Strategic. Leadership Versus. Traditional. Organizational. Management Today. Researchjournali s Journal of Management

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1 1 Strategic Leadership Versus Traditional Organizational Management Today Manish Kerwar JRF Scholar, PHD (Management), School of studies in management Research Centre, Jiwaji University, Gwalior, M.P

2 2 ABSTRACT Impact of adopting strategic leadership in forms long using traditional leadership has been empirically tested and compared, using both primary and secondary data. Key differences between the present day strategic leadership and traditional organizational management have been identified. Case studies of three organizations in India have been taken to support the theoretical foundations, as evidence. The qualitative analysis of three companies, based on open ended questionnaire, indicate significant differences in employee engagement and organizational performance as perceived and observed by the employees. Keywords: leadership,strategic Leadership, Traditional Organizational Management. 1. INTRODUCTION 1.1 ABOUT STRATEGIC LEADERSHIP TODAY Present day strategic leadership refers to leadership styles which not only provide vision and direction to the organizational success, but also foster ownership and bring alignment among employees to implement essential changes (May, R. 2013). Therefore present day leaders require tools and skills for strategy formulation and implementation which should have potential to infuse commitment and involvement among members of the work groups so that they are fully engaged with their jobs and organization. It is about new ways of thinking to use limited resources available to the organization to achieve its strategic goals. These new ways of thought process of the leaders coupled with top management s commitment and time spent on engaging the employees in a common strategic framework, forms the foundation for building most successful organizations potentially setting new benchmarks for the industry (Stumpf, S. et al., 1991) Barron (1995) has termed present day strategic leadership as interactive leadership requiring an educative environment to communicate, create and effect changes interactively. In this environment, leaders identify areas of potential changes in the already existing practices, abilities and skills rather than completely overhauling the organization. Strategic leadership is a very vast terms. Many researchers have defined and explained it in several different ways and perspectives (Rowe, 2001; Davis 2004; Beatty and Quinn, 2010). 1.2 TRADITIONAL LEADERSHIP VS. STRATEGIC LEADERSHIP While traditional leadership is primarily built on personal qualities, strategic leadership is more impersonal, being concerned with relationships between the external environment and an organization s mission as well as its implementation (Maghroori & Rolland 1997). Strategic leaders interpret external events to focus on threats and opportunities for influencing followers values. (Sing Tng, 2009). Therefore while strategic leadership theories are the modern day theories which are built on the ideas and experiences of traditional theories, their focus is multidimensional as against a narrow view in the case of traditional leadership theories.

3 3 Llopis, Glenn (2011) identifies three essential differences in the strategic approach to leadership vs. traditional approach. Firstly, while a strategic leader looks to spread influence among employees and works groups, a traditional leader is more likely to focus on increasing income for the business. Secondly, while a strategic leader works to expand community, a traditional leader is keen on expanding creativity. Finally while a traditional leader aspires to make a mark, a strategic leader desires to leave a legacy (Glenn, 2011). Therefore while a traditional leader does things to be seen everywhere, and try to differentiate itself from others, a strategic leader wants to create an environment of win win for all and garnering support for all those who want him and the organization to succeed. This way he is able to amplify the strategic efforts, commitment and involvement while ensure productivity. 2. AIM AND OBJECTIVES Aim of this research is to empirically test the impact of strategic leadership in modern day organization vs. the traditional leadership style practiced earlier. Researcher has studied 3 Indian organizations which have recently adopted strategic leadership style after a long stint in traditional leadership. The specific objectives of the current study are to find answer to the following questions: 1. Has there been any improvement in the employee engagement in the organizations after adoption of strategic leadership, as perceived by its employees? 2. Have the organizations performing better after adoption of strategic leadership? 3. Do the employees feel that new strategic leadership style can deliver better results in future? 4. Do the employees feel that new strategic management style is sustainable in their organizations? 3. RESEARCH METHODOLOGY This research involves qualitative analysis of responses collected from open ended questionnaire in order to determine the impact of change of leadership style in 3 organizations which has been selected as the case studies. In addition, secondary data has been used to find evidence of support to the results of the responses to the open ended questionnaire. The questionnaire comprised 8 questions (See Appendix I) which was administered to managers working in different departments having at least 10 years of working experience within their current organizations and are well aware of the changes in the internal environment of the organization, before and after the adoption of new strategic leadership styles. In order to maintain the anonymity of the responses, researcher has not included personal demographic information of the respondents within this study. Sample size for qualitative studies is generally kept small, therefore 10 managers from each case organization were approached with the questionnaire. Interview with the respondents was conducted

