peer review

Vol.:(0123456789)1 3

Journal of Business Ethics (2023) 188:429–440 https://doi.org/10.1007/s10551-022-05306-8

ORIGINAL PAPER

The Values Change Management Cycle: Ethical Change Management

Dinah Payne1 · Cherie Trumbach1 · Rajni Soharu2

Received: 31 May 2022 / Accepted: 5 December 2022 / Published online: 21 December 2022 © The Author(s), under exclusive licence to Springer Nature B.V. 2022

Abstract Culture is the most difficult thing about an organization to change in a lasting way. Our paper is predicated upon the idea that better ethics leadership through change is the foundation to more successful implementation of change. Ethical culture will enable the firm to initiate the change process from a stronger position: the obstacles to change such as mistrust, fear of uncertainty, failure of communication and empowerment will be easier to overcome in an atmosphere pursuing the ethically correct approach, combining ethical leadership with an ethical corporate culture. Our idea goes one step beyond the virtu- ous change circle by incorporating a series of check points a leader can reference to stay on a course of change management based in good ethical principle that will lead to effective change. Our model incorporates the concept of values into the management of change; this allows for a more comprehensive approach to change management by the utilization of well- known change management principles used in conjunction with basic principles of ethics. We argue that the change leader can depend on this more comprehensive approach for a better assurance of ethical and therefore more effective change. Our idea also would be effective regardless of the type of change confronting the organization and/or the leaders of the firm. Our point is that, while change is by its nature hard and there is an inclination to resist change, with ethical change management, the firm has a better chance of success.

Keywords Change management · Organizational culture · Ethical leadership

Introduction

Efficient change is necessary for business (or any) organiza- tions to succeed. Indeed, efficient change in organizational success is particularly relevant today in this world of rap- idly changing geographic environments, even for smaller firms, i.e. from the domestic to the global environment or the rapidly changing business environment, now characterized by dynamically continuous and discontinuous innovation. “There is no doubt about the importance of innovation. As markets become increasingly globalized and competitive,

and the pace of technological change grows, it is now widely accepted that organizations have to compete more in terms of the time-to-market and innovativeness of their products. Innovation is considered essential for successful business performance in response to task and institutional environ- ments (Zanko, Badham, Couchmand and Schubert, 2008, p. 562).” Further, “(a)gainst a backdrop of increasing globali- zation, deregulation, the rapid pace of technological inno- vation, a growing knowledge workforce, and shifting social and demographic trends, few would dispute that the primary task for management today is the leadership of organiza- tional change (Graetz, 2000: 550).” A burning question, then, for business and academic leaders is how to effect posi- tive, efficient change. Within the leaders themselves is the clue to the answer: leaders can steward effective change that will serve the organization well, thus also serving society’s needs. We argue that the most necessary element, beyond mere business acumen or skill, for change management suc- cess is ethical leadership. “(L)eadership and change go hand in hand. …(there is a) positive relationship between value alignment, leadership behavior, employee commitment and goal achievement (Burnes & By, 2012: 239–240).”

* Cherie Trumbach [email protected]

Dinah Payne [email protected]

Rajni Soharu [email protected]

1 University of New Orleans, 2000 Lakeshore Dr, New Orleans, LA 70148, USA

2 Rensselaer Polytechnic Institute, 110 8Th St, Troy, NY 12180-3590, USA

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This paper is organized into sections which relate to progression of our ideal change management process, what we call the Values Change Management Cycle. The first section of the paper concerns leaders and includes descrip- tions of the different types of leaders there are, offers a brief comparison of leaders and managers and presents potential systems of leadership values or ethical approaches avail- able to leaders. A review of stakeholders is included, as is a review of what constitutes an ethical organization. Incorpo- rated into the description of the types of change are also the principle reasons for change resistance. Further, we provide a brief review of change management techniques. Finally, we present our ideal change management process, which incorporates leadership, ethics and managerial practice and is designed to elicit effective change management.

In the “virtuous” change circle, the authors identify planned change, the collective good and utilitarian conse- quentialism as the elements that would assure transparency, participation, and democratic decision-making relative to changes confronting the firm.

While much has been written on the subject of leadership and the subject of ethics, we find a dearth of research on the issue of ethical leadership in change management (Burnes & By, 2012; Schaubroeck, Hannah, Avolio, Kozlowski, Lord, Trevino, Dimotakis, Peng, 2012). Therefore, we attempt to further Burnes & By’s, 2012 work on the ethical leadership of change management wherein they offer the virtuous and vicious change circles. Our ethical leadership cycle inte- grates additional elements to the process than those offered by Burnes and By: we argue that folding these ethical ele- ments into a cyclical process, in fact into the organization’s culture and the leader’s own style, will make a positive dif- ference in the effective management of change.

