher in India because we are a MNC

subsidiary. The market here takes our "foreignness" into account and gives us a much higher P/E

multiple than local firms. If we acted like a local

firm in terms of our standards, we wouldn't be

treated the same way. So it is a win-win situation.

An interesting question arises as to a company's moral responsibility to deal with problems that

are not of its making. The two most common

scenarios involve (1) taking over facilities that are

later found to be in non-compliance with the

company's global environmental standards, and

(2) dealing with suppliers whose non-compliance or negligence creates problems for the company.

An example of the first scenario is the takeover

by a Western firm of an industrial plant in a

former East Block country that is later found to

be the source of industrial pollution. Companies like Rubbermaid avoid these problems through a painstaking due-diligence process that essen

tially eliminates contingent liability problems. In

cases where true surprises occur, Rubbermaid's

standard contracts hold the vendor hable for envi

ronmental problems that are discovered a full five

years after the purchase is complete. In many cases, venders are required to put sufficient

money into trust funds to cover potential future

liabilities. An example of the second scenario is

Coca-Cola's June, 1999 crisis in Belgium. Several

dozen Belgian schoolchildren got nauseated

drinking "tainted" Coca-Cola and Belgian offi

cials (and later some French officials) pulled Coke

products from grocery store shelves. Coke traced

the problem to cans contaminated on the outside

by chemicals found on wood-shipping pallets and on defective carbon dioxide used in making soft drinks. While both problems involved

outside vendors, Coca-Cola was severely criti

cized for not quickly assuming public responsi

bility for the contaminated soft drinks. By acting

slowly, Coca-Cola was portrayed in the media

as uncaring and exploitative of European con

sumers. Irrespective of culpability, public percep tions of ethical behavior have to be carefully considered in determining behavior.

Many managers are also confronted with deci

sions involving the giving and receiving of gifts and gratuities. Because of the possibility that gifts

might unduly influence company policy, many

companies have adopted stringent global policies on gifts and gratuities. In response to a series of

abuses or allegations of abuses, including the

1995 allegation that several managers at GM's

Adam Opel unit were involved in a kick-back

scheme (Stern and Lublin, 1996), General

Motors announced a comprehensive gifts and

gratuities policy in June 1996. The policy essen

tially forbids GM employees from either giving or receiving gifts beyond the most nominal of

trinkets. Wal-Mart Stores Inc. has an even

tougher policy that bars employees from

accepting anything with a monetary value.

In some cases, well thought out standards

involving interactions with the external envi

ronment render the company non-competitive. Failure to provide the right "gifts" may destroy the company's chances of succeeding in a

country; similarly, refusal to "follow the leader"

and pollute freely or run sweat-shop factories can

negatively impact the company's cost competi tiveness. In these cases, it is the essence of

integrity to walk away from a country as an

investment platform.

Supporting company strategies

In addition to embracing global environmental

standards and global gifts and gratuities policies,

global leaders also publicly support their

company's global competitive strategies around

the world. They understand that global strategies that build on and exploit their company's repu tation for product quality, customer service, or

leading edge technology should not be changed from country to country. They view their role

as one of articulating what the company does and

does not do, and acting as both a preacher and

teacher in getting the message out.

70 Allen Morrison

Managers who deliberately misrepresent or

undermine the company's strategy discredit

themselves and limit their ability to lead.

And yet, the more companies push into global

markets, the greater the pressure on managers to

alter their company's core strategies. Case in

point: KFC in China. Tony Wang, Vice President

of KFC for Southeast Asia in the late 1980s,

faced huge pressure from his Chinese partners to lower corporate standards for quality, service,

and cleanliness (QSC). They did this because of their perception that Chinese customer placed less emphasis on QSC than did Americans. Yet

Wang also understood that KFC's worldwide

profitability was based in large part on its ability to attract new franchisees around the world.

Franchise fees and the appeal of the KFC brand

were dependent on the company's ability to

maintain high QSC standards worldwide. The

question for Wang was whether he should unof

ficially loosen up on KFC's global QSC standards

to maximize short term profits in China. For

Wang, the decision had business as well as ethical

dimensions. In the end, Wang did not back down

on QSC standards and the restaurant was a

booming success.

