Business Leaders by Andr - e - Marie - L - Pez-Fern - Ndez

Business Leadership and
Market Competitiveness
New Paradigms for
Design, Governance,
and Performance
Andrée Marie López-Fernández

Business Leadership and Market Competitiveness
“Corporate decision-making is becoming complex as society, business, and corporate

governance are triangulated in the global marketplace today. This book puts forth
new dimensions in current business practices for strategic decision making over
the traditional wisdom of managers. The book offers a series of conceptual models
that will lead to a shift in readers’ mindsets. A must read for managers and change
leaders…”.
—Rajagopal, PhD FRSA, Professor and National Researcher,
EGADE Business School, Mexico
Business Leadership
and Market
Competitiveness
New Paradigms for Design, Governance,
and Performance
Universidad Panamericana
Mexico City, Distrito Federal, Mexico
ISBN 978-3-030-03346-0 ISBN 978-3-030-03347-7 (eBook)

https://doi.org/10.1007/978-3-030-03347-7
Library of Congress Control Number: 2018964416
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Preface
There is a constant need to find an adequate balance between the thoughts,

concepts, models, and techniques that created the very foundation of
business and new and innovative propositions, in a context of overwhelm-
ing changes in the environment. Some organizational leaders make the
mistake of engaging in business practices on the basis of tradition or
because they are derived from classical theory without considering the
particularities of the current climate.
The volatility of the environment has become a constant variable in
decision making. The speed with which changes occur has significantly
increased in the last two decades; the Internet boom and the emergence
of social media and social networking sites have without doubt been
instrumental in the shaping of the current external conditions as well as
organizational dynamics. For one, current and potential stakeholders have
become much more empowered and assertive in voicing their opinions
and thoughts regarding business practices and tend to do so via social
platforms. Creating a dialogue with them is essential for the achievement
of desired performance as well as growth and development.
The purpose of this book is to present a comprehensive view of the
implications and attributes of business environments. This book provides
insights into business dynamics that provide satisfaction, added value,
and enhanced performance. Competitive paradigms, which are con-
stantly being shifted, and turbulent environmental conditions, which are
a constant today, tend to dictate rather than inform strategic decision
making regarding organization’s status quo and desired outcomes. As
such, there is a need for organizational leaders to re-examine current
v
vi PREFACE
practices. The book intends to provide theoretical contribution in regard

to leadership, corporate governance, collaborator management, perfor-
mance management and organizational design, as well as the relation of
the aforementioned to types of organizations.
Each chapter begins with a discussion on the corresponding organiza-
tional concept on the basis of various definitions developed by practitio-
ners and scholars. Leadership Taxonomy, Chap. 1, begins with a debate on
nature versus nurture in order to determine the fundamentals of the con-
cept. The different styles of leadership, which have been significantly
debated by scholars and practitioners in organizational literature, are pre-
sented so as to highlight the advantages and disadvantages of each style for
the achievement of desired performance. The practices of seeding and
implanting leadership are discussed to draw attention to the role of society
in the shaping and development, and relevance of a streamlined ideology
and its association with leadership and followership. Three types of leader-
ship, induced, purposive, and macro and global, are introduced to explain
the new dynamics surrounding the concept in the current conditions.
Induced leadership refers to the effects of the organization’s internal and
external dynamics on the development of leadership, organizational cul-
ture, and performance outcomes. Purposive leadership, which is associ-
ated with the latter, is generated on the basis of particular strategic goals,
while macro and global leadership emerge for global strategic goal achieve-
ment. The final section of the chapter includes propositions regarding the
correlation between the concept of syntality (description of group behav-
ioral traits) and leadership; it discusses its implications on team dynamics,
effectivity, and performance.
Chapter 2, Corporate Governance, offers a discussion on corporate
governance; it is a concept that tends to resonate with current and poten-
tial stakeholders when an organization’s decision making is questioned in
traditional media and, increasingly, in social media. The chapter addresses
the differences among organizations that formally design, implement,
measure, and control corporate governance versus those that steer away
from its formal engagement. Transparent communication, control, and
accountability are discussed as leading attributes of the internal and exter-
nal fit of corporate governance. A model for internal fit, which depicts the
systematic process where corporate goals and collaborators’ personal goals
converge, is presented along with a model which explains how corporate
goals and corporate social responsibility goals relate and correlate, in
alignment with the internal fit. Furthermore, it debates the role of media
PREFACE vii
participation in accountability and the consequences of its intervention on

stakeholder satisfaction and perception of organizational dynamics by
illustrating the value of social media, particularly social networking sites.
Chapter 3, Performance Management, tackles the issue of organiza-
tional performance and its correlation with individual performance, specifi-
cally based on individual assessments. Without disregarding the importance
of measuring performance, as it is an elemental managerial practice, the
effectivity of traditional individual evaluations is questioned; there ought to
be a better approach to evaluating performance that does not stem from a
coercive standpoint. An analysis of individual evaluation implications for
performance management is included, as well as details of the repercussions
of these assessments on individual and organizational satisfaction, produc-
tivity, and performance. Moreover, this chapter describes the process to
effectively align organizational performance strategic goals with collabora-
tor strategic goal achievement (SGA). And, in order to do so successfully, a
model is proposed to achieve an integral approach to performance manage-
ment on the basis of individual and organization desired performance.
Collaborators are definitely key to the achievement of desired organiza-
tional performance and, therefore, growth and development; as such,
Collaborator Management is examined in Chap. 4. The dialogue of
empowerment describes the characteristics and differences among collab-
orator voice and silence, and effects of openness. A model, 7Ss for collabo-
rator dialogue, is proposed to achieve desired outcomes. Also, the relation
of empowering collaborator dialogue with leadership, and organizational
culture and climate is discussed. The maximization of collaborator MO is
examined for achieving high levels of productivity, increased satisfaction,
perceived added value, and performance; that is, as opposed to forcing
collaborators into the contextually accepted organizational fold. Further,
it evaluates the impact of SGA on collaborators’ well-being, satisfaction,
productivity, and performance, which is also discussed for managerial
implications. Finally, intergenerational collaboration is addressed by ana-
lyzing the negative effects of generational discrimination on individual
well-being, satisfaction, productivity, and performance, as well as that of
the organization.
In the beginning of Chap. 5, Organizational Designing, the first ques-
tion posed is whether to redesign or perish. It includes a discussion on the
advantages and disadvantages of placing emphasis on redesigning as an ad
hoc solution for sustained business growth and development by describing
its association with the intent to adopt organizational design trends, as well
viii PREFACE
as the effects of radical transformation. The effects of keeping up with latest

propositions and trends to maintain a “state-of-the-art” organizational
design are evaluated and a model to manage potential shock received by
the turbulent environmental conditions is proposed so organizational lead-
ers can properly design their organization. Finally, a layering approach to
design, as opposed to a radical transformation, is described as an alternative
to achieve desired outcomes in regard to organizations’ particular needs.
The final chapter addresses future directions for organizations. It discusses
key elements that all organizations, regardless of size and line of business,
should tackle in the pursuit of sustained growth and development.
The idea for this book came from analyzing current organizational
decision making as well as trends, which led me to examine whether or not
we are likely to tackle current and future challenges. Thus, as we get pre-
pared to enter the third decade of the twenty-first century, it is only fitting
that we ask the difficult and uncomfortable questions regarding our busi-
ness practices.
Mexico City, Mexico Andrée Marie López-Fernández

October 2018
Acknowledgments
The process of writing this book has certainly been supported by lively
discussions with colleges, family, and friends. I thank Dr. Rajagopal, my
mentor, for always inspiring me to continue asking questions. I would also
like to thank Renée Valentina for motivating me to speak my mind, and
Federico for his support and love. I express my deepest gratitude to Anita
for her unwavering support, love, and continuous motivation; she has
been instrumental in this realization of this project as well as many others.
I thank Carla for always being a believer and her contagious enthusiasm,
and Victor, my accomplice, for his continuous encouragement to follow
my dreams. This project could not have been completed without you.
ix
Contents
1 Leadership Taxonomy 1
Defining Leadership 1
Initiating the Debate on Born Leaders 2
Style of Leadership 5
Seeding Leadership 10
Implanting Leadership 12
Induced Leadership 13
Purposive Leadership 16
Macro and Global Leadership 16
Syntality for Effective Leadership 17
References 19
2 Corporate Governance 27
Defining Corporate Governance 27
Governance Formality and Informality 28
Key Corporate Governance Elements 29
Internal Fit 33
External Fit 37
Media Participation in Accountability 39
References 45
xi
xii CONTENTS
3 Performance Management 49
Defining Performance Management 49
Individual Performance Evaluations 50
Integral Performance Evaluations 62
References 67
4 Collaborator Management 71
Defining Collaborator Management 71
The Dialogue of Empowerment 73
Maximizing Collaborator MO 77
Strategic Goal Achievement 81
Generational Collaboration 85
References 88
5 Organizational Designing 91
Defining Organizational Design 91
Redesign or Perish? 94
Keeping Up Is Too Slow 95
Managing Shock Dampers 98
Layering Organizational Design 103
References 107
6 Future Directions111
The Name of the Game: CSR 111
Bringing Consumer Activism into the Fold 113
Swinging for the Fences 114
Challenges Ahead 116
References 116
Index117
List of Figures
Fig. 2.1 Internal fit of corporate governance 34

Fig. 2.2 External fit of corporate governance 37
Fig. 3.1 Negative effects of individual performance evaluations 62
Fig. 4.1 7Ss for collaborator dialogue 75
Fig. 5.1 Strategic corporate philosophy alignment 93
Fig. 5.2 Shock spring versus shock damper 100
Fig. 5.3 Shock damping model 101
Fig. 5.4 Organizational design layering model 107
xiii
List of Tables
Table 1.1 Brief description of leadership styles 5

Table 2.1 Excerpt of 2017–2018 scandal headlines 32
Table 2.2 Hashtags from 2017 and 2018 scandal tweets 43
Table 3.1 Integral approach to performance management 64
Table 4.1 Current sayings about Millennials in the workplace 86
xv
CHAPTER 1
Leadership Taxonomy
Leadership is a remarkable attribute; it has been witnessed in the work of

renowned politicians, policy makers, businesspeople, athletes, scholars,
members of the clergy and nobelists, among many others. There have
been so many women and men who have achieved great results, regardless
of the nature of their strategic objectives and goals. Granted, not all have
had the best intentions, and their actions may have been somewhat disap-
pointing and even manifestly unethical; however, their success ultimately
lies in their followers and achievement of effective outcomes. Their legacy
is, in fact, the continuous successes as leaders despite potential contradict-
ing points of view.
Defining Leadership
The concept of leadership, like so many others, has been widely debated by
numerous scholars and practitioners searching for a worthy definition of
the term. As such, it has multiple definitions that vary according to firm
size and core operations, organizational context, environment, and overall
business dynamics. According to Chemers (2014), leadership is a process
by which an individual assists another or others in fulfilling an undertaking
common to all parties interested. It is about influencing others (Yukl 2010)
to attempt to realize a group’s objectives (Terry 1960); thus, managers
ultimately become leaders when they have followers who collaborate with
them in the pursuit of goal achievement. Leadership has been considered
© The Author(s) 2019 1

A. M. López-Fernández, Business Leadership and Market
Competitiveness, https://doi.org/10.1007/978-3-030-03347-7_1
2 A. M. LÓPEZ-FERNÁNDEZ
to be a process through which a manager or organizational leader success-

fully defines the path of other individuals (Smircich and Morgan 1982). In
a sense, it refers to managers’ behavior and the manner in which they inter-
act with collaborators (Belias and Koustelios 2015). Therefore, leaders’
actions directly impact collaborators’ behavior and attitude toward the
firm, as well as their performance (Lok and Crawford 2004).
An effective approach to leadership has a positive effect on individual
and organizational performance, cooperation, and degree of collaborator
responsiveness to their leaders. According to Bass (1997), leadership has
been discussed from many perspectives and with various intentions; in
fact, it has been researched; examined; and considered to be behavior,
personality, a means of compliance and to fulfill objectives; infusion of
persuasion, power, influence; and the result of a structure, relationships, as
well as a mixture of the above-mentioned. Therefore, leadership is a
charged word, to say the least, which originates from a series of theories
that have enriched our understanding of the concept and its virtue.
Initiating the Debate on Born Leaders

In the nineteenth century, the “Great Man Theory” dominated discus-
sions about leadership. It was 1840 when historian Thomas Carlyle gave a
series of lectures that would become the book On Heroes, Hero-worship,
and the Heroic in History. He described how the accomplishments of such
heroes are intrinsic, in a way that leaders are destined to succeed as leaders
(Carlyle 1840); therefore, theorizing that leaders are born not made.
Further, the theory suggests that groups or teams are high-performers
because they have the best leader, a Great Man (Borgatta et al. 1954). Skip
forward a couple of decades when sociologist Herbert Spencer described
leadership as a trait influenced by environment and context. In his book
The Study of Sociology (Spencer 1873), he stated that the origin of the great
man is determined by the various elements and aspects that have influ-
enced and caused the very social state in which said individual is found.
Moreover, he argues that as much power and influence an individual may
have to change a nation whereby its structure and actions are modified, it
is equally plausible that the very nation attempting to be changed may, in
fact, influence and impact the individual. The leader, then, is first made by
the society she/he is trying to transform; in a sense, leaders would not
become leaders if a leadership role did not need to be filled. According to
Spencer, leaders are, in fact, made, thus, commencing a leadership debate
LEADERSHIP TAXONOMY 3
of nature versus nurture. The debate is a draw; discussing leadership

requires acknowledgment of the influence of both viewpoints.
Personality has also been at the center of leadership theory. It is the
Trait Theory that suggests that personality traits have a direct impact on
leadership (Colbert et al. 2012). Although it does not always accurately
differentiate those that are leaders and those that are not (Zaccaro 2007),
there are certain attributes that are considered to be particular to leaders.
In fact, you may find over one million three hundred hits when you
Google Personality traits of leaders. When some say that a person is a natu-
ral leader or born leader it is suggested that they have a certain personality
suitable for a leadership position. Being proactive, working well under
pressure, being forthright, collaborating well with others, and not being
risk averse, are some trait examples. These include elements of a Type A
personality, such as being persistent, highly involved in their work and
hard driving (Caplan and Jones 1975). Type A Behavior Pattern, accord-
ing to Friedman and Rosenman (1974), is defined as an individual’s mul-
tidimensional actions charged with emotion which drive optimal and
prompt accomplishment of objectives against all odds. The description of
relentless drive to efficiently accomplish goals and objectives is undoubt-
edly fit for what may be considered to be an effective leader; however,
although it has been considered to be a performance indicator (Bartkus
et al. 1989; Barling et al. 1996), it is not characteristic of all leaders, both
effective and ineffective.
The effectivity of a leader is visible when she/he adequately aligns her/
his policies and actions with their collaborators’ requirements (Hur 2008).
It is important for collaborators to feel they are working toward their
growth and development as well as that of the firm. Effective leaders also
foster an amicable organizational climate where collaborators can share
attitudes, beliefs, and values (Schneider 1987). They strategically commu-
nicate their expectations regarding the work of the collaborators (Belias
and Koustelios 2015), to fulfill strategic goals and desired performance.
And, not only are they aware of collaborators’ differences (Hersey and
Blanchard 1993) but they also include them in pursuit of organizational
goal fulfillment. However, as much as these traits are commonly associated
with effective leadership, they are not a guarantee of success.
The debate on born leaders has extended to gender, in that many scholars
and practitioners have questioned whether the best leaders are actually women
or men. The 1980s brought forth conversation of the term glass ceiling.
A concept that remains relevant in the discussion of qualified women and the
obstacles and barriers they encountered to attain positions in higher echelons
(Morrison et al. 1987). The reality is that women still remain underrepre-
sented in leadership positions (Adler 1993; Cook and Glass 2014) worldwide.
Ayman et al. (2009) held a study and found that woman leaders were associ-
ated with significantly less performance than their male counterparts, regard-
less of their level of transformational leadership. Furthermore, according to
Ryan and Haslam (2005), women face a glass cliff effect as they tend to be
appointed to leadership positions when the organization endures financial
problems and/or a decreased performance; therefore, they face a more than
challenging context and environment. It is no wonder some workers prefer
not to collaborate with women leaders (Simon and Landis 1989) and distrust
their effectiveness (Bowen et al. 2000; Sczesny 2003).
Many have studied the differences between male and female leaders.
Although differences have been identified, feminine and masculine leader-
ship styles have been said to be less contrasting than one would assume;
meaning that, the differences are quite small (Eagly 2013). That said, the
general notion is that a feminine leadership style is characterized by a dem-
ocratic, relationship-oriented, participatory leader, who is also more of a
transformational than a transactional leader (Bass and Avolio 1994); while
a masculine leadership style is more associated with an autocratic and task-
related style of leadership (Gardiner and Tiggemann 1999; Eagly and
Johannesen-Schmidt 2001; Van Engen et al. 2001). Under such assump-
tions, (1) all men would be autocratic leaders, which means no empower-
ment, or participation in decision making, and reduced or null innovation
and creativity; (2) all women would be democratic leaders, meaning
empowerment, participation in decision making, and increased innova-
tiveness and creativity; (3) since small firms’ structure is more aligned with
a centralized decision making, most of these firms would be effectively
managed by male leaders; and (4) because decision making in larger firms
is decentralized and even collaborative, these firms would be effectively
managed by female leaders.
While reaching top management and senior positions in large and mul-
tinational enterprises has proved to be difficult to say the least, finding
women entrepreneurs in small and medium enterprises (SMEs) is not
unusual. To be fair, it does not mean that women-owned/managed SMEs
are the majority, rather they are less atypical. However, there are examples
that somewhat contradict common cultural practices. In other words, it is
suggested that there are certain roles still thought should be strictly per-
formed by women and others by men. Consider the example of taquerías
(taco restaurants) in Mexico; these are mostly small businesses that are par
excellence owned, managed, and run by men. This, of course, includes
preparing and serving meals which is customarily considered a woman’s
responsibility, one of women’s roles in society. Thus, it seems clear that the
optimal style of leadership is not a one-size-fits-all style; it rather depends
on organizational context, environment, and, specially, the characteristics
of the group and its personality.
Style of Leadership
There are many styles of leadership that have been widely discussed by
scholars and practitioners for decades. Table 1.1 includes a brief descrip-
tion of leadership styles that have been previously researched and dis-
cussed. That said, the most commonly discussed leadership styles include
task-oriented, relationship-oriented, autocratic, democratic, laissez-faire,
transactional, and transformational leadership (Bass and Stogdill 1990;
Eagly and Johannesen-Schmidt 2001; Nikezić et al. 2012; Ehrhart and
Klein 2001; Tabernero et al. 2009). These styles tend to be associated
with type and/or size of the organization, context, and environment;
moreover, they often determine how collaborators perceive not only lead-
ership, but also their tasks, work environment, and effects of performance.
According to Bass and Stogdill (1990), leadership style is defined as the
different approaches of leaders’ behavior related to their interaction with
team members—collaborators. Meaning that, there is not one style of
Table 1.1 Brief description of leadership styles

Leadership Style Author(s)
Democratic, autocratic, and laissez-faire leadership Lewin and Lippitt (1938)

Servant leadership Greenleaf (1977)
Undemocratic leadership Manz and Sims (1989)
Transformational leadership Burns (1978)
Instructional leadership Marks and Printy (2003)
Spiritual leadership Fry (2003)
Participative, supportive, and instrumental leadership Pedraja-Rejas et al. (2006)
Mechanistic and humanistic based leadership Zehir et al. (2011)
Strategic leadership Quong and Walker (2010)
leadership, a one size fits all, but a range of styles. Further, Eagly and
Johannesen-Schmidt (2001) have posited that leadership styles are the
manner in which leaders behave, which remains fairly unchanged.
Therefore, it suggests that leaders are persistent in the manner they accom-
plish objectives. In a sense, leaders tend to maintain a selected style of
leadership unless they are convinced that their approach is no longer
satisfactory.
A leadership style that is task-oriented prioritizes the completion of
tasks and activities by complying with strategic goals and objectives over
most any other aspect; and a leadership style that is relationship-oriented
prioritizes the connections made between leader and collaborators, the
latter’s well-being, satisfaction, and added value, above all else (Blake et al.
1964; Hersey and Blanchard 1993; Ehrhart and Klein 2001; Tabernero
et al. 2009). Supportive leadership prioritizes collaborators’ well-being by
fostering an amicable environment; it is aligned with the accomplishment
of policies, functions, and tasks (Pedraja-Rejas et al. 2006). And a partici-
pative leadership style suggests that leaders’ approach is based on empow-
erment so collaborators are active in decision making.
A democratic style of leadership is participative (Gastil 1994). Decision
making is decentralized enabling collaborators to actively and, in many
cases, proactively participate in decision making; and they are inspired and
motivated by their leaders (Daft and Marcic 2006; Yukl 2010). These
leaders have a considerable amount of power, yet are not dictatorial or
authoritarian (Oparanma 2013); rather, they not only encourage collabo-
rators to partake in the power (Srivastava et al. 2006) but also empower
them. Thus, they intend to positively influence collaborators (Daft and
Marcic 2006). This style of leadership has been found to increase collabo-
rators’ satisfaction, effectivity, and autonomy (Cuadrado et al. 2012).
Because of the continuous encouragement, collaborators are not only pro-
active and participative, but they also tend to exhibit more creativity and
innovativeness. Moreover, they are made aware of the effects of their work
and influence on organizational productivity and performance.
According to Burns (1978), a manager’s leadership style may either
be transactional or transformational. A transactional leadership style is
characterized by a focus on supervision (Odumeru and Ogbonna 2013)
in an effort to effectively accomplish activities and functions in align-
ment with strategic goals and objectives. It is also regarded as a leader-
ship focused on compliance with organizational policies, norms, and
standards (Ng and Sears 2012) that leads to the achievement of desired
individual and organizational productivity and performance. These

leaders are concerned with collaborators’ well-being and do watch over
the protection of their human rights; however, they are significantly
more concerned with setting objectives, generating added value for
stakeholders, and the maximization of the bottom line (Kanungo 2001;
Aronson 2001). Transactional leadership leans on managerial practices
that revolve around the evaluation of behavior and performance as well
as their reinforcement (Aarons 2006).
These leaders utilize a reward system (Belias and Koustelios 2015) to
promote good behavior and performance (Odumeru and Ogbonna
2013) and punishments to dissuade bad behavior and poor perfor-
mance. Therefore, there is a particular transaction that occurs whereby
the collaborators (1) are compensated for their efforts and (2) are sys-
tematically disciplined and rewarded for their efforts. Due to the above-
mentioned particularities, this style of leadership is often related to a
bureaucratic environment and authority style (Ng and Sears 2012).
With transactional leadership, most everything is a conditioned to
something else. It is more of a quid pro quo situation, which goes from
top-bottom and bottom-up. Leaders condition compensation to desired
outcomes, and collaborators condition productivity and performance to
proper compensation, validation, and recognition. Thus, the relation-
ship between leaders and collaborators is characterized by a somewhat
cold, calculated, and controlling rapport.
A transformational leadership style, on the contrary, is often associated
with more of a democratic leadership style. The focus of this leadership is
on transformation, where collaborators (1) are guided toward self-
awareness of their work, degree of productivity, and performance, and (2)
are in continuous pursuit of their and the organization’s growth, as well as
the pertinent rewards (Ruggieri and Abbate 2013) for their efforts in
accomplishing favorable outcomes. The relationship between leaders and
collaborators is far from a mere exchange of conditioned results; rather it
is based on a participatory environment. According to Bass and Riggio
(2006), transformational leadership is characterized by the following attri-
butes: idealized influence (II), inspirational motivation (IM), intellectual
stimulation (IS), and individualized consideration (IC). Consequently,
Bass and Stogdill (1990) have posited that this style of leadership is visible
when collaborators’ interests are aligned with those of the leader, they
acknowledge and accept the mission, and seek the good of the group,
team, and organization.
These leaders are aware that constant motivation and encouragement

drives collaborators to increased levels of effectivity and productivity under
various conditions; for instance, according to Faupel and Süß (2018),
transformational leaders can have a significant impact on followers’ behav-
ior during processes of organizational change. Further, collaborators know
that constant improvement of their performance is a result of the leader-
ship’s attention to their individual needs as well as those of the firm.
Managers with a transformational leadership style have a positive influence
on collaborators’ personal and professional development and performance
(Dvir et al. 2002). They “motivate others to do more than they originally
intended and often even more than they thought possible” (Bass and
Riggio 2006); in fact, this style of leadership is financially, emotionally, and
intellectually motivating for collaborators. Followers are compensated and
rewarded for their efforts and outcomes and the protection of their human
rights and dignity is one of the leader’s top priorities (Kanungo 2001;
Aronson 2001). Leaders challenge collaborators intellectually to solve
problems innovatively (Bass and Riggio 2006) which has a positive influ-
ence on their creativity (Avolio et al. 1999; Berson and Linton 2005;
Herrmann and Felfe 2014). Furthermore, collaborators are made aware of
their influence on the organization’s research and development (Elkins
and Keller 2003; Chen et al. 2009). Therefore, collaborators perceive that
they are motivated on various levels and are stimulated not only to comply
with requested tasks, but also to do more than the minimum required.
One of the aims and effects of transformational leaders is the develop-
ment of other leaders; that is, the actual transformation of other individu-
als, team members, and collaborators, from followers to leaders. Therefore,
collaborators working with a transformational leadership style are signifi-
cantly more committed to the organization itself and are more satisfied
(Bass and Riggio 2006) which, in turn, increases their strategic goal
achievement and levels of productivity (Belias and Koustelios 2015), as
well as their effectiveness and individual and organizational performance.
The most adequate and effective leaders are frequently associated with a
transformational leadership style (Bass 1985; Judge et al. 2006). When
other styles of leadership are discussed examples of passive non-effective
leaders arise. That said, the effects of transactional and transformational
leadership styles are well associated because the latter influences the for-
mer (Judge and Piccolo 2004).
Bureaucratic leadership is not participatory and decision making is more
than often centralized. This style of leadership leans on strict s tandards and
rules that collaborators must abide by in order to complete their functions.

