Wednesday, April 20, 2011

How Leadership Matters: The Effects of Leaders Alignment on Strategy Implementation

In 2009 the journal, The Leadership Quarterly, published an empirical research studying the influence of leadership in the alignment process in an organization’s attempt to implement a strategy. The research begins by questioning the ability of top management to align every person in an organization. According to the research, the idea of leadership in isolation (top management leadership), is unsustainable because organizations have management in all layers that is necessary for the successful implementation of a strategy.

As an introduction to its empirical study, the article cites a 1986 study (Guth & Macmillan) that concluded that if middle management where not aligned by top leadership in the strategy implementation process, middle management could sabotage the strategy. And, a 1990 study (Wooldridge & Floyd) of 196 managers in 20 different organizations that concluded that the success of strategy implementation lied in the alignment of middle management. This study concluded that there is a positive correlation between the level of success of middle management and the degree of success in the implementation of the strategy.

The research study presented in this article attempts to verify the findings of previous studies such as the ones quoted above. To this end, researchers studied a major health care organization that has more than 3,000 physicians, 19 large medical centers and clinics and provides medical services to over one million health plan members. The assumptions for the study were the following:

Hypothesis 1: The higher a department perceives that its leader (CEO, division leader, immediate or direct leader) supports a new strategy, the stronger the likelihood that the new strategy will be implemented in that department, that is, result in increases in strategically relevant organizational performance.

Hypothesis 2: The more department members perceive that leaders, aggregated across hierarchical levels support a new strategy, the stronger the likelihood that the new strategy will be implemented, that is, result in increases in strategically relevant organizational performance in that department.

Surprisingly, the results contradict hypothesis one. The research does not such independent effects for top leadership effectiveness. On the other hand, hypothesis two was supported by the research findings. According to the results, when the leadership effectiveness variables across hierarchical levels are entered simultaneously, the adjusted R2 increases and all leadership effectiveness variables are positive and significant.

In general, the results of this study were aligned with the results of previous studies. The research concludes that top management leadership is hindered by the availability of resources to the leader, the level of discrete power and the amount of support that a top manager enjoys from the managers that are subordinated to him.

If there are many studies warning about the risks of not including middle management in the process of strategy implementation why do you think that organizations that continue to fail in their strategy implementation efforts by failing to include management in all layers of the organizational chart in the process?

Source: http://faculty.haas.berkeley.edu/chatman/papers/04_HowLeadershipMatters.pdf

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