Tony Buono Professor of Management & Sociology Coordinator, Alliance for Ethics & Social Responsibility

1. Next Generation Management: Shaping Tomorrow’s World Today Benedictine University – Springfield Campus July 23, 2010 Tony Buono Professor of Management & Sociology Coordinator, Alliance for Ethics & Social Responsibility

2. Research in Management Consulting (Information Age Publishing) Vol. 1 Current Trends in Management Consulting (2001) Vol. 2 Developing Knowledge and Value in Management Consulting (2002) Vol. 3 Enhancing Inter-Firm Networks and Interorganizational Strategies (2003) Vol. 4 Creative Consulting: Innovative Perspectives on Management Consulting (2004) Vol. 5 Challenges and Issues in Knowledge Management (2005) Vol. 6 Socio-Economic Intervention in Organizations: The Intervener-Researcher and the SEAM Approach to Organizational Analysis (2007) Vol. 7 Mastering Hidden Costs and Socio-Economic Performance (2008) Vol. 8 Board Members and Management Consultants: Redefining the Boundaries of Consulting and Corporate Governance (2009) Vol. 9 Emerging Trends and Issues in Management Consulting: Consulting as a Janus-Faced Reality (2009) Vol. 10 Client-Consultant Collaboration (2009) Vol. 11 Work and People (2010) Vol. 12 Consultation for Organizational Change (2010) Vol. 13 The Changing Paradigm of Consulting: Adjusting to the Fast-Paced World (in process) Vol. 14 Preparing Better Consultants: The Role of Academia (in process)

3. Next Generation Management Bridges & OD

4. Tensions in OD OD as Superfluous OD as Organizational Survival Enhances innovation Creates foundation for successful change Facilitates collaboration Critical management skill •  Doesn’t work • Too altruistic and misguided • Questionable legitimacy • Lack of credibility Jelinek & Litterer, “Why OD Must Become Strategic,” Research in Organizational Change and Development (1998)

5. OD’s Evolution Micro- Macro- Transorganizational Global Focus Focus Focus Focus Human Process Interventions Human Process Interventions T-groups  Process Consultation Team Building Techno-Structure Interventions Quality Circles  Work Redesign Cross-functional Teams HRM Interventions Action Research Appreciative Inquiry Wellness  Career Planning Diversity Programs Performance Appraisal Strategic Interventions Culture Change/Strategic Direction M&A / Strategic Alliances Virtual Teams Aspirational Interventions UN Global Compact Conscious Capitalism

6. Next Generation Management: Planned Agenda The Conceptualization Challenge: The [Changing] Role and Nature of Business and Management [Education] The Challenge of Creating Conscious, Ethical Organizations: OD in Action The Challenge of Managing Change

7. "The significant problems we face today cannot be solved at the same level of thinking we were at when we created them." Albert Einstein

8. “There is no reason anyone would want a computer in their home.” Ken Olsen Founder of DEC, 1977

9. Best Practice v. Next Practice CK Prahalad Adopting best practice is the surest path to mediocrity … … we need to challenge ourselves to think about the next practices that will lead to success…

10. Human Rights Labor Environment Anti-Corruption Purpose Values Methods Research Partnerships Dialogue

11. Defining Moment for Business Education? Continuous improvement… v. Basic rethinking of of business and management

12. Business as Usual? Public mistrust of business is at an all time high ~ corporate reputation is deteriorating  The world is changing  Aging of the population  higher levels of consciousness  Rapid rise in feminine values in society  more caring and nurturing approach to leadership WWW & Transparency

13. Nature of Organizational Problems High Many Locations Multiple Contexts Many, Diverse Stakeholders Few, Similar Stakeholders Common Context Single Location Wicked Problems (Systems Thinking) Business Complexity Tame Problems (Linear Thinking) Low Low High Socio-Technical Uncertainty Definitive Problem No Definitive Problem & Solution or Solution Adapted from J. Conklin, Wicked Problems and Social Complexity (Wiley, 2005)

14. Coordination Cooperation Collaboration Low environmental uncertainty High environmental uncertainty Pooled & serial task interdependence Reciprocal & team interdependence Centralized decision making Decentralized decision making Indirect integrative mechanisms Direct integrative mechanisms Coordination: Standardization Collaboration: Mutual adjustment Evolution of Organizational Forms Source: Bowditch, Buono & Stewart, A Primer on Organizational Behavior (Wiley, 7th ed. 2008)

15. Complexity of Dynamic Networks Hierarchies become networks Internal Stakeholders Cross-functional teams work within dynamic networks of teams that cross company borders External Stakeholders Source: Jeff Shuman, Rhythm of Business (2009)

16. The Simplicity of Business? The goal of business is to maximize profits PROFITS = REVENUES – COSTS Revenues: COSTS: Sell as many of our products Pay employees minimum to as many people as possible Squeeze our suppliers at as high a cost we can get Externalize costs to away with society Cut corners in customer service Avoid taxes through tax shelters …