Most leaders are also followers and must

support company policies and management. The

failure to do so creates huge leadership problems for the manager. Kelley (1988, p. 144) describes

the fine line between leading and following:

"Many effective followers see leaders merely as

co-adventurers on a worthy crusade, and if they

suspect their leader of flagging commitment or

conflicting motives they may just withdraw their

support, either by changing jobs or by contriving to change leaders." The irony of integrity is that

it forces leaders to balance their obligation to

support company strategies with what are in

some cases private reservations about the appro

priateness of the same strategies. In the final analysis, companies and leaders

have a real impact on the standards others adopt. When companies adhere to the highest ethical

standards across borders, they push local compa nies to lift standards and in so doing, bring benefits to the lives of many people beyond their

immediate sphere of influence. Similarly, when

individual leaders embrace the highest ethical

Standards, they often introduce other local leaders

to practices that benefit the overall business

environment and improve the quality of lives for

many (McCoy, 1983).

Integrity in internal interactions

Integrity is also tested in interactions that are

strictly internal to the company. Because the

ethical or unethical behaviors are internal, people external to the company may or may not be

aware of what is going on. As a consequence,

global leaders may have less pressure to act

ethically or to create an internal environment that

promotes ethical behavior than they would for

interactions that are externally visible.

As a company's operations cross multiple national boundaries and numerous ethical norms,

the possibility for ethical conflicts inside the

organization mounts. National culture can have

a substantial impact on how local managers are

expected to interact with their employees. These

differences in national culture present obstacles

in creating global norms of conduct for the entire

organization. The literature is replete with

examples of how culture impacts values. One

study showed that men in Hong Kong and

Taiwan were more likely than men in Canada

and Japan to discriminate against women. The

same study found that Canadians were less likely to show concern for the employment security of their employees than managers in Hong

Kong and Taiwan were (Nyaw and Ng, 1994). In contrast, Lee (1982) found no cultural differ

ences in ethical standards of British versus

Chinese managers working in Hong Kong. In yet another study, older managers in the U.S., Japan,

Korea, India, and Australia were shown to

value trust more than their younger counterparts

(England, 1978). One relatively straight-forward conclusion from the literature is that ethical

norms governing relationships between managers and employees differ significantly around the

world.


Employee rights

Despite often broad national differences, effec

tive global leaders establish essentially what

amount to rights for employees throughout the

worldwide organization. They do this with the

full recognition that national norms often differ

and act with a sense of duty to all employees. The objectives are to embed employee rights in

the organizational culture and to create behav

ioral norms that govern the behavior of all

employees. While the literature on employee

rights generally focuses on specific issues (for

example, the impact of gender on compensation,

Faichnie, 1998), several themes are evident

(Donaldson, 1985; Kohls and Buller, 1994). The most common include:

worker safety,

equality in hiring,

equality of opportunity for assignments and

promotions,

comparable compensation, and

freedom of expression.

Global leaders routinely establish employee

rights for each of these areas of concern. This is

clearly a challenge given the differences in expec tations around the world. Example number one:

worker safety. Global leaders exhibit integrity when they establish global safety standards for

their employees and when they consistently enforce these standards. At ARCO China, for

example, all off-shore workers on its drilling

platform in the South China Sea must wear safety

goggles, even though this standard is not the

norm in China. Example number two: com

parable compensation. One global leader we

studied established global standards that his

company would pay 25 percent above the pre

vailing local industry norms - irrespective of

where the company operated in the world. By

identifying and applying a consistent global com

pensation strategy, the global leader is able to

maintain his or her integrity across multiple national boundaries.

Personal interactions

At a second level of analysis, managers also have

personal interactions with employees on a regular basis. These interactions involve expatriates

who communicate with foreign employees while

overseas, and head office managers who come

in contact with foreign employees either through travel or line of control reporting. A wide

range of individuals can be involved including

subordinates, peers, and superiors. During these

interactions, some managers have a tendency to

deviate from norms at home in their treatment

of people. When significantly different, this treat

ment is invariably perceived as discriminatory. Some people have a difficult time treating

people consistently and approach interpersonal relations on an ad-hoc basis. When they travel

overseas, particularly in developing countries,

they may take liberties with employees that

would not be tolerated at home. Some extreme

examples include:

using condescending language or tone when

addressing employees,

making sexual advances on employees,

demanding favors of employees, such as the

running of personal errands, and

yelling, berating, or physically abusing

employees.

