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Corporate Governance and Ethics

                       

Corporate Governance and Ethics

3.3. Ethics - Doing Good

At its base, ethics main concern is to focus on something or someone other than ourselves and our own personal gains and interests. It requires us to focus on what best interests our society’s requirements and including those who are a part of that very society (Clark, 1993, p. 305-307). So, thinking ethically means that an individual has put in some thought about what benefits the people around them instead of just their own personal gains.

3.4. Follow Ethics – Achieving Good Overall

Now, one problem with the way we deal with ethics is how it is often used as a weapon. If a group believes that a particular activity is "wrong" and against what they stand for, they use ethics as justification for bashing those who practice that activity (Clark, 1993, p. 308-309). This way of using ethics as an argument may allow others to judge those under fire as people undeserving of respect. So, understanding the proper way to use ethics is important as it’s not only about the morality of a course of action, but it's also about the goodness of individuals and what it means to live a good life.

The proper way to implement ethics in one’s life is also problematic for philosophers to define simply (Shetty, 2012, p. 14-19). Modern thinkers often teach that ethics leads people not to conclusions but to 'decisions' based off of their own moral compass after having weighed the impact on that decision on those around him. Philosophy can help identify the range of ethical methods, conversations and value systems that can be applied to a particular problem. But after these things have been made clear, each person must make their own individual decision as to what to do, and then react appropriately to the consequences.

3.5. Moral Economics

Economists sidestep moral issues as they study trade-offs and incentives and interactions, leaving value judgments to the political process and society. But moral judgments aren’t willing to sidestep economics. To understand some of the problems we need to go back the basics and the need for economics. Of which the most basic of all is this: the point of economic activity is simply to enable us to live well.

Economies are systems of provisioning—ways of providing us with the possibility to live a decent life and a few ways of doing this are much better than others (Götz, 2015, p. 153-157). The aim of a moral economy, unlike the standard and mainstream economics, focuses on this basis and examines whether they are fair for those who are a part of the economy, functional or not, and sustainable or unsustainable. Particularly at this time of economic and environmental crisis, it can provide us with signposts to a different way of doing things which can help us live up to the definition of what an economy’s purpose is.

4. Management approaches in companies

There are many different styles of management which can be used by management to direct their staff towards achieving the required goals. The traditional authoritarian style of leadership once used by many is now being replaced by innovative new styles that also take into perspective the say of the manager’s subordinates. As a manager it’s important to understand the way in which you deliver your message to your employees, as its important to consider the way you are perceived which can also influence the extent to which tasks are completed. This places emphasis on selecting a suitable management style that will be used to direct operations and manage employees, most effectively (Mahajan, 2011). The chosen style would also affect the resulting managerial climate, which is essentially your attitude and approach to working with others in the company.

The various types of approaches to managing the company include the authoritarian approach, paternalistic approach, democratic approach, laissez-faire approach, transactional and transformational approaches. There isn’t any best type of leadership style. The style has to be chosen based on a number of factors, such as the type of employees, the type of environment that a manager is aiming for as well as many other factors (Amanchukwu, Stanley and Ololube, 2015). Every leadership style has its benefits and disadvantages and the best way to implement a style is for a manager to understand his employees and the workplace.

An understanding of the workplace also helps in reducing miscommunication amongst the levels of management. Because of the abundance of technology in today’s workplace, communication through the various means can cause issues if the mode of communication isn’t understood properly. There is also the matter of the various generations working together in companies. From Gen-X, millennials and even more recently boys and girls from Generation Z are all working together which also requires a manager to evaluate how to deal with employees who have a different experience with the differing communication styles.

In a recent interview, an Insurance Executive told that he applied a combination of the transformation and the transactional leadership style. The transactional leadership style is one that requires a manager to supervising their employees’ performance based on a system of rewards and punishments. The interests of the companies are given the highest priority. The exchange of tangible goods and services earns the workforce’s loyalty. Transformational leaders on the other hand inspire their employees into finding new ways to achieve the required outcomes and motivating them by making the employees believe that they can do their best. These leaders allow the employees to freely choose how they’d like to work and also demonstrating true concern for them to help better build trust between the lower and higher levels in a workplace.

In a similar manner, various other managers and leaders may choose a mixture of leadership styles that may help them achieve their goals.