17. The Simplicity of Business: An Alternative View? From… To … Profit through success Stakeholder governance Long-term, holistic orientation Synergies Harmony of interests Value/wealth creating goals • Success through profit • Shareholder sovereignty • Short-term, self-oriented focus • Trade-offs • Conflicts of interest • Exploitative/financial dominance

18. The Paradox of Profits  Happiness: A by-product of other dimensions in our lives  Purpose, service, excellence Personal growth & fulfillment Friendship, generosity, love, compassion  Profits: A by-product of other goals  Great products & services Customer satisfaction Employee happiness & commitment Supplier partnerships Corporate citizenship

19. WEALTH Financial Intellectual Social Emotional Spiritual Cultural Natural

20. Investors Customers Partners FoE Society Employees Environment SPICEE

21. Stock Price Performance of FoE vs. S&P500 and Good to Great Companies Amazon eBay LL Bean Toyota Best Buy Google New Balance Trader Joe’s BMW Harley-Davidson Patagonia UPS CarMax IDEO Progressive Insurance Wegmans Caterpillar IKEA REI Whole Foods Commerce Bank Jet Blue Southwest Container Store Johnson & Johnson Starbucks Costco Jordan’s Furniture Timberland

22. “When the profit motive gets unmoored from PURPOSE bad things happen…” Dan Pink

23. The Power of Purpose • Purpose is a definitive statement about the difference you're trying to make in the world • It drives everything you do • It is your reason for being that goes beyond making money • Yet… it almost always results in making more money than you ever thought possible

24. Whole Foods • GUIDING PURPOSE: Changing & improving the world • Our Core Values: •  Selling the highest quality natural & organic products available •  Satisfying & delighting our customers •  Supporting team member happiness & excellence • Caring about our communities & environment • Encouraging win-win partnerships with our suppliers • Promoting the health of our stakeholders through healthy eating education • Creating wealth & prosperity through growth & profit

25. Characteristics of FoEs • Authenticity • Transparency • Mutual respect • Egalitarianism • Spreading problem solving • Mutual vulnerability • Playfulness • Building enthusiasm • Learning • Interdependence • “Do no harm” ethos • Mutual loyalty • Democratic culture • High-performance culture • Culture of service • Service to all stakeholders • Sustainable practices • Collaboration, not competition

26. Conscious Capitalism To be conscious means to be awake, mindful… A conscious business fosters peace and happiness in the individual, respect and solidarity in the community, and mission accomplishment in the organization. Fred Kofman, Conscious Business

27. Conscious Capitalism

28. Control & Organizational Effectiveness Type of Work A B High EFFECTIVENESS Low Commitment/ Mutual Adjustment Command/ Compliance MANAGEMENT CONTROL ORIENTATION Adapted from: E. Lawler, Transformation from Control to Involvement,” Corporate Transformation (1988).

29. Motivation? v. Creativity High engagement Playfulness Mutual commitment Purpose & direction

30. Next Generation Management: Planned Agenda  The Conceptualization Challenge: The [Changing] Role and Nature of Business and Management [Education] The Challenge of Creating Conscious, Ethical Organizations: OD in Action The Challenge of Managing Change

31. The Economist

32. External Relations Bentley-Mmofra Trom (Ghana) Partnership Campus Life Corporate & Community Partnerships Bentley Microfinance Initiative UN Global Compact Academic Network: PRME Sustainability Task Force & Bentley Green Society Habitat for Humanity Club Global Business Ethics Symposium & Teaching Workshop sponsored by State Street Foundation Bentley Ethics Policy & Campus-wide Ethics Committee Center for Business Ethics Ethics Point American College & University Presidents Climate Commitment Diversity Initiative Service-Learning Center Bentley Beliefs Women’s Leadership Institute Multicultural Center Graduation Pledge Alliance Spiritual Life Center Valente Center for Arts & Sciences Net Impact Chapter TIME Leadership Forum Civic Leadership Program (Graduation Pledge Alliance Chapter) Academic Integrity System Conscious Capitalism Institute Wilder Teaching, Learning & Curriculum Development Initiative Institutional Review Board Risk Management Research Program Faculty, Staff & Student Forums & Workshops Liberal Studies Major Geneen Institute for Corporate Governance Research & Scholarship Teaching & Academic Life Complex Problems/ Creative Solutions 2010 Bentley Alliance for Ethics & Social Responsibility

33. The Bentley Alliance for Ethics & Social Responsibility: Mission Amplify and extend the work of the autonomous Centers and initiatives on campus, supporting and encouraging greater awareness of, respect for, and commitment to ethics, service, social responsibility and sustainability in our research, curricula and campus culture.

34. BAESR Operative Goals • Support and encourage collaborative and interdisciplinary applied research that has the potential to significantly impact current practice. • Influence curriculumdevelopment and pedagogical innovations intended to make our students more ethically sensitive and socially aware. • Ensure a broader application of these principles and ideals in campus life. • Attempt to foster life-long civic engagement among our students. • Seek to partner with external organizations, associations and corporations in pursuit of these goals.

