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Leadership and social responsibility hardcopy

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  • 1. LeadershipAndSocialResponsibility Submitted by: Group 6 MGNT101 Anne Marie Cas Vanessa Santos Julie Rose Sabijon Herman Carlo Sta. Ana Submitted to: Mrs. Aragon
  • 2. Topic OutlineI. Definition of Leadership • Characteristics of a Quality Leader • Various Leadership Style • Contingency Approach to Leadership • The Path - Goal Approach to Leadership Effectiveness.II. Social Responsibility • Social Responsibilities of Managing • Arguments for and against Social Involvement of Business • Social Responsibility & Social Responsiveness • Ethics in Business Management • Ethical Theories and a Model for Business Orientation • Institutionalizing Ethics • Code of Ethics and its Implementation • Factors that Raise Business Setting
  • 3. Definition of Leadership“Leadership is the art of motivating a group of people to act towards achieving a common goal.”Characteristics of Quality Leaders Quality leadership can be hard to come by, but there are some things managers can practice daily at work to ensure that they are better, more effective leaders. And the examples for the “Characteristics of Quality Leaders.” Earn the Respect of Others Good leaders don’t demand respect from others, they earn it through their actions and being consistent with these actions. Only a poor leader would demand respect from his workers through fear and intimidation tactics. The situation we now find ourselves in economically is scary enough; there is no reason to add insult to injury. Part of earning the respect of others is intertwined with other characteristics listed within this article. Knowledgeable and Capable A quality leader is both knowledgeable and capable of doing the work he asks of others himself. No one will listen to a supposed leader who has no idea what he is talking about. Good leaders demonstrate their knowledge through action, not words. Those who stand behind good leaders know that he is capable of doing any task that he ask a member of his team to do, because they have seen him roll up his sleeves and do the work himself in the past. Fairness Fairness is a quality that all good leaders possess. They are able to take the facts of a given situation and render a decision based on all necessary information. Good leaders take all sides into account and make a decision that will be most beneficial to all involved. If a punishment is necessary, it is fitting to the transgression. Excellent Communication Skills The best leaders can effectively communicate in all forms, whether it is written or verbal. A good says exactly what he means and leaves no wiggle room for interpretation or ambiguity. Directness with employees and team members is an absolute necessity in ensuring the success of a business, and good leaders make sure to be as precise as possible when it comes to communications. High Expectations Successful companies are headed up by successful leaders who have high expectations. This is not to say that their expectations are unreasonable by any means, but good leaders know what their people are capable of and expect them to maintain an optimal level of efficiency. This attribute benefits all parties involved and contributes to the success of all as well.Various Leadership StyleAccording to Hersey and Blanchard, there are four main leadership styles: Telling – Leaders tell their people exactly what to do, and how to do it. Selling – Leaders still provide information and direction, but theres more communication with followers. Leaders "sell" their message to get the team on board. Participating – Leaders focus more on the relationship and less on direction. The leader works with the team, and shares decision-making responsibilities. Delegating – Leaders pass most of the responsibility onto the follower or group. The leaders still monitor progress, but theyre less involved in decisions.
