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Integrating Ethical Perspectives in Organizational Change Management

Abstract

This paper explores the intersection of ethical considerations and change management within corporate contexts. Building upon theoretical foundations and practical case studies, the study argues that successful change initiatives are inherently tied to ethical leadership, organizational values, and inclusive practices. Using examples from corporate mergers and digital transformation, the paper emphasizes how ethics guide and impact change processes, enhancing organizational resilience and societal trust.

Keywords: digital marketing, social media, ethic, change management, innovation

Introduction

Digital transformation, globalization, demographic shifts, and economic crises present significant challenges to organizations, often necessitating substantial structural changes. Organizations that fail to adapt face the risk of long-term competitive disadvantages.

This paper, developed for the module „Ethics, Change, and Innovation,“ examines change processes within companies, demonstrating that change management cannot be disentangled from ethical considerations. Throughout this study, the following questions are systematically explored and supported by professional experience:

Describe, analyze, and assess your organization’s attitude toward change and innovation.
Discuss the positive and negative influence of organizational culture on the willingness of leaders and employees to engage with change and innovation.
Evaluate the handling of planned and unplanned changes.
Discuss the role of organizational learning and cross-functional collaboration.
Identify ethical issues arising within your organization related to change and innovation initiatives and assess their potential impacts.
Formulate recommendations for your organization.

This study relies on relevant literature and credible online sources, using established theoretical models and findings from academic research to support its analysis. Following the theoretical groundwork in Chapter 2, the above-mentioned questions are addressed systematically in Chapters 3 through 9. The paper concludes with a summary and final remarks in Chapter 10.

Change Management

Globalization, digitalization, technological advancements, political changes, and social transformations necessitate change processes within organizations. Managing and controlling these processes is the core function of change management. Thus, change management can be defined as the „ongoing adaptation of corporate strategies and structures to changing conditions“ (Schewe, 2018).

The relevance of change management is evident: a simple Google search for the term reveals numerous universities offering master’s programs dedicated to change management. In Germany, a search on the job portal StepStone shows 3,268 vacancies for Change Managers, highlighting its importance. To successfully implement necessary changes and respond to developments and innovations, various measures in organizational and personnel development, communication, and process design are available. Tools such as project management, workshops, leadership development, and environmental and status analyses are commonly used to approach change management (Fleig, 2019).

Change Management

The stages of change management include analyzing the current state of the organization and defining the desired future state. From this, necessary tasks and work packages are derived. The planning phase involves defining goals and outlining the processes needed to achieve them, including conceptualization, time and budget planning, and risk analysis. The third phase, coaching, aims to prepare decision-makers and leaders for upcoming changes. Following this is the implementation phase (Phase Four), where changes are enacted, and Phase Five focuses on evaluating the achievement of goals (Mai, 2021).

Models for Describing Change Processes

Two scientific models have proven effective for executing change processes within organizations and are described in this chapter. These include Kurt Lewin’s Three-Phase Model from 1963 and John Kotter’s Eight-Stage Model developed in 1996. Both models offer a structured framework to examine, plan, and ultimately carry out change processes successfully. For both models, the integration of innovations into the corporate culture is essential.

Kurt Lewin’s Three-Phase Model

Kurt Lewin’s Three-Phase Model focuses on social changes within society and organizational development. It divides the change process into three stages (Heise, 2020).

Unfreezing (Preparation Phase): This initial stage aims to prepare for change. Once the need for change has been identified, the initiative must be communicated to all participants to foster understanding and readiness for the upcoming process (Werther & Jacobs, 2014).
Moving (Change Phase): This stage involves the actual change process, often characterized by uncertainty, lack of established routines, and a temporary drop in performance among employees (Werther & Jacobs, 2014).
Refreezing (Stabilization Phase): The final stage focuses on acclimatization, where new routines are formed through practice and repetition. This stage aims to embed new practices in daily activities to reduce error rates and improve performance. Continuous evaluation is crucial to ensure that individuals do not revert to old habits (Werther & Jacobs, 2014).

John P. Kotter’s Eight-Stage Model

Building upon Lewin’s model, John Kotter developed an Eight-Stage Model, emphasizing that a change process can only succeed if all stages are followed in sequence. Effective leadership is a prerequisite, as most change initiatives fail due to employee resistance or a reversion to old behaviors. According to Kotter, change processes within organizations can only be completed successfully if all eight stages are completed with substantial leadership support (Kotter, 2011). The stages of Kotter’s model are as follows:

Creating a Sense of Urgency: Convincing employees of the necessity and urgency for change within the organization.
Building a Guiding Coalition: Forming an interdisciplinary team from different departments to lead the change effort.
Developing a Vision and Strategy: Creating a vision and defining a common goal to inspire and guide employees through the change.
Communicating the Vision: Consistently communicating the developed vision to keep the common goal in focus and promote trust and motivation.
Removing Obstacles: Optimizing organizational structures and processes to facilitate smooth implementation of changes.
Creating Short-Term Wins: Defining interim goals to foster motivation and engagement throughout the change process.
Sustaining Acceleration: Continuously analyzing the current and desired state, generating ideas, and identifying areas for further optimization.
Anchoring Changes in the Culture: Ensuring that the new processes become fully integrated into the organization’s culture through automation and internalization (Kotter, 2011).

