Managerial leadership, organisational efficacy

Organisational functions and activities need to be organised and coordinated. They should be designed properly to manage the effective division of work, grouping of activities, coordinating and controlling the work of the organisation.

People Management Issues with Robert Mandeya

The flexible leadership theory explains how top executives and other leaders can influence the overall performance and functionality of an organisation, be it business or otherwise. A wide range of leadership behaviours, management programmes, structural forms, and external initiatives can be used to influence the key determinants of organisational performance. It follows then that management programmes and systems are usually more effective when they are mutually compatible and appropriate for the situation. Effective performance requires a cooperative effort by the multiple leaders in an organisation, and they must be flexible and adaptive as the situation changes.

Unpacking organisational efficiency

Simply put, efficiency is the extent to which the organisation minimises the cost of people and resources needed to carry out essential operations. Efficiency also depends on process reliability, which is the extent to which work processes are conducted without unnecessary delays, errors, or accidents. Furthermore, efficiency is facilitated by relevant organisational cultural values, including the desirability of reliability, meeting deadlines, error-free performance, adherence to rules and procedures, controlling costs, and responsible use of resources. It is easier to improve efficiency when the organisation’s leadership is committed to adhering to certain standards of practice or ethics which support efficiency.

Human capital, organisational efficacy

Human capital is the extent to which the members of an organisation have the skills and motivation needed to do the work effectively. Research in strategic human resource management indicates that human capital is another determinant of organisational performance. Defined broadly, human capital includes both human resources and human relations. Human resources (or “employee talent”) for an organisation include the task-relevant skills and experience of the members.

Potential indicators of human resources include the level of relevant skills, experience, and education of employees. There is considerable evidence that the acquisition and retention of human capital have a stronger impact on business results than was previously recognised. Talented employees with unique knowledge and skills are increasingly being viewed as a valuable asset and a source of competitive advantage.

In my previous installment on “Leaders are victims of poor deployment” I alluded to the fact that leaders at times poorly deploy human capital to the extent that organisations suffer “low productivity and experience pathetic return on investment.” At times leaders fail to nurture healthy human relations within the organisation, resulting in dysfunctional operative systems characterised by poor communication, speculation and demotivation. Healthy human relations include organisational commitment, identification with the organisation, mutual trust and cooperation, and optimism about the future. Many studies have found that leaders can influence employee optimism, organisational commitment, collective identification, and mutual cooperation.

Influence of leaders on performance

Leaders can improve the performance of an organisation by influencing the performance determinants. One form of influence is the use of specific leadership behaviours in interactions with subordinates, peers, and outsiders. A second form of influence involves decisions about management programmes and systems, and organisational structure. A third form of influence involves decisions about the competitive strategy for the organisation. The three forms of influence must be used together in a consistent way for effective strategic leadership. It goes without saying that many different types of improvement programmes, management systems, and structural forms can be used to influence the performance determinants and organisational effectiveness.

CEOs and leaders of major sub-units usually have more authority than lower-level managers to implement or modify management programmes, systems, and structural forms. Top management has the primary responsibility for determining what programmes are relevant and mutually compatible, but a coordinated effort by leaders at all levels in the organisation is necessary to ensure that a programmes or management system is effectively implemented.

Decisions about competitive strategy

Again in my previous installment on “A Crisis is a decision point,” I pointed out that “making sound decisions is a preserve of leaders who have clear leadership criteria.”

I further hinted that “in the absence of a clear leadership culture in an organisation most leaders end up taking advantage of the absence of such standards to establish their own self-serving criteria for what effective leadership means.” Top management usually has primary responsibility for decisions about competitive strategy in business firms. However, the amount of discretion the CEO and other top executives have for making major changes in the strategy, structure, and membership of the organisation depend on aspects of the situation such as the type of organisation, its ownership, the relative power of different stakeholders, and constraints imposed by economic and market conditions.

Organisational Structure and Efficacy

According to Shari Zadeh (1998:24), the position of organisational structure planning is one of the effective and key factors determining an organisation’s success. Organisational structure is a sense that the staff has in the group responsibility, provisions, abundance and special manner of decisions. It also focuses on the formal and informal present space and communication ways at an organisation.

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