What you Need for an Ethical Business Culture

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This study asked subject matter experts about key characteristcs of an ethical business culture. Here is what they said:

(1) Mission & Value Driven: Clarity of vision; institutionalization of ethical values
(2) Long-term perspective: Balancing the purposes of business; shareholder vs. stakeholder responsibility
(3) Stakeholder balance: Both internal and external; directly or indirectly connected to the business
(4) Effective leaders: Embodiment of organization’s values in own behavior; compelling communication of values
(5) Process integrity: e.g. recruiting, hiring, firing, evaluating, compensating, promoting, communcating

Alexandre Ardichvili, James A. Mitchell, & Dougals Jondle (2009). Characteristics of ethical business cultures. Journal of Business Ethics, 85 (4), 445-451.

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io Trendbarometer: Innovation, Unsicherheit und Talentmanagement ganz vorn

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Der Trendbarometer der Schweizer Zeitschrift io Management erstellt wieder die wichtigsten wirtschaftlichen Herausforderungen für 2013. Die Themen Innovation, Unsicherheit und Talentmanagement sind ganz vorne dabei. Hier einige Gedanken der zitierten Experten, wie darauf zu reagieren ist.

Innovation: Unternehmen müssen lernen

  • relevante Umweltinformationen effizient zu beschaffen
  • die gesammelten Ideen effektiv zu bearbeiten und zu gestalten
  • eine Innovationskultur zu fördern
  • gezielt Young Professionals zu entwickeln
  • Kunden in die Lösungsfindung miteinzubeziehen
  • in Sozialinnovationen zu investieren: Vergütungssysteme, Ausbildungskonzepte, demografieorientiertes Personalmanagement, Arbeitszeitmodelle

Unsicherheit: Unternehmen müssen lernen

  • Unsicherheit zu akzeptieren, und nicht sie zu umgehen
  • integere Fühhrungspersönlichkeiten auszubilden und integeres Führungsverhalten zu fördern
  • klare Zielsetzungen und Leitplanken für das betriebswirtschaftliches Handeln zu etablieren

Talentmanagement: Unternehmen müssen lernen

  • Talente zu erkennen und zielgerichtet zu fördern
  • Talente umfassend zu fördern: fachlich, sozial, konzeptionell, moralisch
  • Wissenstransfer innerhalb des Unternehmens zu gewährleisten

How to Manage Corporate Citizenship in a Multinational Corporation – Learning from Practice

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Managing corporate citizenship (CC) is complex, managing a multinational corporation (MNC) is complex. So how about managing CC in a MNC? A new study derives a good model from leading practice, so that this extraordinary challenge can be tackled.

Based on two case studies of CC management practices in leading MNCs, the authors see four mechanisms at play that lead to effective CC management:

  1. Hierarchical mechanisms: Definition of clear goals and measurable indicators that lead to relevant outcomes.
  2. Relational mechanisms: Relationship building among employees to disseminate CC policies and strengthen CC activities.
  3. Cultural mechanisms: Making CC part of the internal culture.
  4. Collaborative mechanisms: External collaboration with stakeholders.

According to the authors, employing these four mechanisms helps to address tackling the four challenges of CC management in a MNC:

  1. Global Integration: Clear goals bring the international organization together around common objectives; relationship building through CC leads to global integration, and eventually to an internal CC culture.
  2. Competitive advantage: Measurable indicators lead to specific and relevant CC outcomes, create a culture of achievement in the realms of CC, and establish new links to external stakeholders that again create business value.
  3. Local responsiveness: Clarity about core goals at the same time allow for local adaptations to best achieve common goals (i.e. selection of most relevant goals locally). Thus, CC becomes a vehicle through which shared values within diversity can be celebrated.
  4. Worldwide innovation: Internal relationships and collaboration with external stakeholders bring about cross-innovation.

Overall, this is a nicely designed study, that ultimately provides a good model of effective CC management in a MNC, directly derived from leading practice.

Luciano Barin Cruz, & Dirk Michael Boehe (2010). How do leading retail MNCs leverage CSR globally? Insights from Brazil. Journal of Business Ethics, 91 (2),243-263.


