Total Quality Management

Total Quality Management

Total Quality Management

The Right Stuff: What it takes to champion quality improvement initiatives.

All organizational improvement programs have one thing in common: their success depends on the effectiveness of many collective efforts, rather than any single or individual heroic effort. Contrary to what many managers think, this collective effectiveness cannot be dictated, facilitated, delegated, or otherwise achieved in any instance through direct managerial action alone. This collective effectiveness can only be inspired, balanced and sustained – indirectly – through the operating environment’s ethics and culture, with management as its champion. When managers are champions of projects, some things get done.  When managers are champions of improvement programs, some more things get done. But when managers champion the culture, a much bigger thing happens. The projects, the programs, the quality journey over time, and the organization, all flourish, and the firm truly transforms itself into a higher quality organization.

Total Quality Management Defined

TQM is an approach to organizational performance improvement that is distinguished from other approaches by its key word “total,” which emphasizes a holistic or “total” approach to the firm’s improvement program. TQM’s holistic focus is unique in that it truly focuses on the well being and excellence of the entire enterprise as well as the larger system which the enterprise operates in. TQM is also unique among improvement philosophies because of its ethic of inclusiveness,  as TQM truly includes everything and everybody in its mission including: all employees, all stakeholders, all suppliers and especially all customers (both internal and external). Here are three definitions with some key principles underlined that capture the essence of TQM:

  1. TQM is an economic philosophy, or a strategic intent, to improve the value of the firm by improving the satisfaction of internal and external customers, suppliers, and stakeholders.
  2. TQM is a 360 degree continuous improvement program of metrics, information, training, analysis, discretionary investments, process improvements, change, and controls, that involve the entire organization.
  3. TQM is an organization wide management system that applies tools, technologies, and standardized procedures to integrate efforts, to prevent failure costs, to improve process execution, to assure the existence of a capable and supportive organizational culture, and to sustain the organization’s quality journey over time.

From the above definitions, TQM is not just about boosting the bottom line by improving or streamlining a few economic processes.  Instead TQM is about boosting the bottom line by doing the right things right, everywhere, for everyone involved, the first time every time. Described in this way, TQM is also an ethic for achieving organizational excellence.

However noble TQM’s philosophies and ethics are, it still must face and overcome the same implementation rigors any improvement program must face.  Below are four stages that organizations have typically experienced when implementing TQM.

TQM’s Four Critical Stages

Stage One: The Leadership Stage.

  • Leadership must live the philosophy and ethics of TQM. There is no room for selfishness, moral exclusion, exorbitant compensation for a few, scapegoating, abusive management styles or policies, or inconsistent or selective ethics. The philosophy (like any worthwhile ethic) must be universally applicable to all. This may seem easy enough, yet this ethic has proven to be one of the weakest links in many TQM initiatives. TQM truly begins with, and succeeds or fails because of, the strength of this ethic in the practicing organization.
  • Without a deep commitment from the top to develop a healthy culture based on win-win fairness, open communication, shared information and teamwork, most organizations will not get very far in TQM. One of the greatest lessons of TQM is not how the lack of good culture kills TQM, but how these deficiencies will constrain or kill any improvement program regardless of their name (including Six-Sigma, Balanced Scorecard, Baldrige, etc).
  • This stage generally begins with training the upper and middle management on the general concepts of TQM, and the formation of basic structures to support TQM such as executive steering committee, metrics to aid project targeting (such as Cost of Quality) and a project management system to approve and administer projects.

Stage Two: The Initiation Stage.

  • This is always an exciting stage in TQM, as it awakens the organization to all kinds of amazing discoveries about how it can improve itself.  Initial projects hit pay dirt with the harvesting of “easy fruit” resulting in reduced waste, lower failure costs, fewer hassles and negative experiences, and happier internal and external customers.
  • The culture is energized into new forms of teamwork.  Ethics advance dramatically as individuals and departments become more aware and empathetic to the effects they have on others around them. People are not concerned about rewards, as the improvements themselves are delivering intrinsic and non-monetary rewards to all involved.
  • Economically, project successes and clear economic dividends makes management’s continued investment in the program justified. Monetary rewards are provided to both individuals and groups, which are perceived as “icing on the cake.”
  • There is an abundance of praise for everybody, as everybody kicks their efforts up a notch in a atmosphere of exuberance and mutual sacrifice. .

