Seminal Theories Of Governance And Stewardship For Organizational Leadership

Importance of Different Theories and Leadership Qualities

In order to build a successful organization and maintain its sustenance, it has been noticed that multiple factors have high significance. Any organization needs to respond to the external environment, the economic situation of a country and the demands of the targeted consumers. Hence, an organization needs to depend on the leaders as well as different frameworks that can be helpful in addressing these factors. Moreover, in order to maintain organizational sustenance and long-term success, the role of leaders and managers are regarded as highly important. The report hence will focus on the importance of different theories and leadership qualities that are important in designing the organizational sustenance.

Theories of Governance

Different theories of corporate governance point out that the organizations do not need corporate governance merely to support corporate governance, but also to establish and maintain an efficient and effective administration within an organizational environment. Moreover, it is to be mentioned that by adopting corporate governance, organizations are able to establish a transparent administration and progress towards the organizational objective (Jones & Jones, 2013, pp. – 24). By adopting the governance theories and frameworks, organizations are able to achieve long-term success in the sectors of organizational operations and structuring. In this regard, the different theories of governance are to be discussed.

Political and Power Theory

The Power Theory of organization points out that an organization runs through the process of power control and hierarchy. Moreover, it points out that the organization legitimizes the authority and that itself is power to the organization (Carley & Prietula, 2014, pp.- 19-36). In addition to this, it has been pointed out that the individual members of an organization can also enjoy power without having any authority. It has been witnessed that many a time the political and power theory play important roles in maintaining the high productivity and efficiency of the organization.

It can be said that the theory of power and politics can be harmful in the cases of unjustified use of power. It has been monitored that the organizations that are primarily family-owned tend to implement the theory of power and politics within an organizational theory. However, in many of the cases, it has been noticed that the power struggles become significant hand harmful to the harmony of the organization. Moreover, it can also be said that the organizational harmony is highly dependent on the effective implementation and usage of the power and political interplay within an organizational scenario (Mainardes, Raposo & Alves, 2012, pp. – 173-196).

Theories of Governance

It has been noticed that using the power and organizational, political influences can be beneficial for both the non-profit and for-profit organizations. However, it can be said that the organizational power has often been misused by inefficient leaders and managers. Hence, it can be said that the process of giving entire power control of an organization to a singular individual is to be avoided by the organizations. It has been noticed equal distribution of power and effective communication are helpful and most appropriate in maintaining the favorable organizational scenario.

System Theory

The System Theory is considered as an interdisciplinary study of the systems. The organizational system theory points out organization as a system and employees, management and the consumers are considered as components of it. Moreover, the theory points out that the organizational resources and assets are also to be regarded as the important components of the organization and hence components of the system as well (Shafritz, Ott & Jang, 2015, pp.- 36). The theory points out that organizational communication is to be regarded as highly important in order to serve the consumer in a more efficient manner. Moreover, the System theory can further be segregated into several approaches.

The open system theory points out that an organization can obtain inputs from the outer environment as well as the internal environment of an organization. The approach signifies that an organization receives information from the environment and then processes it internally (Alter, S. 2013, pp.- 29). It can be monitored that the open system approach aims at organizational survival and long-term sustenance.

In contrast to the open system approach of the organizational theory, the closed system approach does not depend on the inputs from the environment (McCleskey, 2014, pp.- 117). However, it can be said that an organization can never completely shun the external environment. It is mandatory that an organization takes input from the outer environment in order to support its long-term sustenance.

Another important aspect of the organizational system theory is to focus on the feedback loop. According to the theorists, the feedback loop is to be considered having a high significance in accessing the effectiveness of the strategies (Bridoux & Stoelhorst, 2014 pp.- 107-125). In this regard, it can be said that the feedback can indicate both inner responses of the employees as well as the responses of the consumers. It is easily understandable that a positive response encourages the employees as well as the managers of an organization. Whereas, negative feedback is important in order to rectify the mistakes.