4.1. Tension Between Employees and Management

Leadership styles play an important role in shaping the behavior and attitudes of the employees working for you (Saeed et al., 2014). Depending on the type of leadership style that one implements in a workplace, the way the manager deals with their employees varies too so as to avoid conflicts within the workplace. The Encyclopedia of the Social Sciences stated that conflict arises whenever one of the parties involved perceives that its goal or preferences is facing obstacles because of another party (Seligman and Johnson, 1963).

Conflicts do arise in workplaces and are common amongst companies, what’s vital however, is the proper way of dealing with the growing tension amongst employees to avoid the conflict into growing out of control (Doucet, Poitras and Chênevert, 2009). In all companies, there are a few problems that do cause the employees to feel some sort of injustice based on various cases like the role specification or hierarchy etc.

Now, the presence of such feelings amongst employees becomes a cause of obstruction for them towards achieving their goals or daily targets (Karadakal, Goud and Thomas, 2015). So, managers need to help the employee avoid the additional stress of such struggles to allow them to work at their hundred percent. The two types of interpersonal workplace conflicts include “relationship conflicts and task conflicts”. Both of these have to be dealt with by the manager.

Relationship conflicts are often referred to as disagreements and frictions amongst group members over personal issues that are un-related to the task being performed. However, task conflicts are referred to as the disagreements and frictions among group members in a company based on the content and solutions of the tasks being performed (Jehn, 1995).

 “A leader is one who knows the way, goes the way, and shows the way,” is the way Maxwell describes leadership. A good leader has a futuristic vision and knows how to turn his ideas into successful endeavors (Goleman, 2000). To be able to do so, there are a few qualities that an individual is required to have to be considered within a leadership role. Some of the qualities were also discussed in the interview which was taken from an Executive, who stated a few of the below qualities including expertise. He believes that it’s important for a leader to be an expert in his field and know more than his subordinates to maintain that level of respect from his workers (Baker, 2014). The qualities of a leader are as:

Honesty and Integrity: Integrity means doing the right thing because that is the right thing to do. Honesty and integrity are two important factors that contribute to make a good leader. A good leader succeeds when they stick to their beliefs and without understanding the importance of ethics it will not be possible to become an embodiment of an honest leader.

Confidence: Self-confidence is an important characteristic that’s required for one to grow as a leader and have the ability to make important decisions. As a leader your confidence should ensure that your employees follow your commands without hesitation as they trust your word. Being hesitant with your choices and decisions will also spread the doubt about your skills amongst the workforce. In no way does it imply that one becomes cocky and overconfident, but that you show your skills enough for them to feel satisfied with you heading the company.

Inspire Others: To be inspired means that something stirs your heart, mind, or spirit. We are inspired by a people and events and we try to hold onto that feeling for as long as possible. The feeling of inspiration doesn’t require any external force to move forward and inspired employees are more than twice as productive as satisfied employees, according to a survey conducted by Bain Research. So, if a person in the position of a leader can inspire his followers into completing a required task then he’s a worthy leader. As John Quincy Adams puts it, “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”

Commitment and Passion: A good leader should be committed and passionate about the task they are managing or leading. Employees tend to look up to leaders for motivation and a leader’s passion towards a project can become infectious and spread through his workers. It will also help a leader gain the respect of his subordinates once they see the leader participate in the task with their full force, hence motivating the workers to put in their best efforts too.

Good Communicator: Miscommunication is a major problem amongst organizations. Not being able to put forward the goals and tasks clearly will make it very difficult for one to get the results required. Simply put, if an individual can’t communicate their message effectively to a team, they can never be a good leader. Words have the ability to motivate people and make them do what’s required of them and help a leader achieve the best results.

Decision-Making Capabilities: Decision-making is one of the most important parts of a leader or managers job description. Sure, the leader doesn’t need to go it alone and take advantage of the opinions of his employees. But, at the end the final call is his. The leader needs to be sure headed to not be easily confused by varying available options. They require a futuristic vision that also allows them to understand the repercussions of the decisions in the future. But, you should also understand the responsibility on your shoulders, as your decision will have an impact on your group members too.

Accountability: As discussed above, the outcome of a decision may require the leader to take the fall if things don’t work out.  Accountability requires the leader to take responsibility for the outcome. The way Arnold H Glasow put it was, “A good leader takes little more than his share of the blame and little less than his share of the credit.” Not just managers, but all employees should be held accountable for their own tasks and outcomes as it will highlight their mistakes and force them to work together and improve.

