Strategic management can be defined as the process of which organization goals are set, policies and plans are formulated to achieve these goals. To make this process, the management must allocate resources to implement the plan. Basically, this refers to the top management of the organization striving to provide the overall direction of the enterprise as a whole in order to set and achieve goals.
These responsibilities are usually performed by the CEO and the executive team, led by the organization’s mission and statement of vision. Strategic management is an ongoing process that can be broken down into several stages.
First of all, a plan (strategy formulation) is established that identifies the function and purpose of the organization. This helps shape and implement a wide range of objectives. This will identify the company’s strategic advantage and core competence whether to focus on customer service, gross profit, research and development, and ideal strategies to optimally deploy resources to achieve that goal.
Leadership within an organization is essentially an action that leads people or organizations of the group in sharing and communicating vision to a large number of people. Leadership often comes in many different styles, depending on various circumstances. In this case, these styles may vary depending on the situation, purpose, and group settings.
There are 05 major styles of leadership and they are Democratic, Visionary, Coach and train, Autocratic, Bureaucratic. And finally, it should encourage and motivates employees to share common visions and goals.
Link between Strategic Management and Leadership.
Leaders are important for strategic management tasks because of their ability to mobilize people. This does not mean that the leader acts independently of the strategic plan. In fact, the leaders are highly dependent on what is been decided on people and who are assigned different tasks. The main reason is that the strategic plan gives a sense of direction. Leaders may be very influential in determining what the ultimate goal is, but trying to reach it without a strategy is like walking in dark without a torch. The developed strategy provides useful tools for all leaders.
The benchmark and timetable show the validity of every motivational effort. Leaders try to become problem solvers. By the way, strategic management is a living task. It is not carved with hard stones. It may reflect on the relationship between strategic management and leadership. Modern managers are filled with a lot of responsibilities and goals that cannot be dealt with by tackling a single attitude or leadership markets today. With the progress of globalization, the foundation of strategic management is based on the understanding of competitors, markets, prices, suppliers, distributors, governments, creditors and shareholders, . It is therefore important that leaders communicate the statement of mission and vision and develop strategies to make business activities successful.
Strategic management specifically leads to leadership in the implementation process where companies set annual targets, formulate policies and secure resources to ensure the success of the strategy. It is necessary to formulate a strategy such as building an effective organizational structure, redirecting marketing activities, creating budgets, developing and utilizing information systems, and linking organizational performance of employee compensation. In this implementation process, management demands an employee’s commitment to follow through tasks / projects to ultimately achieve the desired goals and achievements.
This is when leadership is demonstrated when employees rely on managers to maximize their leadership and skill and ability. In addition, this includes efficient use of resources to solve the problem, providing the solution in place. This link between strategic management and leadership lies in maximizing human capital for the organization to succeed using different leadership styles.
ABC (Pvt) Ltd is a financial services providing company, with more than 200 branches around the country. Starting with my own experience, I am explaining the roles of management and leadership and how it works together. I use to work in one branch belong to ABC (Pvt) Ltd as a junior executive, we almost 25 persons are working in the branch and I’m working in the credit department. ABC (Pvt) Ltd’s goal is to satisfy the customer and attract more potential new businesses to the company. This goal is set by management and should be achieved by using limited resources such as labor force, incentive, over time etc. If 25 people are working in a one particular branch, they should work within a limited time to be able to deliver the right service to the customer. The time required is now a test of true leadership ability. If they use 25 people, how will the leader take advantage of the task to do in time.
For another example management need to reduce the cost of labor by reducing the working hours. Specially overtime is being used at a high rate, first thing that the management did was cutting off the overtime, which was the toughest time for leaders to complete their tasks in time, because there is no more overtime, so what they did before they started making changes.
There were only 3 employees in cash department spending almost additional 2 or 3 hours to loading the ATMs, unloading the Cash Deposit machines and too finally balance daily cash positions by sorting out any excesses or shorts. Now, manager was ask everyone in the other departments(according to a roster 2 people per day) to come back and give them 30 minutes in counting and balancing the machines which is easier to complete the work without overtime.
Excellent leadership is nothing without effective management. For example, if we consider a organizations without a good leadership whatever the best strategy done the executives, if there is no leader to take initiatives to perform that management become useless. Same in the other hand good leadership without the proper management also can’t perform well. The role of strategic management is far greater than leadership and leaders can be known as the boosters of management.