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Crucial Role of Socioeconomic Factors - Term Paper Example

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This paper will discuss the effect of socioeconomic roots has on the upper echelon management’s decision-making process and how that effect along with a cognitive base determines their final decision. And also the socioeconomic factors which will be considered as part of corporate responsibility…
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Crucial Role of Socioeconomic Factors
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 «Leading at the top: The upper Echelon» Introduction Any organized human activity, which is done in-group, will be most times constituted into structure called organization. So, Organization is a structure with a ‘collage’ of humans doing their allocated work under the supervision of a leader, for the benefit of the organization as well as them. These workers will normally be apportioned into different departments for better arrangement or streamlining of work. These workers or employees will be apportioned into different departments or roles according to their educational qualifications, experience, skill, knowledge etc. Then after the recruitment and apportionment is over, it is the duty of the organization to provide the employees a working environment, in which they will work effectively. So, the duty of the organization and its leader is to provide an optimal working environment for its workers. Role of a leader From time immemorial, the success or failure of an organization or any other human activity depends on the role, the leader plays. The leader is the one who can lead humans under him/her to ‘heaven’ or ‘hell’. If the leader follows a set of traits he/ she can ‘sprinkle’ success on many lives, including the workers in his/her organization. The leadership traits should be visible and should be put to effective use when the leader, as a ‘builder’ builds a group and as a ‘founder’ launches an organization. The leader can build a group, by associating individuals who came from the same ‘stable’ like friends, work mates, family members etc and by recruiting individuals with talent, knowledge and attitude. With this ‘living’ group, and the material things like capital, machines, infrastructure, etc the founder cum leader embark on an organization. But, in most cases, a leader will normally take over or preside over or manage an existing organization. That is, the building or recruiting of the ‘group’ of workers as well as the installation of infrastructure, set up, etc, would have already taken place, with the leader only leading and managing the organization along a management team. The leader and the management team of senior executive will play an equal and crucial role. “While the theory suggest that the ultimate responsibility for deciding strategic direction resides with the CEO, ownership of the strategy by senior executives is essential for successful implementation (Bowman and Kakabadse, 1997). This job of taking an existing set up and managing it, brings in set of opportunities as well as challenges, which can be taken care by formulating certain strategies or solutions. “The leader of an organization, using the explicit goals of the organization as a screening device, scans the environment for threats or opportunities. When they are discovered, plans are devised that evaluate alternative methods for exploiting the opportunities or countering threats.” (Rabin et. al, 2000). That is, challenges can be overcome by implementing leadership programs or programs implemented by a leader particularly during the decision making process. Methods: Importance of optimal and apt decisions as part of decision making process With every organization wanting to expand their reach and make an imprint in various markets, there will be enough opportunities for it, to initiate that expansion drive. So, when the organization has enough opportunities, it can set targets and formulate various strategies to achieve those targets. Along with the formulation of new targets and strategies, organizations also have to initiate changes in its overall functioning. The changes can be brought out both by the internal and external environment of the organizations. And the key aspect is, the organizations and its employees will or should be able to adapt or orient themselves towards the targets and should also be in sync with the strategies. So, every organization’s survival and success hinges on how the organization has been able to adapt to the changes in its functioning as well as the changes that might keep happening in the market. “…theoretically a decision maker can arrive at a set of perceptions that suggest a certain choice but discard that choice on the basis of values.” (Hambrick and Mason, 1984). So, formulating and implementing important strategies and needed changes, to guide the employees and then to entice the customers in the market, are the ‘keys’ that opens the door of success and profit for any organization. The decisions which are needed to be taken inside the organization regarding these aspects has to be taken by the leader and the management team with a lot of care, planning, analysis, feedback, etc. “faced with such common decision challenges as information overload, ambiguous cues, and competing