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Developmental Theory by manasse While there is no specific theory from which leader development derives, developmental theory taps into two aspects of development: learning and change. Development is a form of change and it is impossible for a leader to develop without change occurring (Day & Zacarro, 2004). Learning is defined as the attainment of a permanent change in a person because of practice or experience, which then drives change and development (Day & Zacarro, 2004). Learning stems from two traditions: a permanent change in behavior following experience based on behaviorism, and a change in or creation of new mental models based on Gestalt psychology. Behaviorism allows for performance to be used as an indicator of a leader’s behavior. In contrast, Gestalt psychology examines the creation of new mental models that arise from experience, which can help a leader develop their intrapersonal competence. Together, behaviorism and Gestalt traditions are thought to be complementary in the fact that development comes from both changing mental models and creating new behaviors (Hogan and Warrenfeltz, 2003). Differentiating Between Leader Development and Leadership Development Leader development is described as one aspect of the broader process of leadership development (McCauley et al., 2010). Leadership development is defined as the expansion of a group’s capacity to produce direction, alignment, and commitment (McCauley et al.), in contrast to leader development which is the expansion of a one’s ability to be effective in leadership roles and processes. Further distinctions between the two can be made by looking at components of each model. Leader development focuses on developing individual knowledge, skills, and abilities (human capital), whereas leadership development focuses on building networked relationships (social capital) among individuals in an organization. Leader development keys in on the assumption that effective leadership occurs through the development of individual leaders, whereas leadership development is a function of the social resources that are rooted in relationships (Day, 2000). In leader development, the focus is on intrapersonal skills of self-awareness, self-regulation, and self-motivation; leadership development focuses on interpersonal skills of social awareness and social skills (Day, 2000). Day (2000) argues that what most organizations term as leadership development should be more accurately labeled as leader development. Organizations cannot choose one or the other approach, but instead a bridge must be anchored on either side of leader and leadership development for effective development to occur (Kegan, 1994). Therefore, it is important to develop the intrapersonal capabilities to serve as a foundation for interpersonal competence and link both leader and leadership development together. Differentiating Between Leader Development and Management Development Management development and leadership development can often be confused as one. Although they also can overlap, there are key differences between the two that are not to get confused with leader development. Leadership processes allow groups of people to work together, whereas management processes are considered to be position and organization specific (Keys & Wolf, 1988). Management development includes managerial education and training (Latham & Seijts, 1998; Mailick, Stumpf, Grant, Kfir, & Watson, 1998). There is a greater emphasis on gaining specific types of knowledge, skills,and abilities to enhance task performance in management roles (Baldwin & Padgett,1994; Keys & Wolfe, 1988; Wexley & Baldwin, 1986). Also, management development’s goal is to apply proven solutions to problems giving it more of a training orientation. Management development focuses more on the formal managerial roles. Leader Development Model McCauley, Van Veslor, and Ruderman (2010) explain a two-part model for developing leaders. The first part illustrates three elements that combine to make developmental experiences stronger: assessment, challenge and support. Assessment lets leaders know where they stand in areas of strengths, current performance level, and developmental needs. Challenging experiences are ones that stretch a leader’s ability to work outside of their comfort zone, develop new skills and abilities, and provide important opportunities to learn. Support, which comes in the form of bosses, co-workers, friends, family, coaches and mentors, enables leaders to handle the struggle of developing. The second part of the leader development model (McCauley et al., 2010) illustrates that the leader development process involves a variety of developmental experiences and the ability to learn from them. These experiences and the ability to learn also affect each other in that a leader with a high ability to learn will search for developmental experiences and through developmental experiences leaders will increase their ability to learn. It is also important to note that the leader development process is rooted in a particular leadership context which includes elements such as age, culture, economic conditions, gender of the population, organizational purpose and mission, and business strategy (McCauley et al.). This environment molds the leader development process. Along with assessment, challenge and support, leadership context are important aspects of the leader development model. Intrapersonal Competencies There are three types of intrapersonal competencies related to leader development: self-awareness (emotional awareness, self-confidence, and accurate self-image), self-regulation (self-control, trustworthiness, adaptability and personal responsibility), and self-motivation (commitment, initiative, and optimism) (Day, 2000).

