Strategic consensus:
Managing strategic consensus has been identified as the foundation for effective implementation of strategy (Floyd and Woolridge 1992) because the gulf between the strategies formulated and its awareness at the lower levels (what is called the implementationgap) is considered as one of the key reasons for poor implementation.
Strategic consensus has been defined as the agreement among the top, middle and the operating level managers on the fundamental priorities of the organisation and consists of a shared understanding and a common commitment (Floyd and Woolridge 1992). It gets reflected in the decisions taken by the managers. Variations in the strategic process explain when consensus is positively or negatively related to performance (Woolridge and Floyd 1989). Consensus is an outcome of the strategy process and is a function of the character of the process of strategic decision making.
The construct strategic consensus consists of the following dimensions:
- Scope: refers to who participates in the process of decision making. It can be the members of the top management (hambrick and snow 1977, Thomson 1967); or can extend beyond the top management to middle and operational level managers (Quinn 1980; Floyd and Woolridge 1992; Burgelman 1994).
- Content: refers to what decision makers agree about. This can mean ends, means (Dess 1987) or strategic priorities (Floyd and Woolridge 1992).
- Commitment: indicates the manager’s involvement and willingness to cooperate with the implementation of the decisions taken.
Consensus coveys when basic priorities and assumptions are settled. Focus is on integration of activities and a high degree of consensus is built when there is conversation across managerial levels.
Consensus depends upon the specific mix of incrementalism and synopticism adopted in the strategic decision making process, which may vary with the stage of the decision process.
In organisations using a predominantly synoptic strategic decision process, the consensus is of that of the top management. Consensus on content develops sequentially starting with the consensus on environment, then on goals and finally on means. The degree of commitment is dependent on the congruence between organisational goals and personal goals (Floyd and Woolridge 1992).
In cases where the incremental strategic decision process is used, the consensus process is initiated by the group which senses the issue and gets carried out informally, finally culminating in the consensus at the top management level. Thisconsensus is more about the specific courses of action and is limited (Floyd and Woolridge 1992).
For consensus to emerge; broad participation in the strategic decision process is essential in complex and uncertain environments (Mintzberg 1978) since top management consensus may be less important.
Studies on consensus who take the synoptic perspective on strategic decision making have focused on ends and means while those who take an incrementalism perspective have focused on specific actions which reflect top management priorities.
Since strategies are broad based and need to be translated into operational plans, there is a need to look at strategic priorities as the instrument of consensus. Priorities define what is important to the decision makers and describe the content of consensus and are driven by strategic intent and decisions made by top management. The test for assessing priorities is to ask managers to allocate scarce resources (Bower 1970). To look at these we need to look at the middle level and operating level managers (Bowman and Ambrisoni 1997).
Empirical studies on the consensus –performance link have mostly been cross sectional in nature and have concentrated on consensus at top management level. They may miss out on the incremental processes, if only done for goals or means; and do not look for consensus at other levels.
Strategic decision consensus among decision makers facilitates decision implementation speed and success (Dooley, Fryxell and Judge 2000) because it is expected that the best possible decision was reached and there is higher commitment towards implementation effort (Dooley and Fryxell 1999).
Research findings:
Research on consensus has concentrated on top management (Dooley, Fryxell and Judge 2000) and has shown mixed findings (Bowman and Ambrisoni 1997).
Studies on Consensus among members of top management have followed the rational, synoptic perspective on strategic decision process in an organisation (Dess 1987). Hence the consensus is studied as an outcome and it reflects agreement on means and /or ends (Bourgeois 1980) and environment (Bourgeois 1985) or strengths and weaknesses (hrebiniak and snow 1982).
Bourgeois (1980) in his study found that Consensus on both goals and means leads to higher performance. However the highest performance was seen when there was consensus on means and a narrow range of operationalisable goals with disagreement on less operationalisable goals. Therefore critical factors were the operationalisability of goals and agreement on means. Dess (1987) found that consensus on either ends or means leads to higher performance and there is no need for consensus on both. While studies found conflict on goals to improve performance (Grinyer and Noburn 1977-78); Conflict on means was found to lower the performance (Bourgeois 1980; Dewoot, Heyvaert and Martou 1978). In these set of initial studies, the consensus performance link was tested as a direct relationship.
The importance of mediating factors between the consensus and performance link was first enunciated by Bourgeois (1985); and later in conceptual papersby Dess and Origer (1987) and Priem and Dess (1995). Environment, integrating mechanisms (Dess and Origer 1987) and managerial commitment and involvement (Priem and Dess 1995) were identifiedasimportant mediating factors.
