RESPONSIBILITIES OF TOP MANAGEMENT 1 - FULFILLS KEY ROLES (MINTZBERG, 73) INTERPERSONAL ROLES –FIGUREHEAD –LEADER –:LIAISON INFORMATIONAL ROLES –MONITOR –DISSEMINATOR –SPOKESPERSON DECISIONAL ROLES –INNOVATOR / ENTREPRENEUR (PLANNER) –DISTURBANCE HANDLER (CRISIS MANAGER) –RESOURCE ALLOCATOR (SLICING-THE-PIE) –NEGOTIATOR (BARGAINER)

RESPONSIBILITIES OF TOP MANAGEMENT – PROVIDES CORPORATE LEADERSHIP ARTICULATES A TRANSCENDENT GOAL FOR THE FIRM –PROVIDES A VISION OF THE FUTURE –SEES THE FIRM NOT AS IT IS…BUT AS IT CAN BECOME COMMUNICATES HIGH PERFORMANCE STANDARDS –SHOWS CONFIDENCE IN SUBORDINATES –PROVIDES GOALS, AUTONOMY, MENTORING PRESENTS A ROLE FOR OTHERS TO INDENTIFY WITH –SETS AN EXAMPLE IN BEHAVIOR AND DRESS –COMMUNICATES VALUES CLEARLY IN WORDS & DEEDS

RESPONSIBILITIES OF TOP MANAGEMENT – MANAGES STRATEGIC PLANNING INITIATES/MANAGES THE STRATEGIC PLANNING PROCESS SEEKS INFORMATION –LONG-RANGE PLANNING STAFF –DIVISIONAL (SBU) MANAGERS –FUNCTIONAL AND DEPARTMENTAL MANAGERS –TOP MANAGEMENT TEAM

APPROACHES TO STRATEGY FORMULATION THE MASTER STRATEGIST CEO personally shapes the plan Depends on skills and vision of one person DELEGATE IT TO OTHERS Uses a planning staff or task forces Lack of top-down direction and leadership COLLABORATIVE APPROACH Involve key people --- seek group consensus Can political games and compromises be avoided? THE CHAMPION APPROACH Encourage subordinate managers to develop their own strategies Will a coherent, unified strategy emerge?

USING A STRATEGIC PLANNING STAFF THE PLANNING STAFF SHOULD: Help gather and organize information Analyze industry and competitive conditions Administer annual reviews of strategy Distribute information on the firm’s strategic performance THE PLANNING STAFF SHOULD NOT: Prepare strategic plans for someone else to implement Usurp the responsibilities of operating managers Make strategic decisions POTENTIAL PROBLEMS: A planning staff cannot be held accountable for results because they have no authority to implement. Non-acceptance by managers who do not feel ownership in the strategic plan

ROLE OF THE BOARD IN STRATEGIC MANAGEMENT DETERMINE AND APPROVE THE ORGANIZATION’S MISSION AND STRATEGIC OPTIONS EVALUATE AND INFLUENCE KEY MANAGEMENT DECISIONS AND ACTIONS MONITOR AND EVALUATE THE ENVIRONMENT SURROUNDING THE ORGANIZATION MONITOR AND EVALUATE THE OVERALL PERFORMANCE OF THE ORGANIZATION BOARDS DIRECT THE AFFAIRS OF THE FIRM, BUT DO NOT MANAGE THEM

BOARD INVOLVEMENT IN STRATEGIC MANAGEMENT PHANTOM BOARD May not even meet! Never knows what to do. No involvement. RUBBER-STAMP BOARD(Ceremonial – 8 %) Permits officers to make all decisions Votes the officers’ recommendations No board agenda MINIMAL REVIEW BOARD(Passive – 21 %) Reviews issues brought to its attention by the officers Members are notified what is on the agenda….but often come unprepared NOMINAL PARTICIPATION BOARD(Somewhat Active – 45 %) Reviews performance of selected key decisions independently Occasionally questions officers’ actions and strategies Informal groups form within the board

BOARD INVOLVEMENT IN STRATEGIC MANAGEMENT - 2 ACTIVE PARTICIPATION BOARD(Very Active – 21 %) Has active board sub-committees Conducts its own audits Gathers information about the organization independently Questions officers regularly on a wide variety of topics Makes final strategic decisions CATALYST BOARD(Critical Contributor – 5 %) Takes a leading role in establishing and modifying the mission, objectives, and strategies of the organization Has very active strategic planning sub-committees Officers do not propose or formulate strategies…but are expected to implement them for the board

STRATEGIC MANAGEMENT STYLES WHEELEN & HUNGER, HIGH ENTREPRENEURALPARTNERSHIP INVOLVEMENT BY TOP MGMT CHAOTICMARIONETTE LOW LOW HIGH INVOLVEMENT BY BOARD OF DIRECTORS

BOARD COMMITTEES EXECUTIVE FINANCE AUDIT NOMINATING COMPENSATION STRATEGIC PLANNING INVESTMENT ETHICS AND SOCIAL RESPONSIBILITY

BOARDS BOARD MEMBERSHIP Inside Members Outside Members Affiliated Non-Management Independent Co-determination Interlocking Directorates BOARD SIZE Private (8 members, meets 4 times/year) Public (13 members, meets 6-7 times.year) NOMINATION CEO Board Committee ELECTIONS Simultaneous vs. Staggered Terms Straight vs. Cumulative Voting

A “GOOD” DIRECTOR… KORN/FERRY BOARD SURVEY 95 %Is willing to challenge management when necessary 67 %Has special expertise important to the company 57 %Is available outside meetings to advise management 41 %Has expertise on global business issues 39 %Understands the firm’s key technologies and processes 33 %Brings external contacts that are potentially valuable to the firm 31 %Has detailed knowledge of the firm’s industry 31 %Has high visibility in his or her field 18 %Is accomplished at representing the firm to stakeholders

TRENDS FOR FUTURE DIRECTORS… 1—BOARDS HELD TO HIGHER STANDARDS OF CONDUCT Society will pay more attention---lawsuits for negligence 2—DIRECTORS WILL FEEL RESPONSIBILITY FOR/TO THE CORPORATION AS A WHOLE Not just to the stockholders 3—GREATER ACTIVITY IN STRATEGIC PLANNING 4—MORE TRAINING AND ORIENTATION OF BOARD MEMBERS TO THEIR DUTIES Certification of directors for their board responsibilities 5—MORE USE OF NOMINATING COMMITTEES TO SELECT CANDIDATES FOR DIRECTOR POSITIONS 6—DIRECTORS WILL BE MORE INDEPENDENT OF THE CEO