Leadership is the Essence of Fostering Good Governance

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Similar to love, death, money, politics, and war, leadership is a topic that is constantly discussed and debated. Despite its acknowledged importance and considerable focus, leadership remains an enigmatic and puzzling concept. Numerous theories exist to elucidate different facets of leadership; however, there is still no all-encompassing theory that can streamline and improve our overall understanding of leadership.

According to Dessler (2001), a great way to improve our understanding of leadership is to examine how different scholars have defined it. Achieving excellent outcomes in both profit and nonprofit enterprises is dependent on a genuine commitment and respect towards employees. This is an important aspect of both management and leadership, which falls under the realm of governance.

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The topic of this essay is to analyze if leadership is the key to promoting good governance. This essay will provide theoretical evidence to support or disprove this claim, taking into consideration the definitions of leadership found in management literature. The process of change is an important factor in both organizational and personal development (Dessler 2001). The concept of leadership has been defined by many individuals, as Stodgill (1974) states, “There are almost as many definitions of leadership as there are persons who have attempted to define the concept”.

Writers on leadership have developed numerous definitions and viewpoints on leadership. However, a closer analysis of these definitions reveals a growing recognition that the central concept of leadership involves the ability to influence or persuade others, leading to willing and motivated goal achievement behavior. Leadership researchers have defined leadership in various ways.

  • The creative and directive force of morale (Munson 1981).
  • The process by which an agent induces a subordinate to behave in a desired manner (Bennis 1959).
  • The presence of a particular influence relationship between two or more persons (Hollander & Julian 1969).
  • Directing and coordinating the work of group members (Fielder 1967).
  • An interpersonal relation in which others comply because they want to, not because they have to (Hogan et al. 1994).
  • Transforming followers, creating visions of the goals that may be attained, and articulating for the followers the ways to attain those goals (Tichy & Devanna 1986).

Regardless of the definitions applied, leadership needs to have a meaningful objective. If there is no clear goal, leadership can deteriorate into a pursuit of personal gain instead of fulfilling the mission. For instance, aspiring to be an executive vice president solely for the high salary should not be the aim.

Rather than aspired for high office solely for personal gain, one should aim for it in order to achieve specific goals that benefit the company, be it financially or otherwise (Pillai 1999). Vision entails having a clear understanding of the future, knowing where the organization is headed. Visionary leadership combines vision with leadership, inspiring followers to strive for the organization’s objectives.

According to Certo (2003), a visionary leader is the most effective type of leader. A leader emerges from a team, so it is important for a good leader to be able to persuade and motivate their team members to follow their instructions and work passionately towards achieving the desired goals.

According to Dessler (2001), achieving this goal is not a quick process. The leader must first gain the trust and confidence of their team members. To earn their trust, the leader should highlight the significance of teamwork and motivate the team to collaborate towards a common objective. If team members have different goals, it can impede the overall success of the organization. Thus, it is important for the leader to foster unity within the team and prioritize collective accomplishments over personal ones.

A leader should possess the skills of task completion, delegation, and motivation while collaborating with the team to understand their strengths and weaknesses for improving performance. By leveraging these strengths, leaders can inspire the team to increase productivity and proficiency.

The leader’s ability to inspire their team members and help them reach their full potential is crucial. Creating a work environment that encourages cooperation is highly important as it ensures the team’s commitment. However, if the leader relies on intimidation tactics, although the team may initially complete their tasks due to fear, there is a high likelihood that the quality of their work will decrease once that fear diminishes. Ultimately, enhancing the self-confidence of employees is essential for any leader.

Having self-confidence allows individuals to achieve their goals and aspirations, making the leader’s role crucial. In the past, leadership was linked to physical strength, but that is no longer the case. The current emphasis is on cultivating strong relationships with people. Consequently, leaders must possess the ability to choose suitable partners (Hill & Jones 2004).

Co-operation and feedback are essential for true leadership. In order to be a leader, one must nurture the foundations of co-operation and make them accessible to subordinates. Unfortunately, many managers today create obstacles to upward communication, making it seem foolish for someone lower in the hierarchy to seek help from a leader. Moreover, some leaders promote a corporate environment that views asking for assistance as a sign of weakness or failure on the part of subordinates. This ultimately leads to individuals concealing their shortcomings, resulting in harm to the organization.

Effective leaders have a duty to demonstrate concern for the efforts and difficulties faced by their team members. They must also establish an atmosphere where problems are acknowledged, analyzed, and resolved. This not only facilitates smooth functioning of the company but also encourages employees to communicate their concerns to managers. Addressing these issues enhances employee motivation and ultimately results in greater productivity within the organization (Weidman 2003). Attending to particulars is another vital element of successful leadership.

Successful leaders are individuals who delegate tasks and empower others, while also paying attention to details. It is normal for people to lose focus, so leaders must remain vigilant and redirect their attention to the required work. Additionally, leaders should strive to foster collaboration and motivate others to unite with them.

According to Weidman (2003), the leader’s role is to take care of team members’ well-being. This involves addressing any team issues and reporting them to higher authorities for prompt resolution. The leader’s expertise lies in their ability to thoroughly analyze the situation, regardless of their personal preferences.

A crucial aspect for a leader is to be an effective listener, recognizing that the most valuable resources within an organization are its people. The outcome of endeavors hinges on the individuals involved. Thus, it is imperative for a leader to create an environment that appeals to and keeps the most skilled, capable, and innovative individuals (Hill & Jones 2004).

To be an effective leader, one must also be a simplifier. The leader should strive to keep things simple, cutting through doubt, debate, and arguments to propose solutions that everyone can comprehend. They should be able to clearly articulate goals and values that are both vivid and important, thus guiding daily behaviors and choices when faced with multiple options.

