BUS 616 - Business Policy and the Social and Ethical Environment

Chapter SixThe Corporation and Internal Stakeholders

*) Stakeholder Management Approach to LeadershipValues-based leadership approach determines whether or not the organizations leaders and culture:Are integrated or fragmentedTolerate or build relationshipsProtect the organization or create and generate mutual benefits and opportunitiesDevelop and sustain short-term or long-term goals and relationshipsEncourage idiosyncratic (distinctive) implementation or coherent approaches driven by visions, missions, and values*) Figure 6.1: Strategic Alignment Questions

*) Leadership Stakeholder CompetenciesDefine and lead the social, ethical, and competitive mission of organizations Build and sustain accountable relationships with stakeholdersDialogue and negotiate with stakeholders, respecting their interests and needs beyond economic and utilitarian dimensionsDemonstrate collaboration and trust in shared decision making and strategy sessionsShow awareness and concern for employees and other stakeholders in the policies and practices of the company

*) Leadership ResponsibilitiesSet 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 themselvesCreate and reward a culture obsessed with fairness and goodwill toward everyoneAct with compassion and forgiveness in every decision toward every person and groupDo unto their stockholders and stakeholders as they would have them do to their companyTreat 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 serviceto 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 imperativesCategorical 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 LeadershipUnderstand and practice reflective being as well as doingUse discernment/judgement, prayer (hope), and patience in strategic decision makingSee the leadership role as a callingSeek to connect with people and connect people to people with meaning and in meaningful waysCreate communities, environments, and safe havensLead 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-efficayThe Symptoms of Ethical FailureEthical blindnessEthical mutenessEthical incoherence (inconsistency in values followed)Ethical paralysis (unable to act on the values)Ethical hypocrisy (insincerity-not commited) Ethical schizophrenia (split behavior)Ethical complacency (self-righteousness)

Corporate CultureShared values and meaning held by the organizations members, transmitted through:the values and leadership styles that the leaders espouse and practicethe heroes and heroines that the company rewards and holds up as modelsthe rites and symbols that organizations valuethe way that organizational executives and members communicate among themselves and with their stakeholders

Strong Corporate Cultureshave a widely shared philosophyvalue the importance of peoplehave heroes (presidents and products) that symbolize the success of the companycelebrate rituals(sharedness of values, the intensity of the values employees have) 4 Principles of Ethically Effective FirmsEase of interacting with diverse internal and external stakeholders; incorporate good of stakeholdersObsession with fairness for ALL parties, not just fairness for themselvesIndividual-level responsibility, not collective(?)Purposeful activities that tie firm to its environmentProblems and Symptoms of Unethical CulturesProblems: 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 StrategyAn 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 EthicsDecision making centralized or decentralizedSystems organic or mechanisticHierarchy tall or flatProcedures formal or informalLevel of autonomy of internal stakeholderLevel of flexibility, responsiveness of systems and internal stakeholders