While all these behaviors can and do happen at home, the perceived power difference between

headquarters managers and developing country

employees can be substantially larger making abuse all the easier. In other cases, misperceptions of local norms by headquarters managers may lead these managers to think that their behav

iors are expected and quite appropriate in the

foreign country when clearly they are not.

The inconsistent treatment of employees across

countries causes managers to lose respect within

their organization and jeopardizes their ability to lead. In one case, a successful manager in one

large developing country was being considered

for a major promotion at regional headquarters. The individual ran the company's largest factory outside the U.S. and was credited with three

years of uninterrupted productivity improve ments. When the manager was brought to the

72 Allen Morrison

regional headquarters for interviews, he per formed weakly on several company administered

stress tests. This prompted further investigation and finally direct interviews with employees.

These interviews turned up horror stories of

abusive treatment including bullying and physical abuse. The manager had succeeded (in the short

term at least) by using methods that could never

be tolerated outside his home country. What kept

employees working was their ultimate fear of

unemployment that averaged over 30 percent in

the country. The manager was soon replaced.

Productivity fell and the subsidiary's profitability

dipped. But, lower profits palled in comparison to the possible negative consequences if the

manager's (and by extension, the company's)

practices had become public in the U.S.

Invariably, offensive behavior carried out in

one part of the world is rapidly communicated

throughout the organization - either formally or

informally. Reputations are established that are

hard to change. To avoid conflicts and the giving of offense, effective global leaders commit to high

personal standards in all their interactions within

the organization. Their standards of personal conduct do not vary from country to country.

Their personal reputations are based on treating

people with the same degree of respect irre

spective of where they are in the world.

Integrity engenders trust and is good for

business

A leader who does not have a strong commit

ment to personal morals and company standards

lacks integrity and can destroy a company much

faster than a leader who promotes a bad strategy

(Black et al., 1999). Short term compromises -

whether in matters of environment degradation,

bribery, shoddy quality, or abusive treatment of

others ?

may bring temporary benefits to the

manager and perhaps to the overall business, but

invariably bring about huge costs and penalties in the long run. External missteps can undermine

relationships with customers, suppliers, and gov

ernments, and tarnish the company's reputation for years to come. When internally-focused, unethical behavior leads to demoralization,

conflict, and the loss of managerial and technical

resources through resignations. In all cases,

unethical behavior jeopardizes the position of the

manager. When uncovered, lapses of integrity often lead to dismissal and a tainting of one's

name that bring life-long consequences. The commitment of global leaders to high

personal and company standards not only

prevents hazards, but also promotes numerous

benefits. It is only through the exercise of

integrity that a leader can bring out the most in

employees. A good example of this is found in

Du Pont in China. In 1997, Du Pont Greater

China employed over 1,000 people in 8 different

cities in China. Du Pont recognizes the impor tance of maximizing employee commitment and

has worked hard to strengthen the loyalty of

its Chinese employees. Beijing-based Sonny

Matocha, Managing Director, Operations for Du

Pont Greater China provided some unique

insights on the role of integrity in leadership.

In China, people do not naturally differentiate

between management and leadership. They have a

tendency to do what they are told. ... In the past,

they have been told that the managers are the

leaders, so management has automatically come to

mean leadership. And so they don't differentiate

between the two and do not fully understand the

implications of true leadership. This has been com

pounded by the many instances where their supe

riors have not kept their commitments. One of the

results of this is that the Chinese have come to

listen to the words of superiors, but gauge their

interpretation and personal behavior based on the

manager's actions. While they do not challenge

authority, they are very cynical about it. They tend

to do their jobs and nothing more. [We have

learned that] if you want to lead in China, your

employees must believe in you. They must trust

you fully. Once this happens, their productivity, commitment, and creativity go way up. But they

must see you as an ethical, trustworthy person,

who will not compromise no matter what.

The connection between leadership and trust

is clear. The example from Du Pont Greater

China suggests that a strong positive relationship between trust and employee contributions.


The duty of global leaders

Most people do not see the moral dilemmas

around them (McCoy, 1983). They go about

their daily activities either un-perceptive of the

ethical conflicts around them or so self-confident

in their opinions that the need for moral judge ment is foreign. Unlike the majority of people, effective global leaders have a level of individual

integrity that surpasses the norms of the organi zation. The high integrity of global leaders

is required to unite the organization across

cultures.

Developing and maintaining integrity -

both

at the personal and organizational level -

requires a huge effort on the part of these leaders

(Badaracco and Webb, 1995). Effective global leaders maintain their integrity by confronting ethical dilemmas frequently and quickly.