  • 4. Contingency Approach to LeadershipEach Approach we need to know the Leadership Theories in order for us to know how we canapproach it in process. There is the…Leadership Theories Trait Theory What type of person makes a good leader? Trait theory does, however, help us identify some qualities that are helpful when leading others and, together, these emerge as a generalized leadership style. Examples include empathy, assertiveness, good decision-making, and likability. Behavioral Theory What does a good leader do? Clearly, then, how leaders behave impacts on their effectiveness. Researchers have realized, though, that many of these leadership behaviors are appropriate at different times. So, the best leaders are those who can use many different behavioral styles and use the right style for each situation. Contingency theories How does the situation influence good leadership? Factors unique to each situation determine whether specific leader characteristics and behaviors will be effective. But When a decision is needed fast, which style is preferred? When the leader needs the full support of the team, is there a better way to lead? Should a leader be more people oriented or task oriented? These are all examples of questions that contingency leadership theories try to address. Power and influence theories What is the source of the leaders power? Power and influence theories of leadership take an entirely different approach. Theyre based on the different ways in which leaders use power and influence to get things done, and the leadership styles that emerge as a result. French and Raven identified three types of positional power and two sources of personal powerTypes of Leaders In the 1930s, Kurt Lewin developed a leadership framework based on a leaders decision- making behavior. Lewin argued that there are three types of leaders: Autocratic leaders make decisions without consulting their teams. This is considered appropriate when decisions genuinely need to be taken quickly, when theres no need for input, and when team agreement isnt necessary for a successful outcome. Democratic leaders allow the team to provide input before making a decision, although the degree of input can vary from leader to leader. This type of style is important when team agreement matters, but it can be quite difficult to manage when there are lots of different perspectives and ideas. Laissez-faire leaders dont interfere; they allow people within the team to make many of the decisions. This works well when the team is highly capable and motivated, and when it doesnt need close monitoring or supervision. However, this style can arise because the leader is lazy or distracted, and, here, this approach can fail. Positional Power Sources Legitimate Power This type of power, however, can be unpredictable and unstable. If you lose the title or position, legitimate power can instantly disappear – since others were influenced by the position, not by you. Also, your scope of power is limited to situations that others believe you have a right to control.
  • 5. Reward Power People in power are often able to give out rewards. Raises, promotions, desirable assignments, training opportunities, and even simple compliments – these are all examples of rewards controlled by people "in power." If others expect that youll reward them for doing what you want, theres a high probability that theyll do it. Coercive or Forcing Power From the word it self “Forcing” you force your workers to do its job. This source of power is also problematic, and can be subject to abuse. Whats more, it can cause unhealthy behavior and dissatisfaction in the workplace. Personal Power Sources Expert Power When you have knowledge and skills that enable you to understand a situation, suggest solutions, use solid judgment, and generally outperform others, people will probably listen to you. When you demonstrate expertise, people tend to trust you and respect what you say. Referent Power This is sometimes thought of as charisma, charm, admiration, or appeal. Referent power comes from one person liking and respecting another, and strongly identifying with that person in some way.The “Path-Goal” Approach to Leadership EffectivenessThe “Path-Goal” is a Theory of Leadership was developed to describe the way that leadersencourage and support their followers in achieving the goals they have been set by making thepath that they should take clear and easy.Path-Goal theory defines the role of a leader as one who defines the goal and lays down thepath for the subordinate that facilitates completion of goal. • Clarifies the task scope, boundaries and the process. • Clarifies the role and responsibilities of the subordinates. • Clarifies the criteria on which both the task success and subordinates accomplishments will be judged. • Provides guidance and coaching. • Removes obstacles that might affect the task completion. • Provide psychological support and rewards as way to complement the work environment.Motivational Tools of Path-GoalThe most common expectations of employees from their jobs have roots in theirsocio-economic status, people work not just to make a living but also how they compareagainst their peers. A motivational instrument can utilize the common socio-economic rewardsfrom a task completion, namely:- • Raises one’s technical skills. • Formal recognition of one’s abilities. • Promotion or career growth. • Monetary benefits like salary or pay-scale increase. • Job security, immunity from company wide cost-cuttings or layoffs. • Low-cost rewards like spot bonus, time-off, and leisure packages etc. • Making the subordinate role and job more meaningful and important, creating value.
