A multitude of research exists as to strategic management and whilst there seems to be a general consensus amongst academics and business as to the ‘what’ and ‘how’, there is an equal amount of ambivalence as to the ‘who’.
No one-size-fits-all approach exists as to who does what. However one concept is clear: whoever it is must have the interests of the organisation as their number one priority.
In regards to responsibility it makes sense to assume the buck stops with those at the top, though whether this is ‘fair’ is both a disdainful and legitimate argument. According to the Directors Handbook, directors are expected to “acquire and maintain a sufficiently detailed knowledge of the company’s business activities...to enable them to make informed decisions”. The trustworthiness of information given to directors is heavily reliant on individuals with the CEO being regarded as having the biggest influence on the board’s decision-making freedom. Whilst certain directors claim to have no knowledge of inaccurate financial reports the courts clearly believe directors “must pay attention and give appropriate consideration to material placed before them”.
A board must be intimately involved in the strategic management process, there's no question about that. Directors are required to act in the best interests of the company, as are the CEO, management and employees. It can be agreed then, that everyone ‘working’ in the company shares the same common interest.
Strategy implementation is clearly the domain of the CEO and senior management. This boundary of corporate government is unmistakable; directors should not become involved in managing the implementation of board policy.
It is clear and logical that directors should hold overall responsibility; however this doesn’t carry with it the assumption that directors should be the only ones involved in setting and reviewing the company mission, vision and goals (pre-strategy evaluation), nor does it assume the board should be hands-on in carrying out external or internal analysis (formulation). More importantly, neither does it assume that these tasks should be carried out by the CEO, individually or in conjunction with the board. Reference has been made earlier to the amount of influence a strong CEO can have on a board’s decision making.
Those with the greatest investment in the company’s long-term performance and who have the interests of the organisation as their number one priority are not necessarily the director serving a term of say, three years, nor the CEO, serving an average term of three to five years, but long-standing staff with an intrinsic knowledge of the company and industry. Many agree "the best ideas come from the janitor” and research draws a strong correlation between the involvement of middle-managers in the formulation of strategy with improved organisational performance.
In the division of labour as to who does what in the strategic management process, individual companies need to determine who has the best interests of the company at heart at every level. Whilst the buck does stop with the directors, it is the responsibility of those who have the greatest knowledge of the heart and soul of the company to communicate this to the board, the responsibility of the CEO to facilitate and formalise it and the responsibility of the directors to objectively evaluate and guard it.
Annette Kendall is an MBA student at Massey University
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