Behavioural implementation

BEHAVIOURALIMPLEMENTATION

Opening Case Opening case Opening case

“several aspect of behavioural implementation that works behind the scenes adding to its reputation as a company that is respected globally for its value and corporate governance”

INFOSYS CORPORATE GOVERNANCE

TransparencySatisfying the spiritClear communication to outside world of how

company run internally

Facts

company developed guideline for corporate governance

Rated highly on C.G. By national credit rating agency

8 independent director out of 15 directors7 internal directors are all the founders

Succession planning

nomination committee of the board does succession planning

all 7 founders are professional Appointment of strategic leaders is based on

professional standard rather than family relationship.

4th time ranked as most admirable companyIt operates the behavior of strategist

STAKEHOLDER

Stakeholder and strategic management

“Stakeholder are the individuals and group who can affect and are affected by, strategic outcomes achieved and who are enforceable claim on a firm performance.”

Functions of stakeholder

• It give support to the strategic management of organization

• Oppose the top of management in strategy formulation and implementation

“ managing stakeholder relationships is important and critical for the strategic management of an organisation”

Organisational stake holder relationship

External shareholder

CustomerSuppliers

Gov. regulatorsBank/creditorsTrade unions

Employers organisationMass media

NGO/ activistsLocal communities

General public

Internal stakeholders

ShareholdersEmployeesManagersdirectors

organisation

Contributions/supports

Expectations/claims

Identify the stakeholders

Identify the stakeholders Expectations, interests, concerns

Identify the claims of stakeholders Are likely to make on the org.

Stakeholder analysis

Identify the stakeholders who are impFrom the org. prospective

Identify the strategic challenges involvedIn managing the stakeholder relationship

Stakeholder analysis

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Profitable Org.

Average return

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Organization notDoing well

Engagement tactics forstakeholder

“The process of fostering an effective relationship with the stakeholder is termed as stakeholder engagement and it is most critical part of the stakeholder management.”

Agency theory and stewardship theory

• Agency theory- When a person delegates the authority to another, an agency relationship is created.

• Stewards theory- an alternative approach to explaining the relationship between the owners and managers of the organization is called stewardship theory.

CORPORATE GOVERNANCE

Corporate governance

According NFCG “it is concerned with the extent to which organizations are managed in an open and honest manner. The corporate governance mechanisms are designed to create conditions that support the stakeholder of an organization being managed in an open and honest manner”


• Key aspect of good corporate governance , according NFCG

1. Transparency of corporate structures and operations2. The accountability of managers and the board to

shareholder3. Corporate responsibility towards employees, creditors,

suppliers and local communities where the corporation operates


The burgeoning literature on corporate governance and practice around the world suggest several mechanisms that are being used to ensure good corporate governance. Among these are organisational mechanism


• Having an effective board of directors• Fostering transparency through disclosure of

information related to the organisation’s financial and operational performancnce

• Framing a code of governance and committing the organisation to its implementation


• Designing sound internal control systems• Instituting effective auditing and evaluation

system within the organization• Having proper risk management procedures in

place• Designing fair compensation polices for

managers

Relating corporate governance

• Strategic management• Strategic intent• Strategic formulation• strategic implementation• Strategy evaluation

BOARD OF DIRECTORS

Role of board of directors

• Ultimate Legal authority of organization vest with the board of directors

• Members of board are responsible for providing guidance and establishing the directives according to which the organization can operate

Board of directors & strategic management

• Determine the company’s purpose & ethics• Decide the direction, that is, the strategy• Plan• Monitor and control managers and the CEO• Report and make recommendations to

shareholders

STRATEGIC LEADERSHIP

Strategic leadership

• Corporate level managers • Business level managers• Functional level managers• Operational level

Task of strategic leaders

• Determining strategic direction• Effectively managing the organisational

resources portfolio• Sustaining an effective organisational culture• Emphasising ethical practices• Establishing balanced organisational controls

The styles of strategic leaders

• Kurt lewin – democratic , autocratic and laissez faire style.

Role of strategic leaders

• Role of chief executive officer• Role of senior managers • Role of business-level executives• Role of functional and operational managers

Developing strategic leaders

• Choice of future strategic• Career planning and development• Succession planning

Corporate Culture and

Strategic Management

Composition of Culture

Beliefs

Values

Norms

Beliefs are considered to be assumptions about reality and are derived and reinforced by experience.

Values are considered to be assumptions about ideals that are desirable and worth striving for.

Norms are expected standards of behavior.

Impact of culture on corporate life

As a strength: facilitates communication decision making and control create cooperation and commitment

Building of a strong culture

Founder or an influential leader who established desired values.

Sincere and dedicated commitment.

Concern for stakeholders.

Strategy Culture Relationship

To ignore corporate culture

To adapt strategy implementation to suite corporate culture

To change the corporate culture to suit strategic requirements

To change the strategy to fit the corporate cultures

Approaches to create a strategy-supportive culture:

Corporate Politics and

Power

Understanding Politics and Use of Power

Reward PowerCoercive Power Legitimate Power Reference PowerExpert Power

Power and Politics

• Negative• Positive

Strategic use of power and politics

Strategic use of power and politics

Accept the inevitability of politics being there in the organization

Understanding the power structureLead strategyBe sensitive and alert to political signalsReward organizational commitmentUse openness and honesty

Corporate politics and power in the Indian context

Nature of Indian society

Higher level of enviousness

Pervasive enviousness

Personal values

Personal values refers to a conception of what an individual or group regards as desirable.

Business ethics

It is the study of how personal moral norms apply to activities and goals of a commercial enterprise.

It is concerned primarily with the relationship of business goals and techniques to specify human ends.

Personal values and business ethics

A major task of leadership is to inculcate personal values and impart a sense of business ethics to the organizational members.

Personal values and business ethics seek to prevent an indiscriminate use of power politics within organization.

Values : Principles or standards of behavior.

Ethics : The rules of conduct recognized in respect to a particular class of human actions or a particular group,

culture.

Strategy : Strategists take strategic decisions on the basis of values and ethics.

Advantage of business ethics and values

Competitive advantageAttraction of investment and human capitalRetention of valuable employees

Inculcating values and ethics

Transparency in the recruitment and selection

Training and educational programsCommunication of values and ethicsConsistent nurturing of valuesPaying special attention to ethically-

sensitive activities

Reconciling Divergent Values.

Modifying Values to Create Consistency.

Social responsibility Social responsibility is an organization's obligation to

benefit society in ways that transcend the primary business objective of maximizing profits.

Responsibility towards owners Responsibility towards Investors Responsibility towards employees Responsibility towards customers Responsibility towards competitors Responsibility towards suppliers Responsibility towards Government

Social responsibility in Indian context

Models of CSR Operating In India

Gandhian model: voluntary commitment to public welfare based on ethical awareness of social needs.

Nehruvian model: state-driven policies including state ownership and extensive regulation and administration

Contd…

Milton-friedman model: corporate responsibility primarily focused on owners objectives

Freeman model: stakeholders responsiveness which recognizes direct and indirect stakeholders interests.

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