goals and objectives, executives’ perceptions of stimuli are filtered and interpreted through cognitive bases and values”. (Carpenter, 2004). Correct decisions have to be taken by the leader and the management team in times of change, to make that change a success. So, for any organization to survive and shine in a competitive and highly evolving or changing environment, the leaders should adapt and orient towards the needs or changes and take apt decision accordingly. So, management of critical resources having uncertain ‘consumption’ rates is perhaps the most common challenge encountered by leaders and they have to adapt themselves according to the situation. (Kumar and Jacobson, 1998). In that type of situations, leader should follow the leadership theory of Situational Leadership, first proposed by Ken Blanchard and Paul Herschey in 1969. The main idea behind this theory is, leaders or managers should adapt and adjust their style of leadership and take decisions according to the ability and dedication of their co-workers. Even though, imposition of leader’s assumptions, as a form of good culture is one of the good leadership traits, it should not be the norm all the times. Because, in organization new situations, new challenges, new problems, etc will keep on coming up, necessitating or demanding new and different decisions and strategies from the leader. So, in different situations, particularly during the process of decision-making, the leader without following a set practice, could place his/ hers thoughts for discussion among the workers and come up with effective decisions incorporating the employees’ inputs. “The successful firms were more likely to use a comprehensive decision-making process. Managers in these firms sought out more advice and considered more alternatives than did managers in poorer performing firms.” (Rabin et. al, 2000). Data: Crucial role of socioeconomic factors Socioeconomics is the relationship between organization’s economic activity and its social responsibility. That is, although all organizations is established and made to function to earn economic benefits, it should not focus on that aspect all the time. Organizations should need to think about its social responsibility along with economic purposes and take apt decision as part of its decision making process. “…decision making typically occurs in changing, dynamic, social contexts, and that researchers interested in decision making in a social context therefore will benefit by considering the relation between creativity and decision making” (Allwood and Selart, 2001). Organizations could not exist like an ‘island’ without any one around. They have to be in the midst of something, changing the lives of many people in the positive direction. But, the sentence ‘changing the lives of people’ could be restricted to only their employees by some companies, but some companies and its leaders apart from changing the lives of its employees, also does something for the society’s well being. “The analysis of the environment can be segmented...There is the issue of the firm's general environment, the broad environment comprising a mix of general factors such as social and political issues”. (Dobson and Starkey, 2004). This should be the motto for all the organizations and importantly its leaders and upper management team. Because, with corpus of finances exceeding in the high ranges in their ‘treasury’ or in bank accounts, it would be feasible and importantly nice to do nice things for the society by launching the decision making process in that direction. Organizations and leaders should view social responsibility in the positive way and should contribute a lot in that direction to the society and its people. Public normally believe in what they see and hear, and if an organization want to make the people believe in them, they have to reach the minds of the people, through their genuine activities as part of the decision making process. This is where the socioeconomic activities with the social responsibility as the main vehicle come into the picture. To make a good impression about the organization, leaders and the upper management team should participate and also make its workers participate in socially responsible activities. Through this way, the organization can make the common people believe in them positively. Also, it will create a good, satisfying image in the minds of the common people, without spending large amounts of money on advertisement. This registration of positive, good and satisfying image will surely help organizations to attract many businesses including ones from governments of countries, which always trust socially responsible organizations. There is no compulsion on the part of leader and management team to imbue social responsibility in their policies, strategies and goals. But, if it were added and certain decision are made in that aspect, it would function as a right ingredient changing the lives of not only the beneficiaries but as the well as the organization’s image and profit. “Decision making regarded as an between decision maker, problem and context and thus placed a social environment.” (Ranyard et. al, 1997). Results and Discussion In the case of running an organization, the apt decisions have to be taken by the leader regarding the staffing function. It is necessary that the leader