Delegation and Empowerment: It is important for a leader to focus on key responsibilities and assign other tasks to his workers. Delegating tasks to your employees allow you to focus on the more important and urgent tasks. Micromanaging those around you will not allow you to focus on important matters and also annoy employees. Your task should be to delegate tasks and allow your employees to display their qualities and also helps them improve and grow as a part of the company.

Creativity and Innovation: Apart from the more serious aspects of being a leader, being creative and innovative is also required of a good leader. Particularly, in today’s world where leaders are required to not only delegate and lead their employees, but also implement innovative ways with which to solve issues within the company and also to help your team stand out amongst all the others.

Empathy: Leaders should develop empathy with their followers as it’s an important trait in understanding your followers. A dictatorial style doesn’t allow for empathy on the manager’s end and neglect it altogether. Failing to make a closer connection with their followers doesn’t help in building relationships with your workers and fails to build trust amongst everyone. Understanding employees allows the leader to provide his followers with suitable solutions to their problems.

To become a good leader, one must have all these qualities but if they lack some of them, then they might struggle to become an all-round good leader. It’s important for a leader to acquire all these traits as a leader has to be prepared for all eventualities (Kurec, 2016). That is where the leader’s commitment, passion, empathy, honesty and integrity are tested. Good communication skills and decision-making capabilities also play a vital role in becoming a leader. Lastly, innovation and creative thinking, as well as the futuristic vision, help a leader stand-out. These traits also help a leader minimize the conflicts within a workplace as they attain all the traits required for one to become a good leader for their workers.

4.2. Transactional management

The transactional leadership style was first described by Max Weber in 1947. This style is one of the most commonly used by managers. Its basis consists of the management process of controlling, organizing, and short-term planning.

Transactional leadership also involves focusing on their followers by motivating and directing followers (Popper and Zakkai, 1994). Transactional leaders make use of their formal authority and responsibility in the organization to make their followers obey their instructions. It is also known as a ‘telling style’. This style along with the Transformational leadership style was used by the Insurance Executive that was interviewed. He stated that as he thought every manager’s aim was to achieve the maximum result and gain from his employees, it was required that he provides instructions to his staff and also emphasize on the rewards and punishments that accompany the result.

He also stated that he did know the employees better, but in most cases stuck to the transactional way of leading. Using his knowledge of the employees’ strengths and weaknesses he could decide how strictly they needed to be dealt with. He states that his behavior with them isn’t soft and as a manger he needs to be harder with them and keep narrower boundaries so that the employees are reminded of their priorities.

The transactional style of leadership is known to be not too involved in the personal issues of their staff and it can be noticed in the way the interview shows how the Executive tends to stay out of any arguments or issues that may be taking place amongst his employees and only interfere to avoid matters getting out of hand.

Transactional leaders motivate their followers through a system of rewards and punishment (Hussain et al., 2017). If a subordinate accomplishes the task assigned to them, they’re rewarded. However, if he does not do as per the leader’s orders a punishment will follow. This exchange between leaders and followers is the basic way to achieve routine performance goals in a company.

Implications of Transactional Theory: Transactional leaders emphasize mainly on detailed and short-term goals, and standard policies and procedures. Not much of an effort is made by them to enhance followers’ creativity and encourage innovation of any sort. This leadership style works well where the organizational problems are simple and clearly defined (Doucet, Poitras and Chênevert, 2009).

Transactional leaders are quite effective in guiding efficiency decisions which are aimed at cutting costs and improving productivity which is usually the most basic goal and requirement of a company, hence emphasizing on their ability for solving simple problems. The transactional leaders are action oriented and their relationships aren’t based on emotional bonds but rather on professional bonds created by accomplishing tasks assigned to the employees. Transactional leadership is a traditional form of leadership and one of the most commonly used approaches. This form of leadership strategy can have a great effect on workers as it values both order and structure, which usually delivers results. As a manager or leader, understanding the basis of transactional leadership can allow one to make effective use of it in their future pursuits.

Advantages and Disadvantages of a Transactional Leadership Style: In some work environments, transactional leadership may be the only way to get things done as its emphasis on structure and results can be very beneficial in achieving the required results. However, in more open and creative environments, this strategy may fail.