Maintaining and demonstrating integrity requires

huge effort and ongoing attention. As a result,

it is difficult for people to be publicly moral without private commitment. When not backed

up with real belief, managers who only consider

the public relations aspect of morality end up

getting blind-sided by situations that extended

beyond their reactive ability. To promote high ethical standards within

the company, global leaders demonstrate three

inter-related competencies. First, they are good observers. Second, they ask tough questions. And

third, they understand what is core.

Global leaders are good observers

As leadership responsibilities cross cultures, the

potential to misunderstand people or be misun

derstood increases exponentially. Demonstrating

integrity requires the ability to effectively observe

and interpret behaviors and practices. By under

standing different perspectives, global leaders can

better anticipate ethical problems, reduce the

possibility of personal mistakes, and move to

diminish the risk of organizational compromise. A starting point for global leaders is their

actual fondness of people. Global leaders actually like people (Black et al., 1999). Enjoying people makes it easier for global leaders to get

close to them. This proximity is critical for

two main reasons. First, it enables the leader

to better recognize employees as people and

in so doing diminishes the likelihood of patron ization or other forms of abuse. And second,

proximity encourages employees to open up and discuss ethical issues with their leaders.

Trust is absolutely essential for the leader to be

proactive in heading off ethical problems in the

organization.

Beyond liking people, global leaders actively demonstrate their interest in people. They go out

of their way to help people, to build them up, and to show them that they care. Beyond simply

spending time with employees, global leaders

often take unusual steps to gain access to local

employees. One important step some take is

learning one or more foreign languages. Not

only does this demonstrate good will, the

language skills enable the leader to better under

stand some of the cultural contexts the company is operating in.

In observing people, global leaders focus

enormous effort on understanding context.

Ethics have a huge contextual component. Without appreciating the background of indi

viduals, their position in the organization, ages,

gender, educational experiences, leaders cannot

appreciate the context from which others make

ethical decisions (Tichy and Devanna, 1986;

Puffer, 1990). Understanding the context of

ethical issues assists the global leader in formu

lating company standards and in determining how these standards should be communicated

and enforced.

Global leaders ask tough questions

Global leaders work from the assumption that the

world is full of ethical traps. However, these

ethical traps are not always visible. As a result,

global leaders constantly ask tough questions about what is right and wrong, about what

behavior is appropriate and what is not. They also invite comment by trusted advisors and

internal counsel on the appropriateness of

possible actions. By being proactive, global leaders are better able to avoid getting caught up

74 Allen Morrison

in behavior that well-grounded people would

view as unethical.

Not only do global leaders ask tough questions of themselves, they put strong pressure on their

organizations to consistently act in an ethical

manner. One common tool to achieve this is an

ethics forum (Hollstein, 1998; Navran, 1997). In these forums difficult cases are aired openly,

pros and cons of possible actions are discussed, and ethics decisions are made. Global leaders also

use in-house education and training programs to

inform employees of nonnegotiable policies and

to expose them to the importance of ethical

behavior. For example, Motorola has created 83

different case studies to train managers in ethical

conduct. The cases are presented in selected

in-house management programs along with

solutions provided by professional ethicists and

Chairman Bob Galvin. Finally, global leaders

constantly watch their employees for patterns of

troubling behavior. In order to protect the careers

of valuable employees as well as the reputations of their organizations, global leaders ensure that

departments are regularly audited and questions are routinely asked about such things as expenses,

bidding practices, and use of company assets.

Giles Branston, General Counsel for General

Motors Asia Pacific Organization (APO), is an

example of someone who pushes these efforts.

He has organized a multi-faceted approach for ensuring that APO employees do not get

caught up in unethical activities. First, all APO

employees are informed of local laws governing

corruption. Second, all employees receive clear

guidelines on the company's standards regarding

accepting or making facilitating payments. Third, Branston's office regularly sponsors workshops on

ethics for members of the APO Strategy Board.

Finally, a special ethics committee has been estab

lished to review difficult cases within the region.

Together, these four steps have gone a long way to protecting employees and the organization from engaging in questionable business practices.