Leadership

TUCKER and Russell (2004) write about the differences between transactional and transformational leaders as the differences relate to change management. Ultimately, trans- formational leadership is needed to engage in effective change management, while transactional leadership is the necessary foundation for successful transformational leader- ship (Covey, 1991; Burns, 1978; King, 1994; Mink, 1992, Davidhizer and Shearer, 1997; Schuster, 1994). Change management can only be successful if transformational leadership provides the end vision and transactional lead- ership provides the power structure by which transforma- tional efforts are achieved: “transactional managerial tasks must follow the new directions and adjust to the changes (Tucker & Russell, 2004: 104).” Thus, we must define these concepts, knowing that the one is needful of the other and that the other is needful for effective change management to occur.

Tucker and Russell (2004) note that transformational leaders can impact organizational culture in several ways. First, they can influence the internal attitudes of the internal organizational members. Because transformational lead- ers emphasize engagement with their followers, in listen- ing to them, providing appropriate response, helping them develop as workers/leaders and thus strengthening organi- zational commitment, these leaders influence attitudes and the behaviors that stem therefrom. The energies created by good transformational leaders that flow between leader and follower are synergistic to the point that new behaviors will develop, causing the “culture among followers (to take) on a new dynamic (p. 106).” Connected to this notion of the crea- tion of a new cultural dynamic, Gebert et al. (2006) found that transformational leadership fosters a shared social iden- tity, allowing for empowerment amongst stakeholders, which should lead to more effective change.

The second way that leaders can influence organizational culture is to influence the culture of the firm itself through the use of teams, innovation and productivity (Shieh & Wang, 2010). Team-centric transformational leaders foster both innovation and learning by individuals, thus impacting work outcomes (Klaic, 2020). The transformational leader interacts with followers’ psyche and consequent behaviors to influence followers’ values (Brown, 1994). The use of transformational leaders in teams provides a platform for managerial development among all levels of followers, fol- lowers who become leaders of their own teams at their own levels: the transformation change thus permeates the struc- ture of the firm. Tucker and Russell (2004) assert that trans- formational energy thus created leads to greater effective- ness and, thereby, higher levels of performance and higher productivity. “Productivity and innovation improve when transformational leaders emphasize culture and values in an organization… (V)aluing, listening to, and serving people affects growth and outcomes (p. 107).” Leaders thus help organizations create new perspectives and a more flexible approach to meeting environmental challenges (Mink, 1992).

Burnes and By (2012) define leaders as associated with ethics. They derive a definition of leadership that reflects that leadership is a process, just like change, that is a function of individual wills and needs in a dynamic, organic organiza- tion. Further, the process is one of adaptation and evolution, just as culture and organizational culture are (Adler, 1997). Leadership and change are inseparable; so “the prime task of leaders is to bring about change to maintain and enhance organizational success (Burnes & By, 2012: 239).” Building on that definition of leadership, the authors continue with the point that ethical leadership is a key element to affect- ing positive organizational change. “(T)he importance of ethical values is that they influence behavior, especially in terms of whether organizational goals are judged as right and appropriate…(There is a) positive relationship between

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value alignment, leadership behavior, employee commit- ment and goal achievement (p. 240).” Tracey and Hinkin (1998) provided further insight: transformational leadership is based on higher ideals of what is morally valuable, provid- ing a platform from which a more credible leader can shape and share a vision of the future, of the changed organization. Dixon (1998) found that a transformational leader’s behavior is influenced by his self-confidence, inner integrity, hon- esty and personal values: clearly, the ethics component is a strong component of such a leader’s effective management of change. Where there is both trust and valence in leader- ship, employee engagement increases (Islam et al., 2021).

As facile as it might sound, one last thing to note is that leaders of change must accept that, as they are the ones being looked to for guidance and championship of the change, they are also the starting point for the attitude taken towards the change. Recalling the trickle-down effect, Tanasoaica (2008: 622) writes that “(T)he organization will reflect the leader’s attitude, so it is crucial to rapidly come to grips with the change and identify the opportunity it offers.” The leader’s identification of the needed change and his response to it will trickle down to all lower levels of managers and work- ers. They will be more likely to be less afraid of the change and more interested in pursuing the change if the leader’s attitude depicts confidence in the necessity for change and the way the changes are being made. “(S)enior leaders play a significant role in cultivating shared ethical understand- ings at lower levels, working not only through direct effects and indirect influences through ethical culture, but also by constraining or facilitating the influence of ethical leadership at lower levels (Schaubroeck et al., 2012: 1073).” Tucker and Russell (2004) call this the “cascading effect,” an effect caused by the external and visible behavior of the leader

on the organization. “The leader’s behavior motivates and creates an impression that the leader has the competence and vision to achieve success… Changes in behavior are necessary to change culture… Therefore, a leader’s rational behavior affects the organization (p. 104).” Table 1 provides a comparative summary of the concepts of manager, leader, transactional leader and transformational leader. The cul- mination of managerial expertise is in the development of the transformation leader, one who assumes all the charac- teristics and abilities of a manager, leader and transactional leader in his transformation of the workforce and work place.

