Benefits of Strategic Management - Case Study Example

Introduction

• • • Strategic management is a highly recommended methodology for organizations that seek high performance and competitiveness, especially if well implemented (Simerson, 2011). Government institutions and agencies are mostly the largest employers one can find, and are relied upon to deliver the best services even in the face of challenges related to limited resources and complexity of operations (Anthopoulos & Fitsilis, 2014). Strategic management remains a widely accepted feature in the running of government agencies, so that it is difficult to find an institution at whatever level of government that does not at least have a plan (Starling, 2011). Considering the need for optimal service delivery and the possible weaknesses of strategic management however, the question arises of whether strategic management really matters in the improvement of government performance. While it may have its shortcomings, strategic management is useful in ensuring maximum government performance. This paper discusses the role of strategic management in government service delivery, and argues that it matters a lot in ensuring government effectiveness.

Arguments for Strategic Management

Five main arguments may be put forward to show the usefulness of strategic management in determining overall performance. First, it is a useful tool in the comprehensive assessment and development of organizational competence. Agwu & Awele (2015) explain that the approach is helpful especially as it places greater value on the identification and strengthening of core competencies, which in the long run ensures that individual and overall organizational performance is maximized. Hill & Jones (2011) agree that it especially avails organizational perspectives for government entities. Normally, assessment of competencies tends to overlook the wholeness of an organization and how each of its component parts is interrelated. However, with strategic management, there is a broader organizational perspective where all components are included and their interrelationships incorporated in coming up with a strategy which is optimal for the entire organization.

Second, strategic management is helpful in setting appropriate standards that ensure the best quality in any decisions that are arrived at. According to Lasserre (2012), this is because it encourages a change of mentality by decision makers from passiveness and automatic compliance to active participation. To Bouckaert & Halligan (2007), more intelligent decision-making on allocation of resources at all levels in the system ensures greater focus on the objectives of government, better management of risks arising and greater responsiveness to needs of the citizenry. According to Hansen & Ferlie (2016), decision-making at all tiers therefore ends up being founded on better budgeting procedures, longer time frames for planning and better information. Hill & Jones (2011) argue that it is only upon the extensive decisions that programs and projects that satisfy the objectives are initiated.

Third, strategic management helps as it deservedly places focus on the most important resource that determines organizational performance, the workforce. According to Kakoli (2009), strategic management ensures better performance of government employees, and has them as its critical factor. According to Thompson & Martin (2011), strategic management ensures that agencies are enabled to identify and deal with both existing and potential gaps in critical skills which could undermine the attainment of their missions. To Lasserre (2012), a strategic approach to human resource planning enables its integration into the other strategic aspects of organizational planning, making it possible to look at every kind of turnover and ensuring mechanisms to strengthening both existing and future capacities of the organization. In addition, Marr & Gray (2012) note that it ensures effective management of talent through relevant training, retention, recruitment and job flexibility to deal with possible skill gaps and training introduced where necessary. Consideration of the human resource matters a lot in ensuring unit and overall productivity.

Fourth, strategic management helps in marshalling the efforts of all involved towards one desirable direction, hence greater output (Al-Khouri, 2012). According to Van Dooren & Bouckaert (2015), it enables the presence of a uniform purpose and vision for everyone, making it easier for everyone to work towards the single direction of serving the public in the best way possible. There is the likelihood of higher commitment levels towards the respective agencies or departments and the goals that have set out for them. The quality of service to the public will most likely increase, with management even being able to measure the kind of service delivered. Hill & Jones (2011) explain that a strategic plan for instance will assist every participant in a government agency to set priorities appropriately, and match available resources to the opportunities that arise. With a strategic approach, any government agency can better be able to handle risks brought forth by the external environment, and in the long run, decision-making will be improved, hence better overall performance.

Fifth, strategic management provides an avenue for goal-setting and attainment of objectives, which will assist in terms of motivation of the government agency to achieve what it has set out to. According to Hitt et al. (2013), the performance of any government agency will depend on the kind of results that everyone sets out to achieve and eventually manages to. Lasserre (2012) believes that as an approach strategic management supports this by ensuring presence of result-oriented systems. Proper management will facilitate performance management systems that indicate how each individual or unit is to contribute to the overall goals of the department or agency that they work within. The work environment is appropriately adjusted to motivate and enable everyone to engage in continuous improvement and learning, apart from just accomplishing what has been stated as their goals. Fitzroy et al. (2012) explains that strategic management helps to enable progress measurement. Its processes make it possible for the government agencies and government as a whole to set objectives and identify ways in which successes may be measured. Setting such measures demands that an organization first points out what it considers critical to its success then ensures the putting in place of objectives while keeping the critical measures visible for purposes of evaluation.

