Effective Organizational leadership

Effective Organizational leadership

Vibash Mohanraj

BUS509: Stewardship and Governance

Dr. Patrick Kakwezi

06.06.2019

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Effective Organizational leadership

CONTENTS Page Nos.

Introduction 3

Conjecture of Supremacy 4
 Agency theory
 Reserve Reliance theory
 Stakeholder theory
 Operation outlay theory

Offerings of Management Presumption 7

Rapport of Leader Ethics and Successful Authority 9

Wrapping up 11

References 13

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INTRODUCTION

Stewardship is the prudent and trustworthy control of commitment to one’s care. This

term was first described to a job or work assigned to a person maintains a domestic unit

where the size of it is infinite or more in number. This theory detains that possession doesn’t

retain a firm; it’s solely keeping it in faith. It mainly rejects self-interest as the other theories

keep it as a starting point. Trust building is the main part of this theory as it keeps the

employees under the same roof for many years. Employees see themselves as a part of an

organization under steward mode because their part and goal-to-be achieved are spelled out

openly which puts the managers work efficiently. The relationship between the owner and the

steward (i.e.,) manager helps to decide the performance of an organization. This act results in

confident positive reward for an organization.

This type of corporate governance replaces rivalry with coactions and self-

centeredness with overhaul. This concept says that the workers serve as a central point and

principals are those who need to bring in the privilege. Many companies now-a-days try to

change the traditional connection between the principal and the steward and create infinite

ways of being together with them. The World Health Organization has defined stewardship as

the valuable trusteeship of general wellbeing. Many people and organizations defined this

type of governance based on the wellbeing of the employees and the duties performed by the

higher officials. Especially in South Asian regions many governance systems were followed

from the ancient days based on different religions. As a whole this theory has been initiated

to benefit the employees rather than the firm and directors, physical stress and mental stress

are rejected in this method of governance. Apart from the optimistic part there is also

pessimistic part which is questionable.

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CONJECTURE OF SUPREMACY

Corporate Governance is the practice of creation of choice and the progression by

which conclusions are executed in huge firms. The movement of the business is illustrated by

different theories supported on the connection among the stakeholders. High-quality

governance is a principle which is thorny to attain in its whole. It engages wide-eyed leader

who fetch their own thoughts, familiarities, fondness and potency and inadequacy to the

guiding principle counter. Every aspect has its own distinctiveness from that of the others. A

legal framework, intelligibility, openness, consent leaning, evenhandedness, completeness,

efficacy, competence, liability towards statements and contribution are the major

distinctiveness of a positive ascendancy.

AGENCY THEORY

Hires &
Delegates

Principals
Group Agents
theory

Performs

This theory describes the chief and manager relationship. The agents are hired to

perform the work of the organization and these agents are hired by the principals or chief

based on the requirement needed. This theory detaches the possession and power from the

principal. It also proposes rewards in monetary form to the executives which indirectly take

full advantage of earning company’s profit (Eisenhardt). A philanthropic board that functions

in the course of the group premises will give an idea about a practical supervision loom on

favor of the shareholders.

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RESERVE RELIANCE THEORY

This theory mainly spotlights on the part of board of directors in as long as right of

entry to funds desired by the business organization. Here, the board plays a vital position in

securing the organization’s wealth all the way through the links from the peripheral situation.

The experts in the directorial part provide training to the executives and mentorship guidance

to bring forth the performance of the company and also to exert a pull on the assets to the

firm. As a final point, it advocates that maximum of the assessments are being made by the

executives with the support of the board.

STAKEHOLDER THEORY

Investors

Political group

Customers

Communities
FIRM
Employees

Trade Associations

Supplier

Government

This theory is based on the assumption that not only the shareholders but also the

sponsor, supporting group, patrons, society, human resources, deal links, merchant and

regime also have stake in the organization. It also promotes corporate social responsibility,

which is a moral duty for operating, irrespective of the profit decline for the company in the

long run. As the stakeholders have the right to receive dividend out of company’s profit, the

board makes some responsibility for a reasonable return apart from the interests made.

