Business Thought

Leadership: Exemplar | Creating the Virtuous Organization

Any organization can be or become a virtuous organization, no matter the industry or how old or young, large or small, local or global the organization is. The mom-and-pop ice cream shop, booming tech start-up, and decades-old Fortune 500 company all have the capabilities to build up virtuous practices or become virtuous organizations. Vital to this success is buy-in from the people who run and operate the organization: executives, managers, supervisors, and employees at all levels. 

Organizational change faces many barriers – often human barriers – that occur when leaders or teams fail to engage with the change initiative. This may be because they do not understand the initiative; do not like it; or do not know how to incorporate it with their position or team, let alone sustain it. For organizational change initiatives to be successful, each internal stakeholders must know about the initiative, be motivated by it, and understand how to apply the parts or whole within the context of their own responsibilities. 

Leadership is the right people, in the right places in the organization, getting strategic changes and innovation to stick in the right ways. This involves communication, implementing processes, and trust. 

Typically change initiatives are top-down, beginning with the executive team’s vision for how the organization needs to change. 

The pressure to change may come from shareholders, an upcoming merger or acquisition, the ushering in of a new executive or team looking to differentiate, or the need to res-pond to problems in the organization. Social scientists have found in “fair process theory” that in any effective change, executives must determine a process that empowers the managers to act with integrity and that builds employee trust. Particularly in a knowledge economy, which is dependent on employee ideas and innovation, employees will commit to change if they believe that the process the manager used to reach the decision was fair. 

Decisions, initiatives, and change processes that are not clearly communicated and perceived as fair, no matter how good their intention, can cause frustration, fear, and distrust. On the other hand, transparency, authenticity, clear communication, collaboration across the organization, and providing sufficient resources and support can make top down organizational change initiatives effective and build employee trust. 

While becoming a virtuous organization could occur in a traditional organizational change pattern, it can also happen through social cohesion and social contagion pathways. Social cohesion is the willingness of individuals to then work together toward a common objective – more of a change from the bottom up. Social contagion is when individuals change their behavior based on interactions with others. 

Within an organization, change that starts with interactions among individuals can cohese into collective action of a group that can have a far greater impact than any of the individuals who are part of it. For a virtuous organization, the transition to becoming virtuous may begin with the desire of an individual or group of individuals to collectively lead their company toward being a place that they are ever more proud to work at and for. The process can – but does not need to – begin with the executive team of an organization. 

When implementing organizational changes or cultural shifts, getting everyone in the affected group on the same page from the start can mean the difference between success and failure. Many companies do this by kicking off initiatives with an ask of all employees of a department to read a book. This creation of shared language and concrete examples is foundational to sustainable change, as well as preparing employees to contribute to any initiative. Many are made more comfortable with change by seeing a great deal of data or information: customer surveys, industry analysis, fleshed out strategic planning might be a few of the ways to show where management is coming from. 

After learning about virtuous organizations, an individual employee may start the process of transforming the organization by sharing the principles of virtuous organizations with a group of coworkers with whom they work often or share common concerns. 

Together, they may lay claim to bold aspirations as to how they can use their team’s resources, strengths, and responsibilities to support the company’s mission and vision. They can draw on data to give strength to an idea, identifying barriers and mitigating risks – working the idea until there is consensus and then regular prioritization of the initiative, backed up by the commitment of resources and capabilities. The transformation has begun with the ownership of an individual moving into a team. 

From there, the team may work with other teams or within their department to replicate the experience. This ripple process may begin strategically or organically, with a compelling change story that continues adoption until their entire department has aligned to the organization’s mission and has elevated their practices. These efforts can then spread to other employees and departments who will join the effort to institutionalize culture, practices, and policies that support the mission of the organization to elevate society.Though organization-wide ownership and commitment is shown to be the most critical component for successful change outcomes, executive involvement can hasten change by raising the changes as priori-ties and committing resources, and instituting accountability. 

People care about where they work and what their work accomplishes in the world. Virtuous organizations are started and strengthened by institutional leaders with the vision to use their organizational power to impact the world beyond their profit model, or by the less formal leadership of an employee to start making change where they stand. Becoming a virtuous organization is a continuous and aspirational process requiring time, iterations, and celebrations. Virtuous organizations encourage leadership to find ways to improve not only their product and service, but their alignment to a vision and mission to create greater value. To aid in this process, a virtuous organization creates and supports a climate for employees to initiate and adopt new ideas – indeed, to show leadership – as they actively participate in connecting to the mission, other stakeholders, and society’s deepest needs.

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