Governance and Stewardship: Theories, Leadership and Ethics Report

This report comprehensively examines the critical roles of governance and stewardship in organizational success. It delves into various governance theories, including political and power theory, system theory, agency theory, and stakeholder theory, highlighting their influence on organizational structures and operations. The report also explores the contribution of stewardship theory, emphasizing the importance of managers as stewards and their alignment with organizational goals. Furthermore, it discusses the relationship between leadership values, beliefs, and ethical practices in fostering effective teams and maintaining organizational sustainability. By analyzing these elements, the report provides valuable insights into the factors that contribute to effective organizational governance and the qualities that define successful leadership, offering a thorough understanding of how these elements interact to drive long-term organizational success. The report emphasizes the significance of ethical leadership, effective communication, and the alignment of managers and stakeholders in achieving organizational objectives.

Running head: GOVERNANCE AND STEWARDSHIP
Governance and Stewardship
Name of student
Name of University
Author Note

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Executive Summary
It has been monitored that the theories of organizational governance and stewardship are highly
effective in maintaining the effective functioning of an organization. The organizations can be
either non-profit or for-profit in nature. However, it is noticed that organizational theories and
leadership qualities are important for organizations whether they are non-profit or for-profit. The
various organizational theories are effective in addressing the different needs of the
organizations. In addition to this, it can be noticed that values and ethics are some of the
leadership qualities that are effective in maintaining organizational sustenance. In addition to
this, effective leadership qualities are important in deciding effective strategies and frameworks.
The report hence will focus on the different organizational theories as well as the effective
leadership qualities.

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Table of Contents
Introduction......................................................................................................................................1
Theories of Governance...................................................................................................................1
Political and Power Theory.........................................................................................................1
System Theory.............................................................................................................................2
Agency Theory............................................................................................................................4
Stakeholders Theory....................................................................................................................4
Contribution of Stewardship Theory...............................................................................................5
Relationship of Leadership Values and Beliefs...............................................................................6
Asking for Inputs from the Employees:.......................................................................................7
Deciding Organizational Value statement:..................................................................................7
Implementing:..............................................................................................................................7
Evaluation:...................................................................................................................................8
Conclusion.......................................................................................................................................8
Reference.......................................................................................................................................10

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Introduction
In order to build a successful organization and maintain its sustenance, it has been
noticed that multiple factors have high significance. Any organization needs to respond to the
external environment, the economic situation of a country and the demands of the targeted
consumers. Hence, an organization needs to depend on the leaders as well as different
frameworks that can be helpful in addressing these factors. Moreover, in order to maintain
organizational sustenance and long-term success, the role of leaders and managers are regarded
as highly important. The report hence will focus on the importance of different theories and
leadership qualities that are important in designing the organizational sustenance.
Theories of Governance
Different theories of corporate governance point out that the organizations do not need
corporate governance merely to support corporate governance, but also to establish and maintain
an efficient and effective administration within an organizational environment. Moreover, it is to
be mentioned that by adopting corporate governance, organizations are able to establish a
transparent administration and progress towards the organizational objective (Jones & Jones,
2013, pp. - 24). By adopting the governance theories and frameworks, organizations are able to
achieve long-term success in the sectors of organizational operations and structuring. In this
regard, the different theories of governance are to be discussed.
Political and Power Theory
The Power Theory of organization points out that an organization runs through the
process of power control and hierarchy. Moreover, it points out that the organization legitimizes
the authority and that itself is power to the organization (Carley & Prietula, 2014, pp.- 19-36). In

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addition to this, it has been pointed out that the individual members of an organization can also
enjoy power without having any authority. It has been witnessed that many a time the political
and power theory play important roles in maintaining the high productivity and efficiency of the
organization.
It can be said that the theory of power and politics can be harmful in the cases of
unjustified use of power. It has been monitored that the organizations that are primarily family-
owned tend to implement the theory of power and politics within an organizational theory.
However, in many of the cases, it has been noticed that the power struggles become significant
hand harmful to the harmony of the organization. Moreover, it can also be said that the
organizational harmony is highly dependent on the effective implementation and usage of the
power and political interplay within an organizational scenario (Mainardes, Raposo & Alves,
2012, pp. - 173-196). It has been noticed that using the power and organizational, political
influences can be beneficial for both the non-profit and for-profit organizations. However, it can
be said that the organizational power has often been misused by inefficient leaders and
managers. Hence, it can be said that the process of giving entire power control of an organization
to a singular individual is to be avoided by the organizations. It has been noticed equal
distribution of power and effective communication are helpful and most appropriate in
maintaining the favorable organizational scenario.
System Theory
The System Theory is considered as an interdisciplinary study of the systems. The
organizational system theory points out organization as a system and employees, management
and the consumers are considered as components of it. Moreover, the theory points out that the
organizational resources and assets are also to be regarded as the important components of the

