BUS509 Stewardship And Governance

Wilson considers the model of Block and commends it, however he notes Block’s emphasis on “empowerment” and concludes that “a weakness in Block’s definition of stewardship is that it is too strongly biased toward servanthood and the redistribution of power that the leader retains very little legitimate power or authority in the end, just service to those with redistributed power.”

We can thus see that Wilson emphasises the power of the steward leader’s role, power used on behalf of owners/stakeholders

Rodin’s book on servant leadership is also influential (2010).  Rodin’s view: Commitment to our call as stewards guides us as steward leaders…but we are stewards first.  Rodin spends much of his book evaluating the transformations that every steward leader must go through.  This occurs simultaneously at four levels – the steward’s relationship with God, with self, with others, and with God’s creation.  Each relational transformation is a journey.

The challenge has always been to identify which human stakeholders God is using to speak to us, to discern the degree of implicit ownership that each stakeholder has, and to identify the remaining ownership objectives.

The second is the “lens of motivation” – What motivates a person to be willing to lead as a steward of resources they do not own?

Stewardship theory states that there does not have to be an inherent problem with managerial motivation; managers can have an intrinsic desire to maximise organisational performance because of a sense of duty and identification with the owners, the organisation, or the organisation’s mission.

Wilson cites the work of Lex Donaldson and his colleagues for their work on this model.

Tewardship theory demonstrates that steward leaders are motivated more by intrinsic and internal desires and drives (personal growth, self-actualisation, achievement, affiliation) than by external rewards (wealth, authority, title, advancement).  Leaders operating under stewardship theory also develop a greater sense of identification with the owners, the organisation and the mission.

Steward leaders are also motivated by collaborative leadership environments instead of individualistic environments.  They value the protection that plurality of oversight affords through the collaboration of owner-stakeholder, board of directors, and chief executive.

He summarises his view in stating that “the contemporary steward is accountable to accomplish the aspirations, desires, and objectives of the owner or owners….by maximising the efficient use of resources, adding value, multiplying the resources and so on….however many nonprofit leaders are uncomfortable with the risks associated with resource growth and leverage (why?)…but through a close relationship with God and encouragement from stakeholders, steward leaders can experience freedom to responsibly take risks by leveraging resources.”

The report helps in the overall analysis along with discussion of the different key governance theories which helps in contributing towards the organizational effectiveness. Furthermore, the contribution of the stewardship theory is required to be analysed to effective kind of governance which will be beneficial for both the profit and non-profit organizations in the market. The discussion of the proper relationship of the values and the beliefs of the leaders will be analysed and identified in analysing the effectiveness of the governance in the organizations.

There are different theories on governance which helps in contributing towards the overall organizational effectiveness. The entry intends in discussing the various models of governance which will be beneficial for the developed and developing nations and this will be helpful in analysing the analytical look. In order to ensure that the effective of the organization is being maintained, this will be helpful in unified interpretation wherein the governance is considered as the growing kind of phenomenon which is expanding in nature. Glinkowska and Kaczmarek (2015) has commented that the governance is referred to the different actions, methods along with functions of the governing the authorities in an appropriate manner.

Subramanian (2018) has opined and hypothesised that there are different kinds of interpretations on the governance which increases the organizational effectiveness are being described as follows:

Madison et al. (2016) has commented that in line with the for-profit organizations, the different non-profit based organizations are being characterised by the proper separation of the control along with ownership in an appropriate manner. There is a huge difference between the explicit distinctions between the different managers along with the day-to-day decisions along with the different owners of the organization as well. Harrison (2018) has commented that the essential component of the microeconomics is the theory of the firm which helps in providing a brief overview on the decision-making of the organizations in an efficient manner.

Furthermore, Duncan & Whittington (2015) has commented that the theory of the firm concept mainly focuses on the private for-profit organizations which will be beneficial for the success of the companies. On the other hand, Bernstein, Buse and Bilimoria (2016) has opined that the non-profit organizations are legally prohibited in nature from the distribution of the profits to the owners of the organizations along with the other individuals who tries to exercise their control on the organization in a positive manner. Boon (2018) has opined that the for-profit organizations are mainly focusing on maximising their profits in an efficient manner and this has been noticed that the non-profit organizations are often considered as the non-distribution constraint along with the maximisation is not possible in such perspectives as well. The Bottom line statement of this theory is that even if the directors of the company are not acting as stewards, they have the accountability to act as agents. The basic accountability that rests on the directors as per the prophecy of this theory is that they should ensure appropriate protection for the organisation.