Collaborators are not motivated, they excel when following instructions,
and are expected to perform their tasks without asking many questions as
processes and procedures are strictly done by the book. The leader makes all
decisions, that are later dictated to all parties interested, which significantly
reduces collaborator’s creativity and innovativeness. Furthermore, collabo-
rators are focused on individual productivity and are less concerned with
their impact on the organization’s overall performance.
An autocratic style of leadership is described as being highly centralized as
the decision making is solely in the hands of the leader (Bass and Stogdill
1990; De Cremer 2007), which means that the style is non-participatory.
Every task and assignment is dictated; collaborators do as they are told, no
questions asked. In fact, the mere act of asking questions may provoke repres-
sive answers, and swift reprimand. Only one individual, the leader, holds total
power over all decisions; these include the use of coercive measures and,
although less likely, allocation of rewards (Daft and Marcic 2006) for strate-
gic goal achievement or lack thereof. Collaborators are certainly not moti-
vated and inspired; they are not required to be creative or innovative, as that
would mean making waves in a highly standardized environment.
The assumption would be that collaborators prefer to work at an orga-
nization known for its prominent democratic leadership style, to work in
an amicable environment where proactivity and creativity are fostered
through continuous inspiration and motivation. However, such prefer-
ence well depends on the characteristics of collaborators; that is, their per-
sonality traits, method for carrying out tasks and activities, approach to
processes and procedures, and their appreciation for discipline and appren-
ticeship. For instance, an autocratic leadership style may be preferred by
collaborators that are responsive to hierarchical environments that provide
a sense of security (De Hoogh et al. 2015), stability, and confidence in
their work. While some collaborators may prefer a less structured working
environment, others may, in fact, thrive under such circumstances.
The laissez-faire leadership style has been considered to be the depic-
tion of a managers’ lack of responsibility (Bradford and Lippitt 1945) in
their role as organizational leaders. In fact, Hinkin and Schriesheim (2008)
found that this style of leadership is actually well associated with a lack of
leadership, meaning that these leaders avoid supervision functions (Judge
and Piccolo 2004), leading them to the failure of completion of tasks and
activities commonly assigned to organizational leaders. Laissez-faire lead-
ers are not proactive, avoid decision making, and show little to no concern
with collaborators’ individual needs and wants as well as the requirements
of the organization.
Therefore, collaborators receive scant to zero guidance in the fulfill-
ment of strategic goals and objectives which would require them to be
proactive in the design, development and execution of strategic plans.
These leaders may hold power for decision making yet, decide to allocate
it to the collaborators. In other words, collaborators have all power on
decision making and are in charge of business dynamics. Furthermore,
these leaders do not motivate and/or inspire followers; rather, they are
expected to motivate themselves. Incidentally, since collaborators are self-
motivating, self-supervising, and make all decisions, they are not necessar-
ily followers. Thus, it would seem as though this style requires neither a
leader that leads nor followers, per se.
Skogstad et al. (2007) held a study and found that this style of leader-
ship is akin to a destructive leadership style. This would mean that this
particular style of leadership is irrelevant when debating effectivity among
organizational leaders, as well as their impact on strategic goal achieve-
ment and individual and organizational productivity and performance.
However, some collaborators, just like with all styles of leadership, thrive
while working in an environment with a laissez-faire leadership, where
supervision is a nonissue; for instance, writers, researchers, and scientists
are able to effectively perform in an environment that promotes a laissez-
faire leadership style.
Seeding Leadership
As a society, we are obstinate on the importance of leadership and on
being a leader; to the extent that from a very young age we are taught that
a big part of being successful is effectively leading a team toward the finish
line. For that matter, there are many instances in which we discover that
not all individuals are intended to be, want to be, or even should be a
leader. The fact is that we tend to view leadership as a recipe where the
ingredients (i.e. traits) are calculated with the aim of producing the same
results each time; by doing so, we neglect to take a person’s individuality
into account.
Not everyone is intended to be a leader. Some simply do not have the
traits commonly associated with leadership which is not a negative
r eflection on their abilities nor does it diminish their contribution to goal

achievement. Instead of encouraging individuals to nurture their innate
talents and develop skills and competencies within the bounds of their
capabilities, we tend to push a good leader agenda; that is, the right and
effective way to lead others. This, undoubtedly, causes frustration in both
the struggling leader and those she/he is attempting to lead.
Not everyone wants to be a leader. Consider a person who is told that
she/he has a talent for leadership and is perfect to lead others, yet never
takes on a leadership position or decides against it. In such cases having
personality traits fit for a leadership position is no guarantee that the per-
son will become a leader. Not every person who is proactive, goal oriented
and not risk averse is qualified or desires to undertake a task such as guid-
ing others toward the achievement of goals and objectives. There are many
reasons why people skilled to be a leader choose not to be (Goffee and
Jones 2006), and compelling an individual that, although capable, does
not wish to lead others is a disservice to them and potential followers.
Not everyone should be a leader. Not everyone can be the coach of a
sports team, the president or prime minister of a nation, or the Secretary
General of the United Nations and, for that matter, not everybody should
be. For instance, it is possible to be a good enough leader of a successful
business and, yet, be an incompetent Chief of State. This exemplifies how
even good leaders do not always produce good results (Goffee and Jones
2006). Having certain leadership traits and/or respectable past results as a
leader does not ensure that a person will be an effective leader in the future
or in different realms; in fact, the results of insisting that a person be a
leader when they ought not to be can be catastrophic.
In learning that becoming a good leader is synonymous with success,
we forget the value of being a follower. On the one hand, this suggests
that a person transcends and grants true meaning to their professional
lives, if not also personal, by becoming a successful leader. On the other
hand, none of the mentioned leaders, along with many more, are success-
ful without the effective and continuous collaboration of their followers.
It is clear that a team requires good leadership as much as the latter
requires effective collaborators (Chemers 2014); therefore, why not del-
egate efforts toward the development of skilled followers that enrich a
leader’s results and enhance the team’s performance? It does not mean
that leadership skills should not be instilled; on the contrary, they should
be encouraged yet not forced upon those that are not intended to be,
want to be, or should be leaders.
Implanting Leadership
As mentioned earlier in the chapter, one of the characteristics of transfor-
mational leadership is the leader’s efforts to continuously motivate col-
laborators to not only fulfill their tasks effectively but also be creative,
innovative, and proactive. In this sense, leaders are able to develop stream-
lined ideologies that are intended to seep through the organization and
directly impact individual, team, and organizational performance.
Implanting leadership requires a leader with a clear vision of what she/
he aims to achieve, what the finish line should look like, and a mission
describing how members should reach the finish line. Meaning that, the
first step in implanting leadership involves developing and implementing
strategic goals and objectives, and a strategic plan to accomplish them.
Then, the leader creates and executes a philosophy that encompasses val-
ues, beliefs, principles, norms, policies, and standards that dictate the
manner in which members’ behavior and attitude toward the vision and
mission ought to be. By doing so, organizational direction is clarified by a
streamlined ideology.
Take Vincent Thomas Lombardi as an example. He successfully led the
Green Bay Packers to win five World Championships and two Super Bowls
(Lombardi 2001). He has gone down in history as one of the best leaders
because of his inspirational and motivational approach to leadership. In
Lombardi’s famous speech on leadership he said that leaders are made
through continuous effort and hard work in order to account for success
(Lombardi 2001). He recognized that there are certain attributes which a
person must embody in order to become an effective leader, in that leader-
ship is nurtured by a mixture of talents and qualities. He created an ideol-
ogy that described winning as a habit and victory as only the moment
when a person has worked their heart out and lies exhausted on the field of
battle (Lombardi 2001). His ideology of what a team should do and how
it must be done is as celebrated as his inspirational speeches; he transmit-
ted his expertise through them which not only made him one of the great-
est leaders ever but also led a high-performing team to success.
SMEs and particularly family businesses are also associated with the
practice of implanting leadership. In reference to SMEs, owners bring
forth their ideology and, because of the shorter distance between them
and collaborators, they are able to effectively transmit it and ensure its
execution throughout the organization. Family businesses have a certain
familiness, the organization’s individuality (Habbershon and Williams
2000), that dictates the organization’s ideology and permeates its business
dynamics. In both cases, the ideology is implanted through the owners’
leadership which is, in turn, experienced through the organization’s cor-
porate culture.
Induced Leadership
In many cases, leadership is influenced by internal factors as much as by
external factors that surround and affect the organization. These factors
not only delineate the leadership style but also impact decision making and
individual, team, and organizational performance. Contingency leadership
theories suggest that there is no sole way to lead others meaning that,
leadership style is based on context, environment, and is situational
(Horner-Long and Schoenberg 2002). These are the it depends theories;
leadership styles are adopted in accordance with the requirements of given
circumstances, strategic goals, and desired performance. Further, the lead-
ership style might depend on a team’s characteristics and the members
she/he is leading; and, style may also vary with the size of the organization
and line of business.
There are various points of view regarding organization size, the style
of leadership and their performance, including the fact that there are
diverse variables associated with size that may be equally relevant to lead-
ership, decision making, and performance (Hart and Banbury 1994); fur-
ther, industrial characteristics determine organizational strategic behavior
as much as organizational size impacts the latter (Dean et al. 1998).
Therefore, there may be aspects that prove to be more challenging for
smaller firms than that for larger firms; and, vice versa, some strengths for
larger, multinational organizations turn out being areas of opportunity for
smaller ones. Organizational leaders from larger firms place emphasis on
the abilities and skills to effectively and swiftly react when decisions have
been made (Chen and Hambrick 1995). Larger, multinational enterprises
(MNEs) are usually characterized by formal and institutionalized pro-
cesses and procedures, as well as collaborative decision making; that is, the
decisions are usually made by a group (Matlay 1999), or team, of people
working toward a particular strategic goal and objective. Smaller organiza-
tions are characterized by a certain degree of informality in the way leader-
ship relates with collaborators (Matlay 1999) as well as with the design,
development, and execution of policies, processes, and procedures.
One of the main reasons reported for lack of success in small organiza-
tions is unsatisfactory leadership (Davies et al. 2002). Decision making
tends to be highly centralized in entrepreneurial (Mintzberg 1973),
smaller organizations, meaning that, in SMEs the power over decision
making is usually in the hands of one person (Matlay 1999) who is often
the owner/manager of the firm. According to Byers and Slack (2001),
one reason for the degree of power and decision making centralization is
the leader’s interest in preserving control and preference for speedy deci-
sion making. Chen and Hambrick (1995) have posited that one of the
aspects most valued in smaller organizations is the velocity with which
leaders make decisions. Therefore, as would seem, smaller firms are struc-
turally more aligned with a bureaucratic and autocratic leadership style,
and larger firms with a democratic leadership style. However, it is not the
size of the firm which determines the optimal style of leadership that will
ensure desired outcomes, productivity, and performance; rather, it is the
perception of style, and characteristics of the group, team and/or organi-
zation itself that best determines the style of leadership required to fulfill
strategic goals and objectives.
Puni et al. (2014) posit that organizational success has as much to do
with leadership style as with the work environment created for collabora-
tors. Leadership style has been considered a guideline to predict organiza-
tional outcomes and performance. It seems straightforward to correlate a
type of leadership with elements such as strategic goal achievement,
empowerment, stakeholder satisfaction and added value, innovativeness,
and competitive advantage. Furthermore, it should be well associated with
active participation in decision making, organizational climate and design,
justice, and social responsibility. However, this is not always the case
because a significant aspect leadership style effects is its actual perception.
In other words, leadership is in the eye of the beholder…and collabo-
rators too. Each manager selects or adopts a style of leadership and may
or may not be aware of using such style. Further, collaborators may not
always perceive the leadership style as intended by the manager. It is not
uncommon for managers to perceive themselves as democratic, partici-
patory, and/or transformational when in reality their behavioral pattern
of leadership is much closer to an autocratic or laissez-fair style. The
same applies to collaborators; although a leader may have the best inten-
tions, collaborators may perceive their actions inflexible, uninspiring,
and even questionable.
External stakeholders’ perceptions are also a strong determinant in

leadership. Think back to a time you opened a newspaper, logged onto
Facebook or Twitter, or visited a news site, and saw a report on yet
another organization that was exploiting their collaborators. Now, think
back to a time you found a report on an organization that was delegat-
ing efforts toward the improvement of collaborators’ quality of life.
Granted the first example is more common that the latter, nonetheless,
the fact remains that stakeholders’ perceptions are shaped by the infor-
mation they receive regarding business dynamics. And, it is this percep-
tion which can influence organizational decision making regarding its
leadership. Further, today social media enables stakeholders to commu-
nicate directly with organizational leaders in real time, thus, accelerat-
ing the potential influence.
Leadership is also influenced by the internal and external environ-
ment. In the internal environment, for instance, corporate culture
plays a significant role that definitely influences leadership. Culture can
act as an indicator of the degree to which collaborators’ expectations
match those of leadership (Aycan et al. 1999). SMEs and family busi-
nesses have a greater chance of determining and controlling the bounds
of corporate culture because of the distance between owners and col-
laborators, meaning, the possibility of both controlling undesired man-
ifestations of corporate culture and obtaining information directly
from collaborators’ behavior and attitude, beliefs, and values, are
higher. However, this is not always the case with larger firms and
MNEs. In the latter, greater distance exists between owners and CEOs
and collaborators which can cause greater amount of noise in the com-
munication channel and can distort the information. Also, the larger
the organization, the greater the possibility of subcultures forming,
which are harder to detect and manage. In any case, the internal envi-
ronment influences leadership and their decision making. The external
environment includes a series of elements, political, economic, social,
and technological, that individually and collectively influence leader-
ship and performance, as do the abovementioned external stakehold-
ers. Any alteration in, for instance, inflation, fiscal policy, disruptive
innovations, or even presidential elections, can influence the organiza-
tion’s leadership. For such reasons, leadership is also induced by both
internal and external environments.
Purposive Leadership
Sometimes leaders emerge with a sole purpose, meaning that they are
objective oriented and only focused on the achievement of a single objec-
tive. This leadership may dissipate as fast as it materialized; that is, more
often than not, once the objective has been accomplished the person
leaves her/his leadership position. This does not mean that person will not
take on another leadership role, rather, that they may choose another
objective to pursue.
Purposive leadership generates from an ideology that grows with a
given situation in a given context and environment. In the majority of
cases, the objective may be seen as a cause, in that the leader demonstrates
deep commitment toward advocating or standing up for a cause. In order
to achieve the objective, this leadership is embedded in others, i.e. col-
laborators, through their streamlined ideology (implanted leadership). In
other words, the ideology, the cause, and the objective are taken on by
others in its pursuit.
Examples range from parents who decide to coach a little league team
for a season, or as long as their child plays on the team, leading a food
drive for victims of a natural disaster, leading a protest or a campaign,
becoming interim business director or the president of a nation, to eradi-
cating extreme poverty in a region. This type of leadership is untainted as
no other interests are added to those of the leader. This also means that
the leader is extremely focused on the task at hand and is not easily swayed
by third-party concerns. For instance, it is unlikely that parents coaching
little league will compromise their leadership efforts because of interests of
the opposing team, and a protest leader will not give in before the protest
objective has been accomplished. It is not surprising that purposive leader-
ship is, in many cases, the starting point for other types of leaders intend-
ing the achievement of objectives on a larger scale and in the long term.
Macro and Global Leadership

As mentioned, purposive leadership is sometimes the inception of a greater
type of leadership; such is the case of macro and global leadership. In both
instances, leaders draw on a streamlined ideology (implanted leadership),
and the determination to achieve an objective (purposive leadership) or a
series of objectives, in the short, medium, and long term, and are influ-
enced by internal and external factors (induced leadership).
Macro leadership suggests that leaders focus their efforts on social activ-
ism. They are the proverbial agents of change. Although their ideology
adheres to a specific direction, it is influenced by the small and large changes
they cause, variations in the internal and external environment, and cre-
ations of subcultures. Consider Hugh Evans, Co-founder and CEO, and
Wei Soo, Co-Founder and Managing Director, of Global Citizen. The orga-
nization, a social action platform dedicated to the eradication of extreme
poverty, as well as its leadership has been transformed by growing needs.
Evans co-founded the organization originally named the Global Poverty
Project focused on education and advocacy toward action to end extreme
poverty (Global Citizen 2017). Throughout the years, many causes have
been addressed, leadership has developed and six million actions have been
taken since 2012 in the pursuit of ending extreme poverty (Global Citizen
2017). It all started with Hugh Evans’ ideology and commitment to achieve
an objective which has rapidly been adopted by millions.
Global leadership refers to those leaders that operate in an international
arena; their ideology is, for the most part, derived from the institution,
organization, or nation they lead. Their objective is to serve a greater pur-
pose, the common good, whose positive impacts outnumber the negative
effects on the majority. Their leadership is confined by standards and law,
both domestic and international, and their affairs are those of the people.
They are absolutely influenced by internal and external environmental
changes and intend to effectively manage them, while tending to their
objectives. Global leaders tend to work alongside purposive and macro
leaders as they acknowledge the potential positive benefits for the major-
ity. This is the case, or should be, of MNEs, as well as chiefs of state, prime
Ministers, among others.
Syntality for Effective Leadership

Strategic goals and objectives are achievable with any of the abovemen-
tioned styles of leadership, as long as there are followers willing to collabo-
rate toward their achievement and align with the style. In a sense, these
styles of leadership may drive effective practices and successfully deliver
results. However, there is a difference between an effective leader and a
high-performing leader; the former consistently gets the job done and the
latter starts by acknowledging the vast differences among collaborators,
leaders, and the firm’s particularities that coincide in an organization, and
ends by getting the job done. Hence, it is suggested that there are two ele-
ments to the achievement of high-performing leadership: (1) analysis,

acknowledgment, and adoption of the team’s syntality, and (2) equal acces-
sibility to leadership among team members, or distributed leadership.
Syntality is to a group what personality is to an individual (Cattell et al.
1953). According to Cattell et al. (1952), syntality refers to the “characteris-
tics of the group when acting as a group”. In such case, the leader’s personal-
ity traits are not central, rather all traits of collaborators, as a group, are of
interest. By identifying the behavioral patterns of a group when acting as a
group, organizational leaders are able to effectively and optimally drive stra-
tegic goal achievement. Furthermore, knowing and understanding group
attributes enable leaders to accurately motivate and inspire them to go
beyond the call of duty, enhance innovativeness, creativity, empowerment,
and proactivity, consequently, successfully achieving desired individual,
group, and organizational levels of performance.
Perhaps the optimal style of leadership is, then, a combination of shared
leadership and distributed leadership. Shared leadership is about sharing
responsibility. According to Carson et al. (2007), this style of leadership is
“an emergent team property that results from the distribution of leader-
ship influence across multiple team members”. Goldsmith (2010) has pos-
ited that this style of leadership suggests that collaborators are empowered
and granted leadership attributes and positions in the areas in which they
are experts; moreover, it suggests that some tasks require multiple leaders;
thus, the maximization of collaborators leadership skills enables a shared
leadership in such way that motivation, inspiration, support, and direction
is provided by all collaborators not just the leader (Pearce and Conger
2003). Distributed leadership has been defined by Bennett et al. (2003) as
“not something ‘done’ by an individual ‘to’ others, or a set of individual
actions through which people contribute to a group or organization…[it]
is a group activity that works through and within relationships, rather than
individual action”.
These leadership styles, together, require horizontal delegation of activ-
ities, when required, and a willingness to give and receive feedback from
all collaborators, or team members. Combining these styles promotes
diversity within the group, meaning that, it is possible to tend to the needs
and requirements of collaborators that perform better when they empow-
ered, more autonomous, and constantly motivated and inspired; while
tending to those collaborators that are less independent, and require a
greater degree of control and supervision, as well as those collaborators
who have a greater need for structure, standardized instructions, and
reward and punishment systems to perform adequately and optimally. It is

about recognizing strengths and taking advantage of them to the fullest
extent possible. Each member takes on the function of a leader when the
tasks involved are her/his forte, area of expertise. In the sense that all col-
laborators are constantly aware of their role as an expert in certain areas,
aspects, activities, tasks, and functions. Collaborators are not only empow-
ered, but power is distributed through the team or group members; there-
fore, there is a significant decrease in conflict and improvement in conflict
resolution. This principle applies to any and all organizational echelons
and any organization, regardless of line of business and/or the size of the
firm. Therefore, a combination of shared and distributed leadership along
with a grasp of the group’s syntality may yield results of a high-performing
leadership, rather than just effective leadership.
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CHAPTER 2
Corporate Governance
Corporate governance tends to resonate when the outcome of large and

multinational firms’ decisions make the daily news headlines. It is a concept
that hardly comes up, until stakeholders’ outrage reaches the boardroom,
mass media, or worse, social media. It is only natural that current and
potential stakeholders take action when they become aware of organiza-
tions engaging in questionable and/or unethical practices. Therefore, it is
imperative to understand the internal and external dynamics of governance
attributes, as well as their impact on current and potential stakeholder’s
perceptions and actions, and influence on organizational standing.
Defining Corporate Governance

Corporate governance refers to the way in which an organization is gov-
erned; it depicts how decisions are made, objectives are set, and strategies
are planned and executed. It fixes and regulates an organization’s guidelines
that determine the way it is both directed and controlled and is, therefore,
considered to be a business fundamental (Bevir 2009). It is also the compo-
nent that determines the organization’s direction and bounds of operation.
Bounds refer to the policies, norms, and standards that limit the processes
and procedures of decision making. It is also a process by which assets,
resources, and capabilities are used and managed; a systematic process by
which an organization’s owner, CEO, president, founder, etc., directs and
controls the utilization of resources. In other words, it is the organization’s

controlled direction toward strategic goal achievement (SGA). Corporate

governance is typically associated with regulation systems and internal and
external control systems to ensure compliance with a set of instructions, a
collection of rules and bylaws; however necessary rules are, governance is
much more than them as it derives from corporate philosophy and seeps
through the organization for purposes of consistency, quality, and demo-
cratic processes and procedures. For such reasons, corporate governance is
commonly associated with effectivity and best practices.
Scholars have been debating the elements of corporate governance with
the aim of clarifying the definition of the concept as well as determining the
basis for best practices. For instance, Demb and Neubauer (1992) have
argued that the basic attributes of corporate governance include owner-
ship, board structure, regulations or codes, and direct social pressure. Black
et al. (2006) mention shareholder rights, board structure, board proce-
dures, audit committees, and disclosure; and Drew et al. (2006) indicate
that culture, systems, structure, leadership, and alignment are elemental to
corporate governance.
The discussion on corporate governance has been enhanced with the
input of several international organizations working on the subject matter.
According to the International Corporate Governance Network (ICGN),
the attributes that should be considered in the disclosure of corporate gov-
ernance are much more detailed and include: board responsibilities, leader-
ship and independence, composition and appointment, general meetings
and remuneration, corporate culture and risk, reporting and audit, monitor-
ing, risk oversight, engagement, shareholder rights, institutional investors’
responsibilities, capacity, leadership and independence, remuneration, con-
tract terms, conflicts and interests, code of best practice, anti-corruption
practices, lobbying and donations, gender diversity on boards, and voting
(ICGN 2014). A common element linking the abovementioned authors
and institution is the board of directors, which means that structure and
institutionalization are crucial to corporate governance.
Governance Formality and Informality

