Chapter Four

The Corporation and Internal Stakeholders
Value-Based Moral Dimensions of Leadership. Strategy, Structure, Culture, And Self-Regulation
Copyright © 2003 by SouthWestern, a division of Thomson Learning


Corporate self-regulation: Challenges and issues Copyright © 2003 by South-Western. and systems 5.Chapter Topics 1. structure. Leadership and strategy 4. a division of Thomson Learning 2 . Culture. A 10-step assessment of value-based organizational systems and stakeholders 3. Stakeholder management and valuebased organizational systems 2.

and mission are central to its internal alignment and external market effectiveness. a division of Thomson Learning . values. The stakeholders management approach argues that organizations succeed in market and nonmarket environments through open dialogue and a duty to assist stakeholders. 3 Copyright © 2003 by South-Western.Stakeholder Management and Value-Based Organizational Systems    An organization’s enacted purpose. The digital information technology revolution has increased pressure on industries and corporations to question to what extent ethical and stakeholder value-based management principles and practices still work.

and strategies of visionary firms. a division of Thomson Learning The concept of creative destruction. .  Phillip Morris 4   Copyright © 2003 by South-Western. products. Not all organizations have the characteristics of built-to-last companies.Stakeholder Management and Value-Based Organizational Systems  The visionary built-to-last companies are premier institutions. widely admired by their peers. nor would all companies agree with or support some of the ideologies. and having a long track record of making a significant impact on the world around them.

An interesting concept. and counterpart to the creative destruction argument is creative reconstruction.Stakeholder Management and Value-Based Organizational Systems  Internal organizations are composed of systems and stakeholders.  Dot-com survivors   The internal dimensions of an organization are illustrated in the diagnostic contingency model in Figure 4. 5 Copyright © 2003 by South-Western.1. regardless of the nature of external environments. a division of Thomson Learning .

The vision and strategy. systems. and nature of work comprise the internal operations of the organization. structure. technology. states that an organization should treat its internal & external stakeholders ethically to be effective with its marketplace communities. people. Stakeholder management theory. The culture of a company is at the center spoke of the wheel of transformation.Stakeholder Management and Value-Based Organizational Systems     The purpose and core ideology of organizations are modeled by its leaders and embedded in its enterprise strategy. a division of Thomson Learning . 6 Copyright © 2003 by South-Western.

to ensure that the integration and market effectiveness of a company is based on the types of relationship and values that embody trust.Stakeholder Management and Value-Based Organizational Systems  From a stakeholder management perspective. with the support of each professional. and a “win-win” goal for stakeholders and stockholders. Copyright © 2003 by South-Western. a division of Thomson Learning 7 . collaboration. it is the role of an organization’s leaders.

  Copyright © 2003 by South-Western.A 10-Step. There are many stakeholder management audits and assessment frameworks. Value-Based Stakeholder Management Assessment  A stakeholder management approach that is value-based is argued to be more effective in implementing organizational change programs that include ethics and compliance training. human resources. Companies can use management. and ethics consultants to design and deliver these types of assessments. a division of Thomson Learning 8 .

Value-Based Stakeholder Management Assessment  The 10-step assessment is as follows:           Determine the problem or opportunity and gain top leader support Review and develop the vision.A 10-Step. a division of Thomson Learning . mission. values. and ethics code Use a value-based stakeholder readiness checklist Develop performance and responsibility measures and get feedback Identify stakeholder level of responsiveness and responsibility in the corporate strategy Determine the organization's systems alignment Conduct baseline and gap analysis between current and desired future states Create benchmarks Develop summary report with recommendations Review results 9 Copyright © 2003 by South-Western.

a division of Thomson Learning 10 . although the values and behaviors of company founders and CEOs often frame and set the cultural tone for the organizations.  A starting point for identifying a leader’s values is the vision and mission statement of a company. Copyright © 2003 by South-Western.Leadership And Strategy  Leadership is a shared process.

value-based assessment. as well as the competitive. mission of organizations Build and sustain relationships with stakeholders Talk with stakeholders. a division of Thomson Learning .Leadership And Strategy  From a stakeholder management. a CEO and other organizational leaders would demonstrate the following skills:  Define and lead the social and ethical. showing interest and concern for other’s need beyond the economic and utilitarian dimensions Demonstrate collaborations and trust in shared decision making and strategy sessions Show awareness and concerns for employees and other stakeholders in the policies and practices of the company 11     Copyright © 2003 by South-Western.

a division of Thomson Learning 12 . Copyright © 2003 by South-Western.Leadership And Strategy  An emerging body of literature and practice describes leadership from a deeper spiritual and value-based perspective.  Theological and philosophical literature has helped redefine leadership to include new concepts and vocabulary that capture the human and spiritual domains from which business leaders already work.

a division of Thomson Learning .Leadership And Strategy  Leadership styles:     Manipulator Bureaucratic Professional Transforming  Seven symptoms of the failure of ethical leadership:        Ethical blindness Ethical muteness Ethical incoherence Ethical paralysis Ethical hypocrisy Ethical schizophrenia Ethical complacency 13 Copyright © 2003 by South-Western.

a division of Thomson Learning 14 .  Sets the overall direction of business activities  Reflects and models activities that management values and prioritizes  Sets the tone and tenor of business activities and transactions inside the organization Copyright © 2003 by South-Western.Leadership And Strategy  Strategy influences the goals and objectives of the company and its stakeholders.

a division of Thomson Learning .Leadership And Strategy  Corporations formulate at least four levels of strategies:     Enterprise Corporate Business Functional Formulating goals Formulating strategies Implementing strategies Controlling strategies Evaluating strategies Analyzing the environment 15  The strategy management process involves:       Copyright © 2003 by South-Western.

which are articulated and practiced by an organization’s leaders. Organizational cultures are:   Visible and invisible Formal and informal   Organizational cultures can be studied by:    Observation Listening to and interacting with people Other ways 16 Copyright © 2003 by South-Western.Culture. a division of Thomson Learning . Structure. and Systems  A corporation’s culture is the shared values and meanings its members hold in common.

Culture. and Systems  Signs of cultures in trouble or weak cultures include:              An inward focus A short-term focus Morale and motivational problems Emotional outbursts Fragmentation and inconsistency Clashes among subcultures Ingrown subcultures Dominance of subculture values No clear values or beliefs Many beliefs Different beliefs Destructive or disruptive cultural heroes Disorganized or disruptive daily routines Copyright © 2003 by South-Western. a division of Thomson Learning 17 . Structure.

Ethics codes  Value statements that define an organization   Ombudspersons and peer review programs  To manage the legal and moral aspects of potentially problematic activities Another method for handling moral questions 18  Ethics programs  Copyright © 2003 by South-Western. a division of Thomson Learning . implementing stakeholder management assessments. and enacting ethics programs can help a company financially and morally.Corporate Self-Regulation: Challenges And Issues  Establishing codes of ethical and legal conduct.