Volume 22 Number 1 1999

Biographical Notes William A. Drago and Christine Clements are Associate Professors of Management, College of Business and Economics, University of Wisconsin-Whitewater, Whitewater, Wisconsin 53190, USA.

Leadership Characteristics and Strategic Planning
by William A. Drago and Christine Clements Introduction The popularity of strategic planning continues even though the link between its use and organisational performance has yet to show consistent signs of significance (Mintzberg, 1994). One possible explanation for this relatively poor link may be a lack of understanding of the important contextual factors likely to cause modifications in planning systems. For the most part, managers are given a standard strategic planning “package” and are asked to implement it. This study investigates the link between leadership characteristics and the design of planning systems. Organisation leaders are generally given responsibility for overall design of the planning system, yet the link between their personal characteristics (e.g. management style, belief system) and planning system design has been given little attention in past research. Top managers are often assumed to play a pivotal role in the design of an organisation’s strategic planning system yet little is known concerning the importance of a leader’s personal attributes in affecting this design. In fact, the management literature has tended to treat leader characteristics as a dependent variable in relationship to organisational processes. The research question addressed is: “To what extent do leader characteristics effect the design of strategic planning systems?”. More specifically, this study investigates the link between three leader characteristics: power/control, creativity, and people/dependence, on plan intensity as well as the emphasis placed on specific direction-setting tools within the planning process. Direction-setting tools investigated include mission/vision, long-term objectives, short-term objectives and action planning. Plan intensity is defined as the degree to which decisions and actions of organisation members are guided by an established plan. Review The need to design strategic planning systems to fit particular organisations and their unique contexts has been addressed by numerous management writers. For instance, Morrisey (1996a, 1996b, 1996c), a strategic planning consultant and author, repeatedly stresses the need to customise the strategic thinking, long-range planning and tactical planning processes to best fit the needs of an organisation. Mintzberg (1993, 1979) suggests that planning differs according to the structure of the organisation. For example, machine bureaucracies are more likely to stress action planning, divisionalised firms emphasise performance targets and entrepreneurial firms often use vision as a means of coordinating and focusing work. Frederickson (1986) considered the effect that organisation structure might have on strategic decision processes and concluded, “Organisations that differ in their dominant structure are likely to make strategic decisions using a very different process.” (p.294) Several dimensions of strategic planning processes have been identified. Frederickson (1986) summarised these into the following categories: process ini-

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Interest in the importance of leader characteristics to organisation effectiveness has increased due. small and large firms and firms with high and low levels of diversity) and for different strategies. Morrisey (1996a) has also stressed the need for varying planning processes by stressing different direction-setting tools. Each process accentuates the development and use of different direction-setting tools. More specifically. Perrow. however. and “tactical planning” involves development of short-term objectives. Recently. Selznick. Drago (1996a. Prop. 2: Leadership characteristics will be found to be strong predictors of the use and emphasis placed on select direction-setting tools within the planning processes of organisations. to growing interest in transformational leadership and organisation change. strategic. long-term and short-term objectives. “strategic thinking” involves the use of mission and vision while “long-range planning” stresses long-term objectives with action plans. role of goals. 1996b) investigated the use or emphasis placed on different strategic planning directionsetting tools (e.Management Research News tiation. charismatic and transactional. The view taken in this study is that the CEO. 1: Leadership characteristics will be found to be important predictors of the “plan intensity” within organisations. In fact. 1970. there is little agreement as to the exact definition and measurement of these typologies. processes and contexts (i. Certainly. Numerous leadership types have been discussed including transformational.For instance. as leader. the opposite relationship seems more likely that leadership styles or characteristics lead to modifications in the design and use of planning systems. past management researchers and writers have emphasised a view of leadership as dependent upon organisation structure. means/ends relationship. In general. action plans and policies) in different situational contexts (stable and volatile environments.g. Based on this discussion the following propositions are put forth: Prop. Morrisey views strategic planning as three separate processes: strategic thinking. explanation of strategic action and comprehensiveness in integrating decisions. For instance. in part. In the special case of the design of strategic planning systems.e. transformational leadership is viewed by Pawar and Eastman (1996) as a particular form of strategic leadership which emphasises the transformation of organisation members and the linking of individual and collective interests. these leadership types are not necessarily mutually exclusive. 12 . it is suggested that leadership style will effect the emphasis placed on planning in general and on the emphasis placed on different direction-setting tools within the planning process. Managers may choose to adopt any or all of these processes depending on their organisations’ unique situations and needs. The association between leader characteristics and strategic planning processes has not been well developed. 1957). will design a strategic planning system that will most effectively enhance his/her style of leadership. Unfortunately. the CEO in most organisations is in a position of authority where he/she can influence decisions directed at the design of the planning process. mission/vision. long-range planning and tactical planning.