Organizations that choose not to design and execute corporate governance
system tend to do so because they see it as an unnecessary cost, increased
bureaucratic processes and procedures, decreased rights and authority, and
potential scenario for a power struggle. Naturally, these inconveniences, to
say the least, potentially pose conflict and would significantly obstruct
organizational productivity and overall performance. However, since
CORPORATE GOVERNANCE 29
effectivity is at the core of corporate governance, which leads to increased

productivity and performance, these outcomes are highly unlikely given
the adequate design and execution of corporate governance.
One could argue that all organizations have governance, which means
exactly what it sounds like, the way a firm is governed, how its ordinance
is commanded. In that all organizations, regardless of size and line of busi-
ness, have at least one person that transmits the directive through princi-
ples of corporate philosophy. Take, for example, an entrepreneur, a start-up
owner, the head of a family-owned business, and a CEO, they all have a
clear direction in mind for the firm, as well as a clear idea of how the firm
should follow such direction. Their values, goals, objectives, mission, and
vision are shared with others, collaborators, to stay on the path toward
SGA to attain desired individual and organizational productivity and per-
formance. Each of them exerts controlled direction throughout the orga-
nization, regardless of the manner in which it is managed. It is then not a
discussion of whether the firm has governance but whether it has assumed
corporate governance.
The debate on the importance of corporate governance, more often
than not, begins with the size of the firm, because it is not commonly
associated with SMEs. It is suggested that they are less likely to take on the
inconveniences of implementing it, and, in many cases, are regarded as
unknowledgeable or lacking organizational structure “fit” for corporate
governance. However, according to Daily and Dalton (1992), smaller
firms, in fact, take on advised structures fit for effective corporate gover-
nance; further, by means of corporate governance, such firms may benefit
from improved financial performance, and sustained growth (OECD
2010). Moreover, it is true that not all organizations are corporations, in
which case, the very term “corporate governance” would be cause for
resistance; however, it may be deemed as business governance or organi-
zational governance, so as to lessen misperception. Therefore, since
governance is not limited to any organizational size or line of business, its
components and key elements are applicable to any and all organizations.
Key Corporate Governance Elements

As mentioned earlier, all organizations have governance, the difference
being that not all have institutionalized it. In order to do so, they ought to
formally address three key elements, namely, transparent communication,
control, and accountability. Such elements are a requirement for the proper
function of governance and are important components of its internal and
external fit, which will be discussed further in the chapter. Good gover-
nance provides insight into how exactly the business is running, and trans-
parent communication is a significant part of it. As such, the key to its
effectiveness is the flow of information from all corners of the organization,
including top-bottom, bottom-up, and horizontally. Furthermore, the
information should be formally communicated, by means of reports, in
order to ensure regulated disclosure and, therefore, transparency. Granted,
a significant amount of communication is informal which means that efforts
should be made to report the information deemed consequential to strate-
gic decision making.
Authentic transparent communication is a practice that is performed
not only internally but also externally. Merely disclosing data and informa-
tion internally is insufficient; there is nothing that disenchants stakehold-
ers quicker than knowing that organizational leaders have been less than
honest, bending the truth, and lying by omission. Also, today, keeping
information from the public is more than challenging, in fact, it is fairly
impossible. With social media being the name of the game, sooner or later,
current and potential stakeholders will uncover the truth. Stakeholders
prefer to associate with genuine and honest organizations (Sen et al. 2006;
Yang 2009), making transparent communication a fruitful managerial
practice. Therefore, organizational leaders need to enable and encourage
the diffusion of information. Communication, nay, effective communica-
tion is elemental to the success of governance, however insufficient if the
elements of control and accountability are not factored in the equation.
Strategic decision making is in itself complex, which makes group deci-
sion making particular to corporate governance even more difficult; for
such matter, control is a must. It facilitates the significant improvement of
business dynamics including, but not limited to, operational effectivity,
compliance with local and foreign regulations; disclosure reliability; and
stakeholder, resource, and risk management. Decision making is based on
a set of norms, policies, standards and regulations that determine rights
and obligations of owners, boards, and stakeholder; thus, it can be polemic
and may cause conflict (Gourevitch and Shinn 2005). As such, control
becomes a very important function to ensure that strategic objectives are
optimally met and that, therefore, organizational efforts have met the
terms of the corporate philosophy.
Effective corporate governance requires the integration of both internal
and external control systems in order to ensure adequate compliance and
optimally detect various areas of opportunity. Internal controls are processes
and procedures designed and executed throughout the organization to ensure
that previously established strategic objectives are effectively achieved; further,

they enable the obtainment of valuable information that assist in the evalua-
tion of organizational performance (Suárez 2016). Thus, complying with
internal controls is fundamental for organizational growth and development.
External controls are defined by external stakeholders such as regulatory
authorities, standard-setting organizations and institutions, and even mass
and social media. All organizations must comply with all applicable regulatory
norms, standards, and laws in order to maintain the right to operate; any and
all violations may be cause for cessation. Furthermore, relentless media scru-
tiny, from both traditional media and social media, can be testimonial of the
organization’s legitimacy. Therefore, prompt compliance with external con-
trols is essential for the organization’s sustained growth and development.
Organizational practices and internal and external controls are commonly
monitored by means of internal (usually performed by collaborators) and
external (independent organizations usually appointed by shareholders or
external stakeholders) audits. These monitoring processes help guarantee
effective compliance at all levels within the organization, and of all external
requirements (as applicable). Monitoring business dynamics is as important as
taking corrective actions promptly and effectively. Otherwise, there is no sense
in observing, identifying, and analyzing discrepancies and areas of opportu-
nity if no actions are taken to address them. Furthermore, any and all errors,
mistakes, questionable and unethical practices detected should be swiftly man-
aged. Of course, most organizational leaders attest to doing exactly that, how-
ever, in far too many cases, there is a gap between rhetoric and action.
Many consider that accountability is a matter of organizational control in
that interest groups have a say in the manner in which organizations are
operating. It has been referred to as a license or the authorization to operate
(Sternberg 2004) granted by shareholders on the basis of successful out-
comes; in the sense that, shareholders hold organizations liable for their
actions and results. It has also been defined as the process of guaranteeing
that the organization’s conduct is aligned with shareholders’ interests, includ-
ing other stakeholders, by means of monitoring, evaluating, and controlling
(Keasey and Wright 1993). And, according to Valor (2005), accountability
refers to “social corporate control”; meaning that, organizations are account-
able to all stakeholders, not only shareholders in particular as they do not
hold greater insight and power than the other stakeholders. Furthermore,
accountability requires alignment of organizational interests with those of
both current and potential stakeholders, as it would be shortsighted to only
include those with current stake.
Governance may not be achieved without the organization’s accountability

of their policies, decisions, actions, and results. However, as stated earlier,
there seems to be a gap between what organizational leaders state they do as
a governance practice and what actually occurs. Corporate governance is a
concept that naturally comes up in discussions about organizations’ failure to
comply with financial requirements, laws and regulations, as well as personal
and social standards of conduct. Various corporate failures and scandals made
headlines last year and during the first nine months of 2018. Table 2.1 includes
excerpts of news headlines of business-related scandals in 2017–2018. These
are clear examples of organizational cognitive dissonance, in that these firms’
stated thoughts and beliefs are inconsistent with their actions and behavior.
These organizations have undermined their own governance by engaging in
these practices as well as mismanaging the outcomes. These cases are also a
clear example of how organizations, today, are held accountable by both cur-
rent and potential stakeholders; everyone has had something to say about
these actions. Granted, some stakeholders may have more power than others
Table 2.1 Excerpt of 2017–2018 scandal headlines

Organization Headline Source Author(s)
United Airlines “United Airlines Passenger I Dragged New York Victor and
From an Overbooked Flight” Times Stevens (2017)
Uber “#DeleteUber: how social media The Cresci (2017)
turned on Uber” Guardian
Weinstein Co. “From Aggressive Overtures to Sexual The Farrow (2017)
Assault: Harvey Weinstein’s Accusers New Yorker
Tell Their Stories”
Samsung “Samsung Heir, Testifying at His New York Kwaak (2017)
Trial, Denies Bribery Charges” Times
Equifax “Giant Equifax data breach: CNN Tech O’Brien (2017)
143 million people could be affected”
Fox News “Report: Bill O’Reilly settled sexual The Farhi (2017)
harassment claim from Fox News Washington
contributor for $32 million” Post
Wells Fargo “Wells Fargo uncovers up to CNN Money Egan (2017)
1.4 million more fake accounts”
Yahoo “Every single Yahoo account was CNN Money Larson (2017)
hacked—3 billion in all” (2017)
Apple “Apple Confirms It Degrades Your Forbes Spence (2017)
Old iPhone’s Performance” (2017)
(continued)
Table 2.1 (continued)
Organization Headline Source Author(s)
60 Minutes “‘60 Minutes’ producer Jeff Fager CNN Money Stelter (2018)

fired after sending CBS reporter
‘unacceptable’ message”
Transmar “Former Transmar executive Reuters Pierson (2018)
Commodity sentenced to three years prison for
Group Ltd fraud”
CBS “Abusive media moguls harmed more The Sullivan (2018)
than just individual women. They Washington
shaped a misogynistic culture” Post
Tesla, Inc. “Pressure mounts on Tesla as it gets Business Matousek
hit with a third securities fraud lawsuit Insider (2018)
in wake of Elon Musk’s ‘funding
secured’ tweet”
Wells Fargo “Wells Fargo altered documents about CNN Money Egan (2018)
business clients”
to instigate immediate action, for instance, shareholders and regulatory

authorities; however, this does not impede others from voicing their opinions,
requesting sanctions, and even mobilizing others toward bans and boycotts.
Corporate governance is best described as a system, and within it a
mechanism with two main strands that depict its intricacies and business
dynamics attributes, these being, the internal fit and external fit. The for-
mer is associated with the alignment or organizational and collaborator
goals and the latter is concerned with the convergence of organizational
goals and stakeholder contributions. These components must be in unison
to ensure the foundation of the organization’s governance; further, their
synchronism is what sets corporate governance key elements in motion.
Internal Fit
The internal fit of corporate governance refers to the relation and correla-
tion between corporate goals and collaborator’s personal goals; that is, the
systematic process by which firms effectively converge these goals. Figure 2.1
illustrates the factors associated with the internal fit of corporate gover-
nance. Corporate goals are established targets and objectives, usually formu-
lated in a strategic manner, which the organization is expecting to achieve in
Functionary
Current and potential

leadership Directive Vertical /
systems Transparent
horizontal teams
Stakeholders
communication
Collaborator
Corporate
Goals Control
Accountability
Collaborator Engagement Autonomy
involvement
Fig. 2.1 Internal fit of corporate governance
a determined period of time in order to attain desired productivity and

organizational performance. They stem from the organization’s corporate
philosophy and are, in theory, well associated with all levels of organiza-
tional operations; that is, they are linked to all departments; teams; and col-
laborators’ functions, activities, and tasks. The reality is that these goals are
rarely aligned with collaborators’ personal goals; in fact, many believe that it
is an unnecessary practice as they consider that personal goals are not their
bailiwick, they are outside the organization’s purview, while others have not
even contemplated such possibility. However, this is the wrong notion as at
some point corporate goals must converge with collaborators’ personal
goals in order to achieve desired outcomes effectually. Therefore, they
ought to be flexible enough as to enable such convergence at all levels of the
organization.
On the one hand, the convergence is achievable when the organiza-
tion’s functionaries (i.e. Board of directors, top management, and/or
director committee, etc.) exhibit a democratic, participatory leadership
that encourages the active involvement of collaborators in the process of
goal setting and fulfillment. By including collaborators when deciding on
the goals to be set, their performance may effectively be evaluated via
SGA, which will be further discussed in detail in Chap. 4. On the other
hand, such convergence may be effectively achieved by cascading both sets
of goals, meaning that, once they are established, prioritized, and ade-
quately linked to related dimensions, they ought to be synchronized for
fulfillment. Because flexible corporate goals (those that make room to
include personal goals in corporate goals from the get-go) are atypical, it
is suggested that such cascading process be carried out in both directions,
top-bottom and bottom-up. This will further assist in the convergence of
both sets of goals.
It is essential that neither organizational leaders nor collaborators lose

sight of the importance of such convergence, because the moment they are
no longer in unison, is the moment that everyone works in pursue of their
own interests and agenda, rather than toward a common mission and vision.
In this manner, corporate governance may increase collaborator involve-
ment which leads to their enhanced engagement. This practice sends col-
laborators the message that their input is heard, recognized as valuable, and
taken into consideration for decision making. This occurs because it includes
understanding and taking into account how they believe they can and want
to impact their personal goals as well as corporate goal achievement. This is
not as far from current practice as one would think. Take for example, two
common questions during interviews in the hiring process: where do you
see yourself professionally in 5, 10, 15, 20 years? Collaborators more often
than not have a clear answer: I see myself in a managerial position; I will be
in top-management; I see myself leading the company; I will be in this posi-
tion, amongst others. And, how can you contribute to the company: I can
increase sales; secure funds; lead innovation processes; take the company to
the next level, amongst others. Therefore, in many cases, collaborators seek-
ing to join an organization already have personal goals in mind which may
very well be aligned with corporate goals. In a sense, this practice is a matter
of listening to what collaborators have to say, and leadership fostering effec-
tive dialogue with them.
The consideration of collaborators’ personal goals and their alignment
with corporate goals has a positive effect on their engagement. The latter,
which is related to collaborator commitment and passion (Markos and
Sridevi 2010) toward the organization, positively influences performance
(Marrelli 2011). Further, the greater collaborators’ engagement, the greater
their assertion of autonomy which, ultimately, directly impacts the effectiv-
ity of strategic decision making. Convergence of corporate and collaborator
goals also influences the directive systems which include monitoring activi-
ties and functions in relation to collaborator follow-up actions. These, in
due course, enrich the organization’s vertical teams (i.e. teamwork derived
from the top-bottom and bottom-up cooperation) and horizontal teams
(i.e. teamwork derived from within a department) and achievement of con-
verged goals which set forth significant benefits for the organization. Thus,
a leadership that fosters collaborator involvement in the setting and conver-
gence of corporate and personal goals may see the effects at an individual,
team, and directive level.
Successful operation of the internal fit dynamics of corporate governance

is fundamental to the key elements of governance function: transparent com-
munication, control, and accountability. These may not be effectually exe-
cuted without collaborator involvement and an apt leadership, and, they tend
to be executed in succession, for instance:
1. Policies, standards, and norms are transparently disclosed and

shared with current internal stakeholders.
2. Business operations data and information is transparently commu-
nicated throughout the organization for decision making.
3. Actions and results, related to decision making, are transparently
disclosed and shared with current internal stakeholders.
4. Internal and external controls are executed in order to ensure
effective compliance.
5. The organization is held accountable by current internal and exter-
nal current stakeholders.
6. Corrective actions are taken on detected discrepancies, areas of oppor-
tunity, errors, mistakes, and questionable and unethical practices.
7. Business operations data and information is transparently commu-
nicated throughout the organization for decision making.
8. Policies, actions, and results, related to decision making, are trans-
parently disclosed and shared with internal and external stakehold-
ers (current and potential).
9. The organization is held accountable by internal and external cur-
rent and potential stakeholders.
10. Corrective actions are taken on detected discrepancies, areas of oppor-
tunity, errors, mistakes, and questionable and unethical practices.
11. And, so on…
This does not mean that an organization cannot or does not carry out
these practices simultaneously, rather, in the internal fit, they are frequently
tackled sequentially as to ensure effectivity in compliance. Of course, most
organizational leaders will hold back on communicating their results with
external current and potential stakeholders until they consider they have
complied with all requirements and are not liable for any questionable or
unethical practices. However, internal transparent communication is com-
monly carried out with higher frequency as it enables prompt and optimal
strategic decision making.
External Fit
The external fit of corporate governance refers to the relation and correlation
between corporate goals and corporate social responsibility (CSR) goals; that
is, the systematic process by which firms effectively converge these goals.
Figure 2.2 illustrates the factors associated in the external fit of corporate
governance. As the previously established strategic corporate goals are for-
mulated with the aim of attaining desired productivity and organizational
performance, it is essential that they be affectively aligned with CSR goals. In
fact, the latter may not be successfully achieved if these goals were not well
aligned with those of the organization; this would mean that the organiza-
tion’s CSR policies, practices, and results are unrelated to the organization’s
business dynamics. Furthermore, a lack of alignment would be indicative of
mismanagement as both sets of goals should stem from the same corporate
philosophy. Thus, it is a matter of due diligence to ensure that all formulated
goals are effectively related and correlated.
CSR offers various advantages for the organization, society, and the envi-
ronment. For instance, internally, it has a positive effect on collaborator
satisfaction and commitment (Brammer et al. 2007), which leads to
enhanced individual performance and, thus, organizational performance
(Mustafa et al. 2012; Famiyeh 2017). And, externally, socially responsible
practices positively influence stakeholder’s perceptions of the organization
which is noticeable in improved corporate reputation (Porter and Kramer
2006); there are also significant benefits for the community, at least the one
surrounding the organization, and the environmental conditions. Further,
adequate disclosure of CSR efforts is also associated with organizational
Corporate
Current and potential
goals Transparent
stakeholders
communication
Multiparty Business
concerns Control ecosystem
Social Accountability
responsibility
goals
Fig. 2.2 External fit of corporate governance

performance (Nazari et al. 2017), amongst many others. Therefore, it

behooves the organization to not only engage in socially responsible prac-
tices but also effectively align their goals with corporate goals.
Convergence is enabled by the consideration of multiparty concerns,
meaning, those of the organization, collaborators (i.e. those associated
with personal goals), and other current and potential stakeholders. Various
studies have put forth a series of stakeholder definitions; however, they are
mostly referred to as those interested parties that can affect and be affected
by an organization’s practices (Freeman 1984). There has been great
debate on the parties considered stakeholders, particularly when it comes
to the environment; for instance, it has been considered that since the
environment has no voice, it may not have stake in the organization, and
naturally others disagree. It is suggested that stakeholders include share-
holders, investors, suppliers, consumers, regulatory authorities, the com-
munity, the environment, collaborators, and the firm itself, as it has equal
stake in society and the environment. By addressing the concerns of these
stakeholders, both current and potential, the organization is able to opti-
mally converge its corporate goals with its CSR goals.
Internal and external stakeholders make up the organization’s business
ecosystem; they are fundamental to business dynamics, as well as to the orga-
nization’s growth and development. The key elements of corporate gover-
nance are also in play in the external fit in a complex manner as they seem to
occur simultaneously rather than one at a time because of the interaction of
internal and external stakeholders. Communicating corporate practices, par-
ticularly those that are CSR related, have a positive effect on satisfaction and
loyalty. Transparently disclosing these efforts indicates that the organization
is trustworthy and credible, which is important as stakeholders value honesty
(O’Connor and Meister 2008); this practice, in turn, enhances the organiza-
tion’s reputation (European Commission 2013), as stakeholders’ perception
of the organization improves, and its performance are positively impacted
(Maguire 2011). Stakeholders’ interests in accountability have increased
(Strandberg 2005) significantly as they are more invested in business dynam-
ics and impacts of their outcomes on the business, and particularly on society
and the environment. Stakeholders are able to recognize the organization’s
accountability by means of its transparent communication (UNCTAD
2008). Therefore, there is ultimately a convergence between organizational
goals (corporate and socially responsible goals) and stakeholder contribu-
tions in the external fit of corporate governance. To clarify, organizations
must be open to such contributions, meaning that, they ought to be ready,
willing, and able to receive feedback and manage it.
In the internal and external fit of corporate governance, both current

and potential stakeholders are then active participants in the implementa-
tion of governance key elements: transparent communication, control,
and accountability. It is important to note that they are also witnesses of
the organization’s outcomes, and classify them as good and bad practices,
each of which will have an impact on their perception of the organization,
satisfaction with their overall governance, and their ultimate decision mak-
ing. External stakeholders, particularly current and potential consumers
are highly likely to take to social media platforms to voice their concerns;
thus, ongoing communication taking place on social media is of great
consequence for the organization.
Media Participation in Accountability

As has been mentioned, traditional media and social media have a signifi-
cant involvement in organizational accountability. News Media, and jour-
nalists in particular, tend to be viewed as instigators and troublemakers; to
make matters worse, today, media is more often than not regarded as “fake
news”, at least when interested parties disagree with or strongly oppose
the journalist’s reporting. According to Downie and Kaiser (2003), good
journalism produces news that makes a difference, matters, promotes
cooperation, defines events, and instigates change, while bad journalism
can cause serious misinformation, and lead to uniformed news consumers.
It is a common perception that news media and media outlets publish and
distribute more negative news than positive news; this is because the latter
is considered to be more newsworthy (Soroka 2006) and to generate
greater profits (Arango-Kure et al. 2014) than the former. In any case, it
would be more profitable, because there is greater demand for negative
news, or individuals pay more attention to negative news than to positive
news. According to Soroka and McAdams (2015), this can be explained
by evolutionary-biology, in that human beings focus on negative news
because of the cost associated with it; in other words, it is a process of
cost–benefit analysis in which news consumers assess the possible costs
associated with not being informed. In relation to business operations and
dynamics, the majority of news is essentially negative; this may or may not
be a matter of perception, the question is, is it because negative news is
more appealing to the consumer or are businesses simply engaging in
newsworthy questionable or unethical practices? Or is it both?
According to Downie and Kaiser (2003), journalism holds a unique role

in the preservation of accountability; it makes it meaningful, and keeps a
check on the power that individuals, organizations, institutions, businesses,
and governments command. In this sense, news media plays a very impor-
tant role in organizational accountability, in which case current and poten-
tial stakeholders, including the firm itself, ought to be appreciative of the
efforts, and should also be vigilant of the content. Again, it would be of
little or no use to the organization if the provision of information did not
lead to improved control systems, greater compliance, or more strict com-
pliance policies and procedures and, of course, accountability. The first
aspect that should be analyzed is the degree of veracity of the claims, which
requires internal investigation and/or audits. As history has proven, denial
will only worsen the impact of the actions and perceptions of the organiza-
tion. Second, organizations need to accept responsibility and corrective
action must be taken promptly and optimally. Third, policies, corrective
actions, and results regarding the incident must be transparently commu-
nicated with internal and external, current and potential stakeholders.
In 2017 and 2018, business made headlines around the world because
of the scandalous behavior and business practices (see Table 2.1 for some
examples of corporate failures and scandals that instigated global discus-
sion on corporate governance). The thirteen articles naturally carry nega-
tive content because they were descriptive of deplorable corporate practices.
All firms involved have institutionalized their corporate governance which
means that: (1) there is dissonance between what organizations state they
do and what they actually do, and (2) there is a significant schism between
the organizations’ internal and external corporate governance fit.
The events described in the articles (except maybe the first) are not
isolated incidents, in that there was an ongoing process that led to the
ultimate results described in the news. In fact, although the news shocked
people around the world, there must have been internal stakeholders
enabling the behavior and practices. Take the case of United Airlines, what
part of the organization’s discourse led the collaborators involved to
believe they could mistreat a consumer and violently assault him? Or how
about Weinstein Co., what made Harvey Weinstein, and everyone at the
company for that matter, think his behavior was acceptable? What made
organizational leaders, and the board of directors, allow this violent and
abusive behavior? How do these organizations operate? How did this even
happen? Was it just a matter of money? The bottom line is essential for the
organization’s sustained growth, however, only a spec in the complexity of
the business sphere. Was it a matter of power struggles? One of the reasons
that corporate governance is instituted is to ensure that power struggles
are significantly reduced or eliminated, and that each process and proce-
dure is followed in accordance with strict policies, norms, standards, and
bylaws. Or, perhaps, chalk it up to common sense not being that common.
Regardless of the attempt for reasoning and justification, current and
potential stakeholders were definitely impacted by these articles, and the
journalists and media outlets that put forward these articles had an active
role in the preservation of these organizations’ accountability.
Social media, social networking sites, have rapidly become a preferred
source of information and communication (Baruah 2012). That is, users
around the world increasingly gravitate toward social media to obtain
information and the latest news. This is beneficial, for instance, for organi-
zations that communicate their CSR endeavors, as well as best practices on
social media, and engage in dialogue with current and potential stakehold-
ers. And, it is prejudicial for organizations that do not communicate with
current and potential stakeholders on social media and/or are engaging in
questionable or unethical practices. What is important to remember is
that, because of these platforms and stakeholders’ interest in business
dynamics, there is little that social media users will not find out, and when
they do, they will more often than not swiftly post and/or tweet the infor-
mation. Therefore, organizational leaders ought to be aware that they will
share the good, the bad, and the ugly.
Stakeholders are significantly involved in accountability by means of
their active and proactive participation on social networking sites. The
question is, how does stakeholder involvement in social media affect
accountability? On social media, as with traditional media, the vast major-
ity of news shared regarding business dynamics is basically negative. By
sharing experiences and information, social media users take on an impor-
tant role in organizational accountability; each post and/or tweet helps
keep checks on authority figures, individuals, organizations, businesses,
etc., that hold power. Granted, there is an extensive amount of “fake
news” circulating on social networking sites and, unfortunately, a particu-
lar downside is that users tend not to verify the information before sharing
and/or retweeting. The reality is that the same occurs with the informa-
tion retrieved from traditional mass media. Thus, it is up to organizational
leaders to take on the task of managing the content and tone that is being
spread on social networking sites.
Social networking sites’ users, who also happen to be internal and exter-
nal, current and potential stakeholders, took to platforms such as Facebook
and Twitter to condemn the organizations’ behavior. Table 2.2 encom-
passes an excerpt of hashtags included in the tweets related to the organiza-
tions’ 2017 and 2018 scandals and corporate failures. Some demanded an
explanation, others requested a proper response to the incidents, and oth-
ers took to social media to inform they would no longer consume their
products and/or services, and suggested that others do the same. In many
cases, posts and tweets were shared and retweeted causing the information
to go viral and, in doing so, informing millions of people around the world
of these organizations’ practices. Hashtags enable social media users to
categorize and coordinate a discussion (Bruns and Burgess 2011) regard-
ing a particular topic; they connect Tweeter users engaged in the same
conversation. Therefore, hashtags have become an important element in
communication dynamics. Unsurprisingly, the tweets associated with the
scandals had negative content and tone. As can be seen, there is a certain
pattern to the hashtag use. For instance, names of organizations and, if
applicable, names of associated individuals and products and/or services
are converted into hashtags. The next element is a description of unaccept-
able behavior and practices, such as money laundering, sexual harassment,
corruption, abuse, bribery, fraud, and criminal record, amongst others.
The next is a call to action, demand, or exhortation, including: cybersecu-
rity, delete, boycott, ride local, crisis management, compliance, ethics,
CSR, etc. Finally, some provide their opinions (i.e. common sense, bad
business, management?) and link ideas to other movements (i.e. me too,
Times up), amongst others.
A couple of questions come to mind, is the organization’s corporate gov-
ernance internal and external fit open to stakeholder involvement in account-
ability via social media? And, how are organizations following up on
stakeholder involvement in accountability via social media, that is, on their
word-of-mouth? Unfortunately, many organizational leaders get it wrong
when addressing posts and/or tweets. A main reason for this is that they do
not ask the tough questions, which means recognizing the authority and
power of current and potential stakeholders, and requires acknowledging
their voice and enabling dialogue. Further, a common practice is to handle
the situation from a public relations perspective without follow-through.
Meaning that, there tend to be no reporting systems enabling proper
analysis and processing of the situation internally as to ensure its effective
management and non-recurrence. For instance, many large organizations
Table 2.2 Hashtags from 2017 and 2018 scandal tweets
Organization Hashtags Organization Hashtags Organization Hashtags
United Airlines #Unitedairlines Uber #Deleteuber Fox News #FoxNews

