Professional Documents
Culture Documents
Vibash Mohanraj
06.06.2019
1
Effective Organizational leadership
Introduction 3
Conjecture of Supremacy 4
Agency theory
Reserve Reliance theory
Stakeholder theory
Operation outlay theory
Wrapping up 11
References 13
2
Effective Organizational leadership
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
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
3
Effective Organizational leadership
CONJECTURE OF SUPREMACY
which conclusions are executed in huge firms. The movement of the business is illustrated by
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
efficacy, competence, liability towards statements and contribution are the major
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
4
Effective Organizational leadership
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
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.
5
Effective Organizational leadership
Operation outlay theory is also said as transaction cost theory, where the value is
Bargaining
and Decision
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.
organizations to keep up reputation among the general public, employee’s wellbeing, gaining
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.
6
Effective Organizational leadership
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 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.
7
Effective Organizational leadership
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
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
8
Effective Organizational leadership
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
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
9
Effective Organizational leadership
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
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
10
Effective Organizational leadership
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
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
WRAPPING UP
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
11
Effective Organizational leadership
strategies and understanding the external environments pressure are the important qualities of
a steward leader.
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
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
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.
12
Effective Organizational leadership
REFERENCES
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
Rights by Dorothee Fells, Manzur Rahman and Florin Sabac, Journal of Business
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.
Trust by Cam Caldwell and Rajan Karri, Journal of Business Ethics, Vol. 58 (2005),
pp: 249-259.
13
Effective Organizational leadership
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
732-739.
13. Public and Non-Profit Organizations: Stewardship for leading Change, Public
14