Global leaders understand what is core

Most decisions end up being made by the people who are closest to the issues. Because people ulti

mately make their own choices between right and wrong, global leaders can have only have so

much influence. Rather than trying to put their

imprint on every decision made in the organi zation, global leaders determine a core set of

standards that become irrevocable -

both for

themselves and their organization (McCoy,

1983). The importance of having core standards

is articulated by Mikell Rigg McGuire, Senior

Vice President International, for Franklin-Covey: "You must have in place your own fundamental

values, both the company's and your personal ones; otherwise, you are probably going to let

other countries' values overtake yours."

Despite the appeal of global standards ?

whether they involve environmental issues or

gifts and gratuities -

such policies can severely restrict global competitiveness and in some cases

may go too far. In fact, many companies are

losing business in many parts of the world

because global gifts and gratuities policies have

been poorly thought through (King, 1997). Not

only are their companies losing business, but they are offending local officials with standards that

are not only foreign but reek of arrogance. For

example, a manager's inability to pay for a

customer's dinner or a round of golf is often

viewed with disdain in many parts of the world.

Finding the right balance between what is

essentially universally regarded as unethical and

what should be situational is a huge challenge for

global leaders. Figure 1 assists in finding this

balance.

A direct relationship exists between what

should be a global standard and the extent

to which the associated activity is core to a

company's competitiveness. In an extractive

business like Phelps Dodge, mining is core to

the company's business. As a result, standards

involving environmental degradation must be

globally set by the company. In other companies -

management consulting, for example - stan

dards involving environmental degradation should be left to the discretion of local managers.

Determining what is core is one of the most

difficult tasks global leaders undertake. Three

tests are suggested to assist managers in deter

mining what is core.


Standards that are globally determined

Standards that are locally determined

Activities non-core

to company

competitiveness

Activities core

to company

competitiveness

Figure 1. The relationship between standards and activities.

Test #?: is it strategic? In determining what is core, the global leader

needs to relate the possible standard to the

company's overall strategy. To be successful, many service organizations (for example, investment

banking and management consulting) spend

lavishly to retain the goodwill of their top front

line service providers. In many cases, these

employees are paid more than top administrative

officers in the corporation. Other service

providers (for example, fast food restaurants or

discount department stores) treat their top front

line performers less well. There may be a pay dif

ferential of over 100:1 in these organizations. When the treatment of employees is evaluated

within the context of the organization's strategy, the ethics of using widely divergent standards is

rarely a question. In general, if the activities in

question directly impact the company's reputa

tion, they should be considered core.

Test #2: are the standards the highest possible? For global organizations, ethical standards must

be set at the highest levels. Global leaders cannot

operate effectively by embracing low standards.

This is because the reputations global leaders

aspire to - for themselves and their organizations

- are global in nature. Even if the standards

embraced are the norms in one country, they will

ultimately undermine the reputation of the

worldwide organization if they are set at a low

level. Global standards cannot benefit the orga nization in the long run if they are not consis

tently high everywhere.

Test #3: are people being put first? While integrity is ultimately assessed individu

ally, it invariably impacts people -

both positively and negatively. Abusing people, lying, stealing, or damaging the environment are issues primarily because people are affected. Similarly, honesty and decency also impact people. The assump tion in putting people first is that all people have

inalienable rights and that decisions that are not

fair to people undermine an individual's ability to lead. In the context of business, integrity is

demonstrated to people and will ultimately be

evaluated by people. If decisions have a signifi cant impact on people, they are almost always ethical decisions.

Conclusions

Integrity plays a critical role in global leadership. It is the lifeblood of authority and essential

76 Allen Morrison

in securing the goodwill and best efforts of

employees. When operating in a global context,

many managers face huge pressures to modify their personal ethics and change their company's standards. While such "flexibility" can often

bring short-term benefits, global leaders are most

effective when they consistently maintain the

highest ethical standards for themselves and their

organization. For global leaders, maintaining integrity is dif

ficult. It requires huge amounts of work provides while at the same time providing few immediate

benefits. Without substantial personal commit

ment, integrity is difficult to maintain. Creating and maintaining a moral environment for a global

organization is a never-ending job. In a world

that is often uncomfortable passing judgement on

anything, global leaders stand out for their resolve

and are often under attack. The imposition of

values cannot survive beyond the short term. In

the final analysis, integrity cannot be forced on

others. Because of this, integrity and leadership are inextricably linked.

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Richard Ivey School of Business,

University of Western Ontario,

London, Ontario, Canada N6H 5H4

E-mail: [email protected]

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