  • 6. • Instigating a sense of achievement and pride.3 Components of Path-Goal Leadership 1. Leadership Style: The basic styles are as defined by situational leadership, namely “directing”, “coaching”, “participating” and “delegating” but it adds more styles discussed later. 2. Subordinate Preference: It deals with accessing how a subordinate will perceive a particular leadership style; will he find it satisfying and motivating or stressful and unsatisfying? An employee might perceive his own abilities as high and thus views the coaching and directing behavior as irritating and de-motivating. Some subordinates might like to demand more authority on their work while other might expect better support. 3. Task Structure: It deals with analyzing the task and reformulating its structure in clear way. Thus removing any road blocks in the task, increasing the confidence or willingness of the employees.Strengths of Path-Goal • It is the first attempt to provide an expanded framework which combines the previous works of situational, contingent leadership and expectancy theory. • It is also the first theory to emphasize the importance of motivational factors from the subordinate perspective. It defines very practical and clear roles for a leader.Criticism of Path-Goal • It is very complex theory since it considers more parameters and requires analysis of those parameters to effectively choose leadership style. • It is challenging to evaluate and analyze various components of the theory in real organizational situations. • It is also criticized for placing a great deal of responsibilities on the leader and less on the subordinates, thus it might make the subordinates more dependent on leadership and inhibit their independent growth.Social Responsibility “Making Good Business Sense as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large" - Lord Holme and Richard WattsThe Social Responsibility of Management The social responsibility of management, it is now recognized that besides taking care of the financial interest of owners, managers of business firms must also take into account the interest of various other groups. Their social responsibilities are the Stakeholders. Owners The primary responsibilities of management is to assure a fair and reasonable rate of return on capital and fair return on investment can be determined on the basis of difference in the risks of business in different fields of activity. With the growth of business the shareholders can also expect appreciation in the value of their capital. Employees
  • 7. Management responsibility towards employees relate to the fair wages and salaries, satisfactory work environment, labor management relations and employee welfare. Fair wages should be fixed in the light of labor productivity, the prevailing wage rates in the same or neighboring areas and relative importance of jobs. Employees are expected to build up and maintain good relationships between superior and subordinates. Another aspect of responsibility towards employees is the provision of welfare amenities like safety and security of working conditions, medical facilities, housing, canteen, leave and retirement benefits. Consumers In a competitive market, serving consumers is supposed to be a prime concern of management. Management should anticipate these developments, satisfy consumer needs and protect consumer interests. Goods must be of appropriate standard and quality and be available in adequate quantities at reasonable prices. Management should avoid resorting to hoarding or creating artificial scarcity as well as false and misleading advertisements. Governments As a part of their social responsibility, management must conduct business affair in lawful manner, honestly pay all the taxes and dues, and should not corrupt public officials for selfish ends. Business activities must also confirm to the economic and social policies of the government. Community and Society The socially responsible role of management in relation to the community are expected to be revealed by its policies with respect to the employment of handicapped persons, and weaker sections of the community, environmental protection, pollution control, setting up industries in backward areas, and providing relief to the victims of natural calamities etc.Arguments for and against Social Involvement of Business Advantages of Social Involvement of Business Public expectations: Social expectations of business have increased dramatically since the 1960s. Public opinion in support of business pursuing social as well as economic goals is now well solidified. Long run profits: Socially responsible businesses tend to have more and secure long run profits. This is the normal result of the better community relations and improved business image that responsible. Ethical obligation: A business firm can and should have a conscience. Business should be socially responsible because responsible actions are right for their own sake. Public image: Firms seek to enhance their public image to gain more customers, better employees, access to money markets, and other benefits. Since the public considers social goals to be important, business can create a favorable public image by pursuing social goals. Better environment: Involvement by business can solve difficult social problems, thus creating a better quality of life and a more desirable community in which to attract and hold skilled employees. Discouragement of government regulation: Government regulation adds economic costs and restricts management’s decision flexibility by becoming socially responsible, business can expect less government regulation. Balance of responsibility and power: Business has a large amount of power in society. An equally large amount of responsibility is required to balance it. When power is significantly greater than responsibility, the imbalance encourages irresponsible behavior that works against the public good. Stockholder interests: Social responsibility will improve the price of a business’s stock in the long run. The stock market will view the socially responsible company as less risky and open to public attack. Therefore, it will award its stock a higher price earning ratio. Possession of resources: Business has the financial resources, technical experts, and managerial talent to provide support to public and charitable projects that need assistance. Prevention over cures: Social problems must be dealt with at sometime. Business should act