Political and Power Theory

Agency Theory

The Agency theory points out that the owners and stakeholders of an organization are regarded as the principals whereas the management and the executives are the agents. The theory points out that the agents of an organization are always in a contradicting position. It has been pointed out that the agents of an organization often are unaligned with the organizational goals and hence a situation of conflict can arise (Mainardes, Raposo & Alves, 2012, pp. – 173-196).

The primary aim of the theory hence is to resolve any issue that arises between the principles and the agents. Moreover, the theory points out that the organization is responsible for most of the decision making processes. By using the framework of Agency Theory, organizations establish boards that include the agents, and these boards are accountable to the stakeholders of the organization.

In the context of efficient corporate governance, it can be said that the agency theory can be used effectively to identify the sectors of conflict between the agency and the principle (Welsh et al., 2013, pp.- 213-226). It can be said that the agency theory provides the non-profit or for-profit organizations to effectively implement strategies that will be helpful in reducing and eliminating the factors of conflict.

Stakeholders Theory

In opposition to the Agency Theory, the Stakeholder Theory points out that the stakeholders of an organization do not only include the owners and the shareholders. It points out that the stakeholders are included of consumers, employees and suppliers as well. The theory hence points out that the managers of an organization have the responsibility to fulfill the demands of the stakeholders (Glinkowska & Kaczmarek, 2015, pp.- 84-92). In addition to this, the stakeholder theory also ensures that the organization is taking up the corporate social responsibilities.

The stakeholders’ theory puts emphasis on the customers and employees along with the shareholders of an organization. For an easy and effective functioning of an organization, the stakeholders’ theory hence can be regarded as highly effective in for the governance of non-profit as well as a for-profit organization. In addition to this, it can be said that the stakeholders’ theory is helpful in maintaining organizational sustainability as well (Baghurst & Stincelli, 2014, pp.- 1-8). As the theory focuses on the demands of the stakeholders, it can be understood that by taking up the framework an organization is also able to take up corporate social responsibilities as well.

System Theory

The Contribution of Stewardship Theory

The stewardship Theory points out that the managers of an organization are to be regarded as the ‘stewards’ of the organization and they should be given chances and power to run the organization as per their efficiency. Moreover, the stewardship theory also points out that if the stewards or the managers of the organizations are provided with chances to select between pro-organizational behaviors and self-serving behavior, the managers will definitely regard cooperation as being more important than being disloyal to the system (Yukl et al., 2013, pp.- 38-48).

Hence, the stewardship theory identifies the managers or the stewards of the organization, to be honest, and trustworthy. It points out that the manager is willing to work towards the betterment of the organization. In addition to this, the Stewardship theory supports the organizational structure and hierarchy. It advocates the aspect of deriving the satisfaction of the shareholders. Moreover, the theory also points out that an organization needs to have a leader or steward that will communicate the necessary action to the lower level (McCleskey, 2014, pp.- 117). The theory stresses that selecting and handing over the responsibility of the organization to a single leader will avoid complexity to a great extent.

It has been monitored that the Stewardship theory is regarded as highly effective in maintaining the efficiency of an organization. It can be said that the process of selecting a leader or steward is helpful in deciding the necessary and effective strategies for the organization. Moreover, it has also been noticed that the process of effective communication is supported by stewardship theory (Baghurst & Stincelli, 2014, pp.- 1-8). Moreover, the theory depicts both the owners and the managers as aligned and supportive to each other. This has been highly effective in reducing the potential conflicts amongst them. In addition to this, the managers and the stakeholders work in a unity to address the needs of the consumers as well as managing organizational conflicts.  

Relationship of Leadership Values and Beliefs

In order to maintain organizational function and effective leaders are regarded as highly important. In this regard, it can also be understood that the qualities and values of leaders are highly effective in building teams. It has been noticed that the primary and most important qualities of a leader are ethics and values. Values and ethics are interdependent and highly effective in achieving the organizational goal. It is to be mentioned that the organizational environment is important for maintaining the high production and affectivity (Welsh et al., 2013, pp.- 213-226). In this regard, the role of the leaders is also to be regarded as highly important. It has noticed that the leaders are required to understand the ethics and values of the organization as well.