Self-Awareness In today’s changing environment, the two personal capabilities that allow a leader to learn new skills or competencies are self-awareness (identity) and adaptability (Briscoe & Hall, 1999; Hall, 1986a, 1986b, 2002). Leader development is personal development and involves the process of becoming more aware of one’s self (Hall, 2004). Self-awareness is the extent to which people are conscious of various aspects of their identities and the extent to which their self-perceptions are congruent with the way others perceive them (Hall, 2004). Self-awareness has been referred to as “the first component of emotional intelligence” and discusses how it is “the ability to recognize and understand your moods, emotions, and drives, as well as their effects on others” (Goleman, 1998, p. 95). This is vital for a leader to be able to evaluate themselves to recognize their impact on their thinking and decisions as well as on other individuals.

Self-Regulation Self-regulation has been conceptualized in proposed models by Tsui and Ashford (1994) as well as Wood and Bandura (1989). The models have some differences but agree on a fundamental sequence where individuals (a) regulate their attention and effort around self-set goals or assigned goals, (b) take action to achieve their goals, (c) obtain their goals or their performance strategy, if necessary, to maintain or enhance their progress toward their goals and (e) recommence the cycle. Tsui and Ashford (1994) describe the procedure as setting the goal, behaving, detecting a discrepancy, and lastly reducing any discrepancy. This process is vital in leader development because it can have both internal and external effects. As Sosik, Potosky, and Jung (2002) stated that, “individuals desire congruence between their own and others’ perceptions of their behavior, and, therefore, set and work toward goals to reduce perceptual discrepancies, gain congruence, and improve their effectiveness” (p. 212). This is similar to the intrapersonal competence of self-awareness as individuals want their own perception of themselves be congruent with those of others, both outlining importance for leader development.

Self-Motivation Self-motivation involves having higher levels of identification to be motivated to go beyond contracts and exchanges in both their own development and performance (Hall, 2004). Together, the capabilities of self-awareness, self-regulation and self-motivation allow for enhanced individual knowledge, trust, and personal power, which can be seen as fundamental to create in a leader (Zand, 1997).

Modes of Development Leader development takes place through multiple mechanisms: formal instruction, developmental job assignments, 360-degree feedback, executive coaching, and self-directed learning (Boyce, Zaccaro & Wisecarver, 2009; Day, 2000). These mechanisms may occur independently, but are more effective in combination.

Formal Training Organizations often offer formal training programs to their leaders. Traditional styles provide leaders with required knowledge and skills in a particular area by utilizing coursework, practice, “overlearning” with rehearsals, and feedback (Kozlowski, 1998). This traditional lecture-based classroom training is useful, however, the limitations include the leader’s ability to transfer the information from a training environment to a work setting.

Developmental Job Assignments Following formal training organizations should assign leaders to developmental jobs that target the newly acquired skills (Zacarro & Banks, 2004). A job that is developmental is one in which leaders learn, undergo personal change, and gain leadership skills resulting from the roles, responsibilities and tasks involved in that job (McCauley & Brutus, 1998). Developmental job assignments are one of the most effective forms of leader development (Ohlott, 2004). After training a leader should fist complete a “stamping-in” assignment”. A “stamping-in” assignment is one in which the leader masters the new skills before moving on to a “stretch assignment” (Zacarro & Banks). The “stretch” or developmental assignment challenges the leader’s new skills and pushes them out of their comfort zone to operate in a more complex environment involving new elements, problems and dilemmas to resolve (Ohlott, 2004). A truly development assignment doesn’t depend on existing skills, it challenges the leader to understand his or her current limitations and develop new skills (Zaccaro & Banks). These assignments should be given to leaders who do not possess the skills to succeed at the current assignment, but who have the ability to succeed at higher levels (Zaccarro & Banks). Developmental assignments should be accompanied by appropriate feedback that assesses the leader’s strengths and weaknesses in order to be successful (Zaccaro & Banks).

Three Hundred and Sixty-degree Feedback Three hundred and sixty-degree feedback is a necessary component of leader development which allows leaders to maximize learning opportunities from their current assignment. It systematically provides the leader with perceptions of his or her performance from a full circle of viewpoints including subordinates, peers, superiors (Day, 2000), and the leader’s own self-assessment (Zaccaro & Banks, 2004). With many different sources from which to interpret information, the messages may differ and be difficult to interpret. However when several different sources concur on a similar perspective, whether a strength or weakness, the clarity of the message increases (King & Santana, 2010). For this mechanism to be effective, the leader must accept feedback and be open and willing to make changes. An effective way to facilitate the feedback through open discussion and to help facilitate change is through coaching (Day, 2000).

Executive Coaching The goal of executive coaching focuses on enhancing the leader’s effectiveness along with the effectiveness of the team and organization (Frankovelgia & Riddle, 2010). It involves an intense one-on-one relationship designed at learning important lessons through assessment, challenge, and support. Although coaching is sometimes aimed at correcting a fault, it is being used more and more to help already successful leaders move to the next level of increased responsibilities, and new and complex challenges. Coaching must move toward measurable goals that contribute to individual and organizational growth. Day (2000) proposes that leaders should be carefully selected, willing to change, and matched with a compatible coach in order for coaching to be most effective.

Self-directed Learning Self-directed learning is an individual leader’s aim in identifying the focus of development, specifying the developmental processes, and identifying the resources (Boyce, Zaccaro, & Wisecarver, 2010). Self-development is the process of not only acquiring new skills but also gaining an understanding of the leader’s environment and self through new experiences and activities, such as seeking out mentors or developmental job assignments (Boyce, Zaccaro, & Wisecarver, 2010). Application The Army has been conducting leader development studies since as early as 1971; studies include a review of education and training for Army officers, and professional development of officers, warrant officers, and non-commissioned officers. In 1987, the Army Chief of Staff directed a comprehensive leader development study to be conducted which produced the Army’s leader development system, a support system to monitor and adapt to the effects of change on Army leader development, and a leader development action plan (U.S. Army, 1994). The U.S. Army Research Institute’s (ARI) research topics include training, leader development, and soldier research and development. One area ARI’s leadership development program focuses on is ways to provide accelerated development of Army leaders EVOLUTION OF FINANCIAL MANAGEMENTFinancial management emerged as a distinct field of study at the turn of this century. Its evolution may bedivided into three broad phases (though the demarcating lines between these phases are somewhatarbitrary): the traditional phase, the transitional phase, and the modern phase.The traditional phase lasted for about four decades. The following were its important features:1. The focus of financial management was mainly on certain episodic events like formation, issuance ofcapital, major expansion, merger, reorganization, and liquidation in the life cycle of the firm.2. The approach was mainly descriptive and institutional. The instruments of financing, the institutionsand procedures used in capital markets, and the legal aspects of financial events formed the core offinancial management.3. The outsiderâ€™s point of view was dominant. Financial management was viewed mainly from thepoint of the investment bankers, lenders, and other outside interests.The transitional phase begins around the early forties and continues through the early fifties. Though thenature pf financial mgmt during this phase was similar to that of the traditional phase, greater emphasiswas placed on the day to day problem faced by the finance managers in the area of funds analysis,planning, and control. These problems however were discussed within limited analytical framework.The modern phase begin in mid 50s and has witnessed an accelerated pace of development with theinfusion of ideas from economic theories and applications of quantitative methods of analysis. Thedistinctive features of modern phase are:* The scope of financial management has broadened. The central concern of financial management isconsidered to be a rational matching of funds to their uses in the light of appropriate decision criteria* The approach of financial management has become more analytical and quantitative* The point of view of the managerial decision maker has become dominantSince the beginning of the modern phase many significant and seminal developments have occurred inthe fields of capital budgeting, capital structure theory, efficient market theory, optional pricing theory,agency theory, arbitrage pricing theory, valuation models, dividend policy, working capital management,financial modeling, and behavioral finance. Many more exciting developments are in the offing makingfinance a fascinating and challenging field. Goals of financial management: Financial theory in general rests on the premises that the goal of the firm should be maximized the valueof he firm to its equity share holders. This means that the goal of the firm should be to maximize the sharevalue of the equity share which represents the value of the firm to its equity share holders. It appears toprovide a rational guide for business decision making and promote an efficient allocation of resources inthe economic system.Savings are allocated primarily on the basis of expected returns and risk and the market value of thefirmâ€™s equity stock reflects the risk return trade off investors in the market place. If a firm makesdecision aimed at maximizing the market value of its equity, it will raise capital only when its investmentswarrant the use of capital from the overall point of the economy. This suggests that resources areallocated optimally.If a firm does not pursue the goal of shareholders wealth maximization, it implies that its action results ina sub optimal allocation of resources. This in turn leads to inadequate capital formation and lower rate ofeconomic growth.Equity shareholders provide the venture capital required to start a business firm and appoint hemanagement of the firm indirectly through the board of directors.. Therefore it is obligatory on the part ofcorporate management to take care of the welfare of equity shareholders Definitions of Financial Management[edit] "Planning is an inextricable dimension of financial management. The term financial management connotes that funds flows are directed according to some plan." By James Van Morne[1] "Financial management is that activity of management which is concerned with the planning, procuring and controlling of the firm's financial resources. " By Deepika &Maya Rani “Financial Management is the Operational Activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operation.” By Joseph Massie “Business finance deals primarily with rising administering and disbursing funds by privately owned business units operating in non-financial fields of industry.”– By Kuldeep Roy “Financial Management is an area of financial decision making, harmonizing individual motives and enterprise goals." -By Weston and Brigham “Financial management is the area of business management devoted to a judicious use of capital and a careful selection of sources of capital in order to enable a business firm to move in the direction of reaching its goals.” – by J.F.Bradlery “Financial management is the application of the planning and control function to the finance function.” – by K.D. Willson “Financial management may be defined as that area or set of administrative function in an organization which relate with arrangement of cash and credit so that organization may have the means to carry out its objective as satisfactorily as possible." - by Howard & Opton.[2] Business finance can be broadly defined as the activity concerned with planning, raising, controlling and administering of funds and in the business. “ by H.G Gathman & H.E Dougall Financial management is a body of business concerned with the efficient and effective use of either equity capital, borrowed cash or any other business funds as well as taking the right decision for profit maximization and value addition of an entity.- Kepher Petra; Kisii University. Finance management not only for the business, but also for every expenses. Like its for the home base expenses or the government expenses. The government also need to manage the finance for the develop of the country and the household also need to manage their expenses properly - By Vinod Verma "Financial management refers to proper and efficient use of money" and it plays a significant role in analyzing to invest in profitable business enterprise..Return on Investment must be greater than the invested amount..By Ibrar Alam Objectives of Financial Management[edit] Profit Maximization occurs when marginal cost is equal to marginal revenue. This is the main objective of Financial Management. Wealth maximization means maximization of shareholders' wealth. It is an advanced goal compared to profit maximization.[3] Survival of company is an important consideration when the financial manager makes any financial decisions. One incorrect decision may lead company to be bankrupt. Maintaining proper cash flow is a short run objective of financial management. It is necessary for operations to pay the day-to-day expenses e.g. raw material, electricity bills, wages, rent etc. A good cash flow ensures the survival of company. Minimization on capital cost in financial management can help operations gain more profit.