The analytical interface with this theory in relation to the organisational effectiveness demonstrates that stewardship would help to ensure that the company would not get enticed towards typical agency based conduct like of shirking and that the directors would be trustworthy by their loyalty. However, in this context, Waldkirch and Nordqvist (2016), implies that stewardship does not ensure competency in all spheres for a non-profit organisation. In fact, Chen et al. (2016), asserts that perfect competency is a myth in the real business world. Bounded rationality emphasises that all humans have some limitations in the forms of limited knowledge as well as foresight.

Regardless of the size of an organisation, or its nature of holding, a structure is required for the monitoring of the performance of the work groups as well as making it future proof. In this context, the Stewardship Theory .professes that the executives of the company should protect the interest of the shareholders. Clinically, the directors and CEO should direct the organisation in such a way so that the shareholders reap the maximum benefits. This is however more true from the perspective of a profit making company. The companies that follow organisational stewardship places the Chief Executive Officer as well as the Chairman under 1 executive slot and the decision making board is comprised mostly of the in-house members. This helps the organisation to prosper in two things:

• Gathering intimate knowledge of the operations of the organisation
• Develop a deep commitment towards success

Governance as per the Stewardship theory sets a clear target of stakeholder satisfaction. One single and authoritative leader helps in the creation of a single channel for the communication of the business needs with that of the stakeholders and the needs of the stakeholders’ in turn to the business operators. As per the analysis of Coule (2015), this helps in avoiding confusion regarding who is liable to take the charge at the time when the company needs to weather in order to surface a storm. However, as De Massis et al. (2014) has analysed, the CEO needs to be trustworthy and transparent before the stakeholders of the organisation and put the personal gains beside, thus emphasising on the achievement of general good for the company.

In order to fully understand the scope and benefit of the Stewardship theory for the betterment of the organisational performance, it is essential that the leadership styles professed by the Agency Theory as well as the Stakeholder Management Theory be discussed also. The Agency Theory emphasises that a checks and balances kind of leadership style is followed by the organisation. However, for doing that, the CEO as well as the BC needs to act as separate entities. The Board of Directors under the profession of this theory, is a body of independent members who are provided with the task of monitoring the work of the higher management only, in order to avoid issues in the organisation (Joslin and Müller, 2016). However, in such kind of leadership the organisational performance cannot be metered accurately as the directors or the CEO or BC do not have any direct link with the operations’ team of the company.

In a straightway manner, the Stakeholder theory is also fractioning from the advocacy of the Stewardship style. The former needs that not only the stakeholders, but every stakeholder group of the company be benefited equally and given equal importance. This view is directly conflicting with the Stewardship view. The shareholders are given the maximum importance in the Stewardship based leadership style. The value of the accountability of the directors or the BC is also variegated when organisational performs for all stakeholders equally. Hence, in conclusion, one thing can be stated emphatically: the Stakeholder Theory is particularly effective for a Non-Profit organisation (Krzeminska & Zeyen, 2017). On the contrary, for a profit making organisation the perception of the Stewardship Theory is most effective. Giving maximum air to the beneficial needs of the shareholders, the company extracts maximum performance benefits from the market operations.

Effective as well as good governance are concepts that were mostly implemented in the later part of the last century (Black, 2015). In fact various UN organizations have also accepted the importance of effective governance in their field work.

Essential qualities in an effective leader

The followers of an organizational leader must perceive the leader to be an expert in the in the fields of operations. Until the followers see the leaders to be bearing degrees of high academic valuation or specialized experience, and is not able to show exemplary or extraordinary courage in the field of leading from the front, the leaders would not be respected, admired or being followed by the juniors or peers. Many of the leaders do not possess the inherent qualities that would often spell success. Often they learn through the way of hard work. As Priest and Gass (2017), states, the competence potential of a leader is revealed only when he or she do not stand vulnerable on the face of crisis and challenges. However, Jin, Meng & Berger (2017), informs that based on the area of expertise of the leader, the leadership competency varies. Another important aspect of an effective leader is that his or her competency is relevant to the level of understanding of the leader regarding the kind of leadership responsibility or leadership approach is to be taken by him or her.

Accountability as a quality is analogous to concepts such as responsibility, blameworthiness, liability as well as answer-ability. Regarding the aspect of governance, accountability is pivotal to discussions concerning problems in public sector, non-profit as well as corporate organisations.