Stage Three: The Decline Stage

  • Unfortunately TQM often goes downhill from here.  The reason: burnout.  As “easy fruit” projects dry up, increasingly more difficult targets are attempted that often tax and degrade TQM’s delicate system of ethics, rewards and efforts.
  • As project difficulty increases it becomes more difficult to do the ethics stuff, such as inclusion, dialog, consensus, win-win, etc as each of these take effort. Narrower objectives start getting priority over the cultural requirements, and these objectives generally benefit progressively narrower stakeholder groups. These efforts may offer greater economic potential than the earlier projects, and require the efforts of many stakeholders to implement, but upon successful completion these projects tend to distribute rewards to fewer participants and beneficiaries, reinforcing fewer efforts for the next project. This contributes to an ethics and rewards deficit in the culture, increasing resistance to change, and fermenting and a form of mental or spiritual burnout where many hearts simply “are not in it” any more, making some key players not as willing as they once were.
  • Another form of “burnout” is a physiological form that actually makes many past supporters progressively less capable of supporting new initiatives. It takes a lot of human energy to initiate a  quality journey (improvement trend) in an organization, and it takes even more to sustain it. This is a common problem with all improvement programs.  It simply is humanly impossible to sustain the required energy level indefinitely without learning how to work smarter, not just harder. Also, rewards must be commensurate to the effort, not just the results, or a declining state of reduced effort will set in all the faster. This understandably runs counter to the “reward the results” mentality popular in management today. If people are physiologically burned out all rewards become less relevant and some become completely irrelevant. Research in the construction industry indicates that workers can lose up to 50% of their productivity or more when they are overworked for prolonged periods time. In just a few weeks of excessive stress and exertion, workers can quickly become less productive than what normal efforts in the first place would have produced.  This effort constraint is widely recognized today in many fields as a physiological fact, and it’s rate of decline seems to accelerate when people’s hearts are no longer engaged in the objective at hand. It is a common managerial error to demand too much effort (from themselves and/or others) while relying too much on higher rewards for ever fewer participants. This error rate is magnified by the tendency of management to increasingly focus on technical process improvements as project difficulty increases. This effort mismanagement is something every manager needs to be aware of as it is a leading common cause of quality program failure and journey  decline. When it comes to sustaining a quality journey, our own OrgCulture Study as well as other studies robustly suggest that human factors such as ethics, culture, risks and rewards, management style and satisfaction, once considered to be the “soft side” of quality, collectively are statistically more relevant to program and journey success over time than technical process improvements. The logic involved is not a choice between one or the other, but that the latter requires the former.
  • Stage three is about the organization’s powerful and often inevitable transition from euphoria toward withdrawal as effort mismanagement takes its toll.  Without advancements in the quality system infrastructure to help participants cope, and without maintaining cultural balance, people not only become less able but less willing to sustain the journey. This decline in support can also be referred to as a decline in the cultural maturity level of the organization, which can be measured using our Online Survey. If cultural maturity declines, the quality journey will decline in lock-step. Fortunately both conditions are correctable with a little ethics and culture management.

Stage Four: The Journey Perpetuation Stage

  • This stage is about slowing down or reversing the natural forces of decline described in stage three. Here, the focus is on helping the organization cope and advance by working smarter (not just harder), and by managing a balancing act between efforts, ethics, rewards and satisfaction with respect to process improvements (not just pushing for technical success in narrower and more complex projects).  This results in achieving higher levels of teamwork and integration, which, ironically, make the more complex projects more likely to succeed.
  • This stage adopts technologies, advances technical tools, and emphasizes the championing of higher culture practices so appropriate levels of “rational cooperation” are comfortably developed and maintained. Information sharing and ethics and culture practices are integrated so people can get the same information and make the same quality decisions with less physical and psychological effort, and know what they can expect from the system in return. In this stage the focus is on reducing frustration, firefighting, gutter fighting, and negative competition, and maximizing satisfaction and trust for all participants so the organization can fundamentally advance its journey with a maximum of internal cooperation.
  • This stage emphasizes ethics and culture as much as its technical quality, and there is a shared intuitive awareness at all levels that cultural excellence and technical process capability are dependent on each other. Quality management is integrated into each process so it can be performed in normal time with normal effort. Employee satisfaction is healthy, and the culture is capable of ramping up and supporting initiatives that matter the most to the organization, its participants and stakeholders. Most importantly, the organization is able to sustain its  improvement trend and accomplish its strategic objectives.