  • 8. on them before they become serious and costly to correct and take management’s energy away from accomplishing its goal of production goods and services. Disadvantages of Social Involvement of Business Violation of profit maximization: This is the essence of the classical viewpoint. Business is most socially responsible when it attends strictly to its economic interests and leaves other activities to other institutions. Dilution of purpose: The pursuit of social goals dilutes business’s primary purpose: economic productivity. Society may suffer as both economic and social goals are poorly accomplished. Costs: Many socially responsible activities do not pay their own way. Someone has to pay these costs. Business must absorb these costs or pass them on to consumers in higher prices. Too much power: Business is already one of the most powerful institutions in our society. If it pursued social goals, it would have even more power. Society has given business enough power. Lack of skills: The outlook and abilities of business leaders are oriented primarily toward economies. Business people are poorly qualified to cope with social issues. Lack of accountability: Political representatives pursue social goals and ar6e held accountable for their actions. Such is not the case with business leaders. There are no direct lines of social accountability from the business sector to the public. Lack of broad public support: There is no broad mandate from society for business to become involved in social issues. The public is divided on the issue. In fact, it is a topic that usually generates a heated debate. Actions taken under such divided support are likely to fail.Ethics in Business Management Business Ethics is also known as Corporate Ethics. A particular challenge facing businesses is ethically balancing the competing demands of multiple groups of stakeholders – e.g., shareholders, employees, suppliers, clients and the communities in which the business operates.Ethical Theories and a Model for Business Orientation Ethics overlaps with culture because it represents the moral dimension of how we should behave in the world. In Business Ethics, managers compete for information, influence and resources and this is why ethical theories come in. The Ethical Theories Normative theories or also called as Moral Theories is set to apply for every individuals. In Business Ethics there are a lot of theories to apply but there are 3 basic types of moral theories. Utilitarian Theory Utilitarian look beyond self-interest to consider impartially the interests of all persons affected by an action. • Identified most with 19th century philosophers Jeremy Bentham and John Stuart Mill • Requires a decision maker to maximize utility for society as a whole • Max Utility = achieving the highest level of satisfactions over dissatisfactions • It judges our actions based on outcomes (teleological) • Strength: Easy to articulate the standard of conduct – Merely do what is best for society as a whole. • Criticisms: o Difficulty in measuring benefit & harm to all members of society. o Unequal distribution of costs & benefits may lead to detrimental results for a particular class or group of people.
  • 9. Rights Theory This theory is based on Human rights, that all people have basic rights. Examples are the rights to freedom of conscience, free speech and due process. o A right is a claim that can be made upon society o Moral rights are claims justified by moral rules o Positive rights require another’s action o Negative rights require another’s forbearance o Strength: It protects fundamental rights unless some greater right takes precedence. o Criticisms: o Difficult to achieve agreement about which rights are protected. (Rights fundamental to industrialized nations may be unknown or severely restricted in developing nations. o Doesn’t consider the costs or benefits associated with rights. o Creates a sense of entitlement that may have a negative impact on motivation. Justice Theory The Justice theory demands that decision makers be guided by fairness and equity, as well as impartiality. • John Rawls, published A Theory of Justice, in 1971 • Argued it was right for gov’ts to redistribute wealth in order to help the poor and disadvantaged. • Greatest Liberty Principle: Each person has an equal right to basic rights and liberties. This is limited by the Difference Principle: Social inequalities are acceptable only if they cannot be eliminated without making the worst-off class even worse off. • Focus is on outcomes. Are people getting what they deserve? • Strength: Basic premise - The protection of those who are least advantaged in society. • Criticisms: Doesn’t examine the costs of producing the equality.Institutionalizing EthicsManagers, especially top managers, do have a responsibility to create an organizationalenvironment that fosters ethical decision making by institutionalizing ethics. • Code of Ethics A guide of principles designed to help professionals conduct business honestly and with integrity. • Ethics Committee A special group who appointed to consider ethical issues. • Ethics Development Program A Program who research and develop ethical needs.Code of EthicsA code is a statement of policies, principles, or rules that guides behavior. Certainly, codes ofethics do not apply only to business enterprises; they should guide the behavior of persons in allorganizations and in everyday life. There are twelve important procedures to conduct a Code ofEthics. 1. Endorsement Make sure that the code is endorsed by the Chairman and CEO 2. Integration Produce a strategy for integrating the code into the running of the business at the time that it is issued. 3. Circulation Send the code to all employees in a readable and portable form and give it to all employees joining the company. 4. Personal Response Give all staff the personal opportunity to respond to the content of the code.