and the upper management team must ensure a constant availability of sufficient number of efficient employees from managers, executives, technical persons to laborers, for the efficient functioning of the organizations. The important decision that can be taken by the leader in this aspect, which will be associated to the socioeconomic factor, is the recruitment of employees from diverse backgrounds. That is, when the leader of organization particularly Multinational companies decides to recruit employees, the decision making process has to be adapted based on certain socioeconomic factors. When MNC enters foreign territories, it will analyze the foreign market fully and recruit employees accordingly. “…to develop its internationalization processes, an MNC acquires the necessary knowledge about foreign markets and operations mainly from experience in operating abroad over time and with varying entry modes from exports to wholly owned subsidiaries. This knowledge of foreign activities resides with the managers that have been involved with the MNC's internationalization.” (Athanassiou and Roth, 2006). In a multinational company, the workforce recruited as part of the staffing process will have to show a lot of diversity due to socioeconomic reasons. As MNC’s are organizations which are established on foreign shores, it would have ‘collage’ of workers. That is, MNC will be composed of workers from three national or country categories, when they are recruited to fulfill the various needs of the MNC. The employees from the parent country where the firm is usually headquartered or based (or came from) are called Parent Country nationals (PCNs). The employees from the host country where a subsidiary or MNC may be located are called host country nationals (HCNs). Finally, there will be third or other countries which may be the source of labor, finance, research and development, and the employees from these countries are called third country nationals (TCNs). While recruiting the need employees for the organization, the leader should try to include all three groups of workers or at least the first two groups of workers as part of social corporate responsibility. MNCs mainly set up their subsidiaries or units in other countries, to tap the resources of the host country and thereby earn benefits from it, and so it is normal or socially necessary for those MNC to give a share of their benefits, back to the people of the host country. The benefits for the HCNs will be mainly given back by the MNC and its leader, through maximum recruitment of them. Apart from fulfilling the unwritten socioeconomic rule of giving employment to the locals, this recruitment procedure will also benefit the MNC in other ways by providing them surplus and some times cheap labor. So, MNC and importantly its leader by deciding to recruit HCNs can strike two blows with a single stone. After the local or appropriate employees and managers are recruited and apportioned, according to the needs of the MNCs, the MNCs will start to work. And when the role of these local managers and employees are analyzed from the perspective of decision making and socioeconomic angle, the leaders can incorporate three theories. They are: limited autonomy, variable autonomy and negotiated autonomy. According to the theory of limited autonomy, the degree of autonomy given to the employees by the leader will depend on the MNC's approach to globalization. The theory of variable autonomy states that the degree of autonomy given to the leader as part of socioeconomic root varies with the degree of internationalization, the company plans to indulge in. Organizations and its leader who adopt the negotiated strategy can afford to have centralized decision-making with the employees also contributing a lot to the decision making process and in coming up with optimum results. When the organization is functioning, the leaders should take decisions to make the organization as well as its employees ethically perfect in relation to the socioeconomic factor. If the leader is able to do that, they can make the employees exhibit good discipline, hard work and thus high productivity. An organization will mainly be judged by the success or failure it accomplishes. Judged in the sense, the organization will be appreciated or hated by the success or failure, they get. In today’s world, the success of an organization is mostly correlated with its achievement in the form of high profits, maximum market share, etc. Even though this perspective is not at all wrong, the bone of contention is, how a company achieves those positive things through a decision making process. Whether, they achieve those things with apt decisions incorporating the ethical socioeconomic aspects or by the ways of fraud, illegality, etc? The primary focus of any organization is to give a clean management based on preset socioeconomic ethics in its decisions. For that, organizations should structure itself, to enable optimal decision making processes and incorporate socioeconomic factors in those processes. Organization is a ‘structure’ with a ‘collage’ of humans doing their allocated work under the supervision of a leader, for the benefit of the organization as well as them. These workers will normally be apportioned or “structurized” into different departments for better arrangement, streamlining of work and