4 4 after all the permissions were obtained from the HR department of each organization. After the appointments were fixed, researcher conducted the interview which lasted for 20 mins with every individual. Content analysis was conducted on the collected responses in order to identify the themes and keywords so that comparative analysis could be drawn from same. The results of the content analysis have been presented in the later sections of the journal. 4. LITERATURE REVIEW 4.1 A BRIEF HISTORY OF STRATEGIC AND TRADITIONAL LEADERSHIP There are several thousands of empirical researches done on leadership styles both strategic and traditional. Most of these results have been inconsistent and inconclusive (Yukl 2006). Therefore it is not possible to have a very comprehensive literature review on the concept. However major theoretical and empirical studies in the areas of strategic and traditional leaderships have been studied in this section. Traditional leadership styles predominantly emanates from the approaches defined in theories such as Great man theory (1840s) (Carlyle, Thomas, 1888), Traits theory (1930s-40s) (Matthews, Deary& Whiteman, 2003) and Behavioral Theory (1940s-50s) (Horton Thomas, 1992). Traditional leadership theories were formed on the basis of common traditional styles of leaders of the major organizations of their time. Strategic leadership theories are categorized as part of the four approaches of contingency theories of 1960s. These four popular approaches were identified by Crowther et al. (2002) as strategic, educative, transformational and organizational. However most of the modern approaches to leadership are popularly categorized as strategic leadership by nature. According to contingency theories, there is no single way to lead the organization successfully (Van Wormer, et al., 2007). Most of these changes in theories of leadership seem to be the result of changing business environment with changing times. 4.2 FEATURES AND FORMS OF STRATEGIC LEADERSHIP One of the most striking features of the strategic leadership is that it is not really based on personal qualities and is impersonal in nature (Maghroori& Rolland 1997). Also a strategic leader is always looking at changing business environment both externally and internally to be able to exploit the emerging opportunities and face challenges. One popular study has found four popular forms of strategic leadership (1) Entrepreneurial, (2) Political, (3), Professional and (4) Bureaucratic. Each forms of strategic leadership require different set of resources to achieve strategic goals and objectives (Shrivastava, 1989). It is clear that strategic leadership itself can take several forms and features. As contingency theories advocate there can t be a single approach to strategic leadership too.

5 5 4.3 ADVANTAGES OF STRATEGIC LEADERSHIP OVER TRADITIONAL LEADERSHIP Llopis (2011) concludes that strategic leadership creates community and legacy which guarantees results. On the other hand in a traditional leadership environment, there may be individual purpose but no individual efforts (Glenn, 2011). Therefore, a traditional leader s work is only a temporary mark on the organization. While in strategic leadership the effect is permanent. Llopis (2011) further argues that for a traditional leader, the real success is confined to the leader but not to all the internal stakeholders. It is a win win situation for all in case the case of strategic leadership. All stakeholders work in tandem to make the strategic leader and the organization successful. 4.4 USE OF STRATEGIC LEADERSHIP IN ORGANISATIONS TODAY In a fiercely competitive global world of business, no major company can survive without strategic leadership. Still most of the companies have found their CEOs unable to provide right kind of strategic leadership (Applebaum, Loren and Paese, 2012). The frequency of CEO s failures is significant. Articles such as Fortune magazines Why CEOs fail provide several high profile examples of such failures. A study by Manchester Consulting has estimated that 4 in 10 senior persons in companies fail within 18 months of their starting with the job (Grote, 2000). A DDI survey of corporate leadership council members has found that three fourth of companies worldwide are not confident in their capabilities as the strategic leaders (Applebaum, Loren and Paese, 2012). 5. CASE STUDY ANALYSIS Based on the secondary research, authors of this article selected 3 companies which have recently adopted strategic leadership after decades of traditional leadership practices. These 3 companies are - HCL technologies, Tata Steel and Apollo Hospitals. In all these 3 companies major strategic leadership thinking has been introduced in recent times. The results of content analysis are presented in subsequent paragraphs. On an average, three fourth of the respondents felt that there has been perceptible change in leadership style in their organizations in the past 10 years, from a traditional approach to a more strategic approach. Looking at the detailed analysis of the responses it was found that among the responses from the HR department almost 95 percent respondents agreed that their companies have adopted a strategic approach of leadership after a long stint with traditional approach. Since HR department managers are professionally trained to observe the differences between traditional approach and a strategic approach to leadership, it was very clear that these three companies have indeed adopted strategic approach at the top level. The percentages of the respondents on this count were more or less same in case of all three companies, confirming leadership style changes. Almost 80 percent of the respondents in all three companies agree that employee engagement, commitment and involvement have significantly increased after change in leadership style. Approximately 65 percent

