The Importance of Stakeholder Approach in Leadership- Ethics Decision-Making and Interests

The Importance of Stakeholder Approach in Leadership- Ethics Decision-Making and Interests

What are the reasons for encouraging leaders to use the stakeholder approach in their thinking?

Businesses thrive or fail because of stakeholder inputs. Essential stakeholders, such as shareholders, employees, and customers, determine if an organization will succeed or not. As such, it is important to prioritize the mentioned stakeholders by including them in key decision-making platforms. The stakeholder steers the company, deciding if it should progress or not based on their actions (Harrison et al., 2015). For instance, when deciding on a new venture to invest in, it is necessary for leaders to include thinking from shareholders as they will need their funds to achieve the feat mentioned. Similarly, when changing internal business practices, leaders should include thinking from employees, as they will be the ones executing the change and can make it successful or sabotage it (Roszak, 2015). Therefore, businesses should include stakeholder thinking in their decision-making for mentioned reasons.

What might be some of the ethical difficulties if the stakeholder thinking was not used?

When making decisions in an organization, it is essential to include stakeholder thinking as an ethical business practice. Companies must ensure to prioritize all stakeholders’ concerns, failure to which ethical concerns will arise. For instance, it is unethical for a business to provide a clean environment to please community members and hurt profits that shareholders depend on (OpenStax College, 2018). Further, it is wrong for an organization to push for increased sales revenue by giving employees impossible targets to achieve or ensuring they are under unnecessary pressure. Therefore, failure to include stakeholders in key decision-making in businesses is unethical for reasons explained.

How might personal interest and the interests of others enter into the decision-making process?

When making decisions in an organization, it is possible for personal interests to interfere. For instance, an executive may push for a business to acquire a certain firm because they will be promoted to head its incorporated department, even if the activity may cost the business millions of dollars that may be spent in bettering production processes (Lemoine et al., 2021). Other key decision-makers may reject the proposal above in favor of inculcating a radical change in production that will attract more customers in the long run, achieving business goals, mission, and vision quickly. The provided example shows how it is possible for personal interests to mix with the interests of others during decision-making in a business.

References

Harrison, J., Freeman, R. E., & Cavalcanti Sá de Abreu, M. (2015). Stakeholder theory as an ethical approach to effective management: Applying the theory to multiple contexts. Review of Business Management, 858-869. https://doi.org/10.7819/rbgn.v17i55.2647

Lemoine, G. J., Eva, N., Meuser, J. D., & Falotico, P. (2021). Organizational performance with a broader focus: The case for a stakeholder approach to leadership. Business Horizons, 64(4), 401-413. https://doi.org/10.1016/j.bushor.2020.10.007

OpenStax College. (2018). Ethical Decision-Making and Prioritizing Stakeholders. In Business Ethics. Pressbooks. https://opentextbc.ca/businessethicsopenstax/chapter/ethical-decision-making-and-prioritizing-stakeholders/

Roszak, C. (2015). Taking a Transformative Leadership Approach to Stakeholder Trust [Unpublished doctoral dissertation]. Walden University.
https://scholarworks.waldenu.edu/cgi/viewcontent.cgi?article=1330&context=dissertations

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What are the reasons for encouraging leaders to use the stakeholder approach in their thinking?
What might be some of the ethical difficulties if the stakeholder thinking was not used?

The Importance of Stakeholder Approach in Leadership- Ethics Decision-Making and Interests

How might personal interest and the interests of others enter into the decision-making process?