Theoretical Foundations

The second chapter of this paper focuses on providing essential background information, common terminology, and relevant theoretical models.

Ethics

Ethics is the scientific study of morality and a subdiscipline of philosophy. It is understood as the study of human behavior and actions, analyzing the values and norms underlying morality. To draw clear distinctions, related concepts such as morality and ethos are also considered within the context of ethics. Morality (from Latin mores, meaning custom or tradition) describes prevailing norms within a specific cultural context as well as values that have evolved historically. By contrast, ethos (from Ancient Greek ethos, meaning character or disposition) refers to the „ethical attitude of an individual or a social group.“ Ethics, therefore, serves as the systematic reflection on how life is organized and lived (Sajak, 2015).

Descriptive and Normative Ethics

A distinction is made between descriptive and normative ethics. While descriptive ethics refrains from making judgments and instead focuses on describing, systematizing, and explaining moral behavior, normative ethics adopts a position and makes evaluative judgments. Homann defines business ethics as the ethical justification of market-based order and corporate ethics as the assertion of moral norms in entrepreneurial actions (Homann, 2004). Corporate ethics, therefore, focuses on normative principles intended to guide the actions of leaders. Furthermore, corporate ethics necessitates cultural and structural adaptations within organizations to address ethical questions effectively. One key responsibility of corporate ethics is to define guidelines that leaders can follow (Thommen et al., 2020). „Corporate ethics describes the application of moral norms and values by leaders or companies, reflecting the normative conditions of entrepreneurial actions and their legitimacy“ (Thommen et al., 2020).

Levels of Business Ethics

Given its complexity, business ethics is systematically divided into four levels, which are explained below:

Micro-Level: This level focuses on individuals—the actions of individual people within their respective environments, such as workplaces, considering factors like working conditions. Concepts such as integrity, susceptibility to corruption, or lifestyle choices can emerge from this perspective.
Meso-Level: This level examines the actions of economic organizations from an ethical standpoint, which essentially refers to corporate ethics. The societal responsibility of businesses is captured through the term „Corporate Social Responsibility“ (CSR), which, along with sustainability management, is a central topic at this level.
Macro-Level: The macro-level considers the framework conditions set by the state, economic systems, and politics, which directly influence both the meso- and micro-levels.
Supra-Level: As a response to globalization and international collaboration, a supra-level is also distinguished, which examines cross-border regulatory frameworks from an ethical perspective.

Theoretical Foundations

Ethical Theory and Organizational Contexts: Definitions and distinctions among ethics, morality, and ethos.
Descriptive vs. Normative Ethics: The role of normative business ethics in shaping leadership principles.
Change Management Models:
Lewin’s Three-Phase Model (Unfreeze-Move-Refreeze).
Kotter’s Eight-Step Model for Leading Change.

Case Study Analysis: Organizational Culture and Change Readiness

CBS International Business School: Analysis of their adaptive strategies for fostering innovation and resilience, emphasizing organizational values like „openness“ and „modernity.“
Influence of Leadership and Employee Trust: The necessity of cultivating trust, motivation, and a willingness to innovate within organizations.
Organizational Examples:
Positive examples of fostering cross-departmental collaboration and creative meetings.
Challenges and opportunities encountered during change initiatives.

Planned vs. Unplanned Change Management

Planned Change: CBS and its merger with the European University of Applied Sciences as a case study.
Strategies employed: transparency, employee involvement, and phased communication.
Ethical issues encountered: data privacy during system migration, aligning sustainability standards.
Unplanned Change: Response to the COVID-19 pandemic, highlighting flexibility, remote work transition, and communication protocols.

Ethical Challenges in Innovation and Change

Digital Transformation and Ethics: Issues around data privacy, security, and the broader societal impact.
Sustainability: Integrating sustainable practices into organizational change frameworks.
Diversity, Equity, and Inclusion (DEI): Ethical frameworks promoting inclusive and diverse workplaces to support long-term change.

Role of Organizational Learning and Cross-Functional Collaboration

Continuous Improvement and Knowledge Sharing: Promoting a culture of organizational learning to respond effectively to change.
Cross-Functional Collaboration: Benefits and challenges of project-based teamwork to spur creativity and foster new solutions.

Recommendations for Ethical Change Management

Fostering Ethical Leadership: Embedding values-based leadership throughout all levels of the organization.
Promoting Transparency and Communication: Consistent engagement and trust-building mechanisms.
Embedding Ethics in Innovation and Sustainability Goals: Integrating ethical considerations into all phases of change initiatives.

Ethical Challenges in Change and Innovation and Assessment of Potential Impacts

The preceding chapters have shown that examining change and innovation processes today cannot be separated from ethical considerations. Digital products, in particular, require broad acceptance and societal backing. Key aspects of ethical debate also include privacy protection in the context of digitalization, as well as sustainability in production and distribution (Scherer, 2020).