Three Leading Causes of Quality Journey Stagnation:

  1. Lack of continuous effort and focus. Benchmark statistics of the highest quality organizations show the greatest distinguishing factor in achievement was not the brand of programming they chose, but rather how long (in years or decades) they have sustained their continuous effort and focus on quality improvement. Therefore, just “not stopping” and assuring journey continuity may be the single most significant aspect of any quality improvement program. (Has your group’s journey been continuous?  If so, for how long)?
  2. Lack of methodical journey progression. One well documented model, the Capability Maturity Model by SEI (CMM), has statistically correlated the concept of journey progression by organizations. Using the CMM (or Trillium) Models as guides, we can visualize the “logic” of normal progression and generalize that sustainable journey progression could be risked if  normal progression patterns common in advancing organizations are not followed or if key maturity level steps are ignored.

The Trillium scale spans levels 1 through 5. The levels can be characterized in the following way:

    1. Unstructured: The development process is ad-hoc. Projects frequently cannot meet quality or schedule targets. Success, while possible, is based on individuals rather than on organizational infrastructure. (Risk – High)
    2. Repeatable and Project Oriented: Individual project success is achieved through strong project management planning and control, with emphasis on requirements management, estimation techniques, and configuration management. (Risk – Medium)
    3. Defined and Process Oriented: Processes are defined and utilized at the organizational level, although project customization is still permitted. Processes are controlled and improved. ISO 9001 requirements such as training and internal process auditing are incorporated. (Risk – Low)
    4. Managed and Integrated: Process measurements and analysis is used as a key mechanism for process improvement. Process change management and defect prevention programs are integrated into processes. (Risk – Lower)
    5. Fully Integrated: Formal methodologies are extensively used. Organizational repositories for development history and process are utilized and effective. (Risk – Lowest)

For example, if an organization is operating at the Trillium Level #1, it is highly unlikely they will benefit much from an aggressive investment in six-sigma, which tends to succeed best when organizations are already operating at Trillium levels 3 or higher. The key to journey progression is knowing where you are and pursuing the next logical maturity level. (What level is your group at)?

  1. Lack of Ethics and Culture Management. When organizations attempt to advance quality without advancing ethics and culture they often are spinning their wheels only to wonder later why quality initiatives did not work as well as expected. Trying to improve technical quality issues, such as yield or Cpk without considering possible ethics or cultural causes can quickly limit the available human energy an organization can give to its improvement journey.

The Role of Ethics and Culture in Quality Management: Ethics and Culture are closely related to Quality Improvement and the organization’s Quality Maturity Level.  When processes improve, ethics and culture generally improve also, and visa versa. Often ethics are the constraint factor holding back process capability improvement, and sometimes poor process capability encourages poor ethical behavior. Also, managers do not cause improvement projects to succeed as much as they may think they do, at least not directly. It is the operating culture, or the collective effort, that decides which projects succeed or fail in varying degrees. This is where TQM has provide a valuable lesson to all improvement professionals. TQM showed us the importance of people and integrated efforts, the importance of getting the culture behind the improvement initiatives, and the importance of getting management to champion an ethical culture.