also to incorporate ethics in an optimal manner. That is, while structuring into different departments, the leader can establish specific cells within the department to give the employees the option of giving their inputs for the decision making processes. Those cells by collecting and congregating all the inputs, can use it in the decision making process. While collecting the inputs, care should be taken to avoid discrimination on any irrelevant aspects and all the departments should be given importance. Also, when the leader establishes a physical environment or structure, where the employees are treated equally without any discrimination based on background, designation, salary, etc, then also socioeconomic ethics can be incorporated into the organization. “Moreover, the increasing disparity between the compensation of executives and lower-level employees becomes normatively irrelevant in an environment of corporate downsizing and shareholder value in which the legitimate and admired business behaviors are characterized by the marginalization of lower-level employees and the social and psychological distancing of executive officers from the persons they employ.” (Dallas, 2002) Cooper’s model of responsible administration requires socioeconomic ethical decision-making skills on the part of the leader or management. That is, when the decision making process is initiated, as part of ethical practice, the leader should productively involve the employees as part of the process. If all the workers without any discrimination (including HCNs, TCNs and PCN’s) are involved in the management process including decision making process, they could provide valuable suggestions, and importantly will amplify their motivation and work even harder to actualize the given suggestions. The ethical tactic of interacting and then involving the workers in the decision-making process will surely provide organizations good results. This is because, if a leader during the process of decision-making puts for discussion his/hers thoughts and strategies among the workers, it will have unexpected at the same time favorable results, because one may never know from where, when and importantly from whom a great idea could come. So, involving and allowing the workers to play a part in the decision-making process, but at the same time being the final authority is a good method, which leaders can implement for increasing the motivational levels of the workers and also to make them experienced in their job. That is, as specified by the Cooper model, when the workers keep on participating in all the important decision making process, they will start to understand all the intricacies of organization functioning. This way, they will utilize their minds to formulate effective objectives, plans & strategies, and importantly they will gain maximum confidence, because they will be happy with the fact, that they have contributed some thing purposeful to organization or leader or management’s decision making process. So, organization’s socioeconomic ethical tactic will optimize the performance of the workers and thereby their productivity as well. Importantly, the involvement of workers will raise the ethical image of the organization, optimizing their performance as well. Conclusion Unison of humans into organizations, with an urge to usher that organization into a successful endeavor will actualize, if the organization and its employees show undaunted, effective and importantly adaptive conduct. That is, organizations and its leaders should initiate the decision making process at appropriate times, so that socioeconomic factors can be positively tuned to the decision making process. And, if all the parts or departments of an organization conduct this way with the leader and the top echelon management team leading the way, then any organization can have a ubiquitous presence all over the world, and can importantly reach the top echelons References Allwood, C M and Selart, M. (2001). Decision Making: Social and Creative Dimensions. Springer. Athanassiou, N A and Roth, L. (2006) International experience heterogeneity effects on top management team advice networks: A hierarchical analysis. Management International Review, 46 (6) Bowman, B and Kakabadse, A. (1997). Top management ownership of the strategy problem. Long Range Planning Journal, 30 (2). Carpenter, M A. (2004) Upper Echelons Research Revisited: Antecedents, Elements, and Consequences of Top Management Team Composition. Journal of Management. 30 Dallas, J. (2002). The New Managerialism and Diversity on Corporate Boards of Directors. Tulane Law Review, 76. Dobson, P and Starkey, K. (2004). Strategic Management: Issues and Cases. 2nd edition. Blackwell Publishing. Hambrick, D C and Mason, P A. (1984). Upper Echelons: The Organization as a Reflection of its Top Managers. Academy of Management Review, .9 (2) Kumar, A and Jacobson, S H. (1998). Optimal and Near-Optimal Decisions for Procurement and Allocation of a Critical Resource with a Stochastic Consumption Rate. University of Michigan. Business School, Working Paper. Rabin, J., Miller, G and Hildreth, W. B. (2000). Handbook of Strategic Management. CRC Press. Ranyard, W., Crozier, R and Svenson, O. (1997) Decision Making: Cognitive Models and Explanations. Routledge. Read More
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