Transactional leadership styles can usually be seen applied in the military, law enforcement, large corporations, or in multinational companies. This is because the transactional leadership approach is so straightforward which makes it easy to apply for the leaders and also easy to understand for the followers. Before either applying this type of leadership or completely ruling it out, it is necessary to take a look at some of the advantages and disadvantages of transactional leadership (ODUMERU, 2017).

Here are some of the advantages of transactional leadership:

1.     Focused and self-motivated individuals are rewarded for their hard work.

2.     It helps in achieving short-term goals quickly

3.     Workers have clearly distinct rewards and penalties

4.     It encourages productivity amongst workers

5.     The structure is clear enough to understand and implement

6.     It can easily be applied in work environments where structure and systems need to be reproduced

7.     It helps keeps all members in a large organization on the same page

On the other hand, here are some of the disadvantages of transactional leadership:

1.     It does not work well in flexible work environments where more openness to new ideas are required

2.     It only rewards workers with perks or money, with no use of other motivating factors

3.     It does not reward individuals who take personal initiative basing rewards on the final outcome only

4.     It is often considered to be limiting to the workers

5.     Creativity and innovation are limited as well

6.     It can be rigid with no room for flexibility with goals and objectives

Transactional leadership is usually observed to be used by coaches of sport teams. The coaches will encourage their team by promoting the end reward of the game. The final result of the game is such a strong incentive for the team members that they are willing to risk injury in an attempt to achieve the reward.

This form of leadership is also quite effective in a crisis or an emergency, as such situations usually require an individual to take control and provide firm decisions on the matters at hand. In such cases and many more organizations where employees require direction and proper instructions, transactional leadership may be the best strategy available.

4.2.1. Up-or-Out Guide

Up-or-out also chooses people who are good in leadership roles. In a hierarchical organization "up or out", is also known as a tenure or partnership system, in which the requirement is that each member of the organization must achieve a certain rank within a certain period of time. If they fail to do so, they are required to leave the organization. This is usually considered to be an industry’s hard-nosed approach to doing business and is followed by Bain & Co and McKinsey & Company. However, it is not a label that the companies are keen to accept.

In the United States, Tenure-track Professors are usually subject to the up-or-out system. Professors at the beginning of their career must impress their departments so as to be considered for tenure. Those who do not get awarded with tenure over a certain period of time may risk being terminated. "Publish or perish" is a phrase coined for workers in academia that describes the pressure they are under to publish relevant academic material to remain relevant and to help propel their careers forward (Buchanan, 2009).

This is where a good leader may help their employees achieve something to avoid them becoming an eventual target of the up-or-out policy. If an employee is underachieving a not working up to the mark, a good leader should be able to assist those working for him to help achieve what they need.

4.2.2. Ethical and Success-Oriented Assessment

Ethics assessments can serve as a reminder for an agency or company that they are working ethically. Ethical compliance on a company’s end is a requirement for every department to follow and an assessment of the ethical workings could help find an early warning of potential ethical blind spots that could lead to issues in the future if left unchecked (Newton, 2001). An assessment that can help an agency figure out if its workings are ethical and below are a few points that need to be kept in check:

1.     Compliance-Analyzes the degree to which one’s ethics program meets the standards required by law and the degree to which both the organization’s and individuals’ behavior satisfies legal requirements.

2.     Cultural-Explores how employees and other stakeholders feel about the organization’s standards and behavior, including the perceived priorities and ethical effectiveness of individuals and sub-units of the organization, as well as the organization as a whole.

3.     Systems-Assesses the degree to which the ethical principles, guidelines and processes are integrated within the organizational system.

Every agency should check if their company complies with ethics laws that are laid out in policy books of all companies and organizations. Issues relating to professional conduct that further includes accountability, respect for colleague’s openness and stewardship are a few factors that need to be kept in check. Leaders are also required to follow these ethical guidelines to allow for an environment within which there is mutual respect for all. Lack of respect and openness can only cause problems within a work environment (Newton, 2001). Even ethical awareness for research or treatment of animals need to be considered as an ethical requirement. Respecting privacy, fairness, protecting the vulnerable are some ethical concerns that should also be kept in check by the company. Although compliance with ethics laws is a floor-and not a ceiling-for ethical conduct; it is nonetheless an important for an agency to assure itself it is meeting minimum legal requirements for its practices.

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