Quality and process improvement are not entirely synonymous. The former requires ethics, the latter does not, as the following points demonstrate:

  • TQM slipped in popularity in the mid and late 1990’s not because it was inadequate, but because executives, shareholder boards, and in some cases even employees and their unions forced philosophical, ethical and cultural compromises that took a heavy toll on TQM programs. Ethically, the late 1990’s were the “anything goes” years for management,  giving rise to alternative quality initiatives that focused more on techno-economic quality gains without constraining management with ethical or cultural standards. The fact that six-sigma and other best practices programs carried no ethics baggage made them popular among executives and trainers. Ironically,  many of these now maturing programs are increasingly incorporating the TQM doctrines of the past, such as notions of common courtesy, trust, inclusion, participation, open dialog, consensus, team based rewards, and basic governance standards.
  • Process capability improvement alone does not reduce the risk of ethics failure, and ethics failures definitely constrain improvements in process capability.  The same kinds of failures that bludgeoned Enron and Arthur Andersen could still occur in any organization regardless of their apparent successes in process improvement. Unless ethical and cultural excellence are incorporated by design into process improvement initiatives (which TQM incorporates), the risks of journey failure (and business failure) remain.

Whether you are doing TQM, or some other quality improvement program, any program stands to benefit by incorporating the ethics of TQM.  These ethics are essential for sustaining quality journeys over time because every improvement program depends on collective efforts, and effective collective efforts invariably depend on management’s dedication to ethical and cultural excellence.

 

Six-Sigma Management

Six-Sigma Management

Six-Sigma Management

TQ (Technical Quality) x C (Cultural Acceptance) = A (Achievement)

If you are going to do Six-Sigma, do not forget to champion the culture too.

Here are six facts you should know that can improve your  success in six-sigma:

  1. Without a functionally supportive culture six sigma flounders. This is true not only for six-sigma but for every change management program ever invented.  If you want to avoid embarking on another “flavor of the month” do not ignore this fact!
  2. Culture cannot be improved by technical quality alone. Six Sigma programs typically pursue technical quality (process capability) gains until they hit a cultural constraint, then they try to use either more technical quality or brute managerial force to overcome the constraint (metrics-data driven culture).  This may overcome normal politics, but it will not overcome culture failure or its causes.  It is a myth that six-sigma single-handedly creates a better culture! Six-sigma is great at discovering culture problems, but unfortunately is rather incapable of solving them.
  3. Technical quality and an effective culture depend on each other, yet are different things. The more one works in Six-Sigma, the more one comes to understand that process improvement and culture indeed go hand in hand. Ironically, while these are so closely related, they are also entirely different problems utilizing separate bodies of knowledge, causes, and problem solving methodologies. Attempting to use process improvement exclusively to improve culture, or culture exclusively to improve processes, is a non-sequitur error. Both need to be understood and practiced separately, and combined and balanced, to achieve either. Many organizational failures can be traced to management’s failure to properly separate and integrate “TQ” and “C”.
  4. Culture cannot be imposed, it must be nurtured across the participating social systems. Management cannot plan, direct, and control a culture in the same way that it manages other tasks and resources.  Cultures are complex and powerful social systems that operate according to their own codes, aims, and checks and balances.  Cultures are like software programming in many regards.  To permanently change them one must first change their “codes” of conduct.  In software this is LOC (lines of code).  In operating culture this is ethics.
  5. Prevention is cheaper than failure and rework. It is cheaper to prevent culture failure, and program failure, than it is to fail first and then try to fix it.  No matter how much hype a new management program professes, an ounce of prevention is still worth a pound of cure.  You can improve your chances of success in any change management program by diagnosing and addressing potential causes of culture failure at the beginning of the program.
  6. Culture mechanics are measurable and predictable. The supportive capability of an organization’s culture can be diagnosed using the survey method.  See our Online Group Survey.  By the way, our survey uses six-sigma metrics, making culture management a meaningful six-sigma project.  We can show you how.

 

Risk Management

Risk Management

Risk Management

When culture failure strikes an organization, the organization is rarely the same again afterwards.

Culture failure is a leading failure mode in major organizational failures.

