1- Organizational Stakeholders:

Organizations live because they are capable to endure acceptable outcomes and create value for the
stakeholders. Stakeholders are individuals who have a claim, stake, or an interest in how an
organization performs and they are prompted to take part in it if they receive inducements (money
and power) that go over the value of the contributions (skills and knowledge) they need to form.

Inside stakeholders are the ones closer to the organizations and have the toughest claim on its
resources: a) Shareholders are the masters of the organizations and they hold superior shares than
other insiders. They contribute to it by supplying money in and purchasing it’s shares or stock and
they induce by investing their anticipated earnings through stock price appreciation and dividends.
There is no assurance of a return which makes investment tricky and that leads to some ending their
support and selling their shares. b) Managers are in charge of combining organizational resources.
They are often referred to as “C-Suite”, being hired by the BOD and are in charge of supplying funds
of shareholders in resources in order to have greater value of future products and services. They
contribute with their knowledge and skills to assure the organization’s response to the amounting
pressures of the environment. Their inducements are psychological satisfaction (exercising power and
taking risks) and monetary compensation (salaries and bonuses). Like shareholders, they will also
leave if contributions aren’t met. c) Workforce are the employees that are outlined to do specific tasks
and jobs at the required level. They contribute by carrying out duties at high levels and they put their
knowledge and skills into effect, while their inducements (punishments and rewards) are ricocheted
by the organization to control their job perefomance.

Outside stakeholders do no have any relation to the organization besides being absorbed to it. They
comprise of Customers, General Public, Trade Unions, Suppliers, Local Community, and
Government. And each have a hand on the table. Like a) Custosmers, they are the people and the
biggest group. They contribute by paying to the organization when they purchase items and have their
say on them, while they inducement to contribute is the quality and price of goods and services they
have selected. And when they are satisfied they continue with their support and when they’re not by
refusing to the price then they are gone. b) Suppliers play a vital role in an organization’s
environment, they contribute to it with high quality inputs and their inducement is basically the
revenue received from the purchased inputs. Suppliers can attract customers by nourishing demand on
the products and influence the organization with high quality products. c) Trade unions can make
trouble or be on good terms with an organization and they greatly impact it’s effectiveness and
productivity. They contribute in doing free and fair collective bargaining and their inducement to the
organization is of equitable shares.

2- Organizational Effectiveness: Satisfying Stakeholder’s Goals and Interests:

Many stakeholders take advantage of the organization in order to reach their goals {for shareholders
(ROI), employees (compensation and career prospects), customers (product value and reliability)}.
An organization has an obligation to satisfy the interests of all stakeholders, who in turn judge how
well the organization is doing.

For competing stakeholders’ goals there are several factors to ba taken into account, especially that an
organization’s purpose is to satisfy its stakeholders’ goals. However, this is easier said than done, as
different stakeholders have different goals. In addition to this, some shareholders might have goals
which conflict with the goals of the organization itself. This gives the organization the task of
prioritizing its objectives and deciding which ones should not be pursued.

On the other hand for allocating rewards, there is a minimum threshold of shareholder satisfaction
which an organization is under obligation to meet. Anything above that threshold can be considered
“extra rewards” and the organization’s managers must determine what is the best way of distributing
them in order to maximize the shareholders’ motivation to contribute to the organization.

3- Top Managers and Organizational Authority:

The best managers, whether they be from the corporation’s managers or the shareholders
themselves, are the ones who know which are the right decisions to make in terms of using the
organization’s resources, managing the workforce, and setting and reaching goals. Below the
shareholders in the company’s hierarchy, we find the BOD followed by corporate-level management.
Each level of the hierarchy is responsible for supervising those below them and ensuring they are
doing their job right.

