STRATEGISTS AND THEIR ROLE IN STRATEGIC MANAGEMENT
TOP MANAGEMENT CONSTITUENTS
1. BOARD OF DIRECTORS
2. SUB – COMMITTEE
3. CHIEF EXECUTIVE OFFICER
4. TASK RESPONSIBILITIES AND
5. SKILLS OF TOP MANAGEMENT
There are nine Strategists (TOP MANAGEMENT), who, as individuals or in groups are concerned with and play a role in strategic management their role in strategic management is explained below:-
(1) Role of Board of Directors
The ultimate legal authority of an organisation vests in the board of directors. The owners of the organisation – shareholders, controlling agencies, government, financial institutions, holding company or the parent company-elect and appoint the directors on the board. The board is responsible to them for the governance of the organisation. As directors, the members of the board, are responsible for providing guidance and establishing the directives according to which the managers of the organisation can operate. The board exercises its authority according to the memorandum of association and articles of association of the company. Legally, they have to conform to the various provisions of the Companies Act, 1956. Apart from the legal framework, the board acts according to the policies, rules, procedures and conventions of the organisation.
The role of the board in strategic management is to guide the senior management in setting and accomplishing objectives, reviewing and evaluating
organizational performance and appointing senior executives. However, there is no clarity regarding the exact role that the board should play in managing the affairs of the organisation. Much depends on the relative strength, in terms of power, held by the board and the chief executive. Where there is a high level of clarity regarding their respective rules, the relationship between the board and the chief executive is cordial and the functioning of the board is smooth. Where such clarity is less, problems occur.
As the board of directors operates as the representatives of stockholders so the board has also following major responsibilities:
1. To establish and update the company mission.
2. To elect the company’s top officers, the formost of whom is the CEO.
3. To establish the compensation level of the top officers, including their salaries and bonuses.
4. To determine the amount and timing of the dividends paid to stockholders.
5. To set broad company policy on such matters as labour – management relations, product or service lines of business and employee benefit packages.
6. To set company objectives and to authorize managers to implement the long-term strategies that the top officers and the board have found agreeable.
7. To mandate company compliance with legal and ethical dictates.
(2) Role of Chief Executives
The chief executive (CE) is the most important strategist who is responsible for all aspects of strategic management from formulation to evaluation of strategy. The CE is variously designated as managing director, executive director, president or general manager in business organizations. As the chief strategist, the CE plays a major role in strategic decision-making.
The functioning of the board critically depends on its relationship with the chief executive. Where there are differences of opinion between the respective perspectives of the role of the board and the chief executive, disagreements arise. The CE of an organisation plays the most crucial role in determining whether an organisation is successful or not.
The role of the CE in strategic management is the most important among the roles played by different strategists. He is the person who is chiefly responsible for the execution of functions which are of strategic importance to the organisation. In other words, a CE performs the strategic tasks; actions which are necessary to provide a direction to the organisation so that it achieves its purpose. He plays a pivotal role in setting the mission of the organisation, deciding the objectives and goals, formulating and implementing the strategy and, in general, seeing to it that the organisation does not deviate from its predetermined path designed to move it from the position it is in to where it wants to be.
The role modeling approaches attempt to describe the CE in terms of the different roles that they play in organisations. For instance, a CE may be considered as:
Chief architect of organizational purpose, strategist or planner;
Organisation leader, organizer or organisation builder;
Chief administrator, implementer or coordinator; and
Communicator of organizational purpose, motivator, personal leader or mentor.
(3) Role of entrepreneurs
According to Drucker, “the entrepreneur always searches for change, responds to it and exploits it as an opportunity”. The entrepreneur has been usually considered
as the person who starts a new business, is a venture capitalist, has a high level of achievement-motivation, and is naturally endowed with qualities of enthusiasm, idealism, sense of purpose, and independence of thought and action. However, not all these qualities are present in all entrepreneurs; nor are these found uniformly. An entrepreneur may also demonstrate these qualities in different measures at different stages of life. Contrary to the generally accepted view of entrepreneurship, entrepreneurs are not only to be found in small businesses or new ventures. They are also present in established and large businesses, in service institutions and also in the bureaucracy and government.
Entrepreneurs play a proactive role in strategic management. As initiators, they provide a sense of direction to the organisation, set objectives and formulate strategies to achieve them. They are the major implementers of strategies and also their evaluators. The strategic management process adopted by entrepreneurs is, generally, not based on a formal system and, usually, they play all the strategic roles simultaneously. Strategic decision-making is quick and the entrepreneurs generate a sense of purpose among their subordinates.