500 -0. Dev.369. Leadership characteristics were identified through a factor analysis of seven items from the questionnaire targeted at determining the leader’s management style and belief system. Total Assets Minimum Maximum Mean Std.031. These items are as follows: 1) 2) 3) 4) 5) 6) 7) I rely heavily on the opinions of others.100. Return on Assets: Minimum Maximum Mean Std.000 20.919.063.000 164. I am a very task-oriented leader.929. I am a risk-seeker.604. Dev. A financial comparison of firms participating in this study to all firms listed in Industrial Compustat is provided in Table I.633.000 -111.4623 0.000 4.000 1.0193 0. I am always ready to try something new.090.850. I am very aggressive.000.000.387.244.000 5.000 14. In the original investigation potential participants were randomly selected from Standard and Poor’s Industrial Compustat.000 -0.482.000 0 349.513. 13 .00 871.000 304. A seven-point Likert scale was used to assess how closely the above items matched the CEO’s leadership style and belief system (with a “7" indicating strong agreement).Volume 22 Number 1 1999 Methodology and Preliminary Results Data for this study were obtained from questionnaires sent to the CEOs of 156 firms that had participated in a previous investigation. Table I: Statistical Comparison of Sample with Compustat Population Compustat Sample (7341 firms) (91 firms) -4.000 126. and Growth of the organisation is all-important.240.700.1544 Data Item Total Sales: Minimum Maximum Mean Std. Ninety-one firms responded to this second request for information.350.091 4. and more profitable than were the population of firms listed in Industrial Compustat.000 3.5762 0.000 21. Dev.074. I am a very people-oriented leader. As can be seen from the table participating firms were generally larger.128.000 120. in terms of both sales and assets.131.000 8.128.106 88.574.

These factors are provided in Appendix A.62 People-oriented 0.59 Emphasis on planning tools was determined by asking participants to respond to the following: To what extent are the following used to guide decision-making and activities in the organisation? a. the creative factor was significantly and positively linked 14 . models were formed for each leadership factor using scoring coefficients for the dominant variables within each factor. b. Regression analyses were performed to determine the predictive power of leadership characteristics on the planning index as well as each planning tool.40|) are provided in Table II.69 Growth-seeker 0.49 People/Dependence Reliance 0.50 Power/Control Aggressive 0. This seems to be the case as two significant associations existed between leadership factors. Creativity Aggressive 0. Results are presented in Table III. Surrogate factors identifying dominant variables (those with weights greater than |0. a strong sense of mission and vision long-term objectives (two or more year time horizon) short-term objectives (one year or less time horizon) pre-planned programmes of activities. Unfortunately. Pearson Correlation coefficients were used to identify associations between surrogate leadership factors and individual planning tools as well as the overall planning index. Again.52 New-seeker 0. Results Factor analysis identifies sets of variables that are closely associated with one another.19 Task-oriented 0.40 |) Surrogate Factor Variables Included Scoring Coef.27 Risk-seeker 0. Results are presented in Table IV. To perform these analyses. d. c.Management Research News The principal factor method with “varimax” rotation was used in this analysis. when surrogate factors are developed representing only the more heavily weighted variables this independence may often be lost. a seven-point Likert scale was used to guide responses with a “7" indicating strong emphasis on that direction-setting tool. A planning index was also created by summing the responses of each of the planning items above. This planning index was used as a measure of ”planning intensity" for each participating organisation. Three factors were found to explain the majority of variance across items. Table II: Dominant Leadership Surrogate Factors (Includes only variables with weights greater than | 0. As can be seen from Table III. For multiple factor solutions relatively independent factors are created.

