Ethical, sustainability and social impact (ESSI) issues can be discussed as highly influencing the organizational cultures. To guarantee that organizations develop according to the principles of sustainability, it is necessary to focus on their approaches to corporate social responsibility and the ethical behavior standards used in the workplaces (Waldman & Siegel 2008, p. 117). In this context, critical action learning (CAL) is important to be used to explore the workplace-based problem and to propose a plan of action that is dependent on the implementation of learning sets in the process. The purpose of this report is to identify the workplace-based problem, to discuss the theoretical background of the problem, to plan the application of the CAL to the problem, to propose effective steps of the action plan, and to present the observed outcomes of the process.
Workplace-Based Problem Identification
Non-ethical practices followed by leaders in organizations often cause an imbalance in organizational performance. If a leader is oriented only to maximizing profits and protecting the interests of shareholders without focusing on the corporate responsibility and interests of the other stakeholders, the principle of sustainability becomes violated and the organization can produce negative effects on the social environment (Allio 2011). In the concrete Saudi Arabian organization, the corporate mission and vision present ethical standards and environmental concerns because the company works to provide environment-friendly solutions to clients and it positions itself as having the new improved business culture. However, the workplace-based problem is in the fact that the Chief Executive Officer (CEO) supports the stated ethical and environmental principles only on paper, and his non-ethical behavior is observed in terms of promoting favoritism and unfair appraisal; focusing only on financial returns; violating corporate ethical principles of accountably, integrity, and transparency. There is a lack of compliance with ethical standards in the company, the CEO combines leadership roles, and the development of environmental projects does not address the ecological standards of the region.
There is a need for addressing this workplace-based problem in the organization because the leader’s non-ethical behaviors result in affecting the community’s life in terms of ignoring stakeholders’ interests. To address the problem, it is important to draw the Executive Board’s attention to the necessity of improving the ethical and sustainability standards followed in the organization while organizing the ethical committee and developing the system of regulations to control non-ethical behaviors of all leaders, including the CEO. The ethical decisions regarding the projects’ development and promotion of employees made by the CEO should be checked by the ethical committee with the focus on their transparency, accountability, and integrity. Although this task is challenging because of the cultural context, it is possible to organize the ethical committee as the company aims to follow the Western patterns regarding codes of ethics.
Non-Ethical Actions of Leaders and Organisational Responsibility
The absence of clearly defined ethical standards in the organization can lead to developing ethical dilemmas because of ignoring principles of transparency. Referring to Dench, speaking about the ineffectiveness of the CEO’s approach to making ethical and sustainable decisions, a person can become a whistleblower, and he should be protected (Dench 2006, p. 1014). In the case of the discussed organization, a whistleblower is at risk of being fired. Moreover, as it is noted by McManus, there are many barriers associated with implementing new managerial ethical-oriented strategies in organizations (McManus 2011, p. 214). Ethical strategies need to be integrated into the company because their absence leads to violating principles of the organizational responsibility, violation of integrity and accountability principles, development of poor policies, and violation of organizational values (Small 2011, p. 837). While ignoring ethical standards and focusing on maximizing profits, it is almost impossible to succeed in competition (Allio 2011, p. 5). The leader needs legitimate purposes to succeed and apply the principles of organizational responsibility.
In addition to the principle of transparency, the leader should also develop the culture based on the integrity principle, according to Verhezen (2003). In this case, formal and informal methods need to be used to improve the ethical culture (Verhezen 2010, p. 187). It is also important to state that proposed ethical rules and principles in the code of conduct depend on the culture and social rules (Gick 2003, p. 150). Holt (2006) also states that leaders should apply good and ethical managerial approaches while developing their ethical attributes.
Organizational Responsibilities to Stakeholders
Stakeholders play a key role in determining how the organization will develop and compete. According to Parmar et al. (2010), it is necessary to refer to the stakeholder theory and focus on adding value for stakeholders while making sure they are not silent and not afraid of opposing the leader’s views when leaders behave unethically or in contrast to the corporate social responsibility standards. Thus, the failure to consider the stakeholders’ interests in the management of an organization can be critical for leaders (Cennamo, Berrone & Gomez-Mejia 2009, p. 492). It is possible to speak about the stakeholder legitimacy when these actors’ interests determine not only ethical but also managerial approaches (Santana 2012, p. 258). It is the task of leaders to address the stakeholders’ interests and provide them with opportunities to express their opinions, and it is the aspect of the organizational responsibility to stakeholders.