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organization and hence components of the system as well (Shafritz, Ott & Jang, 2015, pp.- 36).
The theory points out that organizational communication is to be regarded as highly important in
order to serve the consumer in a more efficient manner. Moreover, the System theory can further
be segregated into several approaches.
The open system theory points out that an organization can obtain inputs from the outer
environment as well as the internal environment of an organization. The approach signifies that
an organization receives information from the environment and then processes it internally
(Alter, S. 2013, pp.- 29). It can be monitored that the open system approach aims at
organizational survival and long-term sustenance.
In contrast to the open system approach of the organizational theory, the closed system
approach does not depend on the inputs from the environment (McCleskey, 2014, pp.- 117).
However, it can be said that an organization can never completely shun the external
environment. It is mandatory that an organization takes input from the outer environment in
order to support its long-term sustenance.
Another important aspect of the organizational system theory is to focus on the feedback
loop. According to the theorists, the feedback loop is to be considered having a high significance
in accessing the effectiveness of the strategies (Bridoux & Stoelhorst, 2014 pp.- 107-125). In this
regard, it can be said that the feedback can indicate both inner responses of the employees as
well as the responses of the consumers. It is easily understandable that a positive response
encourages the employees as well as the managers of an organization. Whereas, negative
feedback is important in order to rectify the mistakes.

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Agency Theory
The Agency theory points out that the owners and stakeholders of an organization are
regarded as the principals whereas the management and the executives are the agents. The theory
points out that the agents of an organization are always in a contradicting position. It has been
pointed out that the agents of an organization often are unaligned with the organizational goals
and hence a situation of conflict can arise (Mainardes, Raposo & Alves, 2012, pp. - 173-196).
The primary aim of the theory hence is to resolve any issue that arises between the principles and
the agents. Moreover, the theory points out that the organization is responsible for most of the
decision making processes. By using the framework of Agency Theory, organizations establish
boards that include the agents, and these boards are accountable to the stakeholders of the
organization.
In the context of efficient corporate governance, it can be said that the agency theory can
be used effectively to identify the sectors of conflict between the agency and the principle
(Welsh et al., 2013, pp.- 213-226). It can be said that the agency theory provides the non-profit
or for-profit organizations to effectively implement strategies that will be helpful in reducing and
eliminating the factors of conflict.
Stakeholders Theory
In opposition to the Agency Theory, the Stakeholder Theory points out that the
stakeholders of an organization do not only include the owners and the shareholders. It points out
that the stakeholders are included of consumers, employees and suppliers as well. The theory
hence points out that the managers of an organization have the responsibility to fulfill the
demands of the stakeholders (Glinkowska & Kaczmarek, 2015, pp.- 84-92). In addition to this,

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the stakeholder theory also ensures that the organization is taking up the corporate social
responsibilities.
The stakeholders' theory puts emphasis on the customers and employees along with the
shareholders of an organization. For an easy and effective functioning of an organization, the
stakeholders’ theory hence can be regarded as highly effective in for the governance of non-
profit as well as a for-profit organization. In addition to this, it can be said that the stakeholders’
theory is helpful in maintaining organizational sustainability as well (Baghurst & Stincelli, 2014,
pp.- 1-8). As the theory focuses on the demands of the stakeholders, it can be understood that by
taking up the framework an organization is also able to take up corporate social responsibilities
as well.
The Contribution of Stewardship Theory
The stewardship Theory points out that the managers of an organization are to be
regarded as the ‘stewards’ of the organization and they should be given chances and power to run
the organization as per their efficiency. Moreover, the stewardship theory also points out that if
the stewards or the managers of the organizations are provided with chances to select between
pro-organizational behaviors and self-serving behavior, the managers will definitely regard
cooperation as being more important than being disloyal to the system (Yukl et al., 2013, pp.-
38-48). Hence, the stewardship theory identifies the managers or the stewards of the
organization, to be honest, and trustworthy. It points out that the manager is willing to work
towards the betterment of the organization. In addition to this, the Stewardship theory supports
the organizational structure and hierarchy. It advocates the aspect of deriving the satisfaction of
the shareholders. Moreover, the theory also points out that an organization needs to have a leader
or steward that will communicate the necessary action to the lower level (McCleskey, 2014, pp.-