If you are responsible for Risk Management in your organization here are some facts you should know:

  • All operating cultures harbor deadly flaws that can precipitate large scale organizational failures if not managed and controlled.
  • Operating culture is one of the largest organizational risk factors yet this factor often receives the least attention by management.
  • When organizations experience large scale culture failure the costs can  be counted in both dollars and lives and the organizations involved are rarely the same afterwards.
  • Even smaller, everyday culture failures represent significant costs to organizations that affect their bottom line and strategic position.
  • Culture cannot be managed the same way other resources are managed.  In fact, attempting to “manage” culture as a resource is one of the leading causes of culture failure!
  • Culture failure can only be diagnosed and prevented, and positive cultures can only be nurtured, by focusing on and managing with respect to the “basic nature” of operating cultures.
  • Operating cultures have “basic natures” that can be measured and predicted.

Operating Culture Assessments

Operating Culture Assessments

Operating Culture Assessments

Effective Operating Culture Diagnostics Using Online Surveys

Online Group Surveys

Business experts and academics both agree that a healthy operating culture is integral to the performance excellence of any group. If this culture is constrained even the slightest, its effect on organizational performance can be considerable.  Many  managers lack the ability to identify these culture constraint points early enough to prevent culturally related performance failures. That is where this survey tool can help.

Group cultures operate like biological organisms. When all the parts are healthy the organism thrives.  When any one part becomes unhealthy or dysfunctional it can impact the well being of the other parts and the entire organism.  What can begin as just one dysfunctional sub-factor can ferment over time to seriously degrade several major factors that drive performance. Unless this negative “drift” is identified and corrected, dysfunctional cultural factors tend to progressively worsen until a major failure forces a shake-up in the organism. The goal of our culture survey is to identify this negative culture drift so the organization can address the failure modes, take corrective action to improve the culture, and prevent culture induced operating and financial failures.

The Culture Performance Factors we measure:

  • Leadership
  • Ethics
  • Process Capability
  • Risk/Reward
  • Satisfaction

Our online survey can quickly assess the vital few factors in your organization that are constraining performance the most.  Whether your group’s culture is dysfunctional, healthy, or somewhere in between, this survey will generate sufficient detail to show you where you can improve the effectiveness of your operating culture.

Our web based survey can be used to conduct single group or multi-group surveys of organizations in multiple locations, simultaneously, anywhere in the world, for just $11.95 per survey taker.  The average survey taking time is 10 minutes. There is no limit to the number of respondents or sub groups you can use.  Most employees can take the survey while sitting at their desks without requiring time consuming pencil and paper regimens. At only $11.95 this is a simple, cost-effective organizational diagnostic that can be afforded by just about any organization.  All survey questions and Summary Reports are in English.

Single Group Surveys

Single group surveys are used when a single group is to be surveyed. The number of survey “slots” or participants can be as few as one, or as many as thousands. The survey cost is $11.95 per participant and is purchased via phone using a credit card (Visa, MC, Discover and AMX are accepted).

How to Order.  Simply call us Monday through Saturday, 7:00 am to 6:00 pm EST, to place your phone order, and your group survey will be ready to take online within minutes. You will receive an e-mail order confirmation which will provide an activated survey url for taking your  survey. You will also be instructed to distribute that e-mail (url) to the participants in your group to take the survey. Upon completion of the surveys, a detailed single group report will be e-mailed to you, the purchaser.

See a Sample Single Group Report

Multi-Group Surveys

Multi-Group surveys are used when more than one group (such as departments or locations) within a broader group is to be surveyed, and it is considered useful to compare these groups as a part of a holistic view of the larger group. The purpose of the Multi-Group survey is to reveal which cultural constraints are unique among specific sub groups, and which are common issues in the broader organization.  Sub groups have typically been created around established organizational lines such as departments, branches, locations, divisions, or products, however your sub-grouping is in no way limited to these approaches. You are free to define the sub-grouping scheme that is most meaningful to you and your organization.

There are no upward limits to the number of sub-groups you can specify. Multi-Group studies provide the same Single Group Reports for each sub-group as described in the Single Group studies above, plus a Multi-Group Report to provide the holistic view.

Validity.  Our web based online survey will identify the leading ethical and cultural factors constraining performance in any organization.  Our algorithm measures five performance factors and over 20 leading ethics and culture related sub factors which are supported by decades of large scale academic studies.  While many organizational surveys encounter problems with universality and general applicability, our survey has proven to be remarkably universal and applicable to a wide range of organizations throughout the world. When our survey identifies constraints, and these constraints are addressed, group performance improves!