When thinking Corporate Citizenship, think Employee Engagement

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When businesses begin to address the issue of corporate citizenship (CC), and when they develop a corresponding CC-strategy, the concerns of employees are usually not considered important. But take care: Research shows that employees are crucial for success when implementing, scaling, and maturing the CC-strategy. Thus: Thinking CC always requires to think employee engagement.

When adopting and driving CC, businesses go through the following three phases, according to this new study:

  1. Initiation
  2. Implementation
  3. Maturation

During the initiation phase, employees usually do not play a role. Rather, external factors lead to the development of a CC-strategy, such as media pressure or risks to the corporate image.

At the implementation stage, however, the importance of employees increases. Now it is about how businesses justify their claim of being committed to CC. Hereby, employees are often a vital link with local communities, thus becoming a visible part in the CC process.

Employee engagement is most important when maturing and scaling CC work. Only employees are able to create the identity of a responsible organization, showing an impact on at least two levels:

  • Engagement with CC positively affects employees’ attitudes toward the company, leading to increased motivation and retention of talent
  • Employees “allow the brand to be placed and interpreted in local contexts, thus ensuring a direct appeal to both global and local external and internal stakeholders”

Beyond the general observations on CC and employee engagement  summarized above, the study unfortunately does not reveal  dynamics of how the internal organizational process towards CC maturation flows specifically, leaving the practitioner to question how to to create the employee engagement needed. This lack of specificity is especially unfortunate, given the elaborate study design and the great efforts undertaken to collect data. As a consequence, the study falls short of its’ potential.

Sharon C. Bolton, Rebecca Chung-hee Kim, & Kevin D. O’Gorman (2011). Corporate social responsibility as a dynamic internal organizational process: A case study. Journal of Business Ethics, 101(1), 61-74.

Schweizerischer KMU-Barometer Januar 2013

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Die Schweizerischen KMU sind verhalten zuversichtlich. Einerseits bewerten neun von zehn Unternehmen die aktuelle Geschäftslage eher positiv, und ein Drittel erwarten eine Verbesserung der eigenen Geschäftslage. Allerdings sehen mehr als zwei Drittel der KMU sowohl in der schweizerischen wie globalen Wirtschaftslage keine Dynamik nach oben. Dies hat zur Folge, dass nur 22% der Schweizerischen KMU eine Steigerung ihrer Gesamtinvestition, und nur 16% einen Ausbau Ihrer Belegschaft planen. Mehr als jedes fünfte KMU sieht sich bei einer weiteren sechsmonatigen Abkühlung der Konjunktur bedroht. Ganze 70% stellen sich darauf ein, dass der schlimmste Teil der EU-Schuldenkrise noch bevorsteht. 41% stellen sich sogar auf ein Auseinanderbrechen der europäischen Währungsunion ein.
Der Fachkräftemangel beschäftigt die Schweizerischen KMU weiterhin. 51% finden es ‘eher schwer’, neue und ausreichend qualifizierte Mitarbeiter zu finden, 19% gar ‘sehr schwer’. Das grösste Konjunkturrisiko sehen die KMU aber in den hohen Energie- und Rohstoffpreisen. Um den Risiken zu begegnen setzen 50% der KMU auf Kostensenkungs- und Effizienzsteigerungsprogramme. Ein Lichtblick: Nur 1% planen beim Personal zu sparen.

Auffällig ist, dass die Ergebnisse in der Nordwestschweiz im Schnitt leicht pessimistischer ausfallen: Die Zuversicht bei den KMU in dieser Region ist etwas geringer, die Sorge um wirtschaftliche Störungen etwas grösser.

Die Studie wurde von Ernst & Young durchgeführt. Es wurden 700 Geschäftsführer oder Inhaber von kleinen und mittleren Unternehmen in der Schweiz telefonisch befragt. Den Link zu Studie finden Sie hier.

More power to Corporate Citizenship (CC)! Take care, this might hurt CC!

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Corporate citizenship (CC) becomes more powerful in many organizations. This development offers actors associated with CC increased personal power, which might attract opportunistic actors with no genuine interest in realizing the true potential of CC. Thus, the attribution of importance and power to CC might ultimately be an impediment to furthering CC strategy and activities. Smart CC management has to counter these tendencies.