Stakeholders and the Firm as Stakeholder

That “(a)n organization is expected to contribute positively to the community by effectively addressing the delicate bal- ance of its stakeholders’ interests (Armenakis et al., 2011: 305)” is an important statement. Like the fact that business leaders must be able and willing to develop and utilize busi- ness knowledge, skills and acumen, so should business lead- ers exercise ethics in their leadership. As symbiotic mem- bers of society, the firm cannot exist without society nor can society exist in the absence of business to fulfill its needs. Donaldson and Presto (1995: 66) describe organizations as “a constellation of cooperative and competitive interests.” It is these interests which can be viewed as stakeholders who are mutually dependent upon each other. This mutual interdependence is an important source of the ethical nature of the relationship between business and society (DeGeorge, 2010). It is also particularly important in the relationship between the internal stakeholders of leaders and followers, as well as between internal and external stakeholders.

Table 1 Managers, transactional leaders and transformational leaders (adapted from Coetzee et al., 2014; Luthans & Doh, 2012; Ricketts, 2009; Tucker & Russell, 2004)

Managers Leaders: in general Transactional leaders Transformational leaders

Learn necessary skills Have innate leadership traits Represent the foundation of transforma- tional leadership

Represent the culmination of knowledge, skills, and abilities of managers

Maintain status Lead to heightened status Value the relationship between leader and follower

Set high goals for selves, others and firm

Oversee Motivate Motivate for task clarity Take responsibility for change Note flaws to improve upon Recognize good work Expect reciprocal and reciprocated

benefits Create energy synergy to achieve col-

lective well- being, while exhibiting interest in the individual

Focus on efficiency Focus on effectiveness Create power structures to achieve the transformational leader’s vision

Motivate, influence and stimulate creativ- ity and commitment

Have immediate authority Earn respect Provide leadership vision in envisioning new ways to view the environment and the firm’s place in the environment

Follow firm objectives Make decisions Have present vision Have future vision Do things right Do the right things

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Stakeholders

Stakeholders have been identified as anyone who is posi- tively or negatively affected by the actor’s actions (Raiborn & Payne, 1990; Wood-Harper et al., 1996). The traditional view of stakeholders identifies four groups: the firm, its investors, its suppliers and employees, and its custom- ers (Freeman, 1984). A broader definition of stakeholder “requires organizations to take account of and serve not just the narrow interests of shareholders, but the wider interests of society. This embraces anyone and anything which might be affected by or have an interest in the firm’s activities, including communities, governments and the natural world (Burnes & By, 2012: 241).” Indeed, either of the two views of stakeholder composition would include a large number of constituents. Since Burnes and By believe that “leader- ship and change are inextricably linked and that their effec- tiveness in achieving beneficial outcomes for stakeholders is linked to (leaders’) underlying ethical values (p. 248),” clearly leadership, effective change, stakeholders and ethics are inextricably intertwined. By et al. (2012) list employees, customers, clients and activities among their stakeholders. They further assert a responsibility of stakeholders: if the firm is to take into account stakeholder welfare, the stake- holder should actually be a positive part of the equation. The stakeholder has obligations just as the firm does in this symbiotic relationship: the stakeholders “should not be pas- sive observers, but have a positive and active role to play in identifying and ending unethical practices (p. 4).” Antonellis (2014: 86) asserts that “the manager needs to monitor the stakeholders involved in the change process to ensure that no unethical decisions are involved.” Coetzee et al. (2014) note that stakeholders should be identified and their motivations to act determined and understood. Further, such stakeholders should be “won” early in the change process to assure more effective change.

Ethical Organizational Culture: the Firm as Stakeholder

BURNES and By (2012) begin their change management offering with a definition of ethics taken from a dictionary: “ethics (is defined) as ‘moral principles that govern a per- son’s behavior or the conducting of an activity.’ (p. 240).” Tseng et al., (2010: 587) define ethics as “…the study and philosophy of human conduct with an emphasis on the deter- mination of right and wrong.” Velasquez (1998: 11) defines ethics as the “activity of examining one’s moral standards or the moral standards of a society, and asking how these stand- ards apply to our lives and whether these standards are rea- sonable or unreasonable.” Business ethics “is a specialized study of moral right and wrong. It concentrates on moral standards as they apply particularly to business policies,

institutions and behavior (p. 13).” Payne and Landry (2005) reiterate the notion that business ethics is a special ethics field focusing on ethical dilemmas with a business context used to determine if a businessperson’s actions are right or wrong. Business ethics is simply ethics found within the business context.