Improvement. While our surveys are revealing, the survey results will only represent a starting point in the improvement journey. Identified constraints still need to be investigated with the people involved to find the precise conditions that are causing the constraints. Improvement professionals know that in order to find the root cause to a problem, the problem itself must first be identified. Our surveys will tell you what your problems are, so you can focus on finding and correcting the root causes.

 

Nine Attributes of Good Ethics Policy

Ethics Policy

Nine Attributes of a Good Ethics Policy

The first objective of any ethics policy is to facilitate legitimate ethical reasoning activity. It is impossible to merely glance at an ethics policy and judge its “goodness.” The true test of any ethics policy is how it actually works within a specific organization. The following attributes are frequently missing in weak ethics policies, and are positive drivers in strong policies:

1. Addressing the “Big E (not just the “little e”)

Policies not only need to address compliance issues (the “little e”) but  the “Big E” issues such as reasoning, prevention and performance.  The “little e” is more about control and compliance, whereas the “Big E” is about assuring that intents, means, and ends are “good.”  For ethics policies to be impactful and truly improve ethics and contribute value to the organization, they need to be more about the “Big E” than the “little e.”

2.  Universality

Ethical policies must be based on sound logic and universal ethical principles (such as The Golden Rule and The Greatest Good), and these universal principles must be capable of trumping compliance policies.

3. Sound Logical Reasoning

Most ethical reasoning flaws begin with logical reasoning flaws. Ethics policies need to reflect a commitment to data driven and logical decision processes, information sharing, effective dialog and examination.  Ethics can not operate without facts and execution between people. See our training aid Organizational Reasoning.

4. Ethical Examination Skills

Ethical reasoning is a process capability that is a component of organizational reasoning capability. Without sound ethical reasoning the organization becomes less capable of solving problems and making sound decisions. Ethics policies need to reflect a commitment to developing ethical reasoning capabilities at every level of the organization, with every employee, regarding how to elevate dialog and reasoning to “right versus right” reasoning modes. Developing and sustaining  such skills requires an organizational commitment to training, practice and rewards. See our training services.

5. Transforming “wrong” to “right” and “bad” to “good”

Good ethics policies promote skills where logical fallacies and ethical lower forms will be identified and transformed into higher forms of universal ethical reasoning. The transformation of wrong thinking, wrong actions, and bad outcomes to right thinking, right actions and good outcomes is the “blocking and tackling” of organizational ethics. See our training aid 101 Fallacies and Lower Forms. To encourage this constructive activity the policy must assure that any employee may freely engage and question the ethics of any action without penalty. The organization needs to actively solicit inputs from all participants to aid in the identification of ethical issues. See our Online Group Surveys and Diagnostics.

6. Prevention

Ethical policies need to emphasize the importance of identifying “bad” ethical rationale and transforming them to “good” ethical rationale, as stated in Attribute #5, but with one kicker:  It must be accomplished before the fact.” Most ethics policies are compliance based and merely catch wrongdoing “after the fact” when many of the failures, if they had been identified earlier, could have easily been prevented. A good ethics policy incorporates early warnings and checks and balances, not merely to catch and punish violators, but to identify emerging risks, facilitate behavior change, and to prevent ethics failures.

7. Organizational Change Orientation

Organizational processes and practices impose a dominating influence on individual ethical behavior in organizations. Ethics policies need to encourage and reward the willingness to adapt values and behavior patterns to improve the organization’s moral maturity. Policies need to confront processes more than individual’s actions, and focus more on awareness and change than just compliance. Adherence to fixed value positions at the exclusion of systematic causes in an organizational context can itself become a cause of unethical behavior, posing an even greater liability to the group than minor issues of noncompliance. Moving the entire group to the next moral maturity level is far more important to organizational well-being than punishing an employee for a petty violation that should have been prevented in the first place.

