CHAPTER NINECHAPTER NINE

UPPER ECHELON VIEW: UPPER ECHELON VIEW: STRATEGIC LEADERSHIPSTRATEGIC LEADERSHIP

Learning ObjectivesLearning Objectives

1.1. Differentiate between micro and Differentiate between micro and upper-echelon leadership.upper-echelon leadership.

2.2. Describe the domain and roles of strategic Describe the domain and roles of strategic leaders in the management of an leaders in the management of an organization.organization.

3.3. Identify the external and internal factors Identify the external and internal factors that impact strategic leaders’ discretion.that impact strategic leaders’ discretion.

4.4. List the individual characteristics of List the individual characteristics of strategic leaders and their impact on their strategic leaders and their impact on their style.style.

5.5. Contrast the four strategic leadership Contrast the four strategic leadership types and discuss the role of culture and types and discuss the role of culture and gender in strategic leadership.gender in strategic leadership.

6.6. Explain the processes through which Explain the processes through which strategic leaders manage their strategic leaders manage their organization.organization.

7.7. Review issues of executive Review issues of executive compensation and accountability.compensation and accountability.

Learning Objectives (cont’d)Learning Objectives (cont’d)

Strategic ForcesStrategic Forces

ORGANIZATIONSORGANIZATIONS

LeadershipLeadershipLeadershipLeadershipEnvironmentEnvironment

StrategyStrategy CultureCulture

StructureStructureTechnologyTechnology

Differences Between Lower Level Differences Between Lower Level and Upper Echelon Leadersand Upper Echelon Leaders

Who the leader is Who the leader is

Scope of responsibilityScope of responsibility

FocusFocus

Effectiveness criteriaEffectiveness criteria

Dual Role Of Upper Echelon LeadersDual Role Of Upper Echelon Leaders

StrategyStrategyFormulationFormulation

StrategyStrategyImplementationImplementation

PerformancePerformance

LeadershipLeadershipCharacteristicsCharacteristics

ModeratingModeratingFactorsFactors

External Moderators Of External Moderators Of Executive DiscretionExecutive Discretion

Environmental Environmental uncertaintyuncertainty

Type of industryType of industry

Market growthMarket growth

Legal constraintsLegal constraints

Internal Moderators Of Internal Moderators Of Executive DiscretionExecutive Discretion

StabilityStability

Size and structureSize and structure

Organizational cultureOrganizational culture

Stage of organizational growthStage of organizational growth

Presence, power, and makeup of TMTPresence, power, and makeup of TMT

Themes In Upper Echelon StyleThemes In Upper Echelon Style

Challenge SeekingChallenge Seeking

Risk takingRisk taking

Openness to Openness to

changechange

Willingness to Willingness to

innovateinnovate

Future orientationFuture orientation

Need for ControlNeed for Control

DelegationDelegation

CentralizationCentralization

Uniformity of Uniformity of

practicespractices

Focus on processFocus on process

Strategic Leadership DimensionsStrategic Leadership Dimensions

NEED FOR CONTROLNEED FOR CONTROL

High controlHigh control Low control Low control

High High challenge-challenge-seekingseeking

Low Low challenge-challenge-seekingseeking

CHALLENGE-CHALLENGE-SEEKINGSEEKING

HIGH-CONTROLHIGH-CONTROLINNOVATOR (HCI)INNOVATOR (HCI)Challenge-seeker whoChallenge-seeker whomaintains tight controlmaintains tight control

over organizationover organization

STATUS QUOSTATUS QUOGUARDIAN (SQG)GUARDIAN (SQG)

Challenge-averse whoChallenge-averse whomaintains tight controlmaintains tight control

over organizationover organization

PARTICIPATIVEPARTICIPATIVEINNOVATOR (PI)INNOVATOR (PI)

Challenge-seeker whoChallenge-seeker whodelegates controldelegates control of organizationof organization

PROCESSPROCESSMANAGER (PM)MANAGER (PM)

Challenge-averse whoChallenge-averse whodelegates controldelegates control of organizationof organization

Processes Leaders Use To Impact Processes Leaders Use To Impact Their OrganizationTheir Organization

LEADERLEADER

EnvironmentEnvironment

StrategyStrategy

CultureCulture

StructureStructure

LeadershipLeadership

TechnologyTechnology

• Direct decisionsDirect decisions• Allocation of resourcesAllocation of resources• Reward systemReward system• Selection of other leadersSelection of other leaders• PromotionsPromotions• Role-modelingRole-modeling

Direct DecisionsDirect Decisions

• Vision Vision

• MissionMission

• StrategyStrategy

• StructureStructure

• Organizational cultureOrganizational culture

• Selection of other leadersSelection of other leaders

Allocation of ResourcesAllocation of Resourcesand Reward Systemand Reward System

• Decisions regarding funding and Decisions regarding funding and budgetsbudgets

• Allocation of resources to support Allocation of resources to support goalsgoals

• Formal rewards, such as salary and Formal rewards, such as salary and bonusesbonuses

• Informal rewards such as Informal rewards such as recognitionrecognition

• Promotion of other leaders and Promotion of other leaders and managersmanagers

Setting the Norms and Role Setting the Norms and Role ModelingModeling

• Setting decision criteria Setting decision criteria and rules by which and rules by which others make decisionsothers make decisions

• Active or subtle role Active or subtle role modeling of behaviors modeling of behaviors and stylesand styles

Responsibility Of Upper Echelon Responsibility Of Upper Echelon LeadersLeaders

Organizational performanceOrganizational performance Accountability to various Accountability to various

internal and external internal and external constituentsconstituents

Ethical behavior and role-Ethical behavior and role-modelingmodeling

Factors that Affect Executive Factors that Affect Executive SalariesSalaries

Firm sizeFirm size Industry competitionIndustry competition

C.E.O. power and discretionC.E.O. power and discretion InternationalizationInternationalization

High stress and instabilityHigh stress and instability

• Extensive experience in the industryExtensive experience in the industry• Recognizes need for flexibility and Recognizes need for flexibility and

changechange• Focus on using teamsFocus on using teams• Partnerships with universitiesPartnerships with universities

Leading Change:Leading Change:Sari Baldauf of NokiaSari Baldauf of Nokia

President of largest private employer in President of largest private employer in Dominican RepublicDominican Republic

Focus on employees and community Focus on employees and community first and profit secondfirst and profit second

Extensive programs to educate and Extensive programs to educate and support employees and their familiessupport employees and their families

Participation from employeesParticipation from employees

Leadership In Action:Leadership In Action:Fernando Capellàn Fernando Capellàn

• C.E.O. involvement in nomination of board C.E.O. involvement in nomination of board members helps assure that members with the members helps assure that members with the right skills and expertise are selectedright skills and expertise are selected

• Those nominated by C.E.O. may have a conflict Those nominated by C.E.O. may have a conflict of interest and a positive bias towards the of interest and a positive bias towards the C.E.O.C.E.O.

• Creation of a balance of members nominated Creation of a balance of members nominated by different stakeholders is essentialby different stakeholders is essential

The Leadership ChallengeThe Leadership Challenge