Stewardship, Governance, and Ethical Leadership: A Comprehensive View

This essay explores the intertwined concepts of good governance and effective leadership through various theories, including stakeholder theory, agency theory, and stewardship theory. It analyzes the roles and ethical responsibilities of stakeholders, shareholders, principals, and agents within an organization, highlighting the potential conflicts and paradoxes that arise in balancing their interests. The discussion extends to different leadership styles, such as autocratic, democratic, and laissez-faire, as well as contingency and transformational leadership. Ultimately, the essay champions stewardship theory as a means of satisfying shareholder expectations through accountable and socially responsible leadership, emphasizing the importance of a single, ethical leader who prioritizes the organization's gains over personal interests.

Running head: STEWARDSHIP AND GOVERNANCE 1
Stewardship and Governance Paper
Student’s Name
Institution Affiliation

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Good governance and effective leadership are two concepts intertwined based on what
they hope to achieve no matter the circumstance. For the achievement of results, both of the
aforementioned concepts need full realization. Common beliefs articulate that an organization
cannot grow beyond what the leadership sees. This refers to the manner in which things run and
the implementation of formulated policies. Herein lies the discussion of the different theories
which combine or at times work independently for an organization, be it non-profit or for-profit.
For instance, the discussion of aspects entailing the stakeholder theory allows for identification
of principals in an organization. It is through the committed leadership full of integrity that will
influence the rest of the organization into actualization of their undiscovered true potential (Hill
& Jones, 2010). Another example points to the discussion of presumptions within the theory of
stewardship, complimented by the theory of relationships between principals and agents. By
discussing issues from all these viewpoints, issues solved by default include accountability and
other internal agency policies.
Firstly, we could look into the scheme of stakeholders in an organization. A
stakeholder is anyone, an individual or group, who can lay claim to a company’s asset, output, or
resource and any alteration to the workings of the organization may affect him, her, or them. The
position of stakeholders attached to a specific organization depends on their role. Internal
stakeholders include the employees and their respective managers whereas the customers,
suppliers, as well as the competition refers to the external stakeholders (Friedman & Miles,
2009). The board of directors, however, hold a special position as interface stakeholders since
they are able to connect with the internal and external organization environment.
Further classification enlists stakeholders based on their intentions as far as the
organizations mission goes. They either stand a chance at cooperation or a threat towards the

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organization. Some of the previously done research goes as far as looking into social media
interactions as a means of encompassing the forces of competition, dependency, and the
institution for the theory to hold water. This theory holds water on the basis of management
being organizational and prosperity being because of personnel morals and values. Of all three
concepts in this discussion, this theory heavily relies on ethics. This creates a traditional business
fiduciary setting in which a lot of trust is to the managers, entrusted to run things with maximum
efficiency. It points to an ethical responsibility with the managers having multiple fiduciary
responsibilities. Stakeholders and shareholders are two different entities all entrusting managers
to do right by them. This part creates an ethical conundrum. The paradox in all of it is that as
much as it seems natural, it remains proscribed to implement commercial decisions by ethical
standards going beyond strategic deliberations for stakeholders.
By paradox, we look at the ethical dilemma that comes no matter the approach taken.
What is good for the stakeholders will not always be good for the shareholders. It is more ethical
to consider the shareholders with higher regard, but times will come when stakeholders will
come first. It is logically impossible to push the envelope to managers on the different situations
when either will apply smoothly, and maintain efficiency. The solution lies with managers
having to accept their role as obligatory to all stakeholder needs. When it comes to the
shareholders, the duty to fulfil their vision is a fiduciary one. By fiduciary, we take into
consideration that there were no promises to suppliers and employees whatsoever, but the
obligation to not harm or cheat these very stakeholders is apart from the interests of stockholders.
For this paper, adoption of bilateral relationships between personnel creates the notion of a
principal-agent relationship. Proper discussion of this sort of relationship opens up the discussion

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into the stewardship theory and the agency theory, the former discussed in detail later in the
paper.
The second theory, the agency theory, points to a rocky relationship between a principal
figure within the organization and a subordinate agent (Eisenhardt,2009). The assumption is that
they have the same goals but different agendas on the how to achieve their agendas. This means
they maximize their efficacy, but with the agent having more direct contact with the organization
agenda having more leverage. That means that without proper supervision from the principal, the
agent risks only furthering his agenda while the principal figure’s agenda gets derailed. The
problem actually warrants further incursion of costs towards micromanaging the agent in the
name of residual loss, monitoring costs and bonding costs (Iswajuni & Arudistara, 2018). This
contributes to the controversy of the ethical basis of the agency theory. There is an ethical danger
for financial relationships that pit agents and principals between each other. Competition, as it is
in the real world, leads to unchecked self-interests. The need is innate, and hence Christian
teachings pointing to one not getting too comfy in their moral high ground. For business circles,
aspects such as proper management of finances require promulgation of positive business ideas
to an extent of becoming the norm.
In a bid to cut on such and such costs, the principal may seek to inventively align his
agenda with what the agent has in mind. If it fails, it could only result into thorough monitoring
of the agent undertakings, giving the principal more information on what the agent does. This
has the blowback of creating the possibility for reduced efforts from the agent. The smart play
remains offering a contract to the agent that pays based on the outcome rather than the effort put
in hence pushing the bigger picture agenda, which is and remains, the thriving of the
organization. However, this solution is not entirely accurate to apply, especially for an NGO