The facets of complexity, munificence and dynamism (Dess and Beard 1984) were found to be inversely related with consensus on means and ends (Khandwala 1977; Dess and Origer 1987). It was also found that organisation slack moderated the need for consensus on goals in munificent environments (Bourgeois and Singh 1983) and greater the convergence between perceived uncertainty of environment of the top management and actual uncertainty, better was the performance (Bourgeois 1985). Consensus could also be enhanced by collaborative efforts (Bourgeois and Brodwin 1984) or problem centered interactions in a highly structured system of decision making (Shrivastava and Grant 1984). Collaborative efforts to obtain consensus are useful to obtain support where power cannot be used (Bourgeois and Brodwin 1984); or meet requirements of legal agencies (Kellermanns et al 2004) or facilitate swift implementation (Dess and Priem 1995).
Communication (Dess and Priem 1995; Miller 1992; Simon 1997) and Integrative mechanisms (Dess and Origer 1987) such as committees, liaison roles, and strategic planning (ketokivi and castaner 2004) facilitate the process of consensus development by reducing the position bias including functional bias (ketokivi and castaner 2004) and sub goal pursuit (March and Simon 1958) which are products of division of labor and structural differentiation. This can occur even when members are told to look at issues from an organisational perspective which raises challenges both for formulation and implementation of strategy (ketokivi and castaner 2004).
Managerial commitment (Korsgaard, Schweiger and Sapienza 1995);defined as the extent to which team members accept the strategic decision reached and intend to cooperate in carrying it out; ensures that mutual and consonant decision choices for a coordinated and cooperative effort are made. A lack of it can lead to constraints on choices for decision making (Guth and Macmillan 1986)ability to implement the decision (Hitt and Tyler 1991) and have acascading effect on decisions linked to this one (Eisenhardt 1989).
Premature top management consensus is seen when consensus on goals or means precedes consensus on environment and results in suboptimal performance (bourgeois 1985).
While majority of the studies have concentrated on consensus at the top management level; there has been a realization that consensus needs to be looked at all levels of managers in an organisation to explain the link between strategic consensus and performance (Woolridge and Floyd 1990; Floyd and Woolridge 1992; Dooley, Fryxell and Judge 2000; Markoczy 2001; Kellermanns et al 2004).
The middle level and operational level managers are believed to have a greater and better understanding of the business environment, of organisational resources and capabilities (Floyd and Woolridge 2000) and are the key players in the implementation process (Floyd and Woolridge 1992). Their participation in strategy formulation through generation of autonomous initiatives (burgelman 1983) and their key role in resource allocation process( Bower 1970; Bower and Gilbert 2005) coupled with their nodal role in the transfer of information through organisational communication channels allows inputs which facilitate the strategic decision process and its subsequent implementation. Participation allows for greater involvement leading to consensus formation which increases commitment at the managerial levels (Woolridge and Floyd 1989; Floyd and Woolridge 2000).
Methodological issues and evaluation of research:
The empirical studies on strategic consensus have used bivariate analysis (Dess 1987; Rapert,Velliquette,Garretson, 2002), multi variate analysis (Homburg et al 1999; Knight et al 1999) and case studies (Markoczy 2001) with findings being equivocal. Findings which support the consensus –performance link include (Homburg et al 1999; Rapert,Velliquette,Garretson, 2002 ;) partially supportive (Dess 1987; Bourgeois 1980; Bowman and Ambrisoni 1997) and non supportive (west and schwenk 1996).
The reasons for such findings have been identified as limited agreement among researchers about the nature of consensus construct and how it should be measured and about the way to conceptualize the consensus- performance link( kellermanns et al 2004).
Research on consensus has tended to look mostly at the top management and has ignored the fact that implementation requires shared understanding at the lower levels of managers.
The importance of the strategic consensus is repeatedly stressed for development of theory about the strategy process (bourgeois 1985; priem 1990; priem and dess 1995).
Research gap:
Consensus needs to be looked at all levels of the organisation for it to be linked to organisational performance. Therefore when it is looked at all levels, the matching of the locus and content of the strategy has to be ensured (kellermanns et al 2004) since the content will vary with levels of managers for eg: means and ends are suitable for content at top management level while strategic priorities are suitable for middle level managers and operational plans are suitable for operational level of managers.
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