Perhaps the single most influential person in an organization’s hierarchy is the Chief Executive
Officer (CEO). Their decisions often directly impact the organization and the use of its resources,
including choosing its executives and setting its goals.Due to these responsibilities, it is often the duty
of the CEO to communicate with the stakeholders. The COO, on the other hand, is responsible for
managing the company’s internal operations while the Executive Vice-Presidents are further down
the hierarchy and are given the task of managing the company’s different departments.

On the advisory hand, we have Line-Role Managers who are in charge of the good and services’
production process and the Staff-Role basically are responsible for the organization’s research and
sales process (R&D). We also have the Top-Management Team who are under the wing of the CEO
and the COO and they provide a hand to the CEO in developing future objectives, strategies, and
goals. Another member are Corporte Managers that are destined to determine the corporation’s long
term strategy.

4- An Agency Theory Perspective:

The separation of ownership and control can lead to conflicts between Agency Theory which
suggests a way to understand the conflict between Top Management and the BOD, while Agency
Relation occurs when an individual (the prinicpal) authorizes another (the manager, appointed by the
higher party to be effective) in having the upper hand on resources and decision-making.

A problem emerges in the agency when managerial accountability is being assigned when managers
are declared authority. And that leads to troubles because when you employ exports, how do you
know they’re gonna do the right job? Such things require time and they can’t be held responsible for
their actions. Also the managers are a step ahead of the shareholders with the information inserted in
their brains, and actions don’t happen right away, time is needed in order to see the effectiveness of
the managers’ decisions. Managers are for the short-term profits while shareholders are opposite.

The Moral Hazard Problem comes to life when agents get the chance and incentive to follow their
own desires, and it isn’t a piece of cake of evaluating the agent’s performance as he/she possesses an
information advantage over the principal. To solve the problem, managerial compensation, stock-
based compensation schemes and promotional job paths will promote and attract competent
management and will also balance the interests of administrators with the interests of shareholders. If
stockholders are dissatisfied with the results of the new administrators, they may call for the change
of internal management to accomplish the mission.

5- Top Managers and Organizational Ethics:

Ethics is essentially the ability to distinguish between right and wrong. However, morals are not so
easily black and white, so laws are needed to draw the line that separates what is allowed from what
is not allowed, as well as what punishments will be given when the law is broken. Despite this, the
 laws themselves are not perfect and they may vary from one place to another.Societal Ethics are
essentially the laws of a society, both written and unwritten. Professional Ethics on the other hand are
the guiding principles that a specific group of people follow in the work environment, while
individual ethics are the personal morals of a single person that they use in their daily lives. However,
unethical behavior still occurs. This can be a result of a person having developed poor values and a
disregard for how their actions affect those around them. It might also happen as a result of the
current circumstances forcing someone to act unethically while they might have otherwise not done
so.

6- Creating an Ethical Organization:

An organization is ethical if its members behave ethically. Top Managers and the BOD lead the
organization’s ethical culture in a way to show other how its done and have the upper hand in creating the
organization’s policy while also forwarding ethical and moral rules to enhance performance.

In order to design an ethical structure and control system, an organizational structure that reduces
incentives needs to be put into effect. And steps have to taken to encoutage Whisle-Blowing and for
employees to file a complaint if some unethical behavior is on the table, while also establishing an ethics
committee and ethics officer would spice things up. In creating an ethical culture, some known facts are
that the norms, values, and rules that give birth to an orginzation’s ethical position are actual bones and
limbs of its culture, but how senior managers behave towards the society, is a great effect on their
corporate culture. And in order for an ethical and unethical corporate culture to be created, it would
require commitment from all levels. There is a support in the interests of stakeholder groups, and since
the shareholders are on top of the pyramid, they are authorized in any sort of action by dismissing and
recruiting senior management and if there is some unethical play in the field, they pull out the red card
while being aware of the consequences but it’s reputation along with share value is on line. Meanwhile,
poor countries have the least restrictive regulations, and there is an amounting amount of pressure piled
on outside stakeholders to encourage an ethical behavior and some of which are consumer watchdog
groups, governments and their agencies, and also the industry councils.