While digitalization is often associated with attributes such as efficiency, security, democratization, and transparency, it also presents specific risks. These include surveillance, misinformation, issues of solidarity, discrimination, data protection, and privacy. Given the complexity of these topics, it is essential to address ethical questions proactively and engage with potential ethical risks (Strub, 2020).

Specific Scenarios in Organizational Change

Data Migration and Privacy Protection

In the context of merging the European University of Applied Sciences (EUFH) and CBS International Business School, all participant data must be migrated to a unified CRM system. This presents challenges in terms of handling personal data and ensuring privacy protection. According to Article 12 of the Universal Declaration of Human Rights, “No one shall be subjected to arbitrary interference with their privacy, family, home or correspondence, nor to attacks upon their honor and reputation. Everyone has the right to protection by the law against such interference or attacks” (Hause, Huppenhauer, & Kaiser, 2017).

Core principles of the General Data Protection Regulation (GDPR), enacted in May 2018, include purpose limitation and data minimization. Data should only be used for the purpose for which it was collected and only to the extent necessary for that purpose. It is recommended that a supplementary agreement be established with newly integrated students regarding data handling, and that data migration be incorporated into the university’s data protection management system.

Sustainability and Organizational Values

Ethical issues and conflicts can arise not only internally within organizations but also externally with third parties. For example, sustainability is a critical topic. Consumer decisions today are often influenced by environmentally friendly products or production methods that ensure a high level of protection for the environment and employees. Unlike the EUFH, CBS has integrated sustainability into its core brand values. Therefore, tensions may arise during the merger. To address this, it is necessary to foster awareness of sustainable work processes among new employees and align them with CBS’s guiding principles. Examples include implementing a „paperless office“ and achieving carbon-neutral operations across the organization. Regular joint audits and supplementary agreements during integration can strengthen identification with the organizational culture.

The theoretical clarity of abstract ethical norms often contrasts with their practical application, which can be ambiguous and challenging, illustrating the complexity and multifaceted nature of the topic. Additional areas where ethical considerations are unavoidable include tolerance, humanity, solidarity, and gender equality, particularly in human resource practices. Transparent communication and guidelines for contract adjustments are recommended for forthcoming organizational and procedural changes.

· Assessment of Potential Impacts

· The impact assessment of ethical considerations is clear: the credibility and authenticity of an organization are critical, not only internally but also from the perspective of customers. If an organization successfully embodies and communicates humanity and transparency, it can positively influence customer purchasing behavior, as well as employee motivation and satisfaction (Dunlop, 2021).

· A 2022 Deloitte study on marketing trends highlights that organizations can gain a competitive advantage by “making a positive contribution to society and communicating this through their brand messaging.” Additionally, focusing on “diversity and equality” is another key driver of success (Dunlop, 2021).

· Therefore, ensuring that organizational culture evolves transparently and with a future-oriented focus during the merger process is a major challenge. Failure to do so could undermine the long-term economic stability of the organization, particularly in a competitive environment.

Recommendations

Enhancing and Optimizing Innovation Culture

CBS has successfully demonstrated a democratic and transparent approach to change processes. Recognizing early on that corporate success and long-term competitiveness require adaptability, CBS views its employees as a valuable asset. To sustain and amplify positive impulses, CBS should continuously evaluate, optimize, and develop its corporate and innovation culture. Reminding employees regularly of the underlying values, allowing experimentation, and embracing mistakes are measures that can cultivate awareness among employees and drive positive development (Soltero, 2021)

Monitoring Trends and Developments

To ensure continuous organizational development, it is vital to track trends and new developments. Evaluating emerging technologies and insights and applying them to the organization is essential for maintaining a competitive edge (Google Knowledge Hub, 2021). Leadership guidelines can help foster respectful interactions between leaders and employees and promote sustainable resource management. Conducting ethics audits can further evaluate values and processes, strengthening and preserving awareness of ethical considerations across the organization.

Conclusion

This study has explored the complex interplay between ethics and innovation and change processes. In addition to developing the theoretical foundations, ethical considerations were examined and evaluated from the author’s personal professional experience. It was highlighted that ethical conduct is of great significance for organizations and must be actively practiced, as it is also a major focus within society. Successfully integrating ethics into organizational practices can lead to an enhanced reputation. This analysis has demonstrated that economic actions cannot be separated from ethical considerations. Digitalization, in particular, has a significant impact on both people and businesses, increasing the complexity of their environments and accelerating market changes. Consequently, organizations must adapt internal processes to react quickly and flexibly to competitive pressures. The accompanying transformation demands new competencies from employees and leaders and imposes new challenges on management.

Summary of Findings: Ethical considerations are indispensable in managing change effectively within organizations.
Future Implications: Suggestions for ongoing research and practical applications to navigate ethical challenges in future organizational transformations.

In the future, the effects of change and innovation will be even more pronounced for organizations, their leaders, and their employees. It is therefore expected that collaboration among employees within a company will continue to evolve. Given the rapid pace of technological advancements, it is advisable for organizations to monitor trends and developments, assess their potential influence on internal processes, and consider the implications for leaders and employees from an ethical perspective. Doing so is crucial for ensuring long-term competitiveness and maintaining a future-oriented position in the marketplace.

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