17 0. Dev.12 0.02**** 2.30*** to both the power/control and people/dependence factors.00**** 2.41**** 0.36*** 2.001 Action Plans 1.61**** 0.30** 3.04 0.61**** 0.27** 0.32*** 11.09 Four of the five models formed for predicting plan intensity and use of various direction-setting tools were highly significant.22** 0.07 0.61* -0.81 5.20 1.29*** 0. Action Plans Power/ Control Creative People/ Depend 20.36 1.18** 0. These include: 1) power/control was significantly and positively associated to the planning index.50 1.88*** 2.38 1.24** 0.47**** 0.38 Std.48**** 0.07 0. A number of significant associations existed between leadership factors and planning tools.21 0.41**** 0.08 0.Volume 22 Number 1 1999 Mean SP Index Mission/ Vision LT-Obj.14 Depend Variable Intercept Creative Power/Control People/Depend F R sq Adj R sq * p < 0.11 0.15 0.19 -0.05 *** p < 0.75** 0.16 6.06 0.07 0.40 1.28 0.59**** 0. creativity was positively and significantly linked to the planning index.10 ** p < 0.68**** 7.32 5.18 0.24** 0. and. short-term objectives and action plans.22 6.15 0.30 0.14 6. Only when use of long-term objectives was used as the dependent variable did the model formed fail to indicate 15 .33*** 0.14 0.24** 0.28** 0.27** 0.18* 0.26** 0. short-term objectives and action plans.16 5.27 Table III: Pearson Correlations and Descriptive Statistics (1) (2) (3 (4) (5) (6) (7) 0.20* 0.93**** 0.55*** 0. Table IV: Leadership Characteristics and Strategic Planning: Regression Analyses Independent Variable SP Index Mission/Vision L-T Objective S-T Objective 9.71**** 0.09 5.24 1. use of mission/vision and long-term objectives.01 **** p < 0.17 0. people/dependence was positively and significantly linked to the planning index.39**** 0. 2) 3) The regression analyses used to determine the predictive power of these leadership factors on the planning index as well as on individual planning tools are provided in Table IV.17 0.07 0.20 4.71*** 0.32*** 0. ST-Obj.30*** -0.04 0.34 1. 3. use of mission/vision.07 0. mission/vision.07 0.

CEOs with strong people/dependence characteristics were most encompassing in terms of direction-setting tools emphasised. These individuals stressed mission/vision. Strong. The model formed explained 30% of the variance in the planning index across firms in the study. creativity and people/dependence were both significant and positively linked (at the p < 0.10 level). Task orientation suggests a focus on details of the task. Leaders strong on creativity made least use of direction-setting tools. Aggressiveness and importance of organisation growth are viewed as indicators of the power needs of the CEO. In predicting the planning index all three leadership factors were significant and showed a positive association. A conclusion that might be drawn for these results is that the benefits of planning are perceived as higher for those with stronger leadership characteristics regardless of leadership type (at least in terms of the leader characteristics examined in this study). The same cannot be said for use of individual planning tools. While these leaders were willing to rely on others it is apparent that they used multiple planning tools to guide decisions and actions of those individuals. entrepreneurial organisations often tend to be visionaries. power/control and people/dependence were both highly significant and positively associated. the people/dependence factor included a people-oriented leadership style and a willingness to rely on others. which tend to go 16 . The planning index. Together. Discussion Three leadership factors were investigated in this study.10 level). Finally. This factor suggests a leader that works through people in carrying out his or her duties. task-oriented and importance of organisation growth. These results may indicate that planning intensity is affected more by the strength of the leadership characteristics of the CEO than by particular leadership type.Management Research News significance (at the p < 0. This link between mission/vision and creativity is consistent with Mintzberg’s (1993. through strong power and control needs such as the “product genius” that maintains constant contact with operations and through strong people skills such as a leader capable of maximising the potential of individuals around him/her. Here. These links may indicate two types of creative leadership. as well as action planning. Power/control was linked strongly and positively to the use of short-term objectives and action planning. short-term objectives and action-planning in their planning system. and guide their organisation through the sharing of vision with others. risk-seeking and aggressiveness. These variables are consistent with creativity. positive associations existed between creativity and both power/control and people/dependence. these items seem to suggest a need for power and control. High control needs may push leaders to emphasise planning tools with shorter time horizons and greater specificity. used as a general measure of planning intensity. Power/control included three variables. For predicting use of mission/vision. In predicting use of short-term objectives. 1979) belief that leaders of innovative. the link with leadership characteristics was much more selective. innovativeness. was strongly linked to all three leadership factors. emphasising mission/vision in their planning system. namely aggressiveness. The creativity factor includes three variables.