6 6 respondent confirmed that after the leadership style change, majority of the employees are very punctual in their job. They are taking significantly lesser number of leaves. Significantly 68 percent respondents indicated that a majority of the employees are coming up with new and innovative ideas along with useful feedback in order to ensure better results of their respective department. Other respondents gave other logic to support the significant change in employee engagement. For example some respondents said that many employees voluntarily work overtime even without over time compensations when their daily goals are not met. 75% respondents agreed that the change has been positive and constructive. Almost 90 percent of the respondents who worked in HR functions agreed with same. They also said that these changes in the employee engagement and their absorption to their jobs can go a long way in creating a positive environment in their organizations. Almost 70 percent of the respondents said that due to new found employee engagement, their own productivity has increased since they themselves are getting quick response and support from the administrative staff. For example, accounts department is now taking much less time to process payment notes for vendors. Administrative staff is taking faster action on maintenance of pantry, toilets, shop floors etc. Almost 72% of the respondents agree that these changes will significantly improve the strategic position of the company in the industry and they are confident that their companies will set new industry benchmarks in performance. Analysis of secondary data of all these 3 companies have shown that growth rates of all these 3 companies have been significantly higher than during the last 5 years when compared with the results in the previous years. Most of the respondents from the finance departments reported that the valuations of their companies have significantly improved in the market during the last 5 to 7 years. They are also highly positive about the numbers for their organizations in near to medium term in future. 75% respondents feel that the job satisfaction level has improved significantly due to leadership style changes wherein reasons like job clarity and purpose felt by most employees in the new environment were some of the reasons reported by the respondents. Almost 90 % of the respondents from the HR department reported lower level of attrition rates in their organization which coincides with the change in leadership styles in their organizations in last 10 years. Almost 81% of all the respondents agree that the leadership style changes are sustainable in their organizations in the medium and long term future. 75 % of the respondents reported that commitments of the top management to these new changes is permanent and is not likely to change for at least foreseeable future. 65 % respondents feel that board of directors of their companies have acknowledged that major reason for improved company results relates to change in approach to leadership from a traditional one to strategic. 68% of the respondents reported that new efforts of the top leaders are leaving a legacy for the new comers and creating a community of employees who are willing to support new initiatives at all levels. Almost 90 % of

7 7 the respondents from HR department reported that in most of the strategic meetings, key issues discussed are strategic in nature, where employee engagement and their empowerment are the major themes of discussion most of the time. Almost 95 % respondents want the new strategic leadership styles to continue in their organizations. Almost 99% respondents said they want their CEOs to succeed since they feel their own success and growth in the organization is linked to the success of their top leaders. On the same line, 78% respondents agree that current leadership approaches are most appropriate for the internal and external environment of their companies. Almost 68 % of respondents who did not belong to HR department said that the new strategic approach is in line with the internal environment of the organization. A very large percentage of respondents who belonged to HR department agreed on this. Almost 90 % of the respondents from the marketing department said they feel the new strategic approaches adopted within the organization are in line with the changing industry environment both at micro and macro levels. Most of the respondents from this category reported that similar approaches are being used by most of the competitors. However they said that competitors from overseas seem to be doing better in their strategic leadership efforts than their own organizations. Towards the end of the questionnaire a number of suggestions and comments were received. After qualitative analysis, certain important suggestions which emerged as most prominent are given below. A large number of the respondent (approximately 40%) suggested that a culture of educative leadership and management is very important for any organization in modern times, in a fiercely competitive global market environment. Therefore education and industry practices improvement should be a continuous process in any corporate setup. Around 55% respondents felt that their top managers are more easily accessible to them now after the adoption of strategic leadership approaches to management and that there is a continuous flow of information and feedback across hierarchies in the organizations. However a significant numbers of employees, around 35% felt that Indian organizations are still to go farther to match with the international organizations when it comes to strategic thinking at the top level. 6. DISCUSSIONS AND CONCLUSIONS Effective functioning within the organization is a result of several measures and actions which are undertaken to achieve goals and in order to achieve values, purpose, meaning, and vision of the company. Strategic leadership is involved to achieve all these goals which are laid out by the management with the help of managers and planners. Such recognition of importance of strategic leadership over traditional measures of organizational management are essential for efficient management of financial as well as human capital resources. The secondary research explored the role of strategic leadership to foster and promote the goals and values and also enable the development of guiding framework for the employees. Under strategic leadership