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117). The theory stresses that selecting and handing over the responsibility of the organization to
a single leader will avoid complexity to a great extent.
It has been monitored that the Stewardship theory is regarded as highly effective in
maintaining the efficiency of an organization. It can be said that the process of selecting a leader
or steward is helpful in deciding the necessary and effective strategies for the organization.
Moreover, it has also been noticed that the process of effective communication is supported by
stewardship theory (Baghurst & Stincelli, 2014, pp.- 1-8). Moreover, the theory depicts both the
owners and the managers as aligned and supportive to each other. This has been highly effective
in reducing the potential conflicts amongst them. In addition to this, the managers and the
stakeholders work in a unity to address the needs of the consumers as well as managing
organizational conflicts.
Relationship of Leadership Values and Beliefs
In order to maintain organizational function and effective leaders are regarded as highly
important. In this regard, it can also be understood that the qualities and values of leaders are
highly effective in building teams. It has been noticed that the primary and most important
qualities of a leader are ethics and values. Values and ethics are interdependent and highly
effective in achieving the organizational goal. It is to be mentioned that the organizational
environment is important for maintaining the high production and affectivity (Welsh et al., 2013,
pp.- 213-226). In this regard, the role of the leaders is also to be regarded as highly important. It
has noticed that the leaders are required to understand the ethics and values of the organization as
well. By taking up ethical practices, the leaders are able to build an efficient team. In this regard,
it can be said that in an organizational scenario, the leaders are regarded as the role models to the
lower level employees. Hence, the practices and stances take by the leaders are immediately

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followed by the lower level employees (McCleskey, 2014, pp.- 117). Hence, it can be understood
that by taking up ethical practices and values, the leaders are able to ensure longer sustenance of
the organization.
Along with acquiring the ethical values and practices, the leaders also need to implement
those practices within an organizational scenario. It can easily be understood that in order to
implement values and ethics within an organizational scenario, effective strategies are to be
taken up.
Asking for Inputs from the Employees:
The primary step of establishing ethical practice within an organizational scenario is
discussing with the employees as well as the stakeholders in order to decide the effective
strategies for the organization (Jones & Jones, 2013, pp. - 24). Moreover, it is to be mentioned
that by including the employees and other stakeholders in the process of deciding organizational
values and ethics, will be highly effective in maintaining organizational harmony and efficiency.
Deciding Organizational Value statement:
The next step of implementing organizational values and ethics is deciding the value
statement of the organization. It has been noticed that deciding a value statement and ethical aim
helps the organization in communicating the organizational aim to the employees (McCleskey,
2014, pp.- 117). Moreover, in order to practice the ethics and value within the organizational
scenario, it is highly important to decide a value statement for the organization.
Implementing:
After deciding a value statement and communicating the organizational ethics and value
to the employees, the next step is to implement this to the organizational scenario. It is highly

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important that the leaders monitor the process of successful implementation of the organizational
values. In this regard, it can be said that the in order to ensure successful implementation of the
values and ethics within the organizational environment, the leaders need to ensure that they are
practiced on a regular operation (Mainardes, Raposo & Alves, 2012, pp. - 173-196). In this
regard, it is also to be mentioned that the organizations need to analyze the possible outcomes
and consequences of implementing these values and ethics within the organizational scenario.
Evaluation:
The final step of implementation of the values and ethical practices in the organizational
scenario is the evaluation. The process of evaluation is regarded as highly important in order to
ensure the successful implementation of values and ethics. Moreover, it can be said that the
process of implementation of the values and ethics is to be analyzed based upon the responses of
the employees and the stakeholders of the organization. The primary importance is to be given to
the feedbacks of the consumers and the employees of the organization (Carley & Prietula, 2014,
pp.- 19-36). To elaborate it furthermore it can be said that the leaders need to take up and
implement organizational values and ethics in order to ensure longer sustenance for the
organization. In this regard, it has been noticed that by successfully implementing the
organizational values, the production can increase increasingly. Hence, the responses of the
consumers are highly important in this regard. Moreover, the implementation of the values and
ethics enables the leaders of the organization to bring organizational change (Jones & Jones,
2013, pp. - 24). In this regard, it can easily be understood that the organizational changes often
impact the employees both in positive and negative manner. Hence, accessing the responses of
the employee is also important in order to analyze the effectiveness of the value and ethical
practices.

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Conclusion
To conclude, it can be said that qualities such as values and ethics are highly important in
ensuring the successful production of the organization. The leaders and the managers of an
organization play an important role in maintaining organizational success. The various
organizational theories are important and have to be followed In order to run the organization.
However, it can be noticed that the theories emphasize the importance of leaders and managers
in order to ensure the success of the organization. It has been noticed that in the context of both
non-profit and for-profit organizations, the implementation of different organizational theories
and effective leadership qualities are regarded as having high importance. It can be monitored
that the stewardship theory and the stakeholders’ theory put significant emphasis on the role of
the leaders. Moreover, it has been noticed that the leaders having better leadership qualities,
possessing high values and ethics are capable of maintaining organizational functioning in a
more effective way. In addition to this, it can also be said that the leaders who have high values
and ethics also understand the importance of building strong organizational communication and
effective framework. Hence, it can easily be understood that the agent theory of the
organizational governance will not be required in the cases of involving capable and efficient
leaders.

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