#United #boycott #SexualHarrasment
#criminalrecord #csr #Abuse
#crisismanagement #Uber #Shaming
#CSR #toolatenow #BillOreilly
#Ethics #CorporateGood? #scandal
#ridelocal #ethics
#ethics
Weinstein Co. #HarveyWeinstein Samsung #SamsungBribery Wells Fargo #WellsFargo
#MeToo #corruption #fakeaccounts
#TheWeinsteinCompany #LeeJaeyong #CSR
#Corruption #illegalenrichment #whistleblowers
#MoneyLaundering #CorruptionIsEverywhere #consumerfraud
#CommonSense #CSR #badbusiness
#csr #Whistleblowing #ethics
#TimesUp #TaxEvasion #Fraud
#ethics! #Scandal
#misconduct
Equifax #databreach Yahoo #Yahoo Apple #Apple
#Equifax #DataBreach #iPhone
#Privacy #YahooBreach #batteries
#InfoSec #CSR #consumers
#CyberAttack #Hacked #slowdown
#Botnet #riskmanagement #battery
#Deregulation #infosec #performance
CORPORATE GOVERNANCE
#exploits #cybersecurity #Ethics

#insidertrading #compliance #CustomerService
43
#management? #ethics
(continued)
Table 2.2 (continued)
44
Organization Hashtags Organization Hashtags Organization Hashtags
60 Minutes #60minutes Tesla #tesla CBS #CBS

#sexual #disgraceful #harassment
#harassment #Scandal #policies
#misconduct #ridiculous #MeToo
#fired #immature #misconduct
#GreatAwakening #disrespectful #fired
#nowcomethepain #Fraud #morality
#Justice #WhiteCollarCrime #earnings
A. M. LÓPEZ-FERNÁNDEZ
#complaint #StockManipulation #ethics

#MeToo #corporateculture
are utilizing Big Data to gather significant information on consumer

behavior, thus, it seems reasonable to use a Big Data system to attain and
process content being shared via social networking sites to manage
perceptions, enhance organizational image, positively impact positive
word-of-mouth, trust, credibility, and even loyalty toward the firm. That
is, to actually learn from the information being shared in relation to
business dynamics. This, in turn, could increase internal and external,
current and potential stakeholders’ engagement with the organization,
which has a positive impact on business growth and development.
Therefore, organizational leaders should be interested in current and
potential stakeholders’ activity on social media; further, they can
effectively carry out the tasks involved in the internal and external fit of
corporate governance by taking advantage of the multiple benefits of
social media communications.
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CHAPTER 3
Performance Management
Performance is one business concept that is never checked off the to-do
list, meaning that there is no finish line when it comes to performance;
once an organization has fulfilled its strategic goal for performance,
another is put in place. And with good reason, as this leads to sustained
growth and development, as opposed to an organization’s expiration.
Therefore, measuring performance is an important managerial practice
because its results may yield important insights into the fulfillment of stra-
tegic objectives and goals or lack thereof. Furthermore, a timely perfor-
mance evaluation can be the difference between the design and execution
of an effective strategic plan, strategic decision making, and the failure to
achieve desired outcomes. A prominent issue with performance manage-
ment is organizational leadership’s unwillingness to disengage from indi-
vidual performance evaluations as an indisputable direct correlation with
organizational performance.
Defining Performance Management

It is safe to say that all organizations, regardless of size or line of busi-
ness, are continuously seeking high performance. Whether the process
or system is informal or formalized and institutionalized, the intent is to
obtain desired performance and/or enhance performance. In order to
do so, performance management is necessary. This requires that some-
one or a select group in the organization, usually in key decision making

positions, determine expectations and objectives to be met to achieve a

desired level of performance. Since the standards of this practice are con-
tingent on each organization’s characteristics and corporate philosophy,
no specific method or approach exists that guarantees the achievement
of desired performance or high performance.
Performance management has been considered to be a way to improve
the organization’s results (Armstrong and Baron 2005), and a process by
which the organization’s mission and objectives are shared, and collabora-
tors acknowledge their role in the achievement of their performance as
well as that of the organization (Fletcher 2001); therefore, it is the process
of transforming “potential into performance” (Kandula 2006). It is also
considered to be an evaluation that enables the improvement of collabora-
tors’ performance, individually and in teams (Cascio 2006). In order to do
so, performance management ought to be aligned with the organization’s
corporate philosophy, that is, any and all performance expectations should
be well associated with the mission, vision, objectives and goals, values,
culture, as well as the organization’s strategies and tactics. This ensures
that all designed strategic goals are linked as a chain reaction rather than
isolated and disconnected goals. Furthermore, it sends collaborators the
message that the work and efforts of each individual are supporting the
organization’s overall achievements.
There are various activities that may be encompassed in performance
management which focus on individual and organizational growth and
development, such as teambuilding, training and development, motiva-
tion, empowerment, performance evaluations, coaching, trust, commit-
ment and loyalty, and sense of partnership, among many others. It is
important to note that performance management is not synonymous with
individual performance evaluations (Kandula 2006); while the former
seeks the achievement of organizational strategic goals, the latter is an
activity commonly utilized to support and strengthen the former. However,
too many organizational leaders and managers make the mistake of not
only carrying out individual performance evaluations but also overestimat-
ing them as direct links to organizational performance.
Individual Performance Evaluations

The vast majority of organizations utilize individual evaluations or
appraisals to determine performance. Although assessing collaborators’
performance individually is customary and even considered a mundane
PERFORMANCE MANAGEMENT 51
managerial practice, there is a myriad of concerning issues that may be

destructive for collaborators and the organization overall. In fact, the
intentions, use, and results of individual performance evaluations may
evolve to be a disservice to the actual achievement of performance-related
goals. Performance measurement refers to an organizational control pro-
cess that relates each collaborator’s work to the division’s general objec-
tive (Platts and Sobótka 2010); it is a method to determine collaborators’
work-related performance (Kuvaas 2006). The desire to measure every
result comes naturally to managers; however, not all results produced by
collaborators can be adequately measured; according to Awunyo-Vitor
et al. (2014), the results that end up being measured tend to be done so
on the basis of ineffective standards and methods.
Individual performance evaluations, also known as performance apprais-
als, staff appraisals, annual reviews (Sallis and Sallis 1988), among many
others, have been widely discussed by scholars and practitioners for decades.
These evaluations are a method by which organizational leaders and man-
agers can assert control within the organization (La Monica 1994). It is
thought that they describe collaborators’ areas of opportunity and strengths
(Aguinis 2013), as well as successes and failures (Mani 2002) in a short
period of time to determine their performance quality (Khan 2013). There
has been a long-lasting debate on the effectivity and effects of individual
performance evaluations; some consider they can impact collaborators’
performance both positively and negatively (Rudman 2010), as well as that
of the organization. Thus, there is still much to consider for effective per-
formance management.
Edward Deming asserted that performance evaluations of this nature
are a “deadly disease” more than 30 years ago (Deming 1986). The author
argued that may be only in the long term can they be adequately designed
and executed, as well as yield actual and effective results. He explains it as
a “pay for merit” system that focuses on the short term, impedes long-
term planning and, moreover, promotes fear among collaborators. Dr.
Deming was not mistaken; first, it is neither possible nor appropriate for
management to be determining the value of a human being’s exertions
merely in terms of data or, even worse, profit. Second, collaborators’ eval-
uations are a picture, that is, collaborators are evaluated on the basis of a
frozen moment in time, a single short-term period, in which they should
have been able to reach the goals established by leadership. In doing so,
nothing else is considered in the evaluation, and planning is limited to the
determined time frame.
Over three decades later, the lesson has yet to be learned—systematically

evaluating a person’s performance is not beneficial to the collaborator or the
organization. Frankly, performance management based on individual per-
formance evaluations can be demeaning and futile due to lack of impartiality
and fairness. Mismanagement of individual performance evaluations is the
end result of four main beliefs; first, that individual performance directly
correlates with organizational performance; second, that performance eval-
uations should be standardized; third, that strategic goals are imposed, that
is they should be conveyed top-bottom; and fourth, that if leadership is
democratic and participatory, individual performance evaluations are not
coercive. These issues may negatively impact collaborator engagement, sat-
isfaction, productivity, and performance if not handled effectively.
Furthermore, there are considerable effects of the process of individual per-
formance evaluations on collaborators (which are also discussed in Chap. 4)
that render the process controversial and counterproductive.
Individual and Organizational Performance

It is commonly thought that by assessing individual performance, the
organization’s performance is determinable. In this sense, it seems fairly
straightforward to assume that as long as all parties involved, all collabora-
tors, perform their tasks and functions effectively, that their performance
would equate that of the organization. Or, that if all collaborators do as
they are told, the overall organizational performance objective will be met.
However technically rational, there are a series of variables not considered
in the proposition; this may be analyzed using a three-pronged approach:
mathematics, Aristotle, and Gestalt Theory which relate the sum of the
parts to the whole.
The first approach, mathematically speaking, responds to the notion that
the sum of the parts equals the total, whole. This means that: Collaborator(A)
performance + Collaborator(B) performance + Collaborator(C) perfor-
mance +…+ Collaborator(n) performance = Organizational performance
objective. Each collaborator is equally responsible for the achievement of the
organization’s performance objective. A leader will most likely formulate a
challenging organizational performance objective, meaning that it is doubt-
ful that she/he would put forth an objective that requires the organization
to achieve mediocre performance, to be kind of effective, or to reach a 30%
performance rate. Therefore, for the sake of argument, let us say that the
organizational leader has determined that the performance objective is set at
perfection, that is, the entire organization will be 100% effective in a given
period of time. In this scenario, an impeccable organizational performance

requires all collaborators’ performance to be unflawed; further, it only takes
one collaborator that does not reach a perfect evaluation to hinder the out-
come of the desired organizational performance. And, even though a col-
laborator surpassing the expected outcome may be desirable, it certainly
means the objective, as stated, has not been met. Being as though human
beings have yet to achieve perfection, basing organizational performance on
individual assessments would be less than beneficial. There are numerous
variables that may cause a collaborator to fall short of their objective, many
of which are external, meaning that they are uncontrollable. Placing that
amount of responsibility on collaborators is not an effective way to achieve
desired outcomes. Thus, the correlation of individual and organizational per-
formance cannot be reduced to the mathematical approximation of summat-
ing individual performances to tally the organization’s performance. It is not
pragmatic.
The second way in which individual performance has been correlated
with organizational performance entails that the whole is greater than the
sum of the parts, according to Aristotle. In this case, organizational perfor-
mance outweighs that of each collaborator, individually. Any given col-
laborator alone cannot be responsible for the achievement of the
organization’s outcomes; that said, the performance rate of each collabo-
rator adds to the total of organizational performance, as the efforts of each
collaborator will enhance the outcome, and cannot subtract from it
because the latter is always greater than the former. Therefore, this man-
ner of associating individual and organizational performance is somewhat
unfeasible. Consider an extreme situation in which 50% of collaborators
fall short from desired results, while the other 50% exceeds expectations
counteracting the latter. Further, if 50% of collaborators have not reached
their performance objectives, even if the organization’s performance
remains greater, undesirable effects on the degree of effectivity are still
expected, to say the least. Unrealistic performance objectives may cause a
majority of collaborators to fail to comply, and it is also possible that all
collaborators fully surpass expected outcomes; therefore, the achievement
of the organization’s performance objective would yield different results.
This means that lack of effectivity at an individual level will eventually
subtract from the effectivity of the whole.
The third approach, based on the Gestalt Theory, is that the whole is
other than the sum of the parts. Under this scenario, the totality of organi-
zational performance is indistinct from the sum of collaborators’ perfor-
mance, that is, they are not necessarily directly correlated. This is because
the theory does not refer to a principle of summation; rather, it is the

interpretation of the sum of the parts on the basis of the totality, meaning
that the whole, the Gestalt organizational performance, influences the
perception of the parts—individual performance. This theory comes closer
to managerial practices related to individual performance evaluations;
however, although it removes the individual from absolute responsibility
for organizational performance outcomes, it promotes interpretation of
perceptions about the collaborator which can, without the proper stan-
dards’ assessment, produce negative effects on the collaborator and the
organization.
Therefore, performance management based on the premise that indi-
vidual performance evaluation results are directly correlated with organi-
zational performance leads to performance mismanagement. Merely
associating individual performance evaluations directly with that of the
organization is unrealistic as the results depend on a number of factors
such as evaluation intentions and use, indicators and measurements, and
objectivity. Furthermore, there are various external factors that directly
impact collaborators’ achievement of performance goals and are com-
monly disregarded in the process. All these aspects pose challenges for
performance management because they not only affect collaborator pro-
ductivity and performance, but also directly impact their state of mind,
behavior, and well-being.
Standardized Evaluations
As stated, it is commonly thought that individual performance evaluations
are necessary and, it is also thought that they should be standardized.
Collaborators occupying the same position are evaluated in the same way,
using the same goals, indicators, and measurements. Standardization sup-
ports regulation and improves governance outcomes because it is an effec-
tive way of determining suitable processes and procedures that ought to
be followed to ensure quality control, every time they are carried out. It is
a thorough and sensible practice that provides significant benefits, how-
ever, not applicable to determining collaborators’ performance.
At a certain time (varies in each organization), managers and organi-
zational leaders establish the strategic goals that collaborators they
supervise must comply with during the following evaluation period
(usually biannually or annually). These are, in turn, conveyed top-bot-
tom. Since collaborators’ performance objectives are set in accordance
with the organization’s performance objective, the former are imposed

on each collaborator. Ultimately, it means that collaborators have no say
in the strategic goals they are required to achieve. Moreover, ready-made
evaluation instruments tend to be developed by human resources, human
capital, talent management, people operations, etc., sometimes with the
input from managers, minding only the organization’s objectives, fixed
job descriptions, and competencies. They are based on preconceived
notions of what, how, and when a collaborator should accomplish stra-
tegic goals. As such, indicators and measurements are also standardized
per position. Ready-made individual performance evaluations are then
handed down for their administration.
Managers and organizational leaders are tasked with the actual evalua-
tion of the collaborators they supervise. Standardization leaves no room
for interpretation, meaning that the collaborator either did or did not
achieve her/his assigned strategic goals. That said, everything that comes
before determining the latter is subject to interpretation of perceptions.
The objectivity of the instrument to be used for evaluating collaborator
performance amounts to four main questions:
(1) How objective are the stated strategic goals?
Besides well-known aspects of effective strategic goals (i.e. clarity,

measurability, attainability, and time frame), there are elements such as
source and content that should be considered for objectivity. Source: who
established the strategic goals? The greater the distance between the col-
laborator and the person designing the strategic goal, the slighter the
potential compliance. If there is little or no knowledge of the intricacies
of the collaborator, how is it possible to determine what she or he is sup-
posed to accomplish in a short period of time? Content: what do estab-
lished strategic goals state? Strategic goals not designed along with the
collaborator are constructed on assumptions based on “should haves”
and “should dos”; thus, they are not accurate which negatively impacts
their measurement and achievement. When strategic goals are unilaterally
designed, they diverge from what collaborators are able and willing to
accomplish; further, imposed goals have a negative effect on collabora-
tors’ attitude. The latter is associated with productivity (Kinicki and
Kreitner 2006) and performance (Avey et al. 2011); therefore, these
practices do not foster commitment nor drive desired productivity and,
therefore, performance.
(2) How objective are the indicators for strategic goal achievement
(SGA)?
Strategic goal indicators are measurements commonly utilized as stan-

dards for individual performance evaluations (Kaufman 1988) to establish
each collaborator’s degree of competency (Bussin 2013). Measuring is com-
pulsory to determining performance (Popova and Sharpanskykh 2010)
based on SGA. For an indicator to be measurable, it must be defined and
verifiable. Furthermore, for it to be objective it must be solely dependent on
the collaborator’s efforts and evidence of the latter ought to be attainable.
Do the indicators pertain to each collaborator’s scope of work? The greater
the number of collaborators and/or external factors involved in the achieve-
ment of the strategic goal, and therefore the indicator, the lower the prob-
ability that the collaborator in question can be held accountable. If the
leader or manager deems necessary to evaluate indicators associated with
goals to be completed through the efforts of several collaborators, then it
should not be included in individual performance evaluations; rather, it
should be an indicator for a collaborative, team, department, and/or orga-
nizational evaluation. And, if indicators and SGA require the input of exter-
nal actors (such as other stakeholders) or are directly impacted by external
factors (such as natural disasters, policy making and change, and domestic
and international social, political, and economic climate), then the collabo-
rator’s actual performance is not being evaluated; rather, the collaborator is
being held liable for other people’s efforts, results and the effects of external
actions. Therefore, an indicator is only appropriate when measurability is
defined by each collaborator’s scope of work. By not doing so, leadership
may be holding collaborators accountable for the performance of others
rather than their own and, therefore, the results of individual performance
evaluations are neither objective nor fair and cause negative effects on a col-
laborator’s engagement and satisfaction.
Evidence is gathered for each indicator to determine compliance which is,
in turn, rated to define the achievement of each strategic goal and overall
performance. Evidence is a strong word, however pertinent, as no evaluation
should be carried out without acquiring relevant facts. Demonstrability,
source, and partiality are elemental to evidence objectivity. Facts not only
ought to be demonstrable but should also be provided by the collaborator
her/himself. If the leader or manager is requesting evidence from sources
other than the collaborator in question, then it is not conclusive of her/his
performance. Partiality refers to potential biasness of facts gathered for deci-
sion making; in other words, is the evidence more prejudicial than probative?
Although this element is mostly associated with evaluator objectivity (dis-

cussed in question 4), it also refers to potential evidence biasness; specifically,
is it fact or fiction, or, is it based on real or alternative facts? A favored indicator
in many organizations is collaborator attitude and, for some reason, managers
tend to query other collaborators to obtain associated details. Can leadership
be certain that evidence gathered from others is objective and probative? The
fact is that if leadership is not aware of the collaborator’s attitude she/he is not
working closely with the collaborator, therefore, should not be in charge of
such individual performance evaluation.
(3) How objective is the rating system for SGA?
Objectivity of strategic goal indicators and rating also requires flexibility.