35. The Bentley Alliance:An Organizational Change Challenge • Understanding & honoring the past • Remembering research & the classroom: • Guided Changing Challenge • Stakeholder engagement • Conceptualizing Strengths & Linkages •  Building on the Teacher/Scholar Model •  Allying by “Talking Around” • Getting everyone “in the room” • Building on success: Enhancing existing • and linking with/starting new initiatives

36. The Guided Changing Spiral [RE-] ESTABLISH DIRECTION & DESIGN ACTIONS [RE-] [CONTINUE TO] [CONTINUE TO] SHARE THE LEARNING SYSTEM-WIDE IMPLEMENT & IMPROVISE [CONTINUE TO] HOLD ACCOUNTABLE & LEARN Adapted from K. Kerber & A.F. Buono, “Rethinking Organizational Change,” Organization Development Journal (2005)

37. Challenges in Corporate Morality Problems of Misconduct Problems of Moral Ambiguity Moral requirements are clear  Behavior falls below minimum acceptable standards  Right v. wrong  Moral requirements are unclear, conflicting &/or controversial  Behavioral mandates are unclear  Right v. right Precise Ethical Judgments Imprecise Ethical Judgments Adapted from: HBS Case Sears Auto Centers Teaching Note

38. 1991 FSGO: Effective Compliance Program Criteria • Compliance standards & procedures reasonably capable of reducing criminal activity • Oversight by high-level personnel • Due care in delegating substantial discretionary authority • Effective communication to all levels of employees • Reasonable steps to achieve compliance, which include systems for monitoring, auditing reporting suspected wrongdoing without fear of reprisal • Consistent enforcement of compliance standards including disciplinary mechanisms • Reasonable steps to respond to & prevent further similar offenses upon detection of a violation

39. Institutionalizing Ethics Rules-Based Strategy Hierarchy Conformity with rules  Auditing and controls Limited discretion Procedure oriented Adapted from: T. Donaldson, Verizon Lectureship

40. The Emergence of the Ethics Officer Professional Expertise Year position was created Before 1986 4% 1986 – 1987 4% 1988 – 1989 1% 1990 – 1991 5% 1992 – 1993 14% 1994 – 1995 18% 1996 – 1997 26% 1998 – 1999 27% 2000 1% 85% 30% 14% 13% 11% 9% Source: Ethics Officer Association, 2001

41. 1991 FSGO: Effective Compliance Program Criteria • Compliance standards & procedures reasonably capable of reducing criminal activity • Oversight by high-level personnel • Due care in delegating substantial discretionary authority • Effective communication to all levels of employees • Reasonable steps to achieve compliance, which include systems for monitoring, auditing reporting suspected wrongdoing without fear of reprisal • Consistent enforcement of compliance standards including disciplinary mechanisms • Reasonable steps to respond to & prevent further similar offenses upon detection of a violation 2004 Revisions: Role of Culture

42. Institutionalizing Ethics:The Role of Culture Rules-Based Strategy Values & Rules Strategy Shared values & cooperation  Role modeling & responsible self- direction  Loose-tight controls Discretion with dialogue Shared direction oriented Hierarchy Conformity with rules  Auditing and controls Limited discretion Procedure oriented COMPLIANCE ORIENTATION COMMITMENT ORIENTATION Adapted from: T. Donaldson, Verizon Lectureship

43. Management Morality:A Distribution Curve Number of Managers Immoral Managers Moral Managers Amoral Managers Ethical Orientation Adapted from: A. Carroll, “In Search of the Moral Manager,” Business Horizons, March-April, 1987.

44. Conduct-oriented Ethics Training Character Development Principled Reasoning Inculcation and reinforcement of basic moral values (honesty, caring, fairness, respect) Enhance ethical consciousness and competency Source: Josephson Institute for the Advancement of Ethics Immoral Managers Moral Managers Amoral Managers Number of Managers Ethical Orientation

45. Principled Reasoning • Act with integrity, grounded in universally accepted values (e.g., respect for others, fairness, honesty, justice, transparency) • If (when) those values conflict, act in ways that do not, or limit, harm • If harm is unavoidable (justifiable harm), act in ways that the majority benefit and the minority (the harmed) are treated as fairly and justly as possible

46. Management Morality:A Distribution Curve Number of Managers Immoral Managers Moral Managers Amoral Managers Ethical Orientation Adapted from: A. Carroll, “In Search of the Moral Manager,” Business Horizons, March-April, 1987.

47. From Problem Solving to Envisioning a Preferred Future Discover What ideal image(s) of the future do we want? What’s best in our history? Destiny Dream What steps will move us toward our best potential? How do we foster commitment, impact & momentum? Design

48. Compliance vs. OD-Based Perspectives on Ethics: Illustrative Functional Areas

49. Developing an Ethical Organization Individual Institutional Integrity Integrity Autonomy Authority Accountability Ethical Leadership & Culture CHALLENGE: Managing the Creative Tension & Interdependence between the Individual & the Organization Center for Business Ethics, Bentley University

50. What is a Great Business? A Great Business: Maximizes total value creation on a sustained basis, distributing that value in an enlightened and equitable manner among all its stakeholders Enhances the overall health and well-being of society Brings joy, fulfillment and a sense of meaning to all stakeholders By its very existence enriches the world