Examples of Strategic Management in Government: United States

In its strategic approach, all federal agencies have to establish, implement and update plans annually. These should prioritize actions basing on positive Returns on Investment for American taxpayers (GAO, 2013). Strategic Management especially focuses on performance as it relates to all stakeholders’ expectations. Accountability is highly valued, but not the single driving force in management (Wanna & Lee, 2015). The US government expects better performance through adoption of more result-oriented, market-based and citizen-centered approaches guided by five main principles. According to OPM (2014), the principles upheld include strategic human capital management, integration of budget and performance, expansion of e-government, competitive sourcing and better financial performance. The reduction of cycle times in decision-making and support in every government organization seeks to be reduced and information technology is considered crucial for this. Government strategic management is based on strategic plans which are then broken down into objectives to be pursued at the regional and departmental levels (Illustration in Appendixes 1).

Dubai

Tin Dubai, there is the provision of a Strategy Execution Guide for Dubai. According to Executive Council (2010), the guide recommends Strategy Execution Systems (SES), which is in itself a management practice that has to be driven by the specific agencies’ leaders. According to Hvidt (2009), the SES provides a translation of all strategies into actionable and attainable components, then tries to direct every unit in the agency or organization towards what has been spelt out. Through the SES, decision makers are able to access mechanisms and information that enable strategic making of decisions.

Strategic management is adopted as part of the financial and human resource functions so that everything ends up being part of the overall strategy of each agency. Performance measurement and strategic are implemented to ensure proper institutionalization. The overall government strategy for Dubai seeks five main objectives. These are maximization of social development, ensuring economic growth, provision of modern, adequate and up to date infrastructure, promoting security and justice for all and proper utilization and management of land and the environment. There is an additional benchmarking for government excellence in seeking the strategic objectives (Executive Council, 2010)

(Illustration in Appendix 2)

Arguments against Strategic Management

• • • In spite of the five arguments and illustration of how strategic management supports government operations, one can also argue that it does not really matter. This is because strategic management in government as we know it could actually not strategic in the first place. This is because it does not result in strategic thinking, yet this is what governance really requires.

Reference can here be made to an argument by Henry Mintzberg, who according to Hitt et al. (2013), considers even just the idea of strategic planning as being wrong. In his view, planning relates to analysis, yet strategy is supposed to be a synthesis. An analysis can never produce a synthesis, so that planning leads to formulation of plans, and not strategies. Plans are not what will maximize performance in government, but rather real strategy.

The current approach to strategic management is based on fallacies, and may therefore be unnecessary in ensuring government success. The kind of planning pursued both in the United States and Dubai for instance is highly dependent on rationality, logic and a cause-and-effect pattern of thinking. In it, there are proposed structural remedies, problem-solving approaches, set timelines and identified fixed outcomes to be pursued. However, it is possible to argue that such an approach is just too narrow and simplistic. Plans for instance only expose government entities to the risk of reification. According to Simerson (2011), this refers to a situation where a plan ends up as an end which has to be sought even when its assumptions have already been made invalid due to unexpected changes within the environment. Instead of dealing with the realities that face the organization on a day to day basis, the mission of management becomes the following of a blue-print.

Strategic management could easily be replaced with a more dynamic approach. It’s kind of planning seemingly assumes that the world would be at a kind of standstill during the development of plans then afterwards remain on the predicted course during implementation. The truth however is that the environment within which government agencies operate keep changing at an increasing pace, making it possible that plans could be losing their relevance across the planning periods but just because we need to stick to them, they are maintained. A good way of thinking about this would be consideration of the political, social and technological life that was existent only a half a decade ago. Things have definitely changed.

Adopting strategic management as discussed brings with it the wrong assumption that strategy should be based on an objective measurement of hard data. As a result, the issues underlying the actual data are overlooked, even if these may actually be useful in selecting the best direction that the institution needs to go. There is also the apparent assumption that human judgment is inferior to rational sequences, ranging from analysis to implementation, and structural systems presented in plans. I believe however that formalized procedures rarely manage to forecast discontinuities. Instead, they force the drafters of plans to concentrate on the means towards achievement of ends, instead of the ends themselves. A plan basically shows how goals are to be attained and not why they are to be attained. It presents the ways through which objectives may be pursued, and not thinking of which objectives need to be sought. Strategic management is an optional venture because it in most instances lacks originality and therefore exposes government entities to the risk of wrongful application. It is rare to find a plan which is truly original. A majority often cite projections basing on what has happened in the recent past or even borrow their approaches from other nations or jurisdictions. For instance, according to Marr & Gray (2012), there was a time when Total Quality Management (TQM) was considered the ideal. Many institutions would rush to incorporate it, and in most instances implementation would be based on how others in successful countries or organizations had done it. Its limitations however started being noticed afterwards.