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OPERATION OUTLAY THEORY

Operation outlay theory is also said as transaction cost theory, where the value is

formed by the deals in the firm or in the market.

Bargaining
and Decision

Search and Policing and

Information Enforcement

Types
of Cost

If a work is getting done by someone else then their cost raises based on this principle

transaction cost theory if framed. There are internal and external costs that better describes a

company’s net effects. The above said are the external costs that affects firms net profit

where the former is to discover the provider, followed by purchase and the later is to maintain

the quality. The internal costs are best described by asset specificity, firmness and rate of

recurrence.

These are an assortment of key theories of corporate governance followed by diverse

organizations to keep up reputation among the general public, employee’s wellbeing, gaining

profit, expanding the business to competitor level, encouraging corporate social

responsibility, cut down redundant cost and uphold the position in the national &

international market. Stewardship theory is one among them where are stewards wellbeing

plays an important role rather than the profit earned. The most uncommon one is the political

theories which draw attention to the authority, revenue and benefit in favor of the

government.

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OFFERINGS OF MANAGEMENT PRESUMPTION

External
shareholders
(Type 2 :
Beneficiaries)
Consumers, clients
& members.

External
External stakeholders
Stakeholders (Type 3 :
(Type 1 : Funders) Non-profit organization
Suppliers) For-
Private donors, profit, non-profit
BOARD &Public
Corporate donors
& Governments. organizations
MANAGERS

EMPLOYEES OPERAITONAL
VOLUNTEERS

The non-profit organizations can be segregated from simple to huge entities where

employees may be small or large. The funders become the principals who also involve in

decision-making after contributing a sum to the non-profit organizations. Audit plays a main

role in offering a donation to non-profit organization. The financial report is divided into four

variables which are extracted from the bookkeeping procedures are effectiveness, economic

immovability, fund-raising and eminence. These organizations are provoked to take action in

the benefit of their contributors. There are four main strategies for raising the funds, they are,

mutuality, dependability, coverage and affiliation fostering.

Mutuality illustrates the gratitude towards the fund raisers, may be in the form of a

written note mentioning it as a gift for tax deduction purpose. Dependability in the sense

considering the donors while informing them about the funds for any project or any other

purpose to make them feel that the funds are properly used. Coverage here refers to the

financial reports which include the accurate utilization of the funds provided by the donors.

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Affiliation fostering put up a relationship with the donors by inviting them to other events

held for any valuable principle. Crowd funding also provides a huge sum for these business

firms were this type of fund raising option is introduced by the higher officials of the

organization.

The costs are based on the psychological characteristics of the steward like inherent

stimulus, well-built recognition and receptiveness. The foremost characteristics bring-in the

excellence, expertise and learning from the workers to set up a reliance bond. The

environment that all the organizations sustaining now are vibrant which is not unstable in

nature. The external factors shift this type of organization from chain of command to

autocracy. The interests of the general public stay ideal which guides for the change to be

done in the public sector companies and also helps to maintain the reputation in the market.

The managers represent the place of the shareholders to obtain a fair return on the

deal made by the board. The fluctuation in the price of the shares depends on the duties

performed by the board members on behalf of the organization. Affiliation supply influences

in civilizing the community routine optimistically and also has a communication linking the

shareholders who has invested the maximum and the management. This kind of supply was

tracked down to the earlier days were Warren Buffet followed to have a friendly relationship

with the board and management. It is believed that he brought in more experiences than funds

and also a serving offer to the non-profit organizations.

The performances of this organization are measured by the objectives framed. For

instance, everyone have their own views and perspective while looking for the objectives

framed, so, the performance measurement may seem to be difficult and chaotic one for the

management. By improving the performance of the executive directors, directors, board and

thus communicating it to the stakeholders the routine extent can be used. The results from the

above said measurement should be discussed with the higher executives for getting better

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evaluation outcome and has to be kept an eye on the weaker sections and bring-in the changes

as required. Every country has its own principles, governance system and council for the

betterment of the country as well as the organizations which helps in development of the

nation’s economy. Many theories are theoretically strong but when it comes for

implementation infinite number of loop holes are found. This is because of the

underdevelopment in the methodology that is used for testing these theories in the business

units where profit is secondary motive.

RAPPORT OF LEADER ETHICS AND SUCCESSFUL AUTHORITY

An organization to achieve its objectives, prolong valuable supervision, target, and

excellence and to distribute eminence service it should have a possibly positive cream of the

crop and superior power system. Leadership is one of the oldest and most practical concepts

of creature narration and also a slightest tacit one for which many philosophers had different

definitions to illustrate it. Commonly described definition is that it an influence of one person

over the other to satisfy or fulfill the needs, objectives and goals of an organization, entity or

any other group. Mainly it is used to reach the common vision, mission strategies by group of

people working under a same roof. It directs the employees in the right path and also serves

as a medium between the principal and the fellow members of the business entity. This

begins from the early learning stage of an individual and continues to survive until one retires

from their work, could also be said as, last phase of life.

Governance is also a part of leadership; here the power is utilized for the countries

development both socially and economically. Rules and regulations are set to improvise the

business policies and welfare of the employees plays a vital role in recent governance system.

The main purpose of this is to construct a choice and put into practice those both in

prescribed and unceremonious ways. The performance of the colleagues depends on the

standard of the team head, their skill must be assessed carefully while taking-in numerous

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tests practically and theoretically must be kept to analyze the true performance and also the

past experiences must be cross-checked so that a huge loss may be barred at the earliest. The

requirement and qualification of a leader varies from organization to organization and also

from person to person.

The above chart describes about the process which is followed by the corporate

governance. The inputs given to the capital formation basically arise from the strategies to be

followed, the past experiences, the rules and regulation framed by the law and the important

one is the type which the organization serves. The various types of capitals invested are

carefully managed by the dynamics of the board as well as the team; the internal and external

environment controls the activities of the firm, it gives better output when compared to other

structures. The capitals inputted for a business are knowledge, tangible assets, explicit

knowledge of the employees working there and implicit resources. Apart from these

resources for capital a monetary capital would be needed to exercise the goals and powers

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towards attaining the market position nationwide and worldwide. Before appointing the

directors skills and experience must be analyzed carefully according to the requirement of the

business. Human capital is considered to be the most important one because without man

power goals and target could not be achieved.

The leader in an organization must be efficient enough to handle the governance at

various levels, which helps to accomplish the target, reach the goals and offer effective

services at the right time. The changing environment must be studied and changes must be

implemented after analyzing those changes in an effective and efficient manner to prevent the

risk of loss. Even a small negligence could create a huge loss and gives bad reputation where

the organizations market falls. Leadership and governance are inter-related, where the former

helps to improve the later in many ways.

WRAPPING UP

In the latest century an organization is well thought-out to be victorious only if the

leaders or so called board members and the firms’ governance system meet the standards and

requirements of the general public. Economic richness soulfully depends on the weight age

given to the chosen leaders and regulations passed in the annual meetings held without any

delays and struggles. Every member of an organization is responsible for the success or

failure, a successful leader considers the wellbeing of the co-workers or employees who work

under them. The concept of stewardship comes under the corporate governance structure

where leader considers the welfare of the supervisors and low level workers apart from the

profit or revenue earned. The board also supports this type of leadership in order to maintain

a good rapport among the employees who are reflected as the backbone of a successful

business unit. Accepting the change, encouraging the co-workers positively, achieving the

shared goals, sharing the risk and loss, asking ideas for improving the business, framing

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strategies and understanding the external environments pressure are the important qualities of

a steward leader.