Rating systems usually utilize a Likert-type scale, especially for ready-made
individual performance evaluations. In this sense, all available responses
have already been provided to the leader administering the evaluation. Many
organizations utilize these ready-made instruments with such rating systems
and they do so to maintain greater control of the process, and because it is
cost-effective. They function as a test where possible answers are provided;
they leave no room for analysis, as an indicator is either achieved or not.
They do not allow the evaluator to ask why, what happened? Why was the
indicator not achieved? Therefore, factor actual reasons in the evaluation. It
has become all too common for collaborators to be assigned certain tasks
and then, during the evaluation period, be requested to fulfill a set of other
tasks and activities; the latter, of course, have not been included in strategic
goals or indicators but could be sufficient cause for failing to comply with
them. Therefore, evaluators rating individual performance evaluations with-
out considering any and all external variables (those out of the collaborators’
hands or out of the established goals and indicator bounds), are not effec-
tively evaluating collaborator performance. By doing so, collaborators are
being set up to fail; further, there are negative consequences on collaborator
engagement, satisfaction, productivity, and performance.
(4) How objective is the evaluator?
Well-trained evaluators are essential elements of a successful perfor-

mance management (Cascio 2006); however, there is a significant lack of
training for managers to effectively evaluate (Thomas and Bretz 1994) the
collaborators they supervise. Regardless of the lack of proper training,
managers and organizational leaders in charge of evaluating tend to obviate
three particular aspects that assist their objectivity, these being intent and
use, gathered and analyzed evidence, and feedback. There are four basic
question words that managers and organizational leaders should always
have at hand when considering performing evaluations: why, what, how,
and who. This means that decisions related to these evaluations should
always be questioned prior to implementation. The first aspect to explore is
evaluation intentions and use, that is, why carry out individual performance
evaluations? What is to be accomplished by evaluating collaborators indi-
vidually? How will the results of the evaluation be used? For instance, is
collaborator performance individually assessed because…:
• it is tradition?
• it makes good business sense?
• it is a managerial practice of control?
• it explains organizational performance?
• it provides higher echelons with a sense of power and authority?
• it promotes hierarchy, reveals authority, and asserts power?
• it determines if collaborators are doing their jobs right (i.e. as expected)?
• it is a means to give feedback to collaborators?
• it is a quantifiable method for determining bonuses, promotions,
and dismissals?
• it is a technique that enables leaders to make strategic decisions in
optimal time?
These are just a few examples of the intentions and use driving organiza-
tional leaders to carry out collaborator performance evaluations. Whichever
the reason, it is important to understand that the repercussions are eminent
on collaborator engagement, satisfaction, productivity, and p erformance.
This is because no matter how much an organizational leader or manager
focuses on their positive intentions, the mere suggestion of a standardized,
ready-made, planned performance evaluation evokes undesirable emotions
which directly impact collaborators’ work.
The second aspect is gathered and analyzed evidence, that is, why is the
evidence being collected? Who is providing the evidence? What is the
nature of the evidence? How will the evidence be used? These questions
should be posed and answered in order to promote analysis; by not doing
so, there is no way to ensure objectivity. It was stated in question (2) that
evidence ought to be more probative than prejudicial, and it is the objec-
tivity of the evaluator that makes this decision. If the evaluator is basing
decisions on her/his perceptions of the collaborator’s efforts and not fac-

tual evidence or, worse, on the interpretation of perceptions of others,
there is a critical lack of objectivity. Furthermore, perceptions are com-
pletely subjective which means that what is being evaluated is the accuracy
and consequentiality of perceptions and interpretations. Hence, the actual
performance of the collaborator in question is not being evaluated.
The third aspect to determine an evaluator’s objectivity is feedback.
This is a particular area of concern because it not only requires directive
abilities and emotional intelligence, but also fairness, tact, and empathy. In
the same way that a high academic degree does not guarantee that a per-
son will be a good professor, the fact that a collaborator has reached a
managerial position does not mean that she or he is an effective leader;
furthermore, the title does not come equipped with all necessary compe-
tencies. It goes without saying that this part of the process, specifically,
deals with the interaction of, at least, two human beings, both of which are
naturally emotional and technically unprepared to give/receive feedback.
The effectiveness of a manager’s communication abilities will define the
entire process. Every selected word and tone, as well as non-verbal cues,
signal the type of response the collaborator under evaluation will provide.
Moreover, it is the collaborator’s degree of acceptance (i.e. perceived pre-
cision of performance depiction) of the feedback that deems it effective
(Ilgen et al. 1979).
Many evaluators think they are providing feedback, while what they are
really doing is giving a recount of hits and misses; it is more of a briefing
on the results of a standardized, ready-made instrument. First, these
should be mentioned, analyzed, and worked when they actually occur.
Withholding the information until the biannual or annual performance
evaluation makes no sense at all; by that point there is little than can be
done to fix a problem or reinforce a good outcome. Second, if the failures
have already been discussed and managed in a timely fashion, why bring
them up again? Either the purpose of the evaluation is to evoke an emo-
tional response, or the alleged failure was not the disaster it is made up to
be. Because, if it were really a failure, leadership would certainly tackle the
issue straightaway as opposed to merely taking note of it to bring up dur-
ing the next individual performance evaluation. Third, the feedback is not
objective if the evaluator is not able to provide insight into how she or he
would have achieved the assessed indicators; namely, how would have
management achieved the stated strategic goals? What would have man-
agement done differently? How does management plan on continuously
improving? Evaluators should be able to transmit more than a series of

successes, failures, and results from perceptions and interpretations; other-
wise, the collaborator is not receiving feedback.
Not providing feedback can produce anxiety and erroneous self-
evaluations (Taylor et al. 1990), and giving it can actually have a nega-
tive impact on performance (Kluger and DeNisi 1996). It is the build-up
to a biannual or annual individual performance evaluation that stirs up
conflicting emotions, meaning that even before feedback is provided, the
mere idea that the collaborator will be subject to these types of evalua-
tions provokes unnecessary stress. In fact, it arouses a sense of job inse-
curity, which has negative effects on collaborators, leads to greater
conflict and emotional exhaustion (Boswell et al. 2013), before the fact.
There may be significant consequences in the relationship between the
evaluator and the collaborator (Bretz et al. 1992); what is said and how
it is said cannot be undone. Further, it may steer collaborators away from
cooperation and teamwork, as well as proactivity and innovation if they
perceive that it will not add value to the results of their individual per-
formance evaluations.
Standardization of the process of strategic goal, indicator, and measure-
ment setting effectually eliminates collaborators from the process. To make
matters worse, it is not uncommon for collaborators not to be informed of
the elements to be assessed until they receive feedback. That said, standard-
ization is only a part of the problem, in fact, the real issue remains with the
blind use of individual performance evaluations for strategic decision mak-
ing regarding collaborators and, of course, for determining organizational
performance. Rather than being an effective assessment tool, the entire
process may negatively impact collaborator engagement, satisfaction, pro-
ductivity, and performance, thus, rendering it ineffectual.
Coerciveness
It is generally thought that individual performance evaluations are not
coercive as long as they are not menacing, and it is considered to be non-
threatening if positive reinforcement is utilized such as a reward system,
rather than one based on punishment. Pay for performance and pay for
merit plans are designed to motivate collaborators to improve their per-
formance outcomes uninterruptedly. However, these systems are coercive
for two main reasons: first, collaborators are forced to comply with the
overall process that enforces such system and, second, the very element
that is supposed to incentivize (usually a bonus or a promotion), is
granted provided the collaborator is perceived to have done well, other-
wise their incentives, and in many cases jobs, are at risk. A reward is as
easily promised as not granted; it does not take much for a collaborator
to fall short from the strategic goal which, as previously stated, may be
caused by external factors and/or extenuating circumstances, and just
like that, the incentive is gone. Moreover, the incentive becomes a tor-
ment which does not even ensure that collaborators’ performance will
continue being satisfactory. In fact, Dorfman et al. (1986) found that
collaborators who received a promotion or payment as a reward were
satisfied with the evaluation process, yet it had no effect on their future
performance. Thus, it is not a determinant for the manner in which col-
laborators will perform in the next evaluation period.
It is also considered that if the leadership is democratic, participatory, and
transformational there is little to no possibility of engaging in intimidating
practices. However, because individual performance evaluations are techni-
cally measurement instruments, mostly standardized and ready-made, there
is little room for effective analysis and deliberation; also, the fact that leader-
ship is democratic, participatory, and transformational does by no means
ensure that such evaluations are non-coercive, or that the process and evalu-
ator are objective. Collaborators tend not to respond positively to coercive
performance assessments as they create a highly taxing environment, inten-
sify stress, increase the gap between them and leadership, and strain peer
cooperation and collaboration. Moreover, it can have negative consequences
on collaborators’ commitment and loyalty toward leadership (specifically
the evaluator) and the organization in general.
Thus far, individual performance evaluations sound good, in theory,
but are not suitable for adequately determining organizational performance
and are certainly not beneficial for collaborators’ outcomes. A summary of
the effects mentioned are illustrated in Fig. 3.1; it begins with the idea that
performance may be managed by means of individual performance evalu-
ations, that is, in order to determine organizational performance. These
types of assessments negatively impact collaborators’ engagement, which
negatively impacts satisfaction, productivity and, in turn, performance. It
is a process of cause and effect, where each negative effect has a direct
effect on collaborators’ approach to their jobs, as well as their well-being;
thus, rendering the process counterproductive.
Performance
management
Organizational
Performance
[-] [-] [-] [-]

Individual
Performance Engagement Satisfaction Productivity Performance
Evaluations
Stress Proactivity
Decrease
Commitment
Decrease
Increase
Angst Cooperation
Motivation
Burnout Collaboration
Loyalty
Fear Innovation
Fig. 3.1 Negative effects of individual performance evaluations
Integral Performance Evaluations

Napier and Latham (1986) held a study on performance assessments and
found that managers neither perceived consequences from conducting
performance evaluations nor considered them to add practical value.
Objectively evaluating an individual is not only difficult, but evaluating
collaborators’ performance individually may also cause unnecessary angst,
stress, fear (Coens and Jenkins 2000), burnout, and so on. The fact remains
that the traditional approach to performance management based on indi-
vidual performance evaluations is not functioning in the way that manag-
ers and organizational leaders intend it to. To be clear, it is not being
suggested that managers are cognizant of the harm they are doing, as
under this scenario they are merely following the persistent rhetoric that
has permeated organizations around the world as the effective way to
assert control and achieve a successful outcome. Of course, there are many
proponents of individual performance evaluations, however, the negative
aspects outweigh the positive and, therefore, a change in performance
management is required.
Performance management is an ongoing participatory process between
leadership and collaborators (Bacal 1999) which requires the adequate
specification of expectations and objectives to achieve them. It would
certainly be more beneficial and effective if it were not based on the prac-
tice of individual performance evaluations, but on en masse evaluations.
A holistic approach to performance management to determine organiza-

tional performance is suggested; Table 3.1 includes the factors that
should be considered in order to design and execute an integral approach
to performance evaluations. Assessing performance integrally rather than
individually requires a shift in business dynamics and leadership’s mind-
set, as well as in the relationship between leadership and collaborators.
The integral approach to performance management enables leaders and
collaborators to monitor effectivity of the entire process (from PSG–SGA
establishment and alignment to outcomes), the achievement of organiza-
tional performance, and adequateness of performance management, or
lack thereof.
The first aspect to consider is collaborators’ strategic goals which are
usually formed after the goals for organizational performance have been
established. The key is to align organizational performance strategic goals
(PSG) with collaborators’ SGA rather than basing the latter on the former.
They should be established conjointly for collaborators, units, teams,
departments, and the organization; the only way for collaborators’ efforts
to be linked to organizational performance is if they are part of the process
of setting the overall strategic goals. Periodical meetings, perhaps quar-
terly, with leadership and collaborators (i.e. units, teams, and departments)
may enable participants to clearly define expectations for organizational
performance as well as willingness, abilities, and competencies for SGA;
further, assessing PSG–SGA periodically and conjointly may improve deci-
sion making for long-term strategic planning. This practice will bring
forth the organizational indicators, involved stakeholders (i.e. internal and
external actors that influence the accomplishment of the strategic goals),
and required resources and capabilities. Furthermore, in theory, a strategic
goal is not achieved unless it is fulfilled with precision; meaning that, fall-
ing short or exceeding the previously established specifications technically
means that the goal in question has not been met. Therefore, it is sug-
gested that SGA also be developed with a margin—a bit of elbow room, if
you will, that is, with both realistic and challenging top-bottom parame-
ters that define the range of results that will be deemed acceptable and,
thus, be considered as SGA.
The next aspect to consider is accountability. Making collaborators
accountable for their work and results is important however overrated in
relation to individual performance evaluations. Instead, accountability
may be achieved through collaborators’ active participation and proactiv-
ity, that is, by them chronicling their activities and tasks on a daily basis.
Table 3.1 Integral approach to performance management
64
Who What How Why
Strategic goals Leadership PSG–SGA Periodical participatory To effectively:

Collaborators meetings • Align PSG and SGA
• Define top-bottom parameters
• Achieve strategic goals
• Foster prompt decisions making
• Promote long-term planning
Accountability Leadership Self-assessment • Chronicling To ensure:
A. M. LÓPEZ-FERNÁNDEZ
Collaborators and analysis activities and results • All parties are compliant and accountable
including extra work • Transparency
• Constant analysis • Visualization of SGA progress
of actual activity • Objective results
fulfillment • Activities are properly assigned
Time frame Leadership Day by day Hands-on approach To verify:
Collaborators evaluations • All successes are promptly worked for
Feedback Leadership Day by day f Continuous analysis: enhancement
Collaborators eedback • SGA and PSG progress • All failures are worked for prevention and
• Activity fulfillment improvement
• Outcome effects • Efforts are delegated toward SGA and PSG
Results Leadership Strategic decision Analysis To monitor:
Collaborators making Recognition • Effectivity of the process
Reward • Organizational performance achievement
• Performance management
Many may think that this practice leads to a greater workload; this is not
meant to fill collaborators with extra work or leaders with stacks of reports
but as a personal recount of SGA and the factors obstructing SGA. It may
actually incentivize collaborators to ask themselves: what did I do today?
And, therefore, it promotes self-assessment as collaborators are able to
view their progress toward SGA and document the extra tasks and activi-
ties, as well as last-minute rush jobs they have been requested to do. And
this compels leadership to ask themselves: are these extra activities and
last-minute rush jobs adding value? If so, why are they not included in the
previously established indicators for SGA and, therefore, PSG? And,
should the collaborator in question be tackling them? As such, this helps
understand the role of internal and external variables that delineate orga-
nizational performance. Rather than letting them accumulate, and use up
collaborators’ time, which should be for SGA, and see the results at the
end of a semester or the year, leadership and collaborators are able to
assess the situation without delay. That said, this is not a practice limited
to collaborators the leader supervises, it should be performed by everyone
to produce better results.
It is unquestionable that managerial judgment is irreplaceable; no stan-
dardized, ready-made individual performance evaluation instrument can
substitute a manager’s critical thinking and analytical abilities. As stated,
most performance evaluations are held biannually or annually, why wait so
long to perform an evaluation? It is suggested that evaluations should be
an ongoing process. PSG–SGA alignment enables active participation of
all parties and accountability promotes self-assessment on a daily basis;
consequently, evaluating performance is also a practice that may be carried
out day by day. It requires a solid relationship between leadership and col-
laborators. A hands-on approach leads to the active involvement of all
parties and lets them work closely (cooperatively not geographically). This
practice encourages effective communication and also strengthens rela-
tionships; it increases mutual understanding and support for one another,
which leads to less errors, greater cooperation, productivity, and, thus,
performance.
The next aspect to consider is feedback. Self-assessing and day-by-day
evaluations should not only be implemented and shared, but also analyzed
and discussed. The hands-on approach nurtures effective communication
which is essential for feedback effectivity. For instance, both management
and collaborators need to be aware if a mistake has been made; it is quite
simple, nothing can be done to repair the damage if there is no knowledge
of it happening. Furthermore, although elementary, people need to know

that mistakes will happen and, when they do, it is OK to say: I made a
mistake. Too many incidents have gone unattended because of fear of
repercussions, which has been instilled through traditional individual per-
formance evaluations. In many cases, the lack of SGA is due to extenuat-
ing circumstances, external variables, extra tasks, and last-minute rush jobs
that have not been accounted for in indicators and established strategic
goals. Ongoing feedback helps collaborators and management continu-
ously analyze the situations at hand rather than waiting for a biannual or
annual meeting; they immediately tend to the situation: what external fac-
tors or extenuating circumstances are impeding SGA and PSG? Why are
they impacting SGA and PSG? Was there a way to prevent it? Is there a
way to prevent it from happening again? Why was the extra task or last-
minute rush job assigned? Was it assigned to the right person? Were the
tasks completed effectively? How well was the situation handled? Analysis
should be performed by managers as well as collaborators to provide
insights that will yield greater productivity and performance. This practice
will facilitate management of hits, misses, and corrective actions, that is, all
successes are promptly worked for enhancement and all failures are worked
for prevention and improvement; further, it helps ensure that all efforts
are effectively delegated toward SGA and PSG.
The final aspect of the approach to performance management is results.
This is perhaps the most straightforward practice of the approach; man-
agement and collaborators work results by means of strategic decision
making based on actual and potential effects of the outcomes. For
instance, what can remain the same? What must be changed? What needs
to be done first? How do we continue having effective results, high pro-
ductivity, and performance? How can we guarantee that errors and mis-
steps will not reoccur? How could we have done it differently? The
remaining question is whether to use a reward system or not. First, lead-
ership and collaborators should always give credit where credit is due,
praise where praise is due. So much is asked from collaborators, in many
cases more than they were actually hired to do. As such, the least leader-
ship can do is to recognize their efforts and the added value they provide
the organization. Second, rewards and pay for merit systems may fall into
a coercive practice unless applied to a unit, a team, department, to the
organization. In this approach, all parties involved are working conjointly
toward SGA and PSG, thus, any paid reward should be granted to the
team that has performed exceptionally well. Many may think that this
practice is unfair because: what if collaborator A did less than collaborator

B? Or what if collaborator C did not do her/his job? Well, this approach
to performance management is intended to respond to these questions
before a discussion of rewards should be had; in fact, questions of degree
of productivity and performance are asked and answered throughout the
entire process of evaluation. Therefore, any grievous mistakes, attitudes,
and/or behaviors should be dealt with the moment they occur, not
months later when it is time to decide whether a collaborator is to receive
an “incentive” or not. The threatening nature of individual reward sys-
tems is based on the proposition of granting validation when performance
is perceived to be satisfactory. Although it is true that collaborators incen-
tivized by a bonus may work hard toward SGA as they are looking for-
ward to the validation that comes with it, this also entails a significant
increase in angst, stress, and fear during the evaluation period (i.e. when
working toward SGA) and, of course, during the feedback session. It is
noteworthy that when capable and skilled collaborators fail in SGA it is
more often than not due to three main reasons: first, strategic goals are
not set conjointly leading to unrealistic goals that exceed the bounds of
the collaborator’s scope; second, management is not seeing the bigger
picture which leads to lack of assessment of externalities as well as impli-
cations of extra work and/or last-minute rush jobs impeding the collabo-
rator from completing the necessary tasks for SGA; and, third, the
collaborator has been hired for the wrong position. Perhaps it is time to
reassess the nature of performance evaluations.
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CHAPTER 4
Collaborator Management
Millions of people around the world making their way to work are thinking
about the day they are about to have. They are planning their day, going
down the list of pending work, and picturing the exchanges they will most
likely have with others in order to complete their tasks. While some are
enthused, knowing that they are about to have pleasant interactions, others
have increasing feelings of disconcertion and anxiety and are dreading the
moment they step into the office. When managing collaborators, there are a
great many factors that must be considered, including dialogue, voice,
empowerment, task delegation and completion, and goal achievement,
among many others; perhaps the most important factor that should by no
means be overlooked is human nature.
Defining Collaborator Management

There are many names for collaborator management as well as definitions.
For example, Employee Management is described as the manner in which
collaborators are led to high levels of productivity in relation to costs
(Bartram 2011). Industrial Relations is defined as the process by which
collaborator relations are controlled (Walker 1977). Human Resource
Management is the set of activities that are focused on the management of
both collaborators and their work (Boxall and Purcell 2011). Human
Capital is managed by means of collaborators’ knowledge, know-how,
skills, competencies and attitudes, and motivation to work effectively (Hitt

and Duane 2002; Jurczak 2008); and, decreasing in popularity, Personnel

Management and Staff Management. Each of the concepts, as can be seen,
moves back and forth in the debate of people being central versus people
being assets. This has also led organizations referring to people differently,
including, employees, human capital, talent, human resources, collabora-
tors, staff, associates, and partners, and so on.
Throughout history, we have seen the pendulum swing in each direction,
and learned from the pitfalls as well as advancements. For one, we have
learned that wording is important; in the sense that the way that we refer to
people is a clear indicator of the way we regard them in the workplace. Take,
for instance, staff which is a tool, or employee who is a person employed,
used, for a job. Setting aside the denotation, the connotation is that of a
person “put to use”. Therefore, the way people are referred to as in the
workplace is telling of the organization’s approach to business dynamics,
especially to collaborator management.
We have also learned that collaborator satisfaction is directly and posi-
tively correlated with productivity and performance (Bakotić 2016), while
the characteristics of a democratic leadership certainly correlate with inno-
vativeness (Rotemberg and Saloner 1993); and that socially responsible
organizations have lower turnover rates (Vitaliano 2010), higher collabora-
tor satisfaction (Valentine and Fleischman 2008), and loyalty (Lee et al.
2013), and are granted legitimacy (Carroll 1991) by current and potential
stakeholders. Finally, we have learned that all of the above are well associ-
ated with good financial performance (McWilliams and Siegel 2000). This
means that adequate collaborator management ultimately serves the bot-
tom line as it is associated with good financial performance. Therefore, any
progress is directly correlated with an unwavering stance to uphold the
dignity, talent, and value of each collaborator as an essential stakeholder.
In regard to organizational size, there is no significant difference in rela-
tion to collaborator management; meaning that, from micro to large and
multinational organizations, all collaborators require management to
account for effective and desired outcomes. Subtle differences in execution
emerge with the particularities, needs, wants, and interests, of each organi-
zation. And, although the current tendency is to move toward the center
of the paradigm, collaborator management is highly defined by the organi-
zation’s core objectives, values, policies, standards, and leadership style. It
is, therefore, up to organizational leaders to determine the best practices
suitable for their context and environment. Furthermore, it is the collabo-
rators’ behavior, an attitude toward the firm, as well as current and desired
individual and organizational performance, that direct the approach to
COLLABORATOR MANAGEMENT 73
their management. In this sense, there is no one-size-fits-all regarding col-

laborator management; however, there are elements that are certainly
essential to obtain desired outcomes.
Collaborators, thus, embody the very essence of an organization’s cor-
porate philosophy; they are the talent driving the mission and expertise
that thrusts the organization into the future. Therefore, it is undeniable
that collaborators are required to effectively accomplish organizational
goals and objectives, and design and execute strategies. The complexities
of collaborator management lie in the fact that the subject matter entails
human beings, who are naturally complex themselves, and the conver-
gence of individual and organizational interests, needs, and wants.
Furthermore, it is the corporate philosophy that determines the bounds of
business dynamics and, as such, collaborator management.
The Dialogue of Empowerment

One of the most common issues regarding collaborator management is
communication, more specifically, how to engage in effective communica-
tion. Much has been said about the best practices of the manager/leader-
to-collaborator communication (Men 2014; Mazzei and Ravazzani 2011),
also known as top-bottom or top-down communication; meaning, the
most effective ways to transmit corporate philosophies, strategic objec-
tives, performance indicators, and policies, among others. Therefore, in
the majority of cases, a large portion of the communication process is
handled by leaders, as collaborators either strongly avoid giving their
opinions and thoughts, are not expected to, or are otherwise advised
against it; the effect ultimately being organizational and collaborator
silence. The former occurs when collaborators do not speak up because
they are concerned about creating potential problems (Morrison and
Milliken 2000) and, the latter, refers to collaborators that choose not to
say anything as to avoid making assessments and/or intervening in orga-
nizational issues (Pinder and Harlos 2001).
Silence certainly does not mean that the organization is without prob-
lems and areas of opportunity; rather, it means that collaborators refrain
from communicating their thoughts, opinions, and concerns. There are
many reasons why collaborators may decide not to communicate more than
the bare minimum, anything not positive, or say nothing. Glossophobia
notwithstanding, silent collaborators are usually classified into three main
groups. The first includes those that choose to say nothing because it is not
their place or it is not worth it; they prefer not to say anything that could be
misconstrued as negative or place them in a negative scenario (Roberts and
O’Reilly 1974). The second group includes those that say nothing because
of fear of repercussions (Morrison and Milliken 2000). A third group would
be of those collaborators that do not have or perceive not have the “author-
ity” to speak on certain issues. It is possible that one of these groups may be
found in an organization, or that two or the three are present in a single
organization. In all cases, there are three organizational elements that influ-
ence such behavior: climate, leadership, and culture, which individually or in
combination thereof cause collaborator silence.
Leadership, as explored in Chap. 1, directly influences collaborator
behavior, attitude, and perception. And, it is the style of leadership that
shifts the latter along the spectrum altering direction and overall outcomes.
In the case of collaborator silence, an autocratic, and even bureaucratic,
leadership style will ensure the comprehension that, other than key deci-
sion makers (i.e. top management), no collaborator has the authority to
intervene in organizational matters; therefore, they are not to voice their
opinion under any circumstance, regardless of the content. Needless to say,
since decision making is highly centralized, empowerment is a nonissue.
Organizational culture determines collaborators’ behavior and the man-
ner in which they pursue goals and objectives by fulfilling their tasks and
functions. It defines the norms and standards of conduct they are to abide
to be considered a team player and maintain their position. Organizations
presenting collaborator silence have a culture that promotes the notion of
collaborators being “seen not heard” in the sense that, they are expected to
do their jobs effectively without disrupting the status quo. Of course, there
are a series of cultural dimensions within these organizations, as proposed
by Hofstede (2011), that also inform collaborator silence. The high power
distance in them deters collaborators from questioning leaders’ decision
making; individualism motivates collaborators to only care for themselves,
their strategic goal achievement (SGA), levels of productivity, and perfor-
mance. A strong avoidance of uncertainty is illustrated by the rigidness of
conduct, as collaborators do not step out of bounds; they conform to the
existing conditions to decrease a sense of uncertainty of their positions
within the organization. These organizations do not promote indulgence,
far from it, they suppress satisfaction, steer away from praise, and enforce
coercive policies and practices; finally, they may be seen as highly mascu-
line, tough, and even threatening. Under these circumstances, collaborator
silence is a no-brainer.
Organizational climate is related to collaborators’ perception of the

organization’s culture. It is about their reactions to the policies, norms,
and boundaries put in place by the culture, as well as the social influence
(Cialdini and Goldstein 2004) experienced. Silent collaborators may be
complying with the leadership’s requests or may conform to accepted can-
ons. They do so to demonstrate regard for authority by toeing the com-
pany line. This climate is abrasive as collaborators’ complicity is driven by
fear of repercussion, which ranges from disciplinary actions, to losing their
jobs, as well as the effects of the latter. Moreover, public shaming and
mobbing are also unfortunate effects of such climate, as well as precursors
to collaborator silence (Hüsrevşahi 2015). For such matter, it is under-
standable that collaborators would choose to remain silent in light of the
disregard for their value and, of course, loss of job security and income;
ultimately, collaborator trust and moral are compromised, and stress
increases significantly (Tamuz 2001). Furthermore, it goes without saying
that dreading going to work becomes fathomable.
Even for strong proponents, this approach to leadership, culture, and
climate quickly loses its appeal when the top management becomes aware
that a silent collaborator had the insight to impede a misstep, avoid unnec-
essary costs or sanctions, or even accelerate beneficial outcomes. Therefore,
for all abovementioned reasons, collaborators’ collective perception
regarding assertion and risk of using their voice is revealing of the leaders’
openness to a dialogue, and efforts to empower collaborators across the
organization.
Openness to hearing what collaborators want to say is fine, however,
insufficient as it should be invited. Managers and organizational leaders
should seek collaborators’ input as their value goes beyond their know-
how and know-what. In a sense, they ought to be convinced that upper
echelons not only want to hear what they have to say but there will be no
negative repercussions for doing so. There are seven steps, described
below, that may be taken in order to establish and uphold collaborator
dialogue; it is a cyclical process, as seen in Fig. 4.1, which begins with a
diagnosis and comes full circle with effective follow-up.
Size up Stance Stage Sift Step in State Serve
Fig. 4.1 7Ss for collaborator dialogue