Strategic management only limits flexibility and therefore hinders performance in the organization. When it is implemented for instance, there is the possibility of the government entity having to reject some available opportunities. The inability to easily take up all the opportunities that an organization is able to find can lead to frustration. Some strategic management processes are also too formal, thereby limiting creativity, innovation and the overall ability of an organization to foster creativity within itself. Looked at this way, strategic management could be a factor that limits the ability to adapt and change hence perform optimally. When the strategy is integrated and aligned well in the organization, flexibility will be negatively affected too. According to Cerniauskiene (2014), when an organization an strategy are well aligned, issues such as the board, structure, reward and performance systems and staffing are fully addressed. The alignment guarantees that the entire organization is headed in the same, right direction. However, I believe that this could harm adaptability.

Discussion

Overall, after having assessed the weaknesses, it still appears that strategic management is very helpful in ensuring that systems work well in government entities. This is because within it, every member of staff has a chance to make decisions every day, with the knowledge that they all contribute to the movement of the entire organization towards one direction hence productivity. Even having discussed the positive contributions it makes to achievement of goals however, there are obviously cases where it will not be the best option. This is mainly because it assumes the possibility of the organization anticipating the future environment before developing plans. This is unrealistic because prediction of the future can never be an easy task. If the future fails to come out as anticipated, then any strategy taken is likely to be useless. It is also based on long term benefits only, with processes are formulated in a way that will ensure long-term benefits, so that if there is for instance an immediate crisis that needs to be addressed, it will not be possible. It seems sensible enough to deal with all immediate crises before allocating resources to strategic issues.

Irrespective of the weaknesses, it is untrue and even unjustifiable to say that strategic management is not a useful tool in ensuring better government performance. The government is generally indeed difficult to keep track of, with thousands of decisions having to be made each day. To be effective, such decisions need to be of the highest quality possible, as this is what ultimately determines if the government is successful or not. Poor decisions are very costly, and when put under stress authorities can lose their control over certain aspects of public administration which are inevitably entrenched for instance skewed incentives, ambiguity, value conflict and inconsistent information relating to performance. High quality decisions require empowerment of people so that they understand the government’s priorities, the kind of behavior required for achievement of the priorities and the effect of actions and decisions upon the government system. Good information therefore has to be availed to them or that they be given the appropriate incentives to access the information. All these are best guaranteed through an effective strategic management. I believe that just pursuing more planning or struggling to improve the entailed planning processes is not going to get the governments where they want to be. This is because the process usually has some weaknesses, especially when applied to a complex entity like the government.

Having strategic management as the guide in government operations is a significant thing. Through it, the public sector will be able to easily distinguish between the needs and wants of the individuals or agencies involved. When this is done a more rational allocation of resources is likely to be achieved. Managers will for instance be able to ensure the best Return on Investment for every program or decision arrived at. Instead of allocating resources in an incremental manner basing on historical trends as usually tends to be the case it normal management, the government will for instance be able to seek bottom-up reviews upon whose findings resources are to be allocated along agency goals. It is notable that government or departmental spending that is not guided by objective risk and value assessments ends up compromising the ideals of strategic planning. This is because it is capable of unnecessarily diverting resources from otherwise more significant needs, and the outcome is the worsening of the nation’s fiscal position in the long-term.

However, governments should not be rigid in reliance on the plans as formulated currently. A workable alternative to the kind of traditional, plan-based strategic management could probably be implementation of rolling sequences of project-based change and reviews. This would for instance focus every year on one or a few departments, divisions or government agencies. According to Simerson (2011), this constitutes continuous rotational planning, in which a more comprehensive approach is used. In it, fewer targets are concentrated on at a time.

Conclusion

Government is always faced with the chance of maximizing its output to the public, even in the face of challenges arising from financial constraints and complexity in the way it works. Strategic management is however helpful in this effort through ensuring proper evaluation and promotion of organizational competence, maximization of quality in decision-making, focus on workforce development, unity in effort and better goal-setting. It is also criticized in that it is also not truly strategic, is based on fallacies and promotes lack of originality. However, strategic management generally assists in boosting performance through forcing everyone to objectively assess the organization. It brings about discipline, as a result of which top and middle management is able to reexamine the future, as a result of which it is possible to see the bigger picture. There may be the need to evaluate circumstances and avoid rigidity in applying the approach though. Generally however, strategic management remains very helpful in ensuring that service delivery is optimized.