In the context of leadership, accountability refers to the acknowledgement as well as assumption of the responsibility for the actions, decisions, products, as well as policies that scopes administration, governance, as well as implementation within scope of the role or employment position as well as encompassing the responsibility to report, explain as well as remain answerable for the resulting consequences (Bolman & Deal, 2017).

Through his accountability, trust is fostered by a leader. Accountability is manifested by taking up of risks for success as well as failure of the organisation. Accountability is not holding a leader responsible for the failure of an attempt. Rather it is the process of assimilating in every process and learning from the ongoing events, be the experiences good or bad. In summing up, it can be pointed out that a leader have to positively take up personal accountability for every step taken on behalf of the organisation (Shanafelt et al. 2015). That is why the knowledge-ability of the leader is necessary in terms of every action taken by the company and the consequences (benefits or loss) reaped of them.

For an effective leader, openness is also another essential quality. The first feature of openness is a leader is the courage or potential in him to accept a new idea. The idea regarding change is also handling the resistance to change that comes from the employees or other stakeholders.

The ability of a leader to select the direction of change as also recognising the opportunities that are presented when uninvited change is perceived is made deeper with the self-awareness of the person posted in the designation of the leader (Ng et al. 2015). The leader have to make the subordinates and the peers understand that once after they make the others understand the value of the change, they would get to understand how the change becomes effective for the organisation.

Power is one essential quality that should be there in a leader. Power of the leader is emanated from the principles on which the organisational principles are built. Owing to the tenets of the system, the individuals in the organisation are being influenced and they have some sort of shape in their performance as well as leadership style. The leaders enjoy power and that is best used when it is used for influencing the individuals to perform the best for fulfilment of the organisational motives (Ong et al. 2016). The leaders who only enjoy the position, can assert orders over the positional leaders. Whereas the influential leaders communicate with everyone.

Effective and influential leaders can influence the subordinates to omit for the fulfilment of the vision and mission of the company.

This is one of the most efficient qualities of leadership. In spite of the fact that the leaders have the maximum share of the responsibility and they are the one who have to deal with the maximum amount of work pressure, he needs to be absolutely down to earth. He should understand that he is not an owner to the people, rather only the best representative to the organisation’s work force. As, Ong et al. (2016), speaks, only if a mass leader is humble and down to earth, then only the followers or the fellows would approach him seeking for help. The duty of the leader is to motivate his workforce and the leader would be able to best achieve this feat through his humble and supportive nature of leadership.

Various sources of literature as well as academic information sources have analysed the prospect of effective leadership through the perception of either development of organisational skills or from that of the human rights. For evidence, the UNDP as well as the World Bank adopted the perspective of development. On the contrary, Joslin and Müller (2016), informs that the UN High Commissioner for the Human Rights defines it in the terms of the degree to which it delivers on the promise of human, civil, cultural, political as well as social rights.

All the individuals, specifically the leaders’ needs to stay committed to what they say for discharging their responsibilities in the form of a leader as well as an individual in the domain of the organisation. Commitment is in fact the basis of all other sorts of responsibilities. Leaders are required to be straightforward and follow and one particular trait of leadership only. However most importantly the organisational leaders should only “walk their walk’.

In terms of effective governance, the readiness to accept the change is another primary element that ensures smooth organisational momentum. This would help the future leaders to be ready to accept the change and then go accordingly. This is how smooth organisational change can also be ensured if the leaders have a prolific knowledge about change management.

Various theories of proper organisational governance have been compared and contrasted and in this light the Stewardship theory. The emphasis in the case of the Stewardship theory have been laid up on the interest of the group of shareholders. Their benefits and maximisation of their gain would ensure that the company is walking in the path of profit maximisation and that is to ensure that there is a proper way of addressing the organisation’s objectives. In the scope of any organisation, good governance as well as effective leadership are the two criteria that needs to be fulfilled in order to address the requirements of the groups of stakeholders standing in the 21^st century. There is lack of effective leadership in the developing countries that is why the organization of these countries are lagging behind. In this context, this research paper makes it evident that sound governance combined with effective leadership is the key variable for success. Effective leadership as well as sound governance are the complimentary to each other. Without effective leadership sound governance cannot be ensured. IN this context, among all the leadership traits that have been discussed herein, the capability of being an influential leader is the most important. This is because the influence of a leader helps in the mitigation of the impacts of the cultural, social, sociological a well as psychological impacts as well as differences. Its implementation as well as perception also rests up on the level of development as well as acceptance in the society. This hypothesis actually makes it evident that perfect organisational governance is achieved in very few corporate atmosphere in totality.

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