8. Employee Training

Ethics policies should require uniform ethics training around logically applied universal ethical principles. Furthermore, after initial training the principles need to be continuously emphasized, integrated and promoted by a structured managerial effort, team or committee. Most employees need to be exposed to the ethical principles several times before they can internalize them, and most need to actively practice them with the support of fellow workers to develop proficiency with them. See courses: Basic Ethics Training and Getting Ethics into Organizations.

9. Leadership by Example

Ethics policies are not tactical or symbolic monuments that executives can erect and delegate, or worse yet ignore.  Ethics policies are only as valid as the commitment  management give to them. Management is ultimately responsible for the firm’s moral maturity level, and therefore needs to be held to a higher ethical standard than regular employees, not the lower standard we too often see among corporate leaders. Management’s commitment to organizational ethics sets the tone for the ethical direction and performance of the entire organization. Management determines whether that direction is positive, negative, or stagnant. Therefore, ethics policies themselves are not the primary indicator of an organization’s moral maturity. Management’s commitment  to preventing poor organizational reasoning and conduct, and their willingness to hold themselves to a higher standard and lead by example, are the two greatest indicators of ethics excellence in the organization.

 

Ethics Tests

Ethics Tests

Ethics Tests: 

  • Determine the quality of your group’s ethical reasoning skills.
  • Serious about getting ethics into your organization?

Quick Test for Organizational Ethics Quality

[answer “yes” or “no”]

  1. Are you proud of your group’s ethics?
  2. Are communications void of false pretexts or hidden agendas?
  3. Do ethical codes, policies and practices work positively for everyone?
  4. Is the group routinely improving processes with high consensus?
  5. Do improvements matter and/or last?
  6. Is current resistance to change normal and/or inconsequential?
  7. Is there sufficient trust and openness to resolve important issues?
  8. Are existing practices and policies free of double standards?
  9. Do your superiors set good examples and reward good ethics?
  10. Are your group’s ethics an asset that contributes to business results?

Count the “No’s.”  How did you do?

0 – 3 = excellent,  4 – 6 = average,  7 – 10 = poor.

If you scored average or worse, your organization probably has significant room for improvement and would benefit from assessment and training services.

Short Basic Test for Applied Ethics Quality.

  1. Are lower forms of ethical reasoning routinely interfering with ethical reasoning and decision making?
  2. Is the group routinely failing to meet it’s highest duties in its everyday decisions?
  3. Do everyday decisions generally fail to meet the Golden Rule and serve the Greatest Good for the Most?
  4. Are involved or affected parties routinely excluded from consideration?

Count the “No’s.”  How did you do?

3 – 4 = excellent,  2 = somewhat deficient,  0 -1 = poor.

Short Advanced Test for Applied Ethics Quality.

  1. Are most decisions refined to “good versus good” alternatives?
  2. Are at least 3 alternatives generally considered?
  3. Do meetings often have false pretexts, claiming to be about making a decision when in fact the decision has already been made and only group buy-in is sought?
  4. Are attitudes and decisions monitored and corrected if found to result in unethical consequences?

Count the “No’s.”  How did you do?

3 – 4 = excellent,  2 = somewhat deficient,  0 -1 = poor.

 

Corporate Responsibility

Corporate Responsibility

Corporate Responsibility

It takes more than words and policies.  It takes management actively championing ethical reasoning skills and an ethical operating culture.

There is a nexus between ethics, cultural practices, and corporate responsibility.

  • It is not sufficient to just have an ethics or corporate responsibility policy.  If that was all it took, Enron would still be flying high.
  • Culture failure is one of the leading preventable business expenses, yet it gets the least investment in prevention.
  • Culture failure is a leading cause of failing to meet one’s corporate responsibilities to basic governance, environmental and community obligations.
  • Real ethics and corporate responsibility depend on ethical reasoning skills and cultural practices, not policy.
  • Ethics policies often cannot be logically applied to every situation uniformly. Yet corporations expect them to be followed absolutely and tend to enforce them selectively.
  • Bad ethics policies can actually cause unethical behavior to emerge in organizations.
  • Unethical behavior is caused by the convergence of reasoning flaws, attitudes, pressure and opportunity.
  • Severe forms of frustration in the organization are symptoms of ethics and culture failure.
  • Managerial action to merely deal with symptoms of frustration, instead of preventing its root causes, usually makes the culture failure worse than if nothing had been done at all.