This study conducted by Krista Bondy finds that “in some organizations, the more powerful CC becomes, the more this power becomes an obstacle to implementing CC systems”. The reasons for this paradox are described as the following:

  • As CC becomes more important and powerful, opportunistic actors are attracted with no genuine interest in driving CC
  • These actors use CC to improve own position power, leading to power struggles between actors who attempt to control CC
  • Due to the complexity of CC, it is easy for actors with little expertise to manipulate and control CC, without the organization realizing the consequences
  • The complexity of CC is too high for senior managers, leaving them unable or unwilling to resolve the power struggles

The consequences can be dire:

  • Implementation efforts are undermined, as attention and priorities are turned toward power positions rather than CC
  • The amount of work done to further CC might actually decrease with increased importance of CC
  • Because power struggles around CC are not resolved by senior management, organizational stakeholders tend to resolve this ambiguous situation themselves. This often leads to the abandonment of innovative CC strategies, and the support of ‘tick-box exercises’ that comply with only minimalistic ethical standards; as this is perceived in line with traditional business concerns/ manageable with existing skills and competencies

The study of Krista Bondy offers a very important contribution to CC knowledge. Over the years, we have been offered various implementation models for driving CC strategy and actions. The issue of power, however, has been neglected. Without considering power positions, change management towards positive and impactful CC implementation remains ineffective.

Krista Bondy (2008). The paradox of power in CSR: A case study on implementation. Journal of Business Ethics, 82(2), 307-323.

How inclusive leaders can increase group functioning and reduce turnover in diverse groups

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Researchers of Cornell University and the University of Michigan empirically prove that inclusive leaders increase group functioning and reduce turnover rates in diverse groups. Therefore, due to the ever increasing diversity in businesses (e.g. based on differences of gender, nationality, ethnicity, sexual orientation, age etc.), instilling inclusive leadership practices becomes vital.
This study proposes that leaders can promote norms of equality, inclusion, and power sharing  in diverse groups that lead to better reciprocal exchanges. The authors of the study further propose that this results in improved group functioning and in a lower turnover rate.

In their rigorous study, the authors prove these propositions to be correct. This has far-reaching practical implications. First, turnover rates have often been associated with task structures and reward systems. This study shows that turnover rates are also dependent on leadership styles, especially in diverse groups. Therefore, in order to increase retention of skilled workers, according leadership roles need to be defined and nourished by businesses. This also means to create an organizational climate in which leaders can become inclusive and/or develop skills for creating inclusion in diverse groups. Second, the concept of inclusive leadership should be added to employee surveys, in order to identify groups in which leaders might not nourish inclusion.  Dependent on the findings of these surveys, leadership development or coaching might be a means through which inclusive group processes could be nourished. Third, diversity and the management of diversity should be introduced as important concepts into organizations at large, e.g. through policies, communication initiatives, and diversity training. This would enable organizational members to consider diversity and inclusion not only as moral norms, but also as tools for a more efficient management.

Lisa Nishii, & David Mayer (2009). Do inclusive leaders help to reduce turnover in diverse groups? The moderating role of leader-member exchange in the diversity to turnover relationship. Journal of Applied Psychology, 94, 1412-1426.

Preparing for long-term expatriate success: Intercultural systems instead of intercultural training

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Sending highly skilled professionals overseas has become commonplace. The question of how to adequately prepare these professionals for their new roles abroad has been debated intensely. Shen & Lang argue that these discussions are focusing too much on training approaches. According to their study, short but “real” opportunities for getting accustomed to the target culture – through preliminary short-term assignments and orientation trips – work better than preparatory training programs.

Shen & Lang clearly show that intercultural preparation  increases the possibility of success of a long-term assignment abroad.  However, their finding moves expatriate preparation away from training towards organization development. Transnational organizations might have to increasingly think about restructuring work design components, especially for key executive personnel. Routine exposure to international experiences has to be built into career development and the leadership pipeline.

Future researchers might want to tackle the weakness of the study. Shen & Lang derive their findings from interviews with senior level managers; it is their perceptions on the better ways of preparing future long-term expatriates that count. This perception might not reflect the truth. Future researchers might want to rigorously measure whether short-term assignments indeed increase the intercultural competence of future expates, more so than training does.

Jie Shen, & Brant Lang (2009). Cross-cultural training and its impact on expatriate performance in Australian MNEs. Human Resource Development International, 12(4), 371-386.