Size up. As with most managerial tasks, there is not one apt solution for
all organizations, departments, teams, or even individuals. Understanding
dialogue empowerment needs requires assessing leadership, climate, cul-
ture, and, of course, collaborator engagement. In a sense, it means taking
the temperature to determine the degree of openness on both sides, leader
and collaborator, as it will provide a clear picture of which changes are
required for adequately fostering collaborator dialogue. Critical questions
include: what motivates collaborators to remain silent? Which aspects of
leadership/climate/culture need to change to encourage and preserve
collaborator dialogue?
Stance. Once a diagnosis of the organization’s needs has been completed,
the next step is to institutionalize the policies, norms, and rules regarding
collaborator dialogue, meaning that the organizational actions that will be
taken to ensure effective dialogue must be documented; furthermore, they
ought to be shared with all parties interested as to demonstrate that the
organization is formally taking a stand to guarantee encouraging rather than
coercive practices within the process. Critical questions include: have we
shared all policies/norms/rules regarding the process of dialogue with all
stakeholders? Have we formally stated that under no circumstance will col-
laborator dialogue be reprimanded?
Stage. Collaborators need to know that there is a safe space where they
can use their voice. This step requires the pursuit of collaborator empow-
erment. It is not enough to channel critical communication top-down;
collaborators need to be certain that what they have to say has merit, adds
value, is heard, and, importantly, is taken to action. Critical questions
include: do collaborators feel safe enough to share any and all information
pertaining to the organization? Are leaders actively inviting an effective
flow of communication? Are collaborators speaking up, and if not, why?
Sift. Once a foundation of collaborator empowerment has been set, the
content of the dialogue must be examined to ensure it is effectively
addressed. This means that all information should be properly verified and
discussed so suitable action can be taken. Critical questions include: have
we promptly addressed the content of the information? Has the informa-
tion been studied in context? Do we have enough information to effec-
tively take action?
Step in. The next step is to act on the information provided. This entails
validating collaborators that have spoken up. Critical questions include:
have we let the collaborator know that she/he has been heard? Have we
taken action toward solving the situation? Does the collaborator know
that action is being taken to address the situation at hand?
State. Transparent reporting and disclosure is the next step. Dialogue

and actions should be documented and shared with all interested parties
to further demonstrate the positive effects of speaking up. Moreover, for-
mal communication is a valuable practice which is significant to other
business dynamics. Critical questions include: has the situation been prop-
erly documented? Has the documented information been disclosed to all
interested parties?
Serve. In order to ensure that using their voice will continue, organiza-
tional leaders must demonstrate to collaborators that they and what they
have to say are taken seriously. This entails following up on initial state-
ments, actions taken, and the effects of the latter on business dynamics.
Furthermore, it means reviewing the above steps with those that have
asserted their voices and brought the information to organizational lead-
ers’ attention. Critical questions include: did we do everything we could
to solve/improve the situation? By doing so, have we compromised the
well-being of our stakeholders, including that of the collaborators that
came forth with the information? Have we ensured non-recurrence of the
situation, and that collaborators will continue voicing their opinions?
Fostering empowerment by means of self-confidence and proactive
participation certainly diminishes collaborator silence and gives way to
montage communication, that is, effective top-down, down-up, and trans-
verse dialogue. There are certainly several advantages to such empower-
ment; for one, crucial information may be derived. Further, it promotes
beneficial interaction among collaborators, and it increases creativity,
innovativeness, productivity, and performance. Finally, empowering dia-
logue creates a sense of partnership. Collaborators come to own their
decisions and actions and, in turn, grow committed to the organization’s
corporate philosophy and outcomes; this occurs because they witness sup-
port for the stake they have in the organization.
Maximizing Collaborator MO
We are all different—there is no question about it; from our fingerprints,
to our needs and wants, and, importantly, to the different ways of getting
things done, meaning our Modus Operandi (MO). Collaborators’ MO,
their specific method and way of doing things, should certainly be fostered
as it is a differentiator with the potential for adding value and enhancing
competitive advantage.
The natural response is to avoid heterogeneity and to draw collaborators

into the proverbial “business fold”. That is, it is common for business and
management theories and models to be taken and adopted as laws indiscrimi-
nately because there is data that confirms a positive impact on effectivity,
productivity, and performance. The way things get done under the given
circumstances is as important as the actual results. In 2006, Sir Ken Robinson
gave a TED Talk titled: Do schools kill creativity? He addressed several issues,
and illustrated how forcing children into an “accepted” mold could have
negative repercussions in adult creativity. To exemplify, two scenarios are
presented, the first takes place at school and the second at the workplace.
Scenario 1: A student is to take a math exam; besides getting the answer
right, the instructor requests that the student not only show their work, but
also that the work adheres to the processes and procedures previously
instructed in class. The student got the question wrong because she/he
used a different method; although the work and answer were technically
correct, a lower grade was ultimately received; they were penalized for doing
it differently. The student goes on to business school and begins a master’s
in business management; the professor announces: innovation is key to sur-
vival, creativity—thinking outside the box—will enable great success.
Scenario 2: The student is now applying for a job; the interviewer asks:
We are looking for proactive, creative, and innovative people are you up for
the challenge? After several years of educational training, which included the
development of skills, competencies, critical thinking, and creative and
innovative techniques, the candidate is certainly up to the challenge. Within
a week on the job, an opportunity to demonstrate innovative abilities
emerges, so the collaborator decides to take point on the project and pres-
ent it to top management. Instead of encouraging the collaborator, who is
completely qualified, leadership rejects the proposal on grounds of “that’s
not how we do things here”, “you don’t pitch an idea we haven’t given
you”. Although the work was technically proactive, creative, and innovative,
the collaborator was ultimately reprimanded for doing it differently.
In relation to the exam in the first scenario, some may contend that this
falls into the “following instructions” category, and that there is a strong
need to enforce this because it is formative. However, it is also arguable
that their creativity and innovativeness is hindered by lack of openness to a
different approach, a different MO; a lesson that is learned much later and
could have been nurtured at a young age. In the second scenario, the col-
laborator had overcome limitations and learned to magnify creativity and
innovativeness. Again, some may maintain this falls into the “following
company line” category, and there is a strong need to enforce this because
it is a directive. However, it is also arguable that creativity and innovative-

ness is hindered by a lack of openness to a different MO; furthermore, in
doing so, it is quite possible that the collaborator will never again take that
risk, prompting silence and, ultimately, hindering individual and organiza-
tional growth and development.
Maximizing MO involves finding and nurturing collaborators’ talent
and potential, providing optimal work environments, and empowering
momentum. Leadership should recognize that everyone has a particular
method and/or approach to their work; and, although it may not “fit the
mold” it may certainly provide outstanding results, visible in high levels of
productivity and performance. The most detailed résumés would still not
provide an accurate representation of what collaborators are capable of,
especially when considering that candidates tend to prepare them specifi-
cally for each position. Therefore, collaborator observation is essential in
identifying overt and hidden talents.
When hiring, competencies, experience, and expertise are important,
however, not necessarily telling of potential performance. On the one
hand, it is common for collaborators to end up in the wrong position; in
some instances, it is clear by their lack of passion, and increasing frustra-
tion and stress, yet, it may not be that apparent in others. Letting them go
is not the answer; effective leadership detects these collaborators along
with their potential and swiftly redirects them into the adequate position.
There is no reason to force a collaborator to remain in highly controlled
environments and systematic jobs if they have demonstrated creative and
innovative talents.
On the other hand, seemingly, collaborators may be well positioned yet
have a hidden talent that, if nurtured, could provide significant a dvantages,
while increasing their satisfaction. Take, for example, a financier that is not
only effective on the job but also happens to be quite the storyteller, which
would be unknown because it was omitted from her/his résumé. Such
collaborator could excel in the development of annual sustainability and
social responsibility reports, podcasts, and promotional videos on social
media, among many others. Therefore, not acting on a discovered talent
directly and negatively impacts individual and organizational growth and
development.
The second aspect of maximizing MO requires leadership to provide
optimal working environments; it goes without saying that an amicable,
respectful, and just environment is undebatable. This point actually goes
beyond the latter as it refers to the fulfillment of collaborators’ needs and
preferences to motivate and stimulate them, promote their potential,
and enhance productivity and performance. It is commonly thought that

effective leadership directs collaborators on a single path, considered to
be the most optimal, to achieve success; in this case appearance is every-
thing. However, just as we all learn differently, some are more visual,
auditory, and kinesthetic than others, we also work differently.
Comfort is personal. Imagine a typical office building, and consider
that there are collaborators that cannot work in a buzzled, loud, and noisy
environment, while others need some or a lot of noise to work. Some
work better in the morning, others at night; some prefer the office, and
others home, a coffee shop, or a bus. Some need control systems, and oth-
ers need autonomy. Some need their personal space and others need to
feel they are part of a collective. The bottom line is that strategic thinking,
creativity, innovativeness, and productivity do not occur in a vacuum,
meaning that, they cannot be equally stimulated among collaborators
within a single structure or environment. Furthermore, each task, project,
and decision, may also require different stimuli, inspiration, and imagina-
tive environments for favorable results. Therefore, leadership should ask
collaborators what works better for them, and listen.
It is important to note that what is being proposed by no means should
be misconstrued as being overly permissive or letting collaborators run
amok. Rather, the point is to not impose a single work environment and
structure (i.e. single office, shared office, open space, cubicle, and home
office, etc.) because it is considered to provide optimal results. Take, for
example, a collaborator that works well under typical conditions, however,
when the development of a product campaign emerges, she/he presents
better outcomes (i.e. results are more creative and innovative, are delivered
faster, and satisfy the clients) when working from home. In such case, why
not encourage the collaborator to always develop product campaigns from
home? It makes good business sense, after all, lower costs, effective results,
satisfied clients, and a satisfied collaborator, mean better performance. The
fact remains that each person has their own MO, and in the pursuit of
optimal results, there are aspects that just do not matter in the long run.
The third aspect to maximize MO is empowering momentum. Consider
the second part of Newton’s First Law of Motion: inertia is a property of
matter that when in motion, remains in motion unless stricken by any
external force. Imagine that collaborators are, let’s say, “on a roll”, there
is no reason to impede their process; on the contrary, such momentum
should be empowered. The latter is achieved by engaging in three funda-
mental practices:
1. Empowering collaborators to find their momentum. This entails

leadership asserting dialogue, as discussed earlier in the chapter, as
well as helping collaborators find their inspiration, what they are
passionate about within the organization and encouraging them to
follow it.
2. Empowering collaborators to work it out. Leadership should enable
collaborators to do as they do best; this means letting them pursue
different objectives and projects, as challenging as they may be, and
trusting their approach and method. Furthermore, it requires pro-
viding leeway to join forces toward cross-company collaboration.
3. Empowering collaborators’ flow. Leadership ought to avoid being
or providing an external force that will disrupt the thought process,
development, and/or production. The creative process, whichever
it may be, is a fragile moment in time that does not happen often; as
such, ceaseless meetings, unscheduled tasks, and overall interrup-
tions break concentration, impede effective results, and lead to
unnecessary frustration and stress. Therefore, it requires recogni-
tion, value, and respect for collaborators and their work.
Maximizing MO may be, as many other managerial practices, con-

strued as a cost. However, this is a wrong notion because each step taken
in this direction is an investment as beneficial outcomes will absolutely
follow. The processes of empowering dialogue and maximizing MO are,
then, the basis for collaborator proactivity, creativity, innovativeness, and
productivity; furthermore, they are fundamental to the achievement of
desired individual and organizational performance.
Strategic Goal Achievement

Control is certainly an important managerial function as it helps ensure
that the business dynamics are operating smoothly. One of the preferred
methods of control is the use of performance indicators for individual and
organizational annual evaluations. The latter are significant to collaborator
management because they offer insight into the efforts and results obtained
in a given period of time. However, there are several aspects that may deter
performance despite having processes for developing indicators and evalu-
ation systems.
Perhaps one of the most commonly stated concepts in business is per-
formance. Objectives, strategies, indicators, and measurements are con-
stantly being designed and executed in the quest for effective performance
(Boyatzis 1982), quality performance (Prajogo and Sohal 2006), high

performance (Ramsay et al. 2000), and competitive performance (Iraldo
et al. 2009), among many others. Performance is reflected in objectives’
results (Boyatzis 1982), and the way such objectives are met (Armstrong
2006). This concept has been widely studied and discussed; in their ongo-
ing pursue of goals and objectives, leaders attempt to determine the best
practices to motivate and obtain desired individual and organizational per-
formance. Therefore, it is accomplished differently in each organization.
The importance of performance measurement for collaborator man-
agement increased during the 1980s (Tootell et al. 2009); in the begin-
ning, measurement was based on merit (Benge 1984) or on value of
collaborators rather than their job performance and, financial indicators
were considered to be adequate for achieving effective results; however,
this began to change toward the beginning of the next decade (Kaplan and
Norton 1992). The process of performance measurement guides organi-
zations toward the alignment of objectives and strategies with actual out-
comes (Bititci et al. 1997). It is a way to remain competitive (Gabčanová
2012) by evaluating organizational management and stakeholder value
(Moullin 2007).
The objective of measuring performance is to effectively align the
improvement of performance indicators with organizational goals and
design goals to improve activities (Grünberg 2004) and their outcomes.
Therefore, the process has significant implications for all parties interested,
including the growth and development of both collaborators and the orga-
nization. There are various issues surrounding performance measurement
including, but not limited to, SGA, evaluation and the effects of the latter.
There are many terms for performance indicators, such as Key Performance
Indicators which are used to assess individual performance; one way to do so
is through the declaration of strategic goals and their evaluation: SGA
(López-Fernández 2018). Instead of simply referring to indicators, SGA
suggests that there are strategies and objectives tied to such indicators and,
therefore, to productivity and performance; further, it also entails the evalu-
ation of performance. In spite of an alignment of indicators with objectives
and strategies, SGA is not devoid of concerns.
A first concern is dictated versus participated strategic goals. Basically, it
is the difference between management decreeing strategic goals and man-
agement working along with collaborators to state them. To be clear, SGA
is itself a cause for anxiety, stress, and frustration; however, it is exacer-
bated only when leaders merely impose them. Collaborators cannot be
held accountable for the achievement of strategic goals that they have not
set, or have confirmed as even possible to achieve. Take, for example, a
collaborator that receives notification that she/he has to increase sales by
10% by the end of the evaluation period. The collaborator knows that the
state of the current market and volatile environment do not accommodate
that increase, yet, also knows that not reaching the target could have nega-
tive repercussions. This is not a matter of providing a challenge, rather, it
sets the collaborator up for failure.
A second concern is individual versus collective strategic goals. This is
the difference between standardizing strategic goals for all collaborators
occupying the same position, and developing them for each collaborator.
Although the latter might seem taxing in a large organization, the alterna-
tive poses more problems than solutions. By handing out the same strate-
gic objectives, individual competencies, talents, and abilities, as well as
collaborator MO are overlooked. There are two major consequences: (1)
there are collaborators that cannot reach the goals and are, therefore, set
up for failure, and (2) there are collaborators that could have done more.
In both cases, desired individual and organizational performance is not
achieved.
A third concern is inflexibility versus flexibility of strategic goals. This
refers to the difference between determining performance solely on the
basis of what has been stated for SGA, and considering SGA along with
any and all other tasks completed. A performance assessment which is
restricted to activities and functions tied to SGA indicators is shortsighted.
It is unrealistic to think that collaborators only work on the tasks associ-
ated with their SGA; in fact, they are continuously assigned extra tasks and
activities, as well as last-minute rush jobs. These additional responsibilities,
more frequently than not, are the principal cause for collaborators’ failure
to achieve strategic goals, as time and effort are spent on them instead of
paying complete attention on what is to be evaluated.
It is important to determine the objectives of SGA because negative
effects may transpire if this is unclear to collaborators and organizational
leaders. In a sense, are the indicators stated in SGA in place to evaluate
collaborators’ value, measure activity effectivity, determine areas of oppor-
tunity, motivate collaborators, encourage or coerce desired behavior and
attitudes, etc.? Meaning, once strategic goals have been established and
evaluated, what will be done with the result; further, who will carry the
burden of the effects of the practice?
Since the evaluation of SGA is linked to the collaborator’s performance,

it is usually also directly associated with reward or penalization systems,
where a bonus, raise, promotion, or the job itself is in jeopardy. These sys-
tems are effective in the sense that they respond to a seemingly understand-
able cause–effect relationship; however, they are coercive and completely
reduce collaborators’ added value and worth to short-term results. Meaning
that, they are periodically evaluated without consideration of past perfor-
mance or even potential performance. Failure to successfully obtain a satis-
factory evaluation, that is, achieve strategic goals, may be due to a series of
external variables that leadership neglected to consider; furthermore, the
three abovementioned concerns, that is dictated, individual, and inflexible
strategic goals, that are also determinants. In such cases, the evaluation is in
itself ineffective, and any and all repercussions are uncalled for.
The effects of performance evaluation are twofold, meaning that, there
are effects related to leadership’s reactions, as well as collaborators’ reac-
tions to the results. First, leadership’s reactions to performance results are
absolutely influenced by the evaluation system. With a coercive system in
place and a collaborator that has failed on SGA, leadership will most likely
take a harsh stance, reprimand the collaborator and additionally fall into
unethical practices, such as threatening job security and public shaming;
and when a collaborator has met SGA requirements, the system would call
for public praise and rewards. In both cases, the results of the performance
evaluation are directly linked to the collaborator’s worth. In a non-coercive
system, SGA failure would compel leadership to detect areas of opportu-
nity for both the collaborator and leader, as well as find new strategic
methods to improve for the next period of evaluation; and, successful SGA
would prompt leadership to further motivate the collaborator to find stra-
tegic methods to enhance the positive results. In any case, leadership’s
reactions directly influence the effects on collaborators.
Second, collaborators’ reactions are influenced by the results and lead-
ership’s reactions to them; as stated earlier, the evaluation process is cause
for anxiety, frustration, and stress during the appraisal period, which
intensifies with the results. The evaluation system also influences collabo-
rator reactions to the results. In a coercive system of evaluation, because
performance is tied to worth, results can be demoralizing, deter collabo-
rators from teamwork, decrease innovativeness, or even drive the collabo-
rator to seek work elsewhere. Leadership’s reactions, if negative and/or
handled with unethical practices, further increase anxiety, frustration, and
stress; may cause severe depression; and, ultimately, may lead to increased
turnover rates. In a non-coercive system, although anxiety, frustration,
and stress are lessened, they do not disappear as, after all, an evaluation is
being held. The difference is in the effects of the results and leadership’s
reactions. Since performance is not tied to the individual’s worth but to
an activity, process, unit, and so on, collaborators are led to understand
why a result was positive or negative, and are guided toward improve-
ment; and, since leaders do not merely address collaborators’ perfor-
mance as individuals, they do not antagonize, offend them, or further
exacerbate anxiety, frustration, and stress. Therefore, collaborators may
leave a performance evaluation session feeling empowered, motivated,
and, importantly, supported and championed by leadership, and, in turn,
the organization.
Coercive systems manage results, more precisely, they manage short-
term outcomes. Leaders are expected to condition value on the basis of
such results, and collaborators are seen as means to an end, and not people
with the potential to add value. Furthermore, collaborators take on the
entire burden of the effects of the evaluation, leaving no accountability for
all other parties interested, including the leader. Therefore, in order to
achieve effective performance results and individual and organizational
growth and development, a non-coercive performance evaluation system
is required.
Generational Collaboration
A vast amount of debate has emerged on account of the changes in busi-
ness dynamics given the incorporation of multiple generations in the
workplace. One of the most notable and recent issues to arise, is the pres-
ence of Millennials in the workplace. And because of a lack of understand-
ing, in many organizations, this has provoked a new type of work
discrimination. It has ultimately led to ineffective cooperation or inexis-
tent teamwork which, in turn, instigates high levels of discontent, low
levels of productivity, as well as individual and organizational performance,
therefore, challenging effective collaborator management.
Segregation, a truly appalling practice, has many faces but is no more
than blind discrimination. It is not surprising that businesses around the
world have been accommodating to such practices, from gender, race,
beliefs, creed, to preferences and age discrimination, among many others.
And now, we are surrounded by a new type of discrimination: generational
segregation. This is quite different from ageism, as it is not about being
too young or old; today we witness vicious attacks toward Millennials on
the basis of the generation they were born in.
Good, effective, and socially responsible organizations are delegating

efforts toward integral growth and development of both the business and
society. They are determined to create amicable environments fit for inno-
vativeness and high productivity, increase diversity and equality, and
decrease detriment and maximize beneficial outcomes, including profit-
ability. To this end, they build fervent organizations based on principle,
values, and deference. Although many organizations are on their way
toward achieving the latter, they are failing on the not so little matter of
total inclusivity, specifically of Millennials.
Millennials are being discriminated in the workplace because somehow the
generation’s name has become synonymous with bad attitudes, behaviors,
and practices. This has caused a new phenomenon of work discrimination,
calling people the M-word: Millennial. This word has become an expletive
used to undermine, humiliate, and hurt Millennials as, just like any other
offense, it is meant to spread hatred. There are current sayings in the work-
place that have gradually become common regarding Millennials. Table 4.1
includes excerpts of the sayings and the context in which they were stated in
Table 4.1 Current sayings about Millennials in the workplace

