Developing Strategic Management and Leadership Skills

Developing Strategic Management and Leadership Skills

Executive summary

This assignment highlights main elements of the relationship between strategic management and leadership. A number of different styles and strategies have been described during the 20th century. The report tries to summarise some of the important ones and show that altough approaches can be various but the main goal is the efficient existence and continuous development of an organisation.

Introduction

„Leadership has been described as "a process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task"

Chemers M. (1997)

„Strategic Management can also be defined as "the identification of the purpose of the organisation and the plans and actions to achieve the purpose. It is that set of managerial decisions and actions that determine the long term performance of a business enterprise. It involves formulating and implementing strategies that will help in aligning the organization and its environment to achieve organisational goals."

Lamb, Robert (1984)

It is clear that leadership and strategic management both serve an organisation to achieve better performance and able to perform continuos development. All companies are faced today with rapid change of business environment, globalised markets bringing more and more competitors and the effects of recession. Leadeship strategies and skills have to be matched with the plans and projects of the management to attain sustainable competitive advantage.

Relationship between strategic management and leadership

Link between strategic management and leadership

Management and leadership are often considered as synomyms. It is true that they have a strong connection to each other, but the two words have different meanings. Both are crucial to the success of an organisation.

Leadership is the activity, which leads an organisation towards a pre-defined direction or goal. The leader has a clear understanding of visions and goals and the ability to coordinate, direct and support teams and individuals to be able to reach these. Effective leadership plays a key role in running a successful business.

Strategic management defines plans and organises the efficient and effective operation of a company. It identifies the strategies that managers/leaders have to follow to achive the possible best performance. Strategic decisions secure the ongoing development of a company. This continous process analyses the business and economic environment of the organisation. The goals and strategy have to be subject of constant change and development to meet all present and possible future challenges of the industry.

Leadership and strategic management can not perform effectively without each other. Good pre-defined strategy with no leader bringing it to existence is never going to reach it's targets. A leadership with no management might be successfull in reaching short term goals, but is determined to fail. Most likely it would be limited to running the daily business and fail on the wider aspects, as there is no long-term vision to follow and necessary strategic decisions cannot be met.

Effective strategic management combined with good leadership will have the resources of the organisation guided the most effective way towards success.

"As strategic leaders, top level managers must guide the firm in a ways that result in formation of strategic intent and strategic mission. This guidance may lead to goals that stretch everyone in the organization to improve their performance."

Griffin , R. W. (1999)

Impact of management and leadership styles on strategic decisions

Leaders do not have the same qualities, attitude and perspective and do not do fulfill their tasks in the same manner. Leadership style is heavily influenced by the people the leader has to interact with.

Number of leadership theories evolved and several different leadership styles have been described. Probably the mostly discussed differentiations are based on Transactional and Transformational Leadership.

Transactional Leadership Transformational Leadership

* Builds on man's need to get a job done and make a living

* Is preoccupied with power and position, politics and perks

* Is mired in daily affairs

* Is short-term and hard data orientated

* Focuses on tactical issues

* Relies on human relations to lubricate human interactions

* Follows and fulfils role expectations by striving to work effectively within current systems

* Supports structures and systems that reinforce the bottom line, maximise efficiency, and guarantee short-term profits

* Builds on a man's need for meaning

* Is preoccupied with purposes and values, morals, and ethics

* Transcends daily affairs

* Is orientated toward long-term goals without compromising human values and principles

* Focuses more on missions and strategies

* Releases human potential - identifying and developing new talent

* Designs and redesigns jobs to make them meaningful and challenging

* Aligns internal structures and systems to reinforce overarching values and goals

Comparison of Transactional and Transformational Leadership: Covey, (1992)

Some of the most widely described styles are the following four:

Autocratic leadership style: A typical example for Transactional Leadership. Leader makes decision on his own and has absolute control over the group. Team members have no possibilities to raise their voice to highlight their ideas, suggestions. This often leads to dissatisfaction which can result in a high employee