(4) Role of Senior Manager
The senior (or top) management consists of managers at the highest level of the managerial hierarchy. Starting from the chief executive to the level of functional or profit centre heads, these managers are involved in various aspects of strategic management. Some of the members of the senior management act as directors on the board usually on a rotational basis. All of them serve on different top-level committees set up by the board to look after matters of strategic importance and other policy issues. Executive, committees, consisting of senior managers, are responsible for implementing strategies and plans, and for a periodic evaluation of performance. Ad hoc committee formed to deal with new projects has senior managers as project
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managers. When assigned specific responsibilities, senior managers look after modernization, technology upgradation, diversification and expansion, plan implementation, and new product development. On the whole, senior managers perform a variety of roles by assisting the board and the chief executive in the formulation, implementation and evaluation of strategy.
(5) Role of SBU-level Executive.
The rationale for organizing structure according to the strategic business units (SBUs) is to manage a diversified company as a portfolio of businesses; each business having a clearly defined product-market segment and a unique strategy. The role that the SBU-level executives play is, therefore, important in strategic management. SBU-level executives, also known as either profit-centre heads or divisional heads, are considered as chief executives of a defined business unit for the purpose of strategic management. In practice, however, the concept of SBU is adapted to suit traditions, shared facilities and distribution channels, and manpower constraints.
With regard to strategic management, the SBU-level strategy formulation and implementation are the primary responsibilities of the SBU-level executives. Many public and private sector companies have adopted the SBU concept in some or the other form.
(6) Role of Corporate Planning Staff
The corporate planning staff play a supporting role in strategic management. They assist the management in all aspects of strategy formulation, implementation and evaluation. Besides these, they are responsible for the preparation and communication of strategic plans, and for conducting special studies and research pertaining to strategic management. The corporate planning department is not
responsible for strategic management and, usually, does not initiate the process on its own. By providing administrative support, it fulfills its functions of assisting the introduction, working and maintenance of the strategic management system.
How corporate planning works at voltas
The basic function of the corporate planning cell (CPC) at Voltas Ltd. is to disseminate the concept of corporate planning and make planning a way of life in the company. The main objective of the CPC is to convert the existing budgeting system into a corporate planning system which deals with strategic issues. The CPC supports the corporate planning process by assisting the top management in the formulation of corporate plans and integrating the divisional plans with the corporate plan. Based on the company’s long-range plan, divisional strategic plans are made annually. The strategies for each division are explicitly stated by the CPC and communicated to the senior managers. After this, the CPC staff acts as a catalyst in the implementation process by helping the senior managers implement the plan. Evaluation is done quarterly by the corporate executive committee consisting of the president and six vice presidents in different functional areas. The staff at CPC is mainly drawn from within and they possess a few years’ line experience in different functional areas in the company.
(7) Role of Consultants
Many organizations which do not have a corporate planning department owing to reasons of small size, infrequent requirements, financial constraints, etc. take the help of external consultants in strategic management. These consultants may be individuals, academicians or consultancy companies specializing in strategic management activities. According to Management Consultants Association of India, management consultancy is “a professional service performed by specially trained
and experienced person to advise and assist managers and administrators to improve their performance and effectiveness and that of their organisation”. Among the many functions that management consultants perform, corporate strategy and planning is one of the important services offered. The main advantages in hiring consultants are getting an unbiased and objective opinion from a knowledgeable outsider, cost-effectiveness and using specialists skills.
(8) Role of Middle- level Managers
The major functions of middle-level managers relate to operational matters and, therefore, they rarely play an active role in strategic management. They may, at best, be involved as ‘sounding boards’ for departmental plans, as implementers of decisions taken above, followers of policy guidelines and passive receivers of communication regarding strategic plans. Basically involved in the implementation of functional strategies, the middle-level managers are rarely employed for other purposes in strategic management.
The importance of middle management cadres lies in the fact that they form the catchments areas for developing future strategists for the organisation.
(9) Role of Executive Assistant
The emergence of executive assistants in the managerial hierarchy is relatively a recent phenomenon. An executive assistant is a person who assists the chief executive in the performance of his duties in various ways. These ways could be to assist the chief executive in data collection and analysis, suggesting alternatives where decisions are required, preparing briefs of various proposals, projects and reports, help in public relations and liaison functions, coordinating activities with the internal staff and outsiders and acting as filters for information coming from different sources. The executive assistants assist the chief executive, they help to optimise
their time utilisation. The requirements for an executive assistant, in terms of skills and attitudes, include a generalist orientation, a few years’ line experience, exposure to different functional areas, excellent written and oral communication ability, and a pleasing personality. The qualification required is, generally, an MBA or CA. The position of executive assistant offers a unique advantage to young managers as nowhere else can he or she gain a comprehensive view of the organisation which can help in career planning and development and rapid advancement to the senior levels of management.