Interestingly, though not the subject of this particular effort, it has been found that ethical business practices are actually financially beneficial to firms adopting them. Jin et al. (2013) cite a “laundry list” of research that has identi- fied ethics as profitable. Byus et al. (2010) found evidence that firms in the Dow’s Sustainability Index had higher gross profit margins and higher returns on assets than firms not listed on that index. This defense about whether better ethics makes better profit is not the concern of this paper, but our paper is predicated upon the idea that better ethics leadership through change is indeed the foundation to more successful implementation of change.

Armenakis and et al., (2011: 305) assert that “(O)ne distinguishing characteristic of organizations that achieve (the) balance [between stakeholder interests] is often attrib- uted to organizational culture.” Organizational culture is exhibited in three ways or at three levels: cultural artifacts, beliefs and values consciously held and underlying assump- tions giving rise to the beliefs and values (Schein, 2004). Cultural artifacts include visible signs of the culture, i.e., dress, ritual and ceremony. Formal organizational process and unconscious understanding represent the foundations of the latter two exhibited characteristics of culture: the firm’s strategies, goals, and formal and informal practices combine with the individual’s own beliefs and values to form organi- zational culture. Schauboeck, Hannah, Avolio, Kozlowski, Lord, Trevino, Dimotakis and Peng (2012) assert that formal and informal ethical systems, comprising codes of ethics, authority to enforce ethical norms, reward systems for ethi- cal behavior, peer norming and development and use of the firm’s ethical story and history, represent the firm’s ethical culture. “Corporate culture consists of the leading common values and behavior…formed in long term management activities… (It) is important in enabling businesses to adapt to new situations and challenges. It promotes management innovation when a new business model is expected (Shieh & Wang, 2010: 396).” Ethical organizational cultures, cultures that take a stand against ethical violations, and develop a respect for leaders. Employees of these organizations drive innovation have the organization move forward (Nahar, 2018). It is the ethical culture that will enable the firm to initiate the change process from a stronger position for suc- cess in change: the obstacles to change such as mistrust, fear of uncertainty, failure of communication and empowerment will be much easier to overcome in an atmosphere of pursuit of the ethically correct approach.

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In addition to the element of culture, the recognition of the firm as mechanistic or organic should be considered. Mechanistic organizations are “authoritarian, controlling, relatively closed and coercive bureaucratic one(s) (Jin et al., 2013: 17).” Organic firms are “humanistic, democratic, ena- bling, open and trusting (p. 17).” These words alone are sufficiently descriptive as to which organization is going to be more ethical and/or open to the use of ethical princi- ples in the simplistic, perhaps too simplistic but neverthe- less perhaps appropriate, idea that closed, coercive societies are less interested in new ideas, new ideas engendered by democratic, enabling and open groups (see the literature on universalistic vs. particularistic cultural characteristics for more information on this matter: Verkuyten et al., 1994; Trompenaars, 1993; Lefebvre, 1982). Jin et al., 2013: 22 found that “ethical and socially responsible organizations may be developed through the advancement of organic value characteristics. Further, our findings show that ethical and socially responsible organizations do not need to sacrifice profits to achieve these objectives. In fact, our data point to higher profits in organizations that are more ethical and socially responsible.” Thus, it is not too much of a stretch to say that organic leadership, following principles of shared governance, transparency and trust, will not only lead to eth- ics permeating the organization, but also and thereby lead to improved firm performance. “(E)thical leadership is posi- tively related to ethical culture at lower levels (Schaubroeck, et al., 2012: 1070).” Combining ethical leadership with an ethical corporate culture will further effective change: “(i) t is only possible to bring about meaningful change if cred- ible and capable leaders lead the change process (Coetzee, et al., 2014: 828).”

Change: What is It?

Change has been defined in a variety of ways, as relevant to firm performance, the individual leader’s characteristics and actions, alterations in firm structure or human resources or differences in behavior patterns (Coetzee, et al., 2014: 828). Change can be developmental, transitional or trans- formational (Ackerman, 1986; Long & Spurlock, 2008). It can be represented by processes that change organizational relationships, structures, systems or processes to assure con- tinued firm survival (Felkins, Chakiris and Chakiris, 1993). More recently, Boomer (2011), suggests that change impacts attitudes and beliefs. Burnes (2009) offers that change must be voluntarily adopted. MacLean (2012) more prosaically suggests areas for change, citing performance, clarity in accountability and responsibility and cost effectiveness. All of these areas can be seen as both structural and process changes. For example, regarding the issues of accountabil- ity and responsibility, the discontinuance of what he calls the “blame culture” is a change that could involve both

structural and procedural changes, as could the idea of cost effectiveness in a reduction of redundancy and the elimina- tion of the silo mentality.

By (2005) provides a comprehensive list of the types of change, including the scale of change, the causes of change and the rate of change occurrence. The scale of change can be change that occurs at the departmental level and is designed to refine leadership with regard to specialized activities at that level, such as creating units specifically to increase volume and attention to cost and quality. At the incremental level of change, “distinct modifications” to man- agement practice are made regarding process and strategy. The modular transformational level of change encompasses major shifts for one or more departments, while the corpo- rate level scale of change is “characterized by radical altera- tions in the business strategy (p. 377),” as in a reorganization or a revised mission statement.