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since measuring feats and achievements from their line of work is hard to articulate. These
disadvantages are the ones that actually vouch for the establishment of the stewardship theory.
The third theory for this paper is the steward theory. For an organization held either
privately or publicly, objectives being for profit or nonprofit, there is always need to plan ahead
and creating the right structure to achieve the maximum (Farkas, 2016). Selecting the right
model means that the odds of success remain in favor of the institution, and the stewardship
concept works for most. The mode of stewardship extrapolates on the definition of a steward;
someone charged with taking care and protecting other people’s needs. For an organization, this
means having leaders in pole position making all the decisions for the rest of the organization,
with the aim of achieving all the laid-out objectives. Fully embracing stewardship means
incorporating the roles of the Chief Executive Officer and the Chairman to in-house organization
members, as well as aboard with the same background. It makes it easier since they will already
possess knowledge on the operations of the institution plus a deeper commitment.
Briefly, this discussion explores what exactly makes a good leader. The truth is that in
different circumstances there is need for a different type of leader, but the question remains if all
the required traits can be in one individual. Based on the situation, we look into different
leadership theories attempting to define the exactness of an ethical effective leader. The theory of
traits looks into what makes up a standout leader. The initial mentality about this instance used to
be the belief that either you had it in you or you did not. Thankfully, people now have a more
open-minded approach about the qualities of a leader. Possessing integrity, being empathetic,
remaining assertive and having good skills at decision making are integral in being able to lead,
but it does not guarantee a good leader. Subsequently we have traits based on behavior. These
normally focus on the manner in which leaders behave.

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Whether they actually micromanage all the operations or stand back and expect their
team to step up and cooperate counts as their success or failure. This introduces the principle of
the three types of leaders. The autocratic leader is in charge of decision making without the need
for output from the rest of the team. He looks into the best possible outcome and makes the call
on the next move, a useful aspect if the decision is on short notice. The democratic leader gives
his team room to do the critical thinking on different outcomes of every decision before they
ultimately make the final decision. It becomes challenging when the team introduces too many
ideas and perspectives and the level of agreement is low. Lastly, there are the leaders that do not
step in for most of the decisions, meaning the subordinates are responsible for most of the
moves. It is effective for a team that requires little to no supervision, but falls short if the
Laissez-faire leader is just distracted or too lazy.
Still on leadership theories, we have the contingency theory. When the above theories
failed to concisely articulate the best leader, theorists devised that the best leader was the one
who implemented the best way out of a crisis. This means that the style of leadership matters on
the merits of its successful implementation. The instances which define the required type of
leadership include either cases where the leader required needs to be task oriented or people
oriented. The last theory is more on influence and power. It dwells in so many other forms of
leadership but stays true to its core. It expounds on the different means leaders use their
influence and positions of power to get the job done. Under this umbrella we have transactional
leadership, a notion which assumes reward is the only way to get things done. Pay in this means
introduction of contracts that promise tasks completed based on a structure of rewards. It may
not be the best means of governance for creating strong ties among leaders and for
accomplishing agendas but the advantage is that it gets things done. The best style of leadership

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is transformational leadership in which the virtues of integrity and being visionaries are key. By
ensuring the key figure in this whole picture is an individual with future prospects in mind, it
becomes easier when they guarantee high chances of achievement through team building. The
true character and definition of a true steward.
The theory of stewardship in governance is central to satisfying shareholder expectations.
Creating a single pivot figure as a leader means there is only one channel through which
information flows to stakeholders about the business. In times of a crisis, there is the advantage
of a clear distinction of who the leader is, calling the shots and willing to bear the burden of any
blowbacks. The steward shoulders all burdens and at times, may need to sacrifice their own
personal gains over the gains of the organization. When compared to the aforementioned
theories, we can see some of the contrasts. The theory that introduces agents and principal
figures normally focuses on governance through checks and balances. This means that the Chief
Executive and the Board run as two different units. Nevertheless, stewardship resonates with the
values of accountability and social responsibility which are trends in current agendas in policy.
Further discussion of the topic essentially offers managerial implications for instance in the
narrow view for the time frame and resources to specification in a relatively wide range.
The agency theory had a weakness of failing to consistently solve the problem of aligning
the interests of the principal figure and the agent (Cuevas-Rodriguez, Gomez-Mejia, &
Wiseman, 2012). The stewardship theory introduces a different approach towards the economics
relationship between the agent and the principal (Nyberg, Fulmer, Gerhart, & Carpenter, 2010).
Based on its roots in both sociology and psychology, it divides the conflict of interest from two
viewpoints. In the first instance, with the interest of both the agent and principal still not aligned,
the agent feels motivated enough to work on the interests of the principal. This is through the