Sustainability Principles and Corporate Social Responsibility
Sustainability in organizations means that leaders are oriented to address the needs of the people, economic needs, and environmental needs, but it is necessary to differentiate between notions related to sustainability to apply them in management (Wikström 2010, p. 100). The triple bottom line is important to understand the spheres in which leaders need to perform as responsible actors because the costs of ignoring these pillars and principles are high for organizations (Cortez 2011, p. 16; Dhiman 2008, p. 52). To address the principles of sustainability effectively, leaders need to develop the standards of corporate social responsibility (CSR) in addition to the used ethical standards to meet the requirements to the social, ethical, and ecological progress (Menz 2010, p. 117). Implementing the CSR policies to act ethically about stakeholders, organizations should refer to widely-used frameworks of CSR (Freeman & Hasnaoui 2011, p. 420; Waldman & Siegel 2008, p. 117). It is also important to state that by focusing on corporate and social responsibility, leaders promote the adoption of principles of integrity and accountability (Pava 2008, p. 806). As a result, socially responsible activities and the strategic approaches to discussing them and forming codes of ethics are the keys to achieving sustainable development for the organization (Galbreath 2009).
Application of CAL to the Problem
Critical action learning is important to be applied to the process of resolving the identified workplace-based problem. To focus on the individual analysis of the problem, it is important to examine the literature studied in the module and select the theoretical explanations and practical steps that can be implemented to address the concrete problem. It is the first step in the problematizing process. The next step is the focus on dialogues and Learning Set activities to apply the collective reasoning to address the stated issue. The overall critical action learning process needs continuous questioning regarding the appropriateness of collectively proposed ideas to address the problem. The proper analysis of the theoretical literature and the further discussion of the activities with the help of the Learning Set are significant to propose the model for the further application of this process while working to resolve the discussed problem in the organization.
The Plan of Actions
It is important to propose the plan including a series of steps that need to be implemented to transform the observed situation and resolve the identified workplace-related problem. The CEO’s non-ethical behavior can be viewed as a result of the lack of effective ethical strategies and lack of focusing on such principles as transparency, integrity, and accountability (Dench 2006; Pava 2008). To prove or disapprove of this important assumption to continue working on the problem, it is necessary to examine the context. Therefore, the first step is the following one:
- Step 1 – The analysis of the ethical documentation used in the organization to determine the followed ethical rules and principles.
When the information on the organization’s mission, vision, ethical values, and principles are examined and analyzed in terms of determining possible weaknesses in the code of ethics, it is important to cooperate with the stakeholders as interested community representatives to improve current standards. Principles of accountability and transparency should also be taken into consideration during the process of developing the plan and standards to strengthen the currently used corporate social responsibility strategies to avoid unfair practices, favoritism, and possible corruption (Dench 2006; Pava 2008; Waldman & Siegel 2008). It is also necessary to pay attention to moral rules followed in society to explain the ethical decision-making of the CEO (Gick 2003). The next step to develop relationship networks is the following one:
- Step 2 – Collaboration with stakeholders and ethical officers to improve the ethical and sustainability standards followed in the organization.
When the code of ethics is improved as well as statements regarding corporate responsibility and social sustainability, it is reasonable to develop the system of regulations to control non-ethical behaviors and to specify the integrity compliance requirements and prohibitions. If a leader acts non-ethically and violates principles of responsibility and sustainability, it is important to make ethical requirements stricter and propose formal and informal regulations (Verhezen 2010). Compliance should be enforced because ethics programs are most effective with the focus on strict regulation, and it is necessary to identify and prevent unethical actions directly in the company where the CEO demonstrates the improper behavior, and this behavioral pattern can be followed by other employees. Thus, the third step is the following one:
- Step 3 – Development of compliance standards, requirements, and prohibitions.
Ethical standards and responsibility statements will work only in the situation when there are effective control measures (Verhezen 2010). Monitoring activities performed by responsible persons should also be based on the principle of effective formal communication to report any cases of improper behavior or unethical decision-making to address the problem immediately (Gick 2003, p. 151; Parmar et al. 2010). The ethical committee should be responsible for monitoring ethical decision-making according to various frameworks of CSR (Freeman & Hasnaoui 2011). The fourth step is the following one:
- Step 4 – The organization of the new ethics committee to prevent the further violation of social responsibility and sustainability principles.
Finally, in addition to the proposed control measures, there is a need for effective ethical training in the organization to help the leaders and all stakeholders understand and apply the principles of accountability and integrity in their daily practice while focusing on the sustainable development of the organization and contribution to the community (Pava 2008, p. 807). In addition, environmental protection training is also necessary to address the ESSI in the organization to avoid the costs of ignoring the role of the environmental pillar (Dhiman 2008). Therefore, the final step is the following one:
- Step 5 – Development of training sessions in ethical behavior, ethical decision-making, and sustainable development (people, planet, and economics).
To promote the change, it is necessary to engage responsible persons to cooperate while resolving the problem. Thus, the ESSI principle can be implemented in the discussed culture to influence the behavior of the CEO in several ways. These ways include the revision of ethical standards and the revision of the CSR strategy. The ethical committee, including shareholders, managers, and independent actors, takes responsibility for deciding any unethical behavior, including the CEO’s one. It is necessary to persuade stakeholders to unite and address the ethical problems in the company while opposing the leader’s following style because of the aspects of the Saudi Arabian culture. On the one hand, the CEO’s behavior cannot be successfully regulated by stakeholders; on the other hand, involving shareholders in the ethical committee, it is possible to expect positive changes in the culture in the organization.
The primary outcome of the actions is the focus of the stakeholders’ attention on the ineffective standards, policies, ethical rules, principles, and regulations followed in the company and the focus on the absence of an effective ethical committee to address moral issues and monitor situations in which leaders can act inappropriately. The organization of the new ethics committee and the development of the ethical training programs are only planned steps. To speak about the appropriateness of the proposed steps to contribute to changing unethical behaviors and corporate responsibility principles in the company, it is necessary to state whether the compliance monitoring activities are planned in the company. To discuss the problem with stakeholders, several meetings were organized. Individual interviews were followed with employee meetings. Human resource managers from different organizations’ units were met and interviewed on the adoption of new codes of ethics and the organization of one ethical committee for all units. Although it was a challenging task to point at weak ethical strategies followed in the company, it was an important step toward resolving the identified problem. It was concluded from the interviews that organization of the ethical committee is discussed as a good idea, and it is necessary to involve both human resource managers and employees in the process, but the approval of the Executive Board needs to be received to organize the ethical committee for all units and determine limits for the ethical activities of leaders, including the CEO. Even though the positive outcome of this project is the orientation of stakeholders on changing the current situation in the organization, there are barriers associated with the cultural context and attempts to accept universal ethical frameworks in the concrete Saudi Arabian organization (Freeman & Hasnaoui 2011).
Having implemented the project, it is possible to realize with the focus on the learning sets and theoretical literature that unethical leadership behavior leads not only to ignore the stakeholders’ interests but also to the violation of the ideas of social responsibility and sustainability. The implemented project demonstrates that all principles learned during the module are important to be taken into account while developing an ethical strategy that can be effectively integrated into the concrete organization. The experience received during the application of learning set principles to the plan integration is important to accentuate the significance of developing appropriate corporate social responsibility approaches to address different types of unethical behaviors. When ethical standards are inappropriately implemented in the organization and the leader ignores these requirements, it is important to organize the effective work of the ethical committee and develop strict regulations to monitor the ethical situation in the company. This strategy is important to avoid conflicts among shareholders and other stakeholders because of the ineffective management approaches. It is also important to realize that critical action learning is an inquiry process that plays a significant role in solving actual organizational problems when many responsible actors are involved in the process to guarantee success.
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