The Role of Top Management
2.7 The Role of Top Management As the generic name for this group would imply, it is top management as a group that runs a corporation under the guidance of the CEO. Depending on the management style of the CEO, the relationship could be highly participative and democratic, so strategic decisions are made jointly. However, if the CEO is more dogmatic or autocratic, top managers may be asked for their input but would not be involved in making any strategic decisions.
Composition and Authority In a functional organization, the top-management team typically comprises all of the vice presi- dents and C-level executives. In a matrix organization, it would include the department heads and key staff directors and sometimes the managers of large and critically important projects. In a divisional organization, it would comprise key staff directors and all divisional and subsidiary presidents. The same would hold true in international organizations. Country managers are usu- ally not members of the top-management team. Having said that, some global organizations are extremely complex, conducting purchasing, manufacturing, R&D, and sales and marketing in dif- ferent countries. For these corporations, like the Proctor & Gamble example cited earlier, the key executives in their top-management teams could be located in different countries.
The degree of decision-making authority varies also with the kind of organizational design followed. For example, in a functional organization, a vice president or C-level executive has authority only in the functional area in question. A vice president of marketing can decide tactical questions only in areas including marketing, customer relations, sales, advertising and promotions, and market research. On the other hand, a divisional president acts like a CEO within the division in question, overseeing all business activities of the division. In that structure, however, all functional areas of the division must be compatible with their corporate counterparts.
Building Capability Decisions are not easily compartmentalized into “strategic” and “tactical” or non-strategic. Imple- menting a strategy doesn’t mean just doing the tasks that have always been done and in the same
Discussion Questions 1. Describe how a small company’s organization might change from a functional organizational
design to one that might better support a new product it had just developed for a new market. 2. Imagine you are working for a company that had a matrix form of organization, and you had pro-
gressed to being one of the project managers. The client for your project suddenly changed the terms of your project, and you needed more support in computer modeling as a result. The depart- ment head for computer science claims that the person already on your project could handle the extra load, but you feel you need an additional person. How might you resolve this conflict?
3. As an international company expands to a particular country, would you hire someone from that country to run the office there but train them in the company’s culture and products, or have someone set up shop in that country from the home country and have him learn about the mar- ket in that country? Discuss the reasons for your choice.
CHAPTER 2Section 2.7 The Role of Top Management
way as before. Strategy implementation over time becomes more demanding as competition inten- sifies. For that reason, top management must do more than simply keep the company running.
To build the necessary capabilities required for effective strategy implementation, the company must continually recruit the kinds of people it needs and train others in newer systems, processes, products, and technologies. It must develop and keep full a pipeline of potential management and leadership talent that can fill higher-level positions as they become available. It must strive to develop a core competence if it doesn’t have one already or strengthen the one it has. If it does not, the business will erode over time. Part of building capability is to push decision-making authority down to lower-level managers so they can prove themselves worthy of taking on more responsibility (Thompson, Strickland, & Gamble, 2004).
Top management must also be effective at evaluating and developing managers and supervisors at lower levels. It becomes a top-management issue in larger companies where internal demand for good managers and leaders is high and the positions varied. In such a corporation, potential leaders need to be cross-trained in different functional areas or different brands, product lines, or countries as well as develop their problem-finding and -solving capabilities.