Change can be identified by how it is precipitated, as well: it can be planned, emergent, contingency or choice. As this paper builds on Burnes & By’s, 2012 article, in which planned and emergent change are the focus, we will focus on those two types of change, as well. Emergent change is first a rejection of planned change, of which more later, and which envisions change as a series of turbulent and ever-changing environments. “(C)hange is not a linear process or a one-off isolated event, but a continuous, open-ended, cumulative and unpredictable process of aligning and re-aligning an organization to its changing environment (Falconer, 2002) (in Burnes & By, 2012: 243).” Emergent change tends to occur from the lower levels of the firm. Noting that change is unpredictable by nature, By describes emergent change not as “a series of linear events within a given period of time, but as a continuous, open-ended process of adapta- tion to changing circumstances and conditions (By, 2005: 375).” Interestingly, such a process is similar to the spiral of cultural development (Adler, 1997).

Planned change is distinguished by a recognition of the need for change in a participative, open and ethical change process (Lewin, 1947). Change represents a learning process of four steps: exploration, planning, action and integration (By, 2005). “It is an iterative, cyclical, process involving diagnosis, action and evaluation, and further action and evaluation. It recognizes that once change has taken place, it must be self-sustaining (Burnes & By, 2012: 243).” Planned change is most often appropriate: the process as applied here can help the firm understand how to move from one state to another; it “describes the stages an organization must go through to achieve successful change implementation (By, 2005: 374).”

Finally, the change in rate of occurrence can be identified as a variety of types of changes: discontinuous, incremental (smooth or bumpy), continuous, continuous incremental or punctuated equilibrium. As this paper does not primarily

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concern types of change, but rather how to ethically and effectively implement change, a detailed review of these changes is not necessary. It is sufficient to note that the changes described here relate to the rapidity with which the changes occur as well as the timing of the change; for example, “bumpy incremental change…is characterized by periods of relative peacefulness punctuated by acceleration in the pace of change (By, 2005: 372).” For a more compre- hensive review of the types of change, please see Table 2.

Resistance to Change

Change-oriented leadership, employee adaptability, and internalization of organizational values precede readiness for change (Indriastuti, 2021). Without readiness, cultural challenges abound in the realignments and resettling associ- ated with change: Prokesch (2009) indicates that this sense of what we call ‘push-back’ to change can be overcome with, for example, maintaining management teams intact during the change to the greatest extent possible. Resistance to change might come less strongly if those being requested to change know and trust from whom the change is being directed. Prokesch also warns against top management del- egating power to the lower levels, then being unhappy about how a change might have been implemented and taking the lower leadership to task about the perceived failure. He also notes that management that might be new to the organiza- tion must be given time to learn the new culture they have entered into, to assimilate the cultural characteristics of the organization: this will not only ease the indoctrination of the newcomer, but perhaps make it easier for this person to adopt the change being proposed.

Tucker and Russell (2004) identify obstacles to change as potential dangers and abuses of transformational lead- ership. Noting that transformational leadership is ripe for abuse, they describe the origin of the potential danger as being within the interactions of leaders and their followers and the power struggles that may result. “Problems can arise when leaders attempt to practice transformational leadership without relying upon a strong ethical and moral foundation (p. 107).” Personality elements like compulsions, urges, motivation, etc. can have a negative effect on the ability to succeed as a transformational leader. “…(L)eaders who lack integrity can rely upon deceitful and manipulative methods to get people to follow their agendas for the leader’s benefit along (p. 108).” They also cite abuse of power, particularly coercive and utility power, self-absorption, pride and ego- tism as possible sources of leadership failure. It is notewor- thy that the use of power can indeed be a positive thing: “(P) rinciple-centered leaders distribute power to other people. In so doing, they engage people in a positive power exchange rather than allowing the leader to become a ‘black hole’ of power (p. 108).” Ta

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435The Values Change Management Cycle: Ethical Change Management

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Litch (2005) describes the two mental states in which people greet change and neither is easy to manage: the rational dimension and the irrational dimension. The rational dimension addresses the real logistical problems with actu- ally effectuating change, while the irrational dimension encompasses the “human” side of the equation. It is the human side, associated with the firm’s culture, silos, fear of uncertainty, etc. that can be most difficult to manage: i.e., first, leaders must recognize what the culture is and then recognize the need to lead people through the change, rather than simply dictating that this change will occur. Overcom- ing resistance requires two sets of processes: managers should develop techniques to quiet uncertainty and adopt- ing characteristics of a change leader. “They (those affected by the change) ask, ‘How will my life be different? People fear the unknown. They respond first to the loss they are facing instead of some indefinite gains they may receive in the future (Litch, 2005: 21).” The following table, Table 3, adapted from Litch (2005), describes techniques to effect change effectively and characteristics of effective change leaders. Exhibit 1 is a list of actions the transformative leader can take to more effectively implement change.