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motivation that he stands a chance at achievement through self-actualization. The other instance
is the presumption of aligned interests between both parties and hence a smooth working
relationship. For the other theory focused on stakeholders, the emphasis is on every faction of the
organization. Be it the employees, the business partners or the suppliers, no division seems more
important than the other since the agenda is the same and every one contributes to achieving the
organization agenda.
The application of the theory of stewardship being effective in the real world is not
straightforward, especially in for-profit organizations (Glinkowska & Kaczmarek, 2015). In the
case of a business or institution, owners tend to focus on what they gain from the venture. The
ethics of stewardship attest to proper resource of management and planning responsibly with
respect to the big picture. Inasmuch as the organization could be making marginal profits, the
operations are what is more important as per the preliminary vision of the founder. This means
pushing for the same values incorporated on the first day. If the organization shows success
promise, people of the same goal will come in a bid to join the course. After listening to pledges,
personal and individual investigations happen to ensure it is not all lip-service. In case of
indifferences between the two, this may be cause for concern as per the client base. The same
applies to those employed in the same places. If the employees feel like the organization keeps to
their word, treats people fairly then, then the profits do not matter as much. Even if the pay turns
out to not be as rewarding, the loyal ones could stick around boosting morale for the sole purpose
of being a part of something better. Paying more for goods or services from a worthy cause is not
a problem for some clients, but this resilience depends on the leadership’s stance on their beliefs.
In a general field with the application of the stewardship theory, relationships between
our actors – the principal and the agent – have to align prior to further engagements. The

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aforesaid psychological feature of this theory dwells on the motivations that it thrives on
(Hernandez, 2012). The desire to self-actualize, unselfish motivations and accepting other actor’s
goals ties in every one’s gain. That means that the whole team takes the win or the loss together.
The sociology bit is more of the steward centering on an involved team full of the collaboration
spirit, open communication, trust, and sharing leadership qualities. Stewards being unselfishly
regarding of others means there is more investment in harmony than the culture of individualism
(Kuppelweiser, 2011). Non-profits and profits, teamwork, creativity, decision making and
supervision of employees are some of the fields in which stewardship has worked.
Leaders, their ethics, and their beliefs are part of what defines the culture of an
organization. They set the tone for the attitude of the employees towards their work. The success
of an institution does not solely rely on the leader’s values, but most of the times it goes hand in
hand with their ability to uphold the preexisting culture. The task itself is formidable, requiring
oneself to be strong of character, strong of conviction and quite selfless. As far as strategy goes,
there are things worth looking at and they include being strategic when in a leadership position.
This refers to showing true intentions about the planned leadership style up for adoption, (Caers,
et. al, 2009). This is crucial since everyone else looks up to the boss to be the role model and
lead by example, even in crisis mode. The beliefs are handy for when there is need to motivate
others, with it forming the backdrop of job fulfillment. Showing true belief in the cause creates
an environment in which the rest can embrace the same and produce spectacular results.
The value of a leader, no matter the field in which they are at the helm, is determinable
via how well they can sell the idea of the organization’s bigger picture. This means going beyond
the usual everyday traditional beliefs and deeper into the operations of the organizations.
Anything short of convincing the employees their actions have an impact for the community or

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capable of causing a revolution or shaking up the usual way of things running could fall short of
expectations. This means articulating to each department how crucial their contribution is to
achieving the set out vision. This sets out a winning culture of good results and everyone
enjoying what they love, no matter the sacrifice. Incorporating this culture thoroughly brings us
to the third point. The procedures for operating in the day to day decisions made should be a
reflection of the culture laid. This means not exclusively looking at the impact of how procedures
affect the budget. Saving money could be the least of an organization’s problems if they lost a
huge chunk of employees due to an insensitive decision made without consideration.
In conclusion, we may mention that in business circles, trust and culture take time to fully
adopt. Full adoption of both means genuine professional relationships, a huge advantage
especially from a manager and/or steward’s vantage point. Channels of communication should
remain open to ensure feedback is well-versed and timely sent. Consistency and being supportive
means a man of honor leading his people to a greater future with the right attributes that prove to
withstand any predicament.

Running head: STEWARDSHIP AND GOVERNANCE 1
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