Common sayings Context
“Millennials can’t be • Left work on time:

bothered to work” The collaborator did not stay later than required time,
stipulated in the contract, in the office.
“Millennials will do • Suggested change in location:
anything not to work” The collaborator suggested doing home office.
“Millennials are so • Spoke up, placed a complaint:
overemotional” The collaborator stood up for her/his rights and others’
when sexual harassment was witnessed.
“Millennials are so • Spoke up, requested a raise:
entitled” The collaborator requested a deserved raise/promotion,
which had been promised three months earlier.
“Millennials are not • Resigned:
team players” The collaborator resigned after two months once she/he
noticed labor exploitation practices in the organization,
which were enabled by leadership.
“Millennials are • Single:
antifamily and have no The collaborator was not married and/or did not have
real values” children.
“Millennials are disloyal” • Sued:
The collaborator sued the organization for wrongful termination.
She/he was being coerced by leadership to engage in fraudulent
practices; upon taking a stand against it, she/he was fired.
different organizations. These phrases have become so ordinary that the con-
text seems to matter less and less; m
oreover, in all cases, these statements have
come from leadership which further exacerbates the issue at hand.
So little understanding and interest to understand this generation has
led them to be ostracized and virtually segregated. Therefore, the M-word
is charged with a stereotype; however, Millennials do not have different
values, beliefs, and principles than other generations. The BIG difference
lies in their priorities. By engaging in this discourse, organizational leaders
are excluding an entire generation, closing the door on those that are
capable of achieving strategic goals and desired performance and are, fur-
thermore, actively discriminating in the workplace. Perhaps many do not
even realize they are doing so, and others are merely throwing the M-word
around to insult and demean. In both cases, leadership is failing to see the
bigger picture.
There are two aspects that are particularly curious about this rhetoric:
first, these statements are exceptionally inaccurate and, second, their
assertiveness and actions toward work and life are result of evolution. You
see, Millennial behavior and attitude is actually a testament to past genera-
tions’ wisdom. They know better because of the women and men who
have shared their life lessons: “don’t waste time on anything that is not
worth it”, “value and respect yourself and your time, and make others
respect you too”, “a job is just a job; do not trade your beliefs and prin-
ciples for a paycheck”, and “do what makes you happy and gives your life
purpose”. So, actually Millennials have been paying attention, taking
notes, and taking inspiration from past generations.
The moment when organizational leaders realize that the next genera-
tion is part of their legacy, they will come to acknowledge the significance
of coaching and mentoring, an art form that has been mostly lost, and
opening doors, rather than shutting them in their faces. Millennial col-
laborators, and the next generation for that matter, are neither the enemy
nor competitors; rather, their accomplishments ought to be valued.
Organizational leaders need to recognize that what sets them apart is
merely a different MO which, as discussed earlier, should be maximized
for effective productivity and performance. In order to ensure that an
organization’s corporate philosophy is being met, intergenerational coop-
eration and collaboration is a must; moreover, the next generation needs
to be embraced, educated, trained, and guided to take our places, improve
our indicators, and successfully lead the future we might not even see.
Leadership ought to start by providing know-how, encouragement, and
empowerment so that no one is left behind, and others can continue this
work and achieve what we were not able to. Exclusionary practices render
dialogue empowerment, the maximization of MO, and effective SGA,
ineffectual; in fact, they are a nonissue unless leadership puts a stop to
these types of practices and fosters understanding, and openness to dia-
logue among all generations in the workplace.
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CHAPTER 5
Organizational Designing
Organizations follow a certain path or track they have created according

to their strategic planning. Like any other organizational process, continu-
ous innovation of design is required in order to ensure that it effectively
adapts to changes in the environment, organizational behavior, as well as
collaborator attitudes and needs. Following organizational design trends
has become trendy, as they are typically attuned to environmental changes,
still, design challenges lie within rather than without an organization; that
is, while trends are informative, following them is complex. Shifts in com-
petition paradigms are telling of organizational designing efforts, environ-
mental receptiveness, as well as their test of time effectiveness; however, it
is the organization’s innovativeness that will lead to a design that drives
responsiveness and co-creation of value.
Defining Organizational Design

Organizational designing is the process by which internal dynamics are out-
lined meaning that it should always be viewed as a draft which is to be con-
tinuously improved upon. It is an ongoing process, therefore, an organization’s
design cannot stand still; it must evolve with the scores of changes in the
environment (Roberts 2004). Organizational design is an important part of
all types of organizations whether or not it is deliberately carried out to define
structure, determine departmentalization, delineate the connectivity among
collaborators and line of authority, and/or enhance performance, among

others. As such, there may be multiple goals for organizational designing;

however, its main objective is to attain an efficient organization (Roberts
2004). The inevitable question is what makes an organization efficient? The
quick answer is that there is no one answer, that is, there is no one model,
process, or system that can be applied to any and all organizations unchanged
or unmodified that can ensure organizational efficiency. Furthermore, there
are no specific tactics fit for any type of organization, including size and line
of business. The main reasons being that, although the definition of the con-
cept of efficiency transcends organizations, its achievement parameters are
determined in accordance with the strategic goals, standards, policies, and
norms of each organization.
Throughout the years, a series of concepts have been coined to describe
different approaches to organizational design, each with a specific focus
whether on structure, learning, environment, collaborators, change, and
decision making, among others, including combinations of them. The dis-
cussion on organizational design commonly begins with the organization’s
structure; a series of types of structures have been developed including, but
not limited to, functional (Daft et al. 2010), divisional (Bao and Wang 2012),
matrix (Davidovitch et al. 2010), modular (Hoetker 2006), virtual (Ahuja
and Carley 1999), hybrid (Haigh et al. 2015), and team-based (MacQueen
et al. 2008), among others. Each typically presented in charts or diagrams
describing the roles and positions of each collaborator, or at least key decision
makers, as well as the chain of authority and degree of centralization of deci-
sion making. In many ways, the structure is telling of the organization’s
approach to business dynamics as it provides an idea of the organization’s
functional and relational priorities, as well as its path toward strategy fulfill-
ment. Therefore, they are important to organizational design; that said, the
latter is not limited to the organization’s structure (Stanford 2005).
Galbraith (2002) proposed the Star Model for organizational design
which stems from strategy and is integrated by these four elements: struc-
ture, process, rewards, and people. The model describes the importance of
an effective alignment of the elements among themselves and with the
selected business strategy. This process helps manage the organization’s
designing endeavors, as well as desired outcomes. Alignment is quintessen-
tial to a successful outcome in organizational designing; however, it is sug-
gested that it ought to be crafted from the organization’s essence, that is, its
corporate philosophy. Figure 5.1 depicts the alignment of the corporate
philosophy elements. Naturally, each organization’s corporate philosophy is
different, yet the components transcend all types of organizations. The key
ORGANIZATIONAL DESIGNING 93
Corporate
Philosophy
Core Strategic
values goals
Tactics Strategy
Fig. 5.1 Strategic corporate philosophy alignment
is to ensure that all elements effectively derive from and drive each other;
this will create the foundation of business dynamics, as it will determine the
manner in which strategy will be developed and executed, business opera-
tions will be conducted, information and data will be processed and com-
municated, and stakeholder relations will be managed. Therefore, the
starting point of an effective organizational design process is the assurance
that the organization’s foundation is always in alignment.
The abovementioned alignment is, in turn, strategic as designing,
developing, and executing an organization’s corporate philosophy is in
itself a strategy. In a seminal paper, Chandler (1962) posited that strategy
precedes organizational structure, meaning that, the overall strategy that
an organization puts forth paves the way for the structure, which ulti-
mately includes the manner in which design and redesign process will be
tackled, business will be conducted, stakeholder relationships will be man-
aged, and productivity and performance will be pursued. Therefore, as
suggested, alignment is a quintessential practice that ought to be continu-
ously implemented and evaluated in order to ensure that strategic goals
are being achieved as desired, and business growth and development are
being accounted for. After doing so, the question that rises is: should we
redesign?
Redesign or Perish?
Many theories have been developed regarding the achievement of quality
and high performance associated with design. The process of organizational
design is commonly associated with redesign and reengineering. According
to Desa et al. (1987), redesign is a process by which the current design is
altered in order to improve it. And, Hammer and Champy (1993) posit that
reengineering is a process that requires starting over, starting from scratch,
going back to the beginning; therefore, it is a dramatic transformation of the
organization. Business process redesign and reengineering (BPR), popular-
ized in the 1990s (Earl 1994), calls for a radical change (Fiedler et al. 1995)
of process at an operational level to impact competitiveness, and responsive-
ness. It has been defined as the process of rethinking and radically redesign-
ing processes and procedures in order to achieve desired performance in
regard to speed, cost, quality, and service (AbdEllatif et al. 2018; Davenport
and Short 1990); further, it has also been considered as both radical changes
and incremental improvements (Ozcelik 2010) which will depend on the
organization’s context and environmental changes. According to Tinnilä
(1995), despite the various organizations around the world that have suc-
cessfully implemented redesign and reengineering practices for business
processes, there is a significant rate of failures reported.
Organizational designing is, quite often, viewed as a radical transforma-
tion. The primary purpose of altering the organization’s design is that orga-
nizational leaders are perpetually trying to achieve dramatic improvements
to reach their strategic goals in record time; and, with good reason since it
is certainly in the organization’s best interest. By viewing the designing pro-
cess as one of transformation, it immediately creates a challenge of action
and time. The process of designing becomes a race against time to identify
unfunctional, unproductive, and unprofitable processes and procedures,
create and develop effective operational processes and procedures, and
implement them, while maintaining the current momentum on task and
activity fulfillment. This means that collaborators continue fulfilling their
tasks and objectives uninterruptedly. Therefore, this method becomes a
complex practice requiring timely prior planning, as well as active participa-
tion of all interested parties, to design, execute, and evaluate.
There are two particular observations on the matter: first, because rede-
sign and reengineering processes are embraced as cues of organizational
innovativeness, many organizational leaders have come to believe that not
engaging in such practices may eventually lead to the organization’s
demise. Therefore, they tend to take on the tasks of redesigning on the
basis of survival. However, doing so may lead to failing to achieve desired

outcomes when strategic planning is not carried out properly in alignment
with the organization’s corporate philosophy. Granted, it may be consid-
ered that there is only one process or procedure requiring attention; how-
ever, because of existing correlation and potential overlapping of activities
and functions, organizational leaders would be tasked with a significant
overhaul; thus engaging in organizational design transformation. Second,
others steer clear from redesigning and reengineering of organizational
design due to their consideration that there are no aspects in need of
change or modification; however, the old adage “if it ain’t broke, don’t fix
it” does not apply, because of the need to effectively adapt to continuous
changes in the environment.
Organizational design requires constant attention; it is not something
that can be approached only when Mr. Murphey decides to pay a visit.
Meaning, if organizational leaders are considering improvement as a stan-
dard objective for organizational design, then, by its own nature, the pro-
cess ought to be continuous rather than carried out at once and on a large
scale. Furthermore, the decision to undertake a redesigning process is cer-
tainly specific to each organization’s circumstances, that is, organizational
leaders should take all internal and external variables, as well as intraorga-
nizational and interorganizational alignment strategies into consideration
before green-lighting any related projects. Therefore, invoking contin-
gency theory is required, that is, decision making on whether to redesign
or not should always come down to it depending on the variables in play
in a given context and environmental characteristics. The next question
that rises is which cues, if any, should be considered before deciding to
engage in organizational designing practices?
Keeping Up Is Too Slow

The only constant today, is change itself; the number of organizational
internal and external variables in play are vast and in constant transforma-
tion. There certainly was a time in history when the environment under-
went ups and downs, in the sense that there were turbulent times which
were met with relatively peaceful times afterwards. This fluctuation meant
longer periods of time for strategic planning, to execute predictive analy-
sis, anticipate demand, and lower stress levels. The gaps between the highs
and lows have significantly decreased as change happens much faster.
A distinct example of this is the news; the amount of reported news, the
manner in which it is presented, and the actual definition of the concept of
news. The fact is that the content, delivery, and frequency of news have
changed drastically in the last eight decades. The news was previously pre-
sented once a day. On April 18, 1930, a BBC announcer merely stated
“there is no news” (BBC 2017); certainly something unconceivable today.
In the 1950s, news was broadcasted in the evening for 30 minutes, it only
included highlights and, therefore, there was an effort to concentrate on
the facts that could be reported; in other words, the news was unaccom-
panied by opinions and rhetoric. The time slot changed according to the
program in question, meaning some eventually broadcasted first thing in
the morning; however, the format and method did not undergo major
changes. In the 1980s, CNN launched the first 24-hour news cycle chan-
nel (Cramer 2005), effectively shifting news dynamics.
During and after the 1990s, this format was popularized giving room
for multiple channels, such as BBC, MSNBC, and Al Jazeera, among oth-
ers. For instance, there are hardly any topics not covered in the news, from
finances, sports, politics, business, technology, to entertainment, fashion,
and trending topics on social media, among others. Instead of merely
reporting news highlights, opinions are offered which depend largely on
the source and outlet. And, news is not available just 24/7, but it is also
accessible on multiple formats: paper, radio, television, computers, and
mobile devices. Furthermore, outlets have also varied as it is not just news
outlets, but also social networking sites, such as Facebook, Twitter, and
Instagram, among others. Regardless of the accuracy of content and poten-
tial audience manipulation, it is difficult to keep up to date; making a deci-
sion based on the information presented in the morning, from one source,
may be ineffective as something is bound to happen and be reported at the
top of the hour that is likely to impact organizational decision making.
Another example is the textile industry. There used to be four expected
natural seasons, clearly marked by weather, that dictated the path that
fashion would take; however, the creation of micro-seasons has forced an
increase in the number of seasons per year to fifty-two (Yang et al. 2015);
this strategic practice is also known as fast fashion. Each micro-season
either responds to a current trend or is responsible for creating a trend in
the market. Either way, instead of change occurring two to four times a
year, it is happening fifty-two times; which means that what can be
expected is that something “new” will be released on a weekly basis. Even
the idea of keeping up with these trends is unfathomable for the majority
of the world’s population.
The same occurs on social networking sites with trending topics, which
are words or phrases made into hashtags that are highly viewed and shared.
Although the number of tweets required for a hashtag to trend varies, they
have the potential to simultaneously impact millions of users around the
world. While it is possible to weigh in on multiple trending topics via social
networking sites, just like the news, keeping up would require 24/7 vigi-
lance and active participation on social media. Furthermore, even when
participating on a trending topic on social networking sites, it is rather dif-
ficult to modify behavior to fit them. Take, for example, the use of plastic
straws; people around the world have been tweeting and retweeting the
urgency to stop using plastic straws, on account of the environmental dam-
age they cause, with the hashtags: #straws, #plasticstraws, #switchthestraw,
#thefinalstraw, #refusethestraw, among many others. While some consum-
ers are beginning to change their behavior, a great many find it difficult,
even drastic, to alter their habits and may take them much longer to adapt.
Furthermore, the message is meant not only for plastic straw consumers,
but also for organizations that are manufacturing them as well as those
purchasing them.
These examples are illustrative of the undertakings of keeping up with
trends in relation to business practices. Although following organizational
design trends is indicative of intent to evolve, stay current, enhance attrac-
tiveness, and foster growth and development, two particular issues arise.
First, keeping up to date with the latest trends in organizational design is
difficult in itself, then adopting a trend and adapting it to the organization
is even more difficult; it takes time and analytical efforts to determine the
proper fit of the trend, adapt it to the organization, bring collaborators
into the fold, execute, and evaluate the effects on efficiency, productivity,
and performance. And, second, once an organizational design has effec-
tively been adopted, it is likely to be either outdated or on the verge of
becoming obsolete, since scholars and practitioners are constantly study-
ing the organizational environment and developing new techniques and
models to improve designing efforts. Because the environment is continu-
ously changing, organizational design propositions are also in frequent
transformation; thus, by the time an organization has adopted the “latest
trend” it might be superseded.
This is not to say that decision makers should steer clear of trends; on
the contrary, they tend to be quite informative of the shifts occurring in
the environment, and can even provide a good sense of what current and
potential stakeholders’ priorities are or will look like in the near future.
Therefore, trends should be viewed merely as clues in the bigger scheme

of decision making because actual challenges of organizational design are
not restricted to fluctuations and transformations occurring externally. All
factors considered, keeping up with organizational design trends is too
slow when it comes to achieving the desired levels of effectivity and per-
formance. In the sense that each organization should be permanently
striving to innovate their own design on the basis of their current and
potential, internal and external, stakeholders’ needs and wants, as well as
the organization’s strategic objectives which stem from their corporate
philosophy. There is no denying that changes occurring outside the orga-
nization cause an impact; then, the next question is what should be done
with the information from the ever-changing environment overwhelming
the organization’s decision making?
Managing Shock Dampers

Flexibility and adaptability are two commonly recognized qualities that
every organization should possess particularly for organizational designing.
Methodologies, techniques, models, processes, and procedures alike,
require these qualities as rigidity is inconsistent with the basic fundamentals
and objectives of innovation and progress. There are additional qualities
which should also be managed in organizations, including resilience, pro-
activity, and responsiveness in order to respond pragmatically to the uncer-
tainty generated by external environmental fluctuations and volatility. The
flexibility of an organization describes its capabilities as well as the velocity
with which management can set them in motion (Sharma et al. 2010) to
effectively tackle changes and/or shifts in the environment. When an orga-
nization experiences change, resilience enables it to recognize and take in
disruption, disturbances, and it is the individuals’, collaborators’, adapt-
ability what influences the potential resilience (Walker et al. 2004). An
organization’s responsiveness is observable as it is able to effectively respond
to the external environment’s dynamics (Clippinger 1999), while their pro-
activity is viewed through their action plan and efforts to effectively impact
(Grant and Ashford 2008) their strategic goal achievement. Therefore,
adopting a one-size-fits-all approach would surely be a miscalculation, to
say the least. The latter is particularly true when dealing with the innate
uncertainty of the environment.
Uncertainty is a word constantly being in business, and one that most
would rather not hear; it can come up in any given situation and context,
and most always provokes a sense of angst in decision making. Uncertainty
naturally arises when unanticipated circumstances come up, and it is

noticeably avoided; it is fair to say that, today, the pursuit of certainty is
greater than ever. It is understandable that the current climate requires not
only verifying and double-checking every piece of information, data, and
decision, but it is even comprehensible that using expressions such as
“absolute certainty” and “definitely true”, although pleonasms, becomes
more common.
Certainty, which suggests a degree of confidence (Isabella and Waddock
1994) and undoubtedness, is a luxury, an amenity, which while most would
surely enjoy, must end up doing without. According to Kahneman et al.
(1982), uncertainty is not only a fact, but it should be addressed with both
readiness to tackle a situation, as well as an appropriate response in light of
unforeseen outcomes. Regardless of the fact that certainty eludes the work-
place, collaborators are continuously requested to submit infallible data and
information that will result in decisions made with “absolute certainty”.
However, perhaps the purpose of evaluating a decision’s degree of uncer-
tainty should not precisely be to determine certainty, but rather to determine
the degree of risk involved in a given decision. That is because acknowledg-
ing and measuring risk as well as evaluating its effects are much more com-
fortable tasks for decision makers than doing so with uncertainty.
At any given moment, there is a vast number of events taking place
around the world which impact organizations of all types and sizes. Every
one of them causes a ripple effect, which inevitably end up having either a
direct or indirect influence on decision making. It is commonly thought
that incidents of certain nature do not affect all organizations or that situ-
ations occurring in a foreign country, which is currently unassociated with
the organization, will not affect all organizations; however, it would be
incorrect to assume so since the characteristics of a globalized world and
instant simultaneous communication systems, ultimately create a system-
atic interconnectedness that no organization can escape from. As such, and
as suggested by the principles of the ripple effect, although the impact is
imminent, it may not be immediate. Perhaps another way of analyzing this
is recalling chaos theory’s butterfly effect, which dictates that a small change
in a determined state can result in greater differences in another state.
In a complex system, such as an organization, within a greater complex
system, such as a country, within a greater complex system, such as a conti-
nent (and so on and so forth), it is plausible that any given event, situation,
and/or decision, along with their effects, will trigger a series of happenings
that will inevitably reverberate throughout that system. Some may refer to
these occurrences as environmental change, however, because of the shifts

caused by the overall effects, it is perhaps more accurate to label them as
shocks; in other words, external or environmental events can cause shocks
to the system, the organization, and its designing practices in turn.
Shocks, typically characterized as a surprise, not only cause an impact
on the overall organization, but also can even be upsetting when a contin-
gency plan has not been developed. There are four basic categories of
shock, including, political economic, cultural, and social, that are con-
stantly flooding complex systems. Each of them naturally falls in line with
the aforementioned determinants of the butterfly effect, which ultimately
causes two issues: first, everything is connected; in the case of o
rganizational
design, all things connected must be considered for effective decision
making and, second, everything which is connected must be managed.
Therefore, the effects of shock need to be properly managed in order to
tackle their effects on the organization effectively. Accordingly, effectively
managing the risk of shock associated with organizational design requires
flexibility, adaptability, resilience, proactivity, and responsiveness.
A way to manage shock is by damping it, that is, by implementing the
principles of a shock absorber or damper in organizational design decision
making. Shock absorbers are a fundamental part of any vehicle’s suspension
system; its main objective is to stop spring oscillations, provide control, grip,
stability, and comfort to vehicle occupants. The various types of structures
yield different results in the absorption of shock, for the actual operational-
ization of shock management. Figure 5.2 depicts two struts, the structure,
which are assembled with only a spring and the other with a shock absorber,
damper. Merely using a spring, in other words merely absorbing the shock
generated in the environment, is somewhat ineffectual. The spring supports
the weight of the vehicle and receives the majority of the impact in an initial
Fig. 5.2 Shock spring versus shock damper

bump; however, springs tend to rebound and bounce as the vehicle moves
along the road; using a spring alone would cause the vehicle, the structure,
to bounce around, straining direction, reducing grip, and ultimately causing
discomfort for the occupants of the vehicle. Thus, in order to maintain con-
trol so the wheels stay on the ground, a shock damper which connects the
car to the wheel is required.
Structures equipped with a damping device are able to use it to further
absorb the vibrational energy. It is also sensitive to speed, which means
that the faster the overall suspension system moves, the more resistance
the shock absorbers will provide. The adequate functioning of the damp-
ers enables the organization to absorb the unsuspected shock, process it,
and release it back as energy. Finally, these devices are not only important
for the actual absorption of shock, and comfort but, as mentioned above,
they provide grip and stability which are also very important to ensure that
the vehicle’s wheels remain on the ground.
Shock dampers, therefore, are essential to the quality of the system’s
operation. Managing shock with dampers has significant implications for
organizational design. Figure 5.3 illustrates the shock damping model for
organizational design decision making. The springs in the structure indi-
cate that the organization is equipped with the needed flexibility to receive
Political
Social Damper Cultural
Responsivenes
Economic
Fig. 5.3 Shock damping model

the initial shock, that is, any and all changes (regardless of the degree of
association with the organization) occurring in the environment within
the shock categories (i.e. political, economic, social, and cultural). Dampers
provide the necessary infrastructure to absorb critical data and informa-
tion associated with the particularities of each shock received. Organizations
are able to absorb shock generated in the environment and feed the deci-
sion making process. Decision makers will be better equipped and pre-
pared to make strategic decisions as the amount of data and information
being processed can either empower them to proactively take action or can
provide sufficient knowledge to develop a contingency plan that can be
put in motion when needed.
Managing shock dampers provides a sense of control of the unknown,
of the inevitable uncertainty caused by changes in the environment and
associated risk of not tending to them optimally. The faster the system
moves, the greater the resilience of the system. Practice makes perfect in
the sense that the more shock damping is managed, the faster the orga-
nization will be able to respond to shock. Furthermore, the more pre-
pared the organization to receive shock and manage it, the greater the
proactivity to effectively respond to fluctuations and risk. Correspondingly,
its management provides the adaptability required to engage in organi-
zation design whereby internal dynamics (i.e. strategic goals, processes,
procedures, norms, policies, and standards) are modified in the neces-
sary time and fashion. Therefore, accounting for shock by implementing
a damper management system already places the organization ahead of
the game as decision making is already accounting for unanticipated
circumstances.
Finally, organizations that ensure that there is a managed shock damp-
ing system in place are able to remain on path with a certain degree of
confidence in stability, or, with acknowledgeable and manageable risk.
Meaning that, they help confirm that organizations continue in the desired
direction, which has been previously determined when its corporate phi-
losophy was designed. Thus, shock is absorbed and processed as to provide
benefits for the organization; it grants a sense of stability to the organiza-
tion and comfort to collaborators as ambiguity is significantly reduced and
there is greater confidence in the overall day-to-day operations. The next
questions, naturally, are how and when to engage in the organizational
designing process? And, how are the mentioned organizational benefits
produced by managing shock?
Layering Organizational Design

