CHAPTER SIX

The Corporation
and Internal
Stakeholders

*) Stakeholder Management Approach to

Leadership

Values-based leadership approach

determines whether or not the
organizations leaders and culture:

Are integrated or fragmented

Tolerate or build relationships
Protect the organization or create and
generate mutual benefits and opportunities
Develop and sustain short-term or long-term
goals and relationships
Encourage idiosyncratic (distinctive)
implementation or coherent approaches
driven by visions, missions, and values

*) Figure 6.1: Strategic Alignment

Questions

*) Leadership Stakeholder
Competencies
1.

2.

3.

4.

5.

Define and lead the social, ethical, and

competitive mission of organizations
Build and sustain accountable relationships with
stakeholders
Dialogue and negotiate with stakeholders,
respecting their interests and needs beyond
economic and utilitarian dimensions
Demonstrate collaboration and trust in shared
decision making and strategy sessions
Show awareness and concern for employees
and other stakeholders in the policies and
practices of the company

*) Leadership
Responsibilities

Set the vision, mission, and direction

BY COMMUNICATION.
Create and sustain a legal and ethical
culture throughout the organization BY
EXAMPLE.
Articulate and guide the strategy and
direction of the organization.
Ensure the competitive and ethical
alignment of organizational systems.
Reward ethical conduct.

*) Leadership Processes
(maintaining a moral and values-based approach)

Seek to revolutionize every strategy and process for

optimal results (while maintaining the organizations
integrity)
Empower everyone to perform beyond stated standards,
(while maintaining balance of life and personal values)
Understand and serve customers as they would
themselves
Create and reward a culture obsessed with fairness and
goodwill toward everyone
Act with compassion and forgiveness in every decision
toward every person and group
Do unto their stockholders and stakeholders as they would
have them do to their company
Treat the environment as their home

*) Firms of Endearment
(kind word)

Competitive advantage through a business model in which

all stakeholders add and benefit from gains in value
created from a deeper set of resources (Treat all
stakeholders as fair as can be, not to exploit, to threat or
to cheat).
Possess a humanistic soul. From the depths of this soul,
the will to render uncommon service to all stakeholders
flows. These companies are imbued with the joy of service
to the community, to society, to the environment, to
customers, to colleagues.
Leaders who facilitate, encourage, reward, recognize, and
celebrate their employees for being of service to their
communities and the world at large, for no reason other
than that it is the right thing to do. (as human capital, not
merely as source to achieve the organization goals)
See also : Categorical imperatives in business ethics !

Categorical imperatives

Categorical imperative untuk

organisasi bisnis (Bowie, 1999) : (a)
dalam market interaction tidak
dibenarkan eksploitasi, merugikan
dan menipu. (b) respek terhadap
humanity; usaha untuk
meminimasikan perlakuan terhadap
orang yang dianggap hanya sebagai
means/ alat untuk mencapai tujuan.

Spiritual or Servant
Leadership

Understand and practice reflective being as well as

doing
Use discernment/judgement, prayer (hope), and
patience in strategic decision making
See the leadership role as a calling
Seek to connect with people and connect people to
people with meaning and in meaningful ways
Create communities, environments, and safe havens
Lead with reflection, choice, passion, reason,
compassion (consideration), humility, vulnerability
(defenselessness), and prayer (hope) as well as courage,
boldness (confidence), and vision.
PsyCap : Optimism, Hope, Resiliency, Self-efficay

The Symptoms of Ethical

Failure
Ethical blindness
Ethical muteness
Ethical incoherence (inconsistency in
values followed)
Ethical paralysis (unable to act on
the values)
Ethical hypocrisy (insincerity-not
commited)
Ethical schizophrenia (split behavior)
Ethical complacency (selfrighteousness)

Corporate Culture
Shared values and meaning held by the
organizations members, transmitted
through:

the values and leadership styles that the

leaders espouse and practice
the heroes and heroines that the company
rewards and holds up as models
the rites and symbols that organizations value
the way that organizational executives and
members communicate among themselves and
with their stakeholders

Strong Corporate Cultures

have a widely shared philosophy

value the importance of people
have heroes (presidents and products)
that symbolize the success of the
company
celebrate rituals
(sharedness of values, the intensity of
the values employees have)

4 Principles of Ethically Effective

Firms

Ease of interacting with diverse

internal and external stakeholders;
incorporate good of stakeholders
Obsession with fairness for ALL parties,
not just fairness for themselves
Individual-level responsibility, not
collective(?)
Purposeful activities that tie firm to its
environment

Problems and Symptoms of Unethical

Cultures

Problems: secrecy, hidden agendas,

isolated executives, emphasis on status

Symptoms: inward, short-term focus,

morale/motivation problems, inconsistent
policies, physical settings, clashes and
conflict, ambiguous values and beliefs
with no priority

*) Purposes of Strategy
An organizations strategy influences
legality, morality, innovation, and
competitiveness in the following ways:
Strategy sets the overall direction of
business activities.
Strategy reflects what management
values and prioritizes.
Strategy sets the tone of business
transactions inside the organization.

*) Structural Issues Related to Ethics

Decision making centralized or

decentralized
Systems organic or mechanistic
Hierarchy tall or flat
Procedures formal or informal
Level of autonomy of internal stakeholder
Level of flexibility, responsiveness of
systems and internal stakeholders