Agency Theory

By taking up ethical practices, the leaders are able to build an efficient team. In this regard, it can be said that in an organizational scenario, the leaders are regarded as the role models to the lower level employees. Hence, the practices and stances take by the leaders are immediately followed by the lower level employees (McCleskey, 2014, pp.- 117). Hence, it can be understood that by taking up ethical practices and values, the leaders are able to ensure longer sustenance of the organization.

Along with acquiring the ethical values and practices, the leaders also need to implement those practices within an organizational scenario. It can easily be understood that in order to implement values and ethics within an organizational scenario, effective strategies are to be taken up.

Asking for Inputs from the Employees:

The primary step of establishing ethical practice within an organizational scenario is discussing with the employees as well as the stakeholders in order to decide the effective strategies for the organization (Jones & Jones, 2013, pp. – 24). Moreover, it is to be mentioned that by including the employees and other stakeholders in the process of deciding organizational values and ethics, will be highly effective in maintaining organizational harmony and efficiency.

Deciding Organizational Value statement:

The next step of implementing organizational values and ethics is deciding the value statement of the organization. It has been noticed that deciding a value statement and ethical aim helps the organization in communicating the organizational aim to the employees (McCleskey, 2014, pp.- 117). Moreover, in order to practice the ethics and value within the organizational scenario, it is highly important to decide a value statement for the organization.

Implementing:

After deciding a value statement and communicating the organizational ethics and value to the employees, the next step is to implement this to the organizational scenario. It is highly important that the leaders monitor the process of successful implementation of the organizational values. In this regard, it can be said that the in order to ensure successful implementation of the values and ethics within the organizational environment, the leaders need to ensure that they are practiced on a regular operation (Mainardes, Raposo & Alves, 2012, pp. – 173-196). In this regard, it is also to be mentioned that the organizations need to analyze the possible outcomes and consequences of implementing these values and ethics within the organizational scenario.

Evaluation:

The final step of implementation of the values and ethical practices in the organizational scenario is the evaluation. The process of evaluation is regarded as highly important in order to ensure the successful implementation of values and ethics. Moreover, it can be said that the process of implementation of the values and ethics is to be analyzed based upon the responses of the employees and the stakeholders of the organization. The primary importance is to be given to the feedbacks of the consumers and the employees of the organization (Carley & Prietula, 2014, pp.- 19-36). To elaborate it furthermore it can be said that the leaders need to take up and implement organizational values and ethics in order to ensure longer sustenance for the organization.

Stakeholders Theory

In this regard, it has been noticed that by successfully implementing the organizational values, the production can increase increasingly. Hence, the responses of the consumers are highly important in this regard. Moreover, the implementation of the values and ethics enables the leaders of the organization to bring organizational change (Jones & Jones, 2013, pp. – 24). In this regard, it can easily be understood that the organizational changes often impact the employees both in positive and negative manner. Hence, accessing the responses of the employee is also important in order to analyze the effectiveness of the value and ethical practices.

Conclusion

To conclude, it can be said that qualities such as values and ethics are highly important in ensuring the successful production of the organization. The leaders and the managers of an organization play an important role in maintaining organizational success. The various organizational theories are important and have to be followed In order to run the organization.

However, it can be noticed that the theories emphasize the importance of leaders and managers in order to ensure the success of the organization. It has been noticed that in the context of both non-profit and for-profit organizations, the implementation of different organizational theories and effective leadership qualities are regarded as having high importance. It can be monitored that the stewardship theory and the stakeholders’ theory put significant emphasis on the role of the leaders.

Moreover, it has been noticed that the leaders having better leadership qualities, possessing high values and ethics are capable of maintaining organizational functioning in a more effective way. In addition to this, it can also be said that the leaders who have high values and ethics also understand the importance of building strong organizational communication and effective framework. Hence, it can easily be understood that the agent theory of the organizational governance will not be required in the cases of involving capable and efficient leaders.  

Reference

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