Managers have a vital role in ensuring that all employees understand and complete their work. It is important for managers to explain tasks clearly, considering the different levels of knowledge and talent among individuals. According to Nelson & Quick (2000), managers are responsible for giving clear instructions and setting specific deadlines for completion. Furthermore, leaders must make decisions with integrity, leaving no room for confusion.

Peter (2004) emphasizes the importance of leaders displaying consistent and firm actions in order to ensure that team members fully comprehend their expectations and carry out their tasks effectively. Failure to establish firmness can result in team members disregarding rules and acting independently, ultimately causing organizations to experience a decline in clarity, credibility, and integrity.

Governance processes are vital for both legal compliance and the success of an organization as they ensure effective coordination of different elements like individuals, equipment, and finances to achieve strategic objectives. However, poorly designed governance processes can have negative consequences (Colley et al. 2003).

Corporate governance encompasses various processes and systems aimed at facilitating effective company management for the collective advantage of all stakeholders, both internal (such as promoters, members, workmen, and executives) and external (including shareholders, customers, lenders, dealers, vendors, bankers, community, government, and regulators). These processes center around addressing structural and organizational issues. The primary objective of corporate governance is to establish a structure that enables directors to supervise corporate matters while remaining responsible to stakeholders.

The primary concern of corporate governance, as emphasized by Daily et al. (2003), is the ethical behavior and conduct exhibited by both the company and its management. The system places significant importance on maintaining transparency, integrity, and accountability in all aspects of management, including the participation of non-executive directors. Corporate governance aims to ensure that efficient company operations are carried out while also prioritizing the interests of shareholders and adhering to ethical principles and values.

Corporate governance involves managing continuity through succession planning, identifying opportunities, facing challenges, and effectively managing changes within the business. It also focuses on allocating resources to prioritize the right issues (Daily et al., 2003). Corporate Governance comprises two elements: Firstly, a long-term relationship that deals with checks and balances, managerial incentives, and communication between management and investors. Secondly, a transactional relationship that involves disclosure and authority matters (Sundaramurthy & Lewis, 2003).

Corporate governance refers to the regulations, processes, customs, and unspoken guidelines that dictate a company’s authority in making managerial decisions pertaining to its stakeholders. These stakeholders include shareholders, creditors, government entities, and employees. It encompasses the financial, legal, and organizational structure that allows companies to optimize long-term shareholder value by expanding, diversifying, restructuring, or ceasing operations as needed (Colley et al., 2003).

The concept of governance in a business organization relates to its fundamental elements, such as its nature, purpose, integrity, and identity. It primarily addresses the organization’s significance, continuity, and fiduciary responsibilities. The main focus is on overseeing and supervising the organization’s strategic direction, socio-economic and cultural environment, external factors, and various stakeholders. Henceforth, corporate governance encompasses particular issues arising from interactions among senior management personnel, shareholders, board of directors, other stakeholders, and society at large.

The exercise of power over the directions of enterprise, the supervision of executive actions, acceptance of a duty to be accountable, and regulations of the affairs of the corporation are dealt with in corporate governance (Farrar 2005). The growth of modern business and the emergence of corporate giants necessitate a professionalized approach to the governance and management of corporations. The changing global corporate scenario also highlights that effective management is not just determined by organizational culture, but also by the mission, vision, and proactive approach of the top management (Watson 2003).

An assumption in governance/strategic leadership is that the choice of various governance structure options and leaders could be linked to firm performance (Dalton et al. , 1999). A crucial question driving this idea is how much a firm’s leadership can effectively implement strategic change to improve financial performance. As pointed out by Dalton and Kesner (1983: 736), “This assumption is doubtful, especially in large organizations. The sheer number of individuals involved, the complexity of the organization, and the range of interests both within and outside the company serve as possible limitations to successful change strategies.”

“Finkelstein and Hambrick (1996) also acknowledge that in large firms, decision-making discretion and effectiveness can be compromised due to the combination of ambiguity, complexity, and competing stakeholder demands. The literature on organizational crises and turnaround further underscores the limitations on leaders’ ability to significantly impact firm outcomes. A key point is that organizational leaders have a significant influence on processes and outcomes mainly during a crisis situation, such as financial decline (Dalton et al., 1998).”

In the context of firms, effective leadership becomes crucial as leaders strive to restore financial stability (Daily, 1994). The relationship between leadership and performance is particularly significant in entrepreneurial firms. Unlike the belief that leadership is restricted in organizational settings, there are aspects of entrepreneurial firms that enable leaders to drive change and enhance performance. Notably, CEOs and directors in smaller firms experience fewer limitations from organizational systems and structures (Meyer & Dean, 1990).

The size of the firm affects managerial discretion. In particular, officers have more influence in smaller firms (Finkelstein & Hambrick, 1996). Additionally, smaller firms may enhance power and concentrate the firm’s planning, core knowledge, and environmental scanning processes (Baysinger & Hoskisson, 1990).

In the subsequent sections, we present an overview of the possible areas where studying governance/strategic leadership in entrepreneurial firms can be valuable. For instance, CEOs in these firms are typically the individuals who founded (or co-founded) the organization (McConaughy et al. 1998). We also include venture capitalists in our examination. Although not all entrepreneurial firms have dealings with venture capitalists, for those that do, these capitalists have a significant impact on firm performance. Additionally, venture capitalists are important stakeholders for entrepreneurial firms as they frequently impose different forms of governance on firms in which they hold equity (e.g., Bruton et al. 1997).

According to the strategic leadership and governance literatures, our analysis includes overviews of CEOs/founders, CEO duality, TMT members, boards of directors, and venture capitalists. In conclusion, it is clear that leadership plays a crucial role in promoting good governance.

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Leadership is the Essence of Fostering Good Governance. (2017, Aug 27). Retrieved from


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