Thus far, a series of attributes related to organizational design have been
discussed, including its definition, origin, within each organization, the
importance of strategic corporate philosophy alignment, implications of
the decision to redesign, as well as the consequences of intending to keep
up with latest trends, and shock management. Once the process of organi-
zational design is defined as a strategy, it appropriately becomes relevant to
the alignment of the organization’s corporate philosophy which determines
the manner in which the rest of the attributes are addressed and ultimately
managed. Take, for instance, an organization with a corporate philosophy
that puts forth a conservative approach to management, a transactional
style of leadership, a highly hierarchical organizational structure, and/or
displays tones of risk aversion, will certainly tackle organizational designing
differently than, say, an organization exhibiting the opposite of the latter.
Another example may be an organization that consciously decides to not
alter its design, and all factors associated, unless the very survival of the
organization is in question; while another organization may consciously
decide to undergo radical transformation at specific intervals. In a sense,
organizational design, like most all business-related constructs, falls in the
category of “it’s all relative”.
The perception of what aspects or factors in an organization need to be
modified is particular to each decision maker; however, the when and how
may be fairly optimized to fit shifts in competitive paradigms. Rather than
approaching organizational design from a redesign, reengineering, and/or
transformation standpoint, it is suggested that designing be addressed as an
ongoing process. It neither calls for drastic and/or radical transformation
of the organization nor suggests that changes and alterations be made
incrementally. For instance, unless there is a fundamental problem with the
organization’s corporate philosophy, there is no need to transform it.
It is suggested that viewing organizational designing in such manner
would be a mistake as it is not a linear process, meaning that, the needs
and powers that be which set designing in motion, do not transpire in a
sequential manner. On the contrary, particularly considering the condi-
tions of a turbulent environment, organizations are constantly permeated
by the effects of change from multiple origins; instead, the process is
deemed to remain “in progress”. It does not mean that the process never
reaches an outcome, but that there is no deadline set, there is never a cul-
mination of the process. The approach entails taking the foundation as is,
and tweaking its layers until a desired design is achieved.
The approach requires effectively managing internal and external variables

to layer the organizational designing process systematically. By addressing
organizational design as a layering process, the question of when the decision
should be made to engage in the practice is eliminated. As previously stated,
uncertainty is a condition that, for all intents and purposes, will subsist. In
dealing with designing, what is certain is that it ought to be continuously
updated; the complexity of updating lies in the fact that it should be done on
the basis of the organization’s strategic planning (internal variables), which
should account for the results of shock management (external variables). The
latter, then, implies that the organization is properly managing the variables
as well as their effects.
Consulting and auditing becomes an important constant; asking ques-
tions such as, is the organization offering a product and/or service, a solu-
tion, added value, satisfaction, all of the above?—may assist in determining
how an organization should undertake the process of layering organiza-
tional design. This approach requires the organization to
1. delegate constant efforts toward strategic planning

a. It means laying down a train track and constantly designing alter-
nate rails as to be ready for any shifts in the environment, through
effective innovation plans, contingency plans, and crisis plans,
among others. Layering organizational design efficiently means
that organizational leaders and decision makers are not waiting
for things to go wrong before acting on them. Therefore, layer-
ing involves continuous contingency and crisis planning derived
from the strategic plan which has been properly aligned with the
organization’s corporate philosophy.
A clear example of this is the planning required for confronting the

challenges of a natural disaster. Early warning earthquake systems, which
provide 45 seconds to a minute’s warning, have saved thousands of lives;
countries that adopt this technology do so because they can account for a
significant number of earthquake-related deaths. Not investing in this
technology does not make any sense, does it? Not planning for a catastro-
phe is a catastrophe waiting to happen. In Mexico, even with the system in
place in Mexico, on September 19, 2017, the alarm did not go off, and the
rest is history. The social impact notwithstanding, not preparing for any
and all environmental changes did not make good business sense either.
Not having a strategic contingency and crisis plan had a direct and signifi-
cantly negative impact on all types and sizes of organizations.
2. weigh the pros and cons of trends

a. This means that the organization need not base strategic decisions
on trends for the sake of staying up to date. Layering organiza-
tional design effectively also means being vigilant of the activity
occurring on social networking sites and evaluating the implica-
tions of adopting versus not adopting them. Thus, the layering
approach entails proactively listening and tending to current and
potential stakeholders’ needs and wants (not solely regarding
products and/or services the organization offers) in order to
ensure effective responsiveness.
For instance, there are environmental and social movements, such as

#csr, #savethearctic, #timesup, currently occurring in social network-
ing sites that are clear messages of the direction that organizations
should be taking now, if they have not already, and in the near future
regarding policies, norms, and standards of their everyday operations;
not doing so may result in undesired repercussions on business growth,
in fact, it is happening to organizations that refuse to adhere to inter-
national environmental standards. Responsiveness to current and
potential stakeholders’ needs and wants, then, is the basis for the co-
creation of value.
3. delegate efforts toward shock damping management

a. It means that organizations recognize uncertainty as a given, risk
must be assumed, and shocks stemming from various categories
(i.e. political, economic, social, and cultural) directly or indirectly
impact and influence decision making. Layering organizational
design involves managing these shocks by damping them, and
processing them with the aim of generating beneficial changes in
the design’s core. Regardless of the size of the modification, each
change is sought to improve organizational effectivity, thus, the
scope of the modification’s impact is organizational.
An example of this is the constant changes occurring in the political

realm worldwide. Certain decisions made by, let’s say a Head of State,
whether or not she/he is leading the country in which the organization is
operating, will have a direct or indirect impact on the organization and

will surely influence decision making. Therefore, it makes good business
sense to absorb such shocks and process them to ready the organization
for any and all changes those decisions may cause.
4. identify and evaluate outcomes

a. This point seems to be straightforward, as it means that organiza-
tional leaders need to engage in the well-known function of con-
trol; however, it is not that simple. Although some may think
otherwise, it is fairly easy to detect errors, mistakes, mishaps, and
overall failure, yet, it is more difficult to vocalize successes and vic-
tories. Most collaborators are qualified to identify failure and even
point it out; however, not all collaborators are bestowed with the
authority to state that victory has been achieved. The layering
approach, then, requires granting collaborators authority to express
positive outcomes, praise hard work, and recognize the added
value generated. This will lead to an organization that is, besides
improving its design, constantly in a learning process.
For instance, news headlines are inundated with examples, as noted in

Chap. 2, where organizations are labeled because of mistakes and ultimate
failure of meeting stakeholders’ expectations. In such cases, the process of
designing is overshadowed by the need to fix wrongdoings. This is not to
say that these organizations should not be held accountable, on the con-
trary, they must be held accountable; more accurately, legitimacy is not an
option in the pursuit of business sustainability. Therefore, again, it makes
good business sense to foster legitimacy from the inside-out by evaluating
and enhancing the hits, rather than focusing on the misses.
Layering organizational design provides significant benefits for the
overall organization. Figure 5.4 depicts the organizational design layering
model which is accomplished by effectively managing shock; it illustrates
how doing the latter provides benefits which are visible in four elemental
organizational aspects: leadership, performance, growth, and develop-
ment. Each fragment of information developed by managing shock pro-
vides insights to further streamline the framed ideology intended for
implanting leadership; therefore, the attributes and effects of leadership
can be positively renovated by means of organizational design layering. In
such case, leadership is tweaked rather than drastically transformed which,
Fig. 5.4 Organizational

design layering model
Political
Social Damper Cultural
Responsivenes
Economic
to say the least, requires a significant investment. Achieving desired per-

formance is not a stress-free task; however, those layered improvements in
design, which lead to improved leadership, inevitably have a positive effect
on collaborator performance, hence, organizational performance. The
information that organizational leaders are promptly equipped with by
implementing this approach is critical for optimal decision making.
Certainly, changes in the environment, technological advancements,
and continuous innovations have informed the various methods of organi-
zational designing, including the proposed layering process. All actions
lead to a series of events that cause shock, vibrational energy (data and
information), that permeate the organization and it is its layering innova-
tiveness that will lead to a design that stimulates responsiveness, desired
performance, and the co-creation of value; consequently, innovativeness in
layering is what will drive the achievement of business sustained growth
and development.
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CHAPTER 6
Future Directions
The ever-changing environment certainly poses a series of questions of

what lies ahead, which challenges organizations will face next. To under-
stand future directions it is perhaps important to first acknowledge what
has been learned in order to appreciate the current state of affairs. Two
specific concepts come to mind, not new but resounding, namely, account-
ability and legitimacy; although much has been learned about them, there
are still significant areas of opportunity that must be addressed. Therefore,
future directions will entail reinforcement of accountability in pursuit of
organizational legitimacy.
The Name of the Game: CSR

Scholars and practitioners have been formally discussing the operational
implications of organization roles in social responsibility for almost 70
years, that is, since Dempsey (1949) articulated the concept of business
responsibility and Bowen (1953) first coined the term corporate social
responsibility (CSR); thus, it is not a new concept. Although there is no
consensus on either the exact moment organizations started engaging in
CSR-related practices or its definition, most agree on its significance to
business, the environment, and society. From any angle it is analyzed,
whether financial performance, business growth, social performance,
stakeholder satisfaction, added value, corporate reputation, strategic mar-
keting, and business development, among others, CSR is a practice that

just makes good business sense. And, it is for such reasons that procrasti-
nation on the matter seems unfathomable.
There have been a series of incidents that have unquestionably informed
the definition of CSR and led to the need for a serious discussion on
accountability, the latter being incredibly significant in the fight against
violations of human rights, scarcity of basic needs, environmental destitu-
tion, and wars, among many more appalling issues. The social shock, par-
ticularly grounded on an emotional jolt, rising in response to these
deplorable conditions, and abhorrent decisions are driving the urgency for
worldwide collaboration and cooperation. Also, the social shock caused by
lack of action is galvanizing current and potential stakeholders to take a
stance and urge organizations to be effectively responsive.
There are multiple examples of organizations being informed and
requested to be proactive in relation to environmental and social issues. In
1962, Rachel Louise Carson, in her book The Silent Spring, alerted the
world of the inevitable negative effects of poor decision making on the
environment and, thus, incited the environmental movement. In 1987,
the World Commission on Environment and Development, in the
Brundtland Report (AKA “Our common future”), put forth the definition
of sustainable development and petitioned the citizens of the world to be
proactive in the matter (WCED 1987). Also, former UN Secretary General
Kofi Annan and UN Secretary General Ban Ki-moon both have urged
organizations, institutions, firms, businesses, and governments alike, to
take action for the successful alignment with the UN Global Compact and
achievement of the eight Millennium Development Goals (today reformu-
lated as the seventeen Sustainable Development Goals (SDGs)), respec-
tively (UN 2000; Ki-moon 2016), to name a few examples.
CSR defines organizations attitude and behavior. To put it plainly, it is
indicative of the organization’s corporate philosophy. The latter, as dis-
cussed in Chap. 5, reveals who the organization is, why it exists, where it
is going, and how it intends to get there, therefore, it ought to be fit (i.e.
have the necessary foundation) for CSR engagement. This ultimately
means that not engaging in CSR also speaks volumes of organization’s
inadequacy to be accountable and disregard for social growth and devel-
opment. This begs the question, why are organizations so resistant to
engage in CSR practices? And, the follow-up, do they, despite facts to the
contrary, continue to view CSR as a cost rather than an investment? Do
they not believe that they are accountable for their actions? Have they no
concern for the environment, human rights, equality, freedom, safety and
FUTURE DIRECTIONS 113
security, etc., or do they simply only care about the bottom line? How
about their responsibility toward collaborators, have they no concern for
wellness, deference, and the elimination of microaggressions as well as
macroaggressions?
Global conditions have become so severe that the discussion on whether
or not organizations should be socially responsible is no longer on the
table; it is now critical that organizations effectively engage in CSR; in
other words, as stakeholders of society, it is imperative that they strive to
be accountable for their actions as well as for business and social growth
and development. Furthermore, the “request” for organizations to engage
in CSR is now more of a demand, as the number of consumers taking an
“or else” stance is growing by the minute. In order to achieve business
sustainability, the name of the game is CSR.
Bringing Consumer Activism into the Fold

Consumer activism has been around for a long time, although lately it has
taken on a life of its own. Activist consumers are proactive in their pur-
chase decision making; they enjoy researching products, services, and
brands before making purchases to ensure that products and services are
on par with their expectations. They unwaveringly state that they will not
purchase products and/or services from organizations actively engaged in
questionable or unethical practices; in a sense, these consumers exhort
organizations to “do the right thing”, by sending an “or else” message.
Traditionally, these consumers would strongly urge organizations to com-
ply with their requests or they would take to the streets in protest and/or
boycott the organization in question; their intent, then, is to influence
organizational decision making. Although some may argue that they are
less likely to be influenced by, for instance, marketing techniques, it is not
the case, rather they are influenced by the knowledge of an organization’s
operations, its business dynamics. Therefore, marketing techniques are
effective as long as those consumers perceive them to be authentic,
honest.
The main difference with current activist consumers is the platform on
which they are able to make their voices heard, rather than taking to the
streets, they take to social media without having to actually leave their
comfort zone. Their “do the right thing or else” message is now placed on
boundless social networking sites, such as Facebook, Twitter, and
Instagram, among others. They denounce organizational misconduct on
such platforms and are able to call for a worldwide boycott and/or ban;
and, the use of hashtags further unites consumers around the world and
leads to potential viralization reaching millions of current and potential
consumers. There are hundreds of hashtags that have been created and
have gone viral, some examples are: #metoo, #nomore, #timesup, #hefor-
she, #actonclimate, #savetheplanet, and #staywoke, among many others.
There is a direct association between organizations’ engagement in
CSR and consumer activism, meaning that these consumers not only pre-
fer to purchase from organizations engaging in CSR but also wish to con-
tinuously influence their decision making to improve their internal
dynamics. Activist consumers engaging in online discussions with organi-
zations and other stakeholders, do so to exhort organizations to change
their policies, norms, and standards. Their intention is to influence social
development; thus, they will sanction those organizations that do not
engage in CSR practices and will publicly confront them, and will do the
opposite with those that are socially responsible. Because stakeholders are
ones that grant legitimacy to organizations, encouraging effective com-
munication with them via social networking sites, trolls and bots notwith-
standing, makes good business sense. The reality is that the only way that,
today, organizations will be able to bring consumers into the fold is if they
take on a serious commitment to engage in CSR and proactively listen to
both current and potential stakeholders. The questions that rise, then, are
why do organizations avoid activist consumers? And why are organizations
not proactively engaging stakeholders on social media?
Swinging for the Fences
In the need to adapt to change and remain competitive, some organiza-
tional leaders often make the mistake of following the pendulum to the
opposite extreme; each time it is their turn to lead and make decisions,
they swing for the fences. Granted, home runs are thrilling, they stir up
the crowd, produce more points, and create icons; however, not every play
can be made for a home run, sometimes the most strategic play can be a
pickoff or a sacrifice fly. Players that always swing for the fences can have a
negative impact on their well-being and their performance (and that of the
team), and doing so can drastically alter structural design, and damage
relationships. The reality is that in business as in sports, critical strategic
thinking and analysis are required to successfully evaluate environmental
conditions, changes, and trends, in order to make the right call.
FUTURE DIRECTIONS 115
Take, for example, organizations that have jumped on the e-business

train with conviction; their leaders and managers have come to believe that
consumers are leaning toward a totally digital world, where they will effec-
tively exchange their brick and mortar experiences for only online shop-
ping experiences. As such, they have completely transformed their
organizational design to adopt a full virtual experience for consumers,
meaning that, they only sell their products and/or services online. It might
make sense to some for consumer behavior may seem to be headed in that
direction; however, in reality what has occurred is that they have merely
skimmed the external conditions and behavioral patterns to make that call.
Although it is true that there continues to be an increment in Internet
access which enables online shopping, consumers are displaying significant
change in their behavior and attitude toward online transactions.
Consumers are becoming more and more conscientious about the impli-
cations of online purchases; that is, they have begun to ask important
questions, such as: what is done with their personal information? What are
algorithms and why are they being applied to their information? Why is it
ok for organizations to sell the results of user searches, preferences, and
purchases? Does the concept of privacy even apply to online shopping?
How socially responsible are organizations that are misusing their data
and information? Also, is the convenience of buying online worth it?
Therefore, consumers are not only more wary of the consequences of pur-
chasing online, but also of the amount of personal information that needs
to be shared on virtual platforms to purchase a product and/or service.
These very aware consumers are retreating from the digital world and
are returning to the bricks and mortar experience. Therefore, organiza-
tions that buy into the “change” and transform their organization’s design
on such basis, may find that their once loyal consumers are no longer with
them. In a sense, a more thorough analysis and a layering design approach
would have prevented such transformation and would have enabled the
organization to retain its current consumers and attract potential ones,
that is, by adopting an online presence that serves the online consumer
without alienating other consumers; thus, having a positive impact on the
organization’s business growth.
A change in the environment and stakeholders’ preferences does not
always call for following the pendulum to the opposite extreme, engaging
in drastic alterations, nor does it merit always swinging for the fences. The
question, then, is why do organizational leaders make these decisions?
Why is strategic thinking not being featured as the fundamental of strate-
gic decision making?
Challenges Ahead
Competitive paradigms are ever shifting, causing organizational leaders
and decision makers to constantly question what are the challenges ahead.
The fact is that on the verge of the third decade of the twenty-first century,
to be competitive, an organization ought to be able to achieve business
sustainability (i.e. remain in business) and do so by satisfying stakeholders’
needs and wants, sustaining financial performance, adding value, and
effectively engaging in CSR. Rather than steering clear from activist con-
sumers, organizations should strive for their feedback as there is always
room for improvement, and satisfying current and potential stakeholders
should always be a priority. The challenge of leading a high-performing
organization will lie in the strategic alignment of internal dynamics with
external needs caused by ongoing change. Therefore, organizations are
expected to be change agents, to make a significant difference, to expand
their objectives from merely achieving a desired bottom line to achieving
business and social growth and development. Hence, the challenge is to
#staywoke.
References
Bowen, H. R. (1953). Social responsibilities of the businessman. New York: Harper
& Row.
Dempsey, B. W. (1949, July). The roots of business responsibility. Harvard
Business Review, 27, 393–404.
Ki-moon, B. (2016, June 22). Remarks at 2016 UN Global Compact leaders’ sum-
mit: Making global goals local business. Retrieved September 14, 2018, from
United Nations Secretary-General: https://www.un.org/sg/en/content/sg/
speeches/2016-06-22/remarks-2016-un-global-compact-leaders-summit-
making-global-goals.
UN. (2000, September 8). Millennium summit of the United Nations. Retrieved
September 12, 2018, from Millennium Declaration: http://www.un.org/en/
development/devagenda/millennium.shtml.
WCED. (1987). United Nations report of the World Commission on Environment
and Development. Our common future. Oxford: Oxford University Press.
Index
A goals, 33–35, 37, 38

Accountability, 29–32, 36, 38–45, philosophy, 50, 73, 77, 87, 92, 93,
111, 112 95, 98, 102–104
Adaptability, 98, 100, 102 reputation, 111
Added value, 111 scandals, 40, 42
Agents of change, 17 Corporate social responsibility (CSR),
37, 38, 41–43, 111–114, 116
B
Business sustainability, 113, 116 D
Decision making, 92, 95, 96, 98–102,
105–107
C Dialogue, 71, 73–77, 81, 88
Coerciveness, 60–62
Collaborator
goals, 33, 35 E
satisfaction, 72 Effective communication, 73
Competitive paradigms, 116 Empowerment, 71, 73–77, 88
Compliance, 28, 30, 31, 36, 40, 42, 43 Engagement, 52, 56–58, 60, 61
Consumer Environmental change, 114
activism, 113–114 Environmental issues, 112
behavior, 115 Evaluators, 57–61
Control, 27–31, 36, 39, 40 Evidence, 56–59
Corporate External fit, 30, 33, 37–39, 42, 45

Competitiveness, https://doi.org/10.1007/978-3-030-03347-7
118 INDEX
F N
Family business, 12, 15 News, 96, 97, 106
Feedback, 58–60, 65–67
Flexibility, 98, 100, 101
Followers, 1, 8, 10, 11, 17 O
Organizations
climate, 75
G performance, 49, 50, 52–54, 58,
Gender, 3 60, 61, 63, 65
Glass ceiling, 3 structure, 93, 103
Glass cliff, 4
P
H Performance strategic goals (PSG),
Hashtags, 42–44, 114 63, 65, 66
High-performing, 17–19 Proactivity, 98, 100, 102
Productivity, 28, 29, 34, 37,
52, 54, 55, 57, 58, 60, 61,
I 65–67, 71, 72, 74,
Implanting leadership, 12–13 77–82, 85–87
Individual performance evaluations, Purposive leadership, 16
49–52, 54–63, 65, 66
Induced leadership, 13–16
Integral performance evaluations, R
62–64 Redesign, 93–95, 103
Internal fit, 33–36 Reengineering, 94, 95, 103
Resilience, 98, 100, 102
Responsiveness, 91, 94, 98, 100, 105, 107
L
Layering design, 103–107
Legitimacy, 111, 114 S
Satisfaction, 52, 56–58, 60, 61
Seeding leadership, 10–11
M Shock
Macro and global leadership, 16–17 absorber, 100, 101
Measuring performance, 82 dampers, 98–101
Millennials, 85–87 Silence, 73–75, 77, 79
Millennium Development Goals Small and medium enterprises (SMEs),
(MDGs), 112 4, 12, 14, 15, 29
Modus Operandi (MO), 77 Social issues, 112
Multinational enterprises (MNEs), 4, Social media, 27, 30–32, 39, 41, 42,
13, 15, 17 45, 96, 97
INDEX 119
Social networking sites, 113, 114 T

Social shock, 112 Transparent communication, 29, 30,
Stakeholders, 27, 30–33, 36–42, 45, 36, 38, 39
72, 76, 77, 93, 97, 98, 105, 106 Trends, 91, 96–98, 103, 105
perceptions, 15 Turbulent environment, 103
preference, 115 Tweets, 33, 41–44
satisfaction, 111
Standardized evaluations, 54–60
Strategic goal achievement (SGA), 56, U
57, 63, 65–67, 74, 81–85, 88 Uncertainty, 98, 99, 102,
Strategic planning, 91, 95, 104 104, 105
Streamlined ideologies, 12, 16
Sustainable Development Goals
(SDGs), 112 V
Syntality, 17–19 Voice, 71, 74–77

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Business Leadership and

Andrée Marie López-Fernández

“Corporate decision-making is becoming complex as society, business, and ­corporate

ISBN 978-3-030-03346-0 ISBN 978-3-030-03347-7 (eBook)

Library of Congress Control Number: 2018964416

Cover pattern © John Rawsterne/patternhead.com

There is a constant need to find an adequate balance between the thoughts,

practices. The book intends to provide theoretical contribution in regard

participation in accountability and the consequences of its intervention on

as the effects of radical transformation. The effects of keeping up with l­atest

Mexico City, Mexico Andrée Marie López-Fernández

Fig. 2.1 Internal fit of corporate governance 34

Table 1.1 Brief description of leadership styles 5

Leadership is a remarkable attribute; it has been witnessed in the work of

© The Author(s) 2019 1

to be a process through which a manager or organizational leader success-

Initiating the Debate on Born Leaders

of nature versus nurture. The debate is a draw; discussing leadership

Table 1.1 Brief description of leadership styles

Democratic, autocratic, and laissez-faire leadership Lewin and Lippitt (1938)

individual and organizational productivity and performance. These

These leaders are aware that constant motivation and encouragement

rules that collaborators must abide by in order to complete their functions.

r­ eflection on their abilities nor does it diminish their contribution to goal

External stakeholders’ perceptions are also a strong determinant in

Macro and Global Leadership

Syntality for Effective Leadership

ments to the achievement of high-performing leadership: (1) analysis,

reward and punishment systems to perform adequately and optimally. It is

Bass, B. M. (1985). Leadership and performance beyond expectations. New York:

Gender & work: Challenging conventional wisdom: http://www.hbs.edu/fac-

Hersey, P., & Blanchard, K. H. (1993). Management of organizational behavior:

Corporate governance tends to resonate when the outcome of large and

Defining Corporate Governance

© The Author(s) 2019 27

controlled direction toward strategic goal achievement (SGA). Corporate

Governance Formality and Informality

effectivity is at the core of corporate governance, which leads to increased

Key Corporate Governance Elements

that previously established strategic objectives are effectively achieved; further,

Governance may not be achieved without the organization’s accountability

Table 2.1 Excerpt of 2017–2018 scandal headlines

60 Minutes “‘60 Minutes’ producer Jeff Fager CNN Money Stelter (2018)

to instigate immediate action, for instance, shareholders and regulatory

Current and potential

Fig. 2.1 Internal fit of corporate governance

a determined period of time in order to attain desired productivity and

It is essential that neither organizational leaders nor collaborators lose

Successful operation of the internal fit dynamics of corporate governance

1. Policies, standards, and norms are transparently disclosed and

Fig. 2.2 External fit of corporate governance

performance (Nazari et al. 2017), amongst many others. Therefore, it

In the internal and external fit of corporate governance, both current

Media Participation in Accountability

According to Downie and Kaiser (2003), journalism holds a unique role

United Airlines #Unitedairlines Uber #Deleteuber Fox News #FoxNews

#exploits #cybersecurity #Ethics

Organization Hashtags Organization Hashtags Organization Hashtags

60 Minutes #60minutes Tesla #tesla CBS #CBS

#complaint #StockManipulation #ethics

are utilizing Big Data to gather significant information on consumer

Defining Performance Management

© The Author(s) 2019 49

“Corporate decision-making is becoming complex as society, business, and corporate

as the effects of radical transformation. The effects of keeping up with latest

Mexico City, Mexico Andrée Marie López-Fernández

Fig. 2.1 Internal fit of corporate governance 34

Table 1.1 Brief description of leadership styles 5

r eflection on their abilities nor does it diminish their contribution to goal

positions, determine expectations and objectives to be met to achieve a

“Millennials can’t be • Left work on time: