Relationship Between Strategic Management And Leadership Management Essay

Establish the relationship between strategic management and leadership in relation to achieving an organizations performance using relevant academic resources

The Role of strategic management in leadership

Businesses involve the setting up of goals and strategies in the interest and upon the approval of stakeholders [1] . Strategic management has the objective of assessing these goals and strategies [2] as implemented by top level management. It also assesses how these are performing against external factors (Nag, et al., 2007); and therefore has the purpose of identifying the goals and action of an organization. According to Lamb (1984) strategic management is a process that goes on constantly especially since it involves a high level of decision making as they arise rather than for the future (A.Steiner, 1979).

In addition, strategic management involves a skilled execution of strategies set up the board of directors of a company. However, the skill to execute the strategic plan of a company requires solid leadership. Among the trades of leadership one finds the ability to motivate employees within the company in order for them to act on and perceive the goals of a company in a positive way. Leadership also requires knowing the organization well. This brings with it the ability to put forward business strategies recommendations which providing solutions for priority concerns. The leader has to sell them to the Board.

Optimal and high standard performance is the goal/reward behind strategic management and this is its role its place in contemporary business. In brief, strategic management and leadership are the heart behind an organization’s success. Like in all other fields the level/ability of strategic management employed can make or break a company.

The Role of Strategic Management in Establishing Organizations Goals and Objectives

Strategic management looks at the objectives, goals and strategies of an organization. A meticulous analysis [3] of the organization’s strong (Hamel, 1989)and weak points (Barron, 2010) usually takes place on a hierarchical level. Alongside this assessment, a plan of action establishing short and long-term objectives [4] , bearing the period dates within which and details of how they should be accomplished is drawn up. The unstable environment including unforeseeable market conditions are also acceptable criteria for a strategic leader. Therefore, it is the method adopted to assess the operative element of an organization to its targets that makes a difference. Hence, the leadership approach [5] applied assumes paramount importance as the method applied invariably depends on its promulgator. According to Dr. Jagdish Sheth while strategic planning may be looked upon as a business tool, it cannot replace sound leadership (N.Sheth & Sobel, 2002). In strategic management therefore, a charismatic or transformational leader is required as the success of strategic management ultimately depends on how well an organization answers to a dynamic environment. Alternatively, a transactional leader is suitable best for stable economic and work scenario. This is the fundamental link between strategic management and leadership.

While the starting point is to verify whether the strategies applied will solve the issues faced, the leadership approach will make a huge difference. For instance, in case of transactional leadership, the leader cannot expect his employees to work faster or be innovative in a monotonous work atmosphere. The latter would require top level management to change the strategy or sub-strategies if their intentions are to succeed. Likewise, a transformational leader cannot be expected to perform at his best in a slow de-motivating work scenario. Resultantly, strategic management requires the desire and ability to adapt to situations and changes as they come along (N.Sheth & Sobel, 2002). Not every leader is able to adapt or improvise. This is where an assessment of leadership types comes in, ensuring that the organization has the right direction/leader to allow to see its targets through despite the daily challenges. Indeed, the organization should aim at having it strategy consistent with the organization’s plan of action, management’s expectations and the external environment as such (Avolio, 1993; Arieu (2007).

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Critical Analysis Leadership Styles

Research has shown that constant individual differences in leadership exist (Judge TA, 2002). Resultantly, different leadership styles arise. Current leadership theory makes a strong emphasis on the charismatic or transformational leadership models as opposed to transactional leadership models (Burns, 1978).

The main objective of transactional leaders is to keep the smooth running and stable functioning of the organization by rewarding the efforts, motivation and loyalty through commitment of the organization’s employees. The notion of control is heavily strong on transactional approaches whereby compliance with the organizations’ policies and procedures (Fry, 2003) as well as external requirements such as the regulators’ rules are warranted. This influence is best implemented through clarification by the same leaders of results that are expected, of rules and procedures to be followed and by placing strong emphasis with their subordinates (House, 1996). Due to the fact that goals and policies need to be clarified and certain, the transactional leadership approach is commonly found in stable atmospheres (Bass, 1985).

Similarly, charismatic leadership is said to go beyond transactional leadership although the main framework of leadership approach subsists with some differences in the way they are perceived (Yukl, 1999). In fact, charismatic leadership is perceived as leaders who build on and augment the impact of transactional leadership, thereby expecting to motivate followers perform ahead of expectations (Bass, 1985; House, 1996).

Both charismatic and transformational leadership’s styles are perceived as being able to change the status quo of an organization by adding a significant meaning to the employees’ regular job description. This has the effect of obtaining a quick and effective response from employees to the exigencies of the organization (Bass, 1985; Burns, 1978; House, 1977) (Powar & K-Eastman, 1997) (Waldman, et al., 2001).

According to Bass (1985), charismatic leadership is present in challenging/dynamic work environments which offer a chance for innovative ideas. Consequently, a stable work scenario tends to reap the opposite effect of a scenario that is rapidly changing such as the technology market (Avolio, 1993 ) since employees aren’t encouraged to be innovative.

A number of authoritative figures recommend that charismatic or transformational leadership should also aim at empowering employees. Empowerment takes place by delegation of responsibilities, enhancing of independent thinking ability, encourage innovation.

Charismatic leadership theories are attributed to lead to effective leadership (Yukl, 1999) with both charismatic and transformational leadership styles seen as contributory approaches to enhancing positive moral and as increasing the financial performance and measures within an organization. It seems that the relationships that evolve under a charismatic or transformational leadership are sturdier than those resulting from a transactional approach (Bycio, 1995) (Fuller, 1996) (Judge TA, 2002) (Waldman, et al., 2001).

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Another theory in this area is the personality theory. It has been widely accepted that personality can be perceived by five characteristics (Digman, 1990; Goldberg, 1990) which are agreeableness (Costa, 1987) neuroticism (Bass, 1985) (House, 1996) extraversion (Costa, 1987), openness to experience (Waldman, et al., 2001)and conscientiousness (Costa, 1987). These personality traits are usually inherited.

Moreover, a relevant leadership approach is for the leader to adapt to the situation known as the trait activation theory. Consequently, the approach can be said to be circumstantial (Tett, 2003) (Murphy, 2000). It seems that personality traits are more visible in his/her behaviour when the situation calls upon the personal characteristics of the same (Murphy, 2000). Similarly, personality and circumstance play an important role in relation to whether a leader will apply the charismatic or transactional approach (akin to the trait activation theory). The type of leadership approach applied will depend on the circumstances the leader and the organization are in.

Evaluation of strategic HR resource model

Strategic management also takes into account the human resources department and the strategy with which it is as the HR Department contributes towards the overall organization’s strategy. In line with this various strategic HR resource models have been implemented.

Generally an HR organizational model has to be strong and needs to start with the assessment of the Company’s strategies, goals and objectives. This assessment is normally done by the leader in charge of the organization such as the chief manager, director or chief executive officer (CEO). These leaders are then to transcend the organization’s strategy to HR. HR will then communicate the goals to the employees for instance through workshops, training sessions and one-to-one with their staff. Applying different yet adequate HR strategies here is vital since individuals have different personalities. However, HR’s hands are usually tied up by the leader’s directions. For example, during a period of crisis, HR is made to cut on human resources. The retained staff will absorb the additional work of previous employees. If HR adapts an open door policy and also with HR’s own experience, HR realizes that the staff retained are under a considerable amount of pressure, feeling underpaid, it is the duty of HR to apply the rightful strategy perhaps by creating what are known as ‘perks’ [6] to motivate the employees to keep up the workload ensuring employees’ retention. However, it is important that HR keeps to the business strategy and consequently needs to ensure that its financial planning is in line with the strategic plan. It would be opportune therefore to seek the advice of the organizations’ financial controller as well as that of the leader.

HR, however, does not exist on its own. The HR manager will need to communicate its strategy to other line managers and if possible to all employees (through email for instance). Previously HR was not involved much in important decisions or the recruitment process and its role used to be reduced to payroll. In the past decade the perception of HR has been changed and now HR has become responsible for implementing the company’s strategy among other recruitment functions.

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Evaluation of strategic positions and their importance in business

The positioning theory (Trout, 1979) is fundamental to an organizations’ success whereby clients’ perception of the business as opposed to its competitors or its internal factors become the focus of the strategy. It goes beyond the position of the business in the market but rather focuses on where clients place the organization. Mathematical, statistical and visual techniques are used to establish the positioning of an organization in the mind of customers [7] . In line with this technology, HR and product or services are analyzed in a feasible way (Barney, 1991). Benchmarking, therefore involves a study of the organizations’ strengths and improving upon them (Camp, 1989).

Recommendations

In order for leaders to achieve goals, the organization has to carefully select the leader. The organization must first know what it stands for and upon a thorough personality test of the prospective leader, it chooses the best candidate. If the organization already has a leader who doesn’t fit in the organization’s momentum, it should provide training and constant support.

Also many organizations are not up-to-date with their current situation. They either have an outdated strategy or a strategy that does not serve to reach the intended goals (Hamel, 2002). Conversely, while the strategy might be appropriate, the means (Lindblom, 1959) to achieve this strategy such as an inappropriate leader, wrong control structures; inadequate financial and HR allocation results in failure to retain key employees in the organization.

Unfortunately, most organizations do write their strategy. This results in difficulty in communicating the strategy to other employees. It also leads to unfettered managerial/leader discretion (Woodhouse, 1993) which might create a feeling of instability within the organization in the absence of specific direction. Hence, a written strategy is warranted. However, the strategy should be flexible so that it can be adapted to the circumstances within which the organization operates, enabling leaders to reach the intended objectives.

Conclusion

Successful strategic management encompasses a number of disciplines ranging from an assessment of personality traits, the organizations’ profile all the way to strategic management theories. Careful selection of each of these components will together formulate the strategic plan which will assist leaders in achieving the goals established by the organizations top management and stakeholders. Should one of the disciplines not match the other approaches taken, the achievement of objectives may suffer in the long-run. The selection of an inappropriate leader will impinge on the strategic management of an organization. For example M&S h and Tesco have both changed their strategies in the past since they realized the business objectives weren’t being met. The courage to change the strategy is where leadership is visible.

Word count: 2,098


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