  • 10. 5. Affirmation Have a procedure for managers and supervisors regularly to state that they and their staff understand and apply the provisions of the code and raise matters not covered by it. 6. Contracts Consider making adherence to the code obligatory by including reference to it in all contracts of employment and linking it with disciplinary procedures. 7. Regular Review Have a procedure for regular review and updating the code. 8. Enforcement Employees and others should be aware of the consequences of breaching the code. 9. Training Ask those responsible for company training programs at all levels to include issues raised by the code in their programs. 10. Translation See that the code is translated for use in overseas subsidiaries or other places where English is not the principal language. 11. Distribution Make copies of the code available to business partners (suppliers, customers etc.), and expect their compliance. 12. Annual Report Reproduce or insert a copy of the code in the Annual Report so that shareholders and a wider public know about the company’s position on ethical matter.Factors that raised Business SettingFor ethical codes that are effective, Business Setting Behavioral effect of the employees andother stakeholders. These are the good signs of a developed Business setting from a code ofethics. The Attraction of an Ethical Company The appeal of an organization which has a good, ethical reputation comes when you need to choose between two similar organizations with similar strengths. The decision comes down not to efficiency, but as to who is more worthy of your support. Though one persons ethics may obviously differ from another, an organization which helps the poor, elderly, disabled, children or abused animals would surely appear as ethical in most peoples eyes. Political ethics are a different thing altogether, since peoples political views can change, especially when the economy does poorly. An organization should stick to having an ethical policy which can stand the test of time. Ethics Add to a Companys Reputation Organizations with a code of ethics still need to prove that they run themselves efficiently. Prepare a code of ethics for your organization, however big or small. Charitable organizations cannot fully function without rock-solid ethics. If a charitys ethics show signs of slipping, then they will have a difficult time restoring their reputation. For other organizations, ethics add to a companys reputation. Even the most successful companies can never have too much of good publicity. Dont Let Standards Slip Any organization which has a good, ethical reputation will come under pressure to maintain that reputation, and if its standards slip, it will cause a great deal of damage. People who have supported an organization will feel a sense of betrayal if an organization doesnt live up to its previous high ideals. An organization should espouse ethics which it can live up to without fear of trying to do too much. No one organization can do everything, and the general public will understand this.
  • 11. Ethics Case Study: Heinz CorporationHeinz Corporation owns a sales and distribution centre called H2 Corp in Northern Ontario. It isa very small company with only 30 employees. There is a president, vice president, controller, 2accounting clerks, 6 sales people, 10 stock employees, and 9 truck drivers. Julia, an accountingclerk, has worked there for 10 years and is well liked and trusted by everyone. She is responsiblefor accounts payable and accounts receivable. The other accounting clerk, Joanne, is new to thecompany and is in charge of posting ketchup deals. She thinks Julia is nice, but has a “badfeeling” about her.A few weeks ago Joanne and Julia had to stay late at work to finish posting entries. Joannenoticed that Julia had a lot of cash in her purse. She asked Julia why she had so much cash.Julia seemed nervous and responded that she and her husband were going to buy a newtelevision that night and she took out the cash from the bank during her lunch break. Joannethought that was a plausible reason and never really thought about that again. Last week,Joanne also witnessed Julia taking five twenty dollar bills out of the cash box. Joanne asked herwhat she was doing and Julia said she was exchanging a one-hundred dollar b ill for fivetwenty’s. The last straw was yesterday when Joanne was talking to Julia and again noticed awad of cash. This time the cash was located in the pocket of Julia’s jacket. Joanne asked herwhy she had so much cash again. Julia responded with a quick answer mentioning somethingabout winning the money at the casino the night before. Joanne knows that a number ofcustomers have put cash deposits on their purchases recently. Also, Julia never mentioned toanyone at work that day that she had won so much money at the casino. Joanne stronglybelieves Julia is stealing money from the company. 1. Identify all the parties, both internal and external, that are affected in this situation. How will they be affected by this situation? 2. Describe the alternatives (give at least 3) Joanne has and the consequences of each action. 3. Decide which alternative is the most appropriate in this situation. Explain why. 4. Identify the weaknesses in internal control in H2 Corp. Why are these weaknesses? 5. What internal controls should be put into place to prevent this situation?