Ethics in Change Management

Of particular importance to this effort, Armenakis, et al. (2011), invoking Schein’s (2004) three levels of organi- zational culture, use the labels of ethical and unethical to describe organizational culture. “For example, an artifact of an ethical culture might be a formal code of ethics, based on an espoused belief/value of ‘we conduct business honestly,’ which is an expression of the underlying assumption ‘if we cannot be ethical in conducting our business, we should not exist (p. 306).’” Further in this vein, Armenakis and et al., (2011: 306) offer stakeholder theory of management: “an organization’s performance should be judged in terms of economic, legal, moral and philanthropic responsibilities.” This is again of particular importance in this effort: our point

is that, while change is by its nature hard for us, something to be resisted, if we manage change ethically, the firm has a better chance of success with the management of change, ultimately, hopefully, the ethically implemented change leading to bettered performance and, again, ultimately, better fulfillment of our economic, legal, moral and philanthropic responsibilities.

As Tucker and Russell (2004), Bass and Steidlmeier (1999), Arterburn (1996) and Covey (1991) all contribute, transformational leadership, i.e., good ethics are essential in effective change management. Summarizing Bass and Steidlmeier (1999), Tucker and Russell (2004: 107) relate that the effectiveness of transformational leadership is based “in three essential pillars: (1) moral character, (2) ethical val- ues, and (3) the morality of the processes of ethical choices. These pillars primarily affect the treatment of followers. ‘Followers should not be mere means to self-satisfying ends for the leader but should be seen as ends in themselves (Bass and Steidlmeier, 1999: 186).’” This refusal to treat followers

Table 3 Resistance Management (adapted from Litch, 2005)

Overcoming resistance Characteristics of a change leader

Do not feel personally responsible for effecting the change: the leader is simply sharing the information about the change, not using it to destroy employees’ lives

Accept that the ideas for change may or may not be really good: becoming wedded to an idea others legitimately think is not good is dogmatism sure to fail

Allow affected employees to express feelings of concern, confusion and anxiety

Describe the change and anticipated results, which should be positive, inviting acceptance

Engage in incremental stages of change to prevent the feeling of over- whelming change

Build trust and credibility before announcing or making changes: acceptance will be more likely if the change is from a trusted source

Accept that the acceptance of change is bound in culture and that cul- tural change is a long-term proposition

Retain sufficient familiar organizational cultural characteristics such that the firm is indeed the same firm originally prompting employee loyalty and buy-in

Exhibit 1 The Leader’s “To Do” List for Implementation of Effective Change (Denham & Kaberon, 2012; Lawson et al., 2013; Litch, 2005; Long, 2014; Zanko et al., 2008)

Shared mission/vision Commitment to innovation Use of leader insight Appropriate use of systemic power Creation of environment conducive to camaraderie Creation of environment conducive to knowledge spillover Creation of environment conducive to shared knowledge Creation of environment conducive to cross-functional collaboration Consistency of message Transparency Trust building Managerial and leadership competence Appropriate mechanisms for conflict resolution Accountability

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(or anyone) as a means to one’s end mirrors classical ethical consideration to treat people respectfully (Kant, 1969).

Tucker and Russell (2004) and MacLean (2012) identify accountability as important in good transformational lead- ership. “Maintaining accountability keeps leaders from isolation and nurturing their ‘dark side.’ It also helps keep leaders’ focus off themselves and on the people who follow them. Good transformational leaders sacrifice pride, share their power and develop humility (Tucker & Russell, 2004: 108).” MacLean widens the concept of accountability to include compliance with role definitions, understanding of expectations of the defined roles (interface), and the setting of clear, known boundaries between roles. Effec- tive change management mandates “role alignment (that) requires participation by people who will actually be in the roles and have familiarity with the potential conflicts and interface issues (MacLean, 2012: 113).” In the same vein, Tucker and Russell, as well as Covey (1991), cite humility as a stable characteristic among good, strong leaders who make significant contribution to their environments.

Burnes and By (2012) note the availability of both the deontological and teleological approaches to ethical decision-making frameworks, but used only the teleologi- cal system of ethics. The deontological system of ethics encompasses many different analyses, from Kant to Rawls to systems of justice, etc. This approach is the duty based approach, which assigns a duty to do something or not depending on the inherent duty existing to do or not do the action. For example, Kant (1969) described three moral imperatives: to act consistently universally, to act respect- fully towards others, mindful of their own inherent worth, and to act to respect the autonomy of others. The Kan- tian analysis reflects the values of consistency, integrity, respect and freedom of choice.

Simplistically, the teleological approach has two very basic theories, both of which are based in the conse- quences of the action, rather than an innate responsibil- ity: egoism and utilitarianism (Bentham, 1970; DeGeorge, 2010; Velasquez, 1998). Egoism is the utilitarian analy- sis as applied only to the decision maker and the conse- quences of the alternatives available as they apply only to him; it is a very ‘self’ centered analysis. Utilitarian- ism in the broader sense is the consequentialist approach taking into account all stakeholders: this is the one more appropriate from transformational leaders, charged with the ethical and effective development and implementation of change. In this analysis, the alternative that provides the greatest good for the greatest number or the least harm for the greatest number is the morally correct alternative; this analysis is reflective of utility and competence. In our development of the Values Change Management Cycle, we can use either the utilitarian or any of the deonto- logical analyses to support the concept of ethical change

management. Table 4 represents the ethical concepts found in basic business ethics principles as compared to those offered by change management authors. Notably, these terms are not mutually exclusive: they are reflective of each other.

The Circles: Vicious and Virtuous

BURNES and By (2012) offer descriptions of their ideas of ethical change management in the virtuous and vicious change circles. We offer an additional model by incorporat- ing the concept of values into the management of change; this allows for a more comprehensive approach to change management by the utilization of well-known change man- agement principles used in conjunction with basic principles of ethics. We argue that the change leader can depend on this more comprehensive approach for a better assurance of ethi- cal and therefore more effective change. Our idea also would be effective regardless of the type of change confronting the organization and/or the leaders of the firm.

Burnes and By (2012) incorporate emergent change into their vicious change circle, with individual good as the ulti- mate objective in an egoistic teleological approach to ethical decision-making. Emergent change is different from planned change; emergent change involves turbulent and dynamic environments, while planned change is more predictably necessary. This kind of change isn’t linear or isolated, but rather on-going and uncertain. The vicious change circle is precipitated by emergent change, the leader utilizing the egoistic consequentialist approach to assure his individual good. The manager adopting the egoistic consequentialist approach is a uses only costs or benefits in the calculation of what alternative to be chosen would provide the great- est good (or least harm) for the manager himself (Bentham, 1970; DeGeorge, 2010; Velasquez, 1998). The result is

Table 4 Principle Terms Applicable to Business Ethics and Change Management Ethics (Velasquez, 1999; Kant, 1969; Burnes & By, 2012; Bass and Steidlmeier, 1999; Arterburn, 1992; Covey, 1991; Tucker & Russell, 2004; McLean, 2012)

Terms of basic business ethics Ethical terms of change management leadership

Consistency Moral character Integrity Ethical values Respect Moral frame-

works for decision making

Freedom of choice Accountability Utility Humility Competence Focus on others

437The Values Change Management Cycle: Ethical Change Management

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leader-dominated decision-making processes that work to the opaque exclusion of stakeholders. This circle is depicted in Fig. 1.

Alternatively, planned change is distinguished by a rec- ognition of the need for change in a participative, open and ethical change process (Lewin, 1947). The learning process of change is repetitive, beginning with a diagnosis of change that should occur, continuing with action, evaluation of the action and so on, again, iteratively; change must be self- perpetuating (Burnes & By, 2012). In the “virtuous” change circle, the authors identify planned change, the collective good and utilitarian consequentialism as the elements that would assure transparency, participation, and democratic decision-making relative to changes confronting the firm. This broader approach to utilitarianism reflects the use of all sorts of human values as they relate not only to the decision- maker, but also to all identified stakeholders. This circle is depicted in Fig. 2

The Values Change Management Cycle

Our idea goes one step beyond the virtuous change circle by incorporating a series of check points a leader can refer- ence to stay on a course of change management based in good ethical principle that will lead to effective change. It is depicted in Fig. 3. In our values change management cycle, we have chosen the word cycle rather than the word cir- cle to indicate that this is a continuous process, changing and responding to the leadership and change environments: with the rapid changes and disruptive innovations constantly being presented to business organizations, the change pro- cess is ever present for a succession of leaders and followers.

First, the leader must identify himself as a transforma- tional or transactional leader regarding the prospective change. Depending on the nature of that change, i.e., more routine or more innovative or transformative, the leader will review the characteristics he needs to access found in Table 1. For example, if the leader must convince followers that a budget reallocation, while painful to some in the short- term, will ultimately be beneficial to overall health of the organization, the leader is a transformative leader who will have to take responsibility for the change, create appropriate synergies among stakeholders, motivate commitment to the reallocation and provide a leadership vision for the future.

The second step is for the leader to determine which ethical principles he will espouse: Kantianism, egoism, utilitarianism or any of a number of other approaches. These basic principles can be found in Table 4, along with well- established ethical change management principles. Again,

Egois�c Consequen�alism

Emergent ChangeThe Individual Good

Fig. 1 The vicious change circle

U�litarian Consequen�alism

Planned ChangeThe Collec�ve Good

Fig. 2 The virtuous change circle

Elements of effec�ve change, reflec�ng

the symbio�c nature of business and

society: The "To Do" lists

The Change and the Leader:

Transac�onal vs. Transforma�onal

Leadership Values and

Ethical Approach

Stakeholder and Firm

Characteris�c Iden�fica�on

Types of Change

Obstacles to Change

Ethical and Legal Accountability for Leadership

Decisions

Fig. 3 The vital change management cycle

438 D. Payne et al.

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using the change of a budget reallocation, the leader, already identified, for our purposes, as a transformative leader, might reference principles of respect for followers, integrity, util- ity, and competence as basic premises from which to act utilizing known decision-making frameworks, accepting his accountability to his stakeholders. These concepts, again, are merely checkpoints for an ethical transformative leader to tick to be better assured himself and to provide better assur- ance to followers that his actions are merited and based in the good of the organization.

Step three involves identification of stakeholders as well as the identification of the firm as being more mechanistic or more organic in its approach to doing business and managing human assets. In our example of budget reallocations, stake- holders can include a wide variety of those affected: manag- ers at all levels, employees and their dependents, customers, and the communities served. The nature of the firm relates to how controlling, mechanistic, is the organization versus how organic or, i.e., “humanistic, democratic, enabling, open and trusting (Jin, et al., 2013: 17)” the firm is. Evidence presented earlier indicates that ethical firms are indeed profitable, leading to the conclusion that the transformative leader leading an organic firm, incorporating the interests of the stakeholders will be more easily able to effect positive change, benefiting both followers and other stakeholders.

Grappling with identifying the types of change to be undertaken is the next step in the Values Change Manage- ment Cycle. Table 2 provides a very basic review of the types of changes a leader might be confronted with. This is the “substance” of the change the leader must lead and speaks to the fundamental nature of the changes. Using the budget reallocation example, questions such as is the change necessary to adapt to the environment, how continu- ous will the reallocation process be over what time period, what is the magnitude of the change to be expected, or what is the strategic nature of the reallocation relate to the type of change the leader should identify for the sake of clarity in defining the issue to better fashion the change process. Step 5 is recognition that there will be resistance to change. Knowing that change is resisted as a matter of human nature and identifying why change is resisted is critical in over- coming such resistance. Again using the budget reallocation example, people will feel threatened by what they fear may be a budget reduction for themselves or their units; allowing them to express their concerns, confusion or anxiety builds a community more trusting of the leader and, thereby, of the possible budget change. Table 3 is a resource for leaders to identify broad bases for resistance to change, helping to pro- vide a platform for crafting ways to diminish such resistance.

Finally, the leader should hold himself, as others will, accountable for his leadership behaviors, his actions in attempting or accomplishing change. “The most effective culture is a culture of accountability… With

accountability, people will embrace their roles in the facilitation of change and demonstrate ownership of their responsibilities. The attitude of ‘it’s not my job’ will be replaced with ‘what can I do to make the firm more suc- cessful? (Boomer, 2011: 26).” Clear roles and responsibili- ties are critical to accountability in change management (MacLean, 2012): not only will this ease concerns as to who is making the decisions, but also it will mean that an identifiable person can be approached about a particular element of the change. In a budget reallocation exercise, for example, the Vice President of Finance might be a person identified to be accountable for decisions, in con- junction with other top level leaders, to whom followers look for guidance, clarity and competence that the right decisions are being made. Once the decisions are made and the changes are implemented, depending on the envi- ronment, the process will begin all over again, this time incorporating into the firm’s culture the changes and the processes by which the changes were made, to shape future change management. Figure 3 depicts the Values Change Management Cycle.

Future Research and Conclusions

Future research associated with the Values Change Man- agement Cycle include designing a study to determine if it would be efficacious in practice as well as in theory. A survey could be designed that would test a few theories. For example, do leaders have different feelings than fol- lowers about the efficacy of ethical management of change. Further, the question of whether constructs such as the nature of change, ethics, accountability, etc. are inter- related, and, if so, to what degree could be explored. In the light of the relative lack of empirical evidence addressing relationships between transformative leadership and ethi- cal change management, the opportunities to continue to explore these ideas are great. “If transformational leader- ship is authentic and true to self and others, it is character- ized by high moral and ethical standards… At the same time, it aims to develop the leader as a moral person and creates a moral environment for the organization (Bass and Steidlmeier, 1999: 990).”

Our work offers a useful addition to the literature of change management. We know that change surrounds us; we know we must embrace it or face failure in business. Every additional managerial tool that can help affect posi- tive change, change continuously designed to improve per- formance, represents another “arrow in the quiver” with which we can better aim at the center of the target: success in business, success for stakeholders, success in improving the symbiotic relationship between business and society. Our

439The Values Change Management Cycle: Ethical Change Management

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model represents such an arrow to help achieve successful change.

Data availability No data are associated with this article.

Declarations

Conflict of interest There are no known conflicts of interest. The re- search does not involve human nor animal participants. There is not need for informed consent.

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