The corporate heritage identity of this theory is categorized in three ways

positionality, heritage and custodianship awareness. The first is to achieve the long-term

goals and understand the employee’s mindset, the second passes on the importance in general

way and the final one work together with manager’s individuality and independence. The

managers have two-dimensional comprehensive state of mind, temperaments identified

circumlocutory affects the frame of mind of the managers, interrelated magnitude focuses on

longevity, custom receptiveness provides a abstract bond among the superiors and tutelary

element justifies the potency.

The control and failure to notice for a program are to be considered as the prior reason

for a feasible production control preparation in an organization. These are obligatory for the

reason that humans varying thoughts in experience, moral principles and restraint might

affect the decisions previously taken. The independent directors set the rules and strategies

according to the needs and necessities of the organization and the client requirements are

fulfilled by executing the best plans which is cost effective and gives quality outcome. The

designs or the products produced in those firms where freedom is given to the members to

take decisions and implement them at their own risk and company also takes part in such risk

to encourage the ideas provided by the workers at low level. Finally, these study are

theoretically possible and many high grade organizations fear to lose their reputation in the

market.

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REFERENCES

1. Classical and modern concepts of corporate governance by Beata Glinkowska and

Boguslaw Kacznarek , Journal of Management, Vol. 19 No. 2 (2019) pp: 84-92.

2. Collaborative governance in Theory and practice by Chris Ansell and Alison Gash,

Journal of Public Administration Research and Theory, Vol. 18 No. 4 (2008) pp: 543-

571.

3. Corporate Governance and Innovation: Theory and Evidence by Haresh Sapra, Ajay

Subramanian and Krishnamurthy V. Subramanian, Journal of Financial and

Quantitative Analysis, Vol. 49 No. 4 (2014) pp: 957-1003.

4. Corporate Governance Systems Diversity: A Coasian Perspective on Stakeholder

Rights by Dorothee Fells, Manzur Rahman and Florin Sabac, Journal of Business

Ethics (2018), pp: 451-466.

5. Corporate Heritage Identitu Stewardship: A Corporate Marketing Perspective by

Mario Burghausen and John M.T.Balmer, European Journal of Marketing, Vol. 49

No. ½ (2015), pp: 22-61.

6. Development of a Scale to Measure Perceptions of Stewardship Strategies for Non-

Profit Organizations by Geah Pressgrove, Journalism and Mass Communication

Quarterly, Vol.94 No. 1 (2017), pp: 102-123.

7. Global Governance and “New Governance Theory”: Lessons From Business and

Human Rights by John Gerard Ruggie, Global Governance, Vol. 20 (2014), pp: 5-17.

8. Organizational Governance and Ethical Systems: A Covenantal Approach to Building

Trust by Cam Caldwell and Rajan Karri, Journal of Business Ethics, Vol. 58 (2005),

pp: 249-259.

9. Reflections on Stewardship Reporting by Vincent O’Connell, Accounting Horizons

Vol. 21 No. 2 (2007), pp: 215-227.

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10. Stewardship Theory: Is Board Accountability Necessary? By Andrew Keay,

International Journal of Law and Management, Vol.59 No.6 (2017), pp: 1292-1314.

11. The Concept of Stewardship in Health Policy by Richard B.Saltman and Odile

Ferroussier-Davis, Bulletin of World Health Organization, Vol.78 No.6 (2000), pp:

732-739.

12. Theories of Governance: South Asian Perspective by Sk.Tawfique and M. Haque,

Public Organizational Rev, Vol. 13 (2013), pp: 365-379.

13. Public and Non-Profit Organizations: Stewardship for leading Change, Public

Organizational Rev, Vol. 10 (2008), pp: 299-301.

14. Steward Leadership: Characteristics of the steward leader in Christian nonprofit

organizations by Kent R. Wilson (2010).

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