8 8 the leader scans both external environment and internal environment to determine strengths and weaknesses when making a decision to achieve organizational goals. Further in contrast to traditional organizational management strategic leader works towards finding a viable direction for the organization and unlike traditional approach will also influence people to internalize the plans, policies and procedures. Further based on primary research, adoption of strategic leadership within the three case organizations indicated improvement in overall organizational functioning. They have reported significant changes post the adoption of strategic leadership. Further, managers indicated employee engagement, commitment and better involvement with the change in leadership style. Organizations also reported improved job satisfaction among employees. 7. REFERENCES Applebaum, Loren and Paese, M. (2012). WHAT SENIOR LEADERS DO: THE NINE ROLES OF STRATEGIC LEADERSHIP. Retrieved November 16, 2014, from Barron, B. G., & Henderson, M. V. (1995). Strategic leadership: A theoretical and operational definition. Journal of Instructional Psychology, 22(2), 178. Bass, B. M., Avolio, B. J., & Atwater, L. E. (1996). "The transformational and transactional leadership of men and women". Applied Psychology: An International Review, 45, 5 34 Beatty, K., & Quinn, L. (2010). Strategic Command Taking the Long View for Organizational Success. Leadership In Action, 30(1), 3-7. Business Line print edition dated May 29, 2010 Carlyle, Thomas (1888). On Heroes, Hero-Worship and the Heroic in History, Fredrick A. Stokes & Brother, New York, p. 2 Celliapp, P., Singh, H., Singh, J.V., Usmeen, M. (2010). Leadership Lessons from India. Retrieved November 16, 2014, from Crowther, F, Kaagan, S, Ferguson, M & Hann, L 2002, Developing teacher leaders: how teacher leadership enhances school success, Corwin Press, Thousand Oaks. Davies, Barbara J. & Davies, Brent (2004) Strategic leadership School Leadership & Management, Vol. 24, No. 1, February 2004 Washingborough Foundation Primary and Nursery School, UK; University of Hull, UK ET Bureau, (2014), Tata Steel consolidated net profit up 37% on land sale in Q2, Retrived from on Novemer 16, 2014 Glenn, Llopis. (2011). The Immigrant Leader vs. the Traditional Leader: The 3 Essential Differences. Retrieved November 16, 2014, from Grote, D. (2000). Secrets of Performance Appraisal. Across the Board. Retrieved from: sources/pdfs/across-the-board-secrets-of-performance-appraisal.pdf Horton, Thomas (1992). The CEO Paradox, New York Maghroori, R & Rolland, E (1997), 'Strategic leadership: the art of balancing organizational mission with policy, procedures and external environment', Journal of Leadership Studies, vol. 2, pp Matthews, G., Deary, I.J., & Whiteman, M.C. (2003). Personality traits (2nd edition). Cambridge: Cambridge University Press

9 9 May, R. (2013). Strategic Leadership for Executives. BusinessDictionary.com - Online Business Dictionary. Retrieved Nov. 15, 2014, from Rowe, W. G. (2001). Creating Wealth in Organizations: The Role of Strategic Leadership. The Academy of Management Executive, Shrivastava, P. (1989). STRATEGIC LEADERSHIP PATTERNS. Strategic Management Journal, 10, Retrieved from Publications Directory/Strategic Leadership Patterns.Pdf Sing Tng, C. (2009). An Educational Leadership Framework Based on Traditional and Contemporary Leadership Theories. Retrieved November 16, 2014, from Stumpf, S. and Mullen, T. (1991). Strategic Leadership: Concepts, skills, style, and process. Journal of Management Development, 10(1), 42 53, S. Van Wormer, Katherine S.; Besthorn, Fred H.; Keefe, Thomas (2007). Human Behavior and the Social Environment: Macro Level: Groups, Communities, and Organizations. US: Oxford University Press. ISBN Yukl, G 2006, Leadership in organization, 6th edn, Peason Prentice Hall, New Jersey. APPENDIX I QUESTIONNAIRE FOR CASE ORGANIZATIONS 1. Do you think there has been a major change of leadership style from a traditional one to strategic in last 10 years in your company? 2. Do you think there has been a significant change in the employee engagement, commitment and involvement due to changes in the leadership style? If yes in what ways? 3. Has the change in leadership style brought a positive and a constructive culture in your organization? If yes, how? 4. Do you think the leadership style changes of the type which has been observed in your organization, can really take the company to higher success and better results in near future? 5. Do you think job satisfaction level has improved among employees and associates of the organization, with these changes after adoption of strategic leadership? 6. Do you think these changes in top management approaches are sustainable in your company in the long run? If so, how? 7. Do you think strategic leadership approach currently used by the top management is most appropriate for the organization in the given industry and internal environment? If yes, how? 8. If you have any suggestions with regard to the current leadership style in your organization, kindly enumerate the same here. Any other comments