Do you want to just appear to have corporate responsibility, or do you want to truly have corporate responsibility?

Is your ethics policy effective?

Read this and find out.

 

Culture Management

Culture Management

Personal ethics and group ethics follow the same ethical principles, however they differ in their processes and effects. These differences represent the cultural effects which must be managed if organizational ethics are to improve. 

Influence

Ethics in organizations are influenced more by the group ethics system (culture) than by the sum of the individual personal ethics systems. These “group effects” can have a profound effect on the ethical behavior and overall culture of an organization (see illustration below). Therefore, to improve group ethics, more emphasis is generally needed on group dynamics, or culture management,  than on personal ethics systems alone. (The illustration below has been included in Wiley’s Organizational Behavior, 8th Edition, 2003, pg 265).

Culture Management ethics

Ethical Reasoning Processes.

Understanding why group ethics systems tend to function at lower levels than individual ethics systems can be explained by noting the differences in the comparative reasoning processes.  Individual ethics systems tend to follow the bottom up process (see illustration below) where ideas are refined in a logical progression by eliminating logical fallacies and lower forms first, followed by resolving dilemma, optimizing higher forms of ethics using moral creativity, and policy considerations. In contrast, organizational ethics systems tend to follow the top down process beginning with policies (not reasoning) and consider logical fallacies last, if at all. Organizational ethics processes tend to lack sufficient logical rigor at the beginning of the reasoning process. All decision sciences give the greatest weight to the beginning of the reasoning process, because if this step is not soundly based all subsequent steps will either be irrelevant or dead wrong. Ethical reasoning is a decision science which must obey this same principle.

Ethics Culture Management

Change Management Processes.

When actual behavior does not meet required or expected behavior, this deviation constitutes a “culture gap.” Whereas changes in personal ethics and behavior can often be driven by training, reasoning and awareness alone (as espoused by the classical philosophers Socrates, Plato, Aristotle), often groups create their own ethics which can differ greatly from the sum of the individual ethics systems. In order to change the behavior caused by the “group effect” commensurate changes must be “engineered” into the underlying system of causes. Studies in organizational behavior – including our ongoing OrgCulture Study – indicate that emergent behavior in groups can be heavily influenced by three forces: the Required System, Leadership Style and the Background Factors (see flow diagram below). Adding more policies (required systems), a typical knee jerk management reaction to nonconforming behavior, cannot solve a culture gap problem if the true causes are manifested in the four Background Factors, Management Styles, or combinations thereof. This kind of misdiagnosis and mismanagement not only fail to achieve their intended objective, but often make the culture gap worse than if nothing had been done at all. Culture management therefore is not only an acquired skill, but according to many management scholars, it is an essential skill that organizations need if they are to perform to their potential. Doing culture management requires that managers be trained in the tools of diagnosis and response so they may become proficient at reducing unfavorable culture gaps and improving their group’s performance.

Culture Management Flow Chart

 

 

Merger Integration

Merger Integration

If you are in the business of acquiring and merging firms, you  are also in the culture management business. 

Merger success is not the norm.

Several studies in the early 1990’s on acquisitions by leading consulting organizations and universities revealed more or less the same findings:

  • less than 40% paid for their cost of capital, less than 25% created any appreciable value, and nearly 50% were later divested at significant losses to shareholders.
  • the inability to integrate cultures and management styles was cited as a leading cause of merger failure.
  • the more successful acquiring firms generally placed a higher priority on culture management and integration and were more capable in this managerial skill.
  • the less successful acquiring firms generally placed a lower priority on culture integration and management and were less capable in this managerial skill.

the ethics of merger integrationWe can help you diagnose, estimate, plan, and manage the culture factors involved in your acquisitions using our online survey. A relatively small investment in information can significantly help your chances of success!

Get the culture management skills mergers require. We can show you how to identify and prevent culture failure so they will not spoil your merger plans.