but research concerned with investigating causal factors affecting the strategic planning process remain scarce. With short-term objectives they may feel more in control of the pulse of the organisation. the surrounding future conditions that are likely to exist and the required effort necessary for the organisation to be effective. The small sample size and financial differences between participants and the population of firms in Industrial Compustat makes generalisability to this larger pool of organisations suspect. Leaders strong on power/control emphasised direction-setting tools that provided the greatest specificity including short-term objectives and action planning. including power/control. short-term objectives and action planning. Finally. Generally.” The need to modify the process due to the unique situation of an organisation has been suggested (Morrisey. Conclusion Past research suggests that the link between strategic planning and organisation performance is not strong. Further research is required to determine if the relationships noted in this study are similar in a wider range of firms. or the emphasis placed on all direction-setting tools. individual direction-setting tools tended to be stressed by leaders with different characteristics. leaders strong on creativity stressed mission/vision. The limited number of items used to assess leader characteristics suggests the possibility of other important characteristics that may effect the use of planning and specific directionsetting tools. was relatively indifferent to specific leader characteristics (all leader characteristics were significant predictors). 1996a). The short time horizon will provide greater certainty that the appropriate tasks are considered. use of various direction-setting tools in the planning process 17 . were strong predictors of planning intensity and most planning tools considered. Where planning intensity.Volume 22 Number 1 1999 hand-in-hand. a longer-term and broadly focused direction-setting tool. By concentrating planning efforts on the near term plans can be created with greater certainty in terms of the resources to be available. Leaders with strong power/control needs may feel they are giving up too much power to the long-term objective set. This study has investigated the link between leadership characteristics and the use of emphasis placed on various direction-setting tools in the planning process. creativity and people/dependence. with the exception of long-term objectives. Finally. leadership characteristics studied. Leadership characteristics were not strong predictors of long-term objectives. This also seems to fit a leader with a strong taskorientation since action planning will best allow him/her to define the task. leaders with strong people/dependence characteristics may feel that long-term objectives hinder their ability to maximise the potential of people around them by confining actions toward those long-term results. Leaders high on creativity may not want to be constrained to striving for specified results over a long-time horizon or they may feel that any long-term objectives set are too unrealistic. Finally. There are a number of limitations to this study that should be noted. One possible explanation for this may be the treatment of strategic planning as a “standard package. Those leaders strong on people/dependence stressed mission/vision.

013 0. Morrisey on Planning: A Guide to Long-Range Planning. 19.136 New-seeker 0. IL: Row. pp. (1957).874 0.169 0. Peterson.086 -0. Englewood Cliffs. (1996a). San Francisco: Jossey-Bass Publishers. (1997). G. References Drago. W.045 0. Pawar. J. San Francisco: Jossey-Bass Publishers. G. “Strategic Plan Intensity: Effectiveness in Different Contexts. B. and Eastman. Organization Analysis.816 0.” Management Research News. Vol.851 Aggressive 0. “Strategic Plan Intensity and Competitive Strategy. “The Strategic Decision Process and Organization Structure. Perrow.167 0. “The Nature and Implications of Contextual Influences on Transformational Leadership: A Conceptual Examination. CA: Wadsworth. Morrisey on Planning: A Guide to Tactical Planning. NJ: Prentice Hall.481 0. G. (1996b). H. Evanston. Mintzberg.822 Growth-seeker 0. Morrisey.280-296. Mintzberg. 22. Vol. P.725 0. No. Vol. W. (1986). Structure in Fives: Designing Effective Organizations. 11.80-109. Fredrickson. Further research is necessary to determine if leader characteristics are associated to other diAppendix A: Factor Analysis of Leadership Characteristics: Rotated Factor Pattern Variable Factor 1 Factor 2 Factor 3 Reliance 0. Morrisey.095 0.016 mensions as well. pp. (1996c).1-13. The Structuring of Organizations. 19. pp. Morrisey. Leadership in Administration. (1993).059 0.” Academy of Management Review.626 0. Selznick. K. 18 .839 0.Management Research News is only one of many important dimensions of the planning process. (1996b). Belmont.318 0. (1996a).” Academy of Management Review. NJ: Prentice Hall. 11.” Management Research News. 1/2. Vol. Morrisey on Planning: A Guide to Strategic Thinking. C. Englewood Cliffs. (1970).201 Task-oriented 0.008 Risk-seeker 0. Drago. pp. (1979).019 People-oriented 0. No.13-25. H. San Francisco: Jossey-Bass Publishers.