Scope of Financial Management[edit] Estimating the Requirement of Funds: Businesses make forecast on funds needed in both short run and long run, hence, they can improve the efficiency of funding. The estimation is based on the budget e.g. sales budget, production budget. Determining the Capital Structure: Capital structure is how a firm finances its overall operations and growth by using different sources of funds.[4] Once the requirement of funds has estimated, the financial manager should decide the mix of debt and equity and also types of debt. Investment Fund: A good investment plan can bring businesses huge returns.Outline of corporate finance[edit] The primary goal of financial management is to maximize or to continually increase shareholder value.[3] Maximizing shareholder value requires managers to be able to balance capital funding between investments in projects that increase the firm's long term profitability and sustainability, along with paying excess cash in the form of dividends to shareholders. Managers of growth companies (i.e. firms that earn high rates of return on invested capital) will use most of the firm's capital resources and surplus cash on investments and projects so the company can continue to expand its business operations into the future. When companies reach maturity levels within their industry (i.e. companies that earn approximately average or lower returns on invested capital), managers of these companies will use surplus cash to payout dividends to shareholders. Managers must do an analysis to determine the appropriate allocation of the firm's capital resources and cash surplus between projects and payouts of dividends to shareholders, as well as paying back creditor related debt.[3][4] Choosing between investment projects will be based upon several inter-related criteria. (1) Corporate management seeks to maximize the value of the firm by investing in projects which yield a positive net present value when valued using an appropriate discount rate in consideration of risk. (2) These projects must also be financed appropriately. (3) If no growth is possible by the company and excess cash surplus is not needed to the firm, then financial theory suggests that management should return some or all of the excess cash to shareholders (i.e., distribution via dividends).[5] This "capital budgeting" is the planning of value-adding, long-term corporate financial projects relating to investments funded through and affecting the firm's capital structure. Management must allocate the firm's limited resources between competing opportunities (projects).[6] Capital budgeting is also concerned with the setting of criteria about which projects should receive investment funding to increase the value of the firm, and whether to finance that investment with equity or debt capital.[7] Investments should be made on the basis of value-added to the future of the corporation. Projects that increase a firm's value may include a wide variety of different types of investments, including but not limited to, expansion policies, or mergers and acquisitions. When no growth or expansion is possible by a corporation and excess cash surplus exists and is not needed, then management is expected to pay out some or all of those surplus earnings in the form of cash dividends or to repurchase the company's stock through a share buyback program.[8][9]