CHAPTER 9

STRATEGIC LEADERSHIP FOR EFFECTIVE ORGANIZATION

The Power Being the Throne

The strategies and structure that has been pointed out in the last discussion determines the
success and failure of the firm. Some big corporations failed to match the strategies and the
structure that resulted in some failures while other top performing teams were able to overcome
the adversaries in the business environment. It is therefore necessary to pinpoint the
responsibility for the whole operation of the business.

As structurally defined in many corporations, the board of directors is the policy making body of
the corporate organization while the chief operating officer is the implementing arm of the board
with regards to the policy decisions. The board of directors and for representing the
stockholders’ interest in the business. Higher performance level is expected when the board is
actively and directly involved in shaping the firms’ strategic decisions.

The control of most Philippine business organizations is in the hands of the chief operating
officer of the President who is also the chairman of the board. Some big corporations have a
separate President. Example of such a giant local corporation in San Miguel Corporation where
the Chairman of the Board is different from the Chief Operating Officer. The success of the
above-mentioned corporation could be attributed to the creation of a top management team that
develops defined strategies for actions.

Who is the power behind the throne in the whole strategic implementation and decision making
is the next question that has been resolved. The board of directors may find it difficult to direct
strategic actions of powerful Chief Executive Officer (CEO) and top management teams, who
happen also to be members of the board are elected and appointed because they represent the
majority shares of the chairman, and therefore serve as a rubber stamp for management
initiative.

This duality of functions in the composition of the board and the top-level management team
may have positive and negative effects. It is positive when the members of the board are also
heterogeneously selected and have the expertise in the different operations of the business.
Better still when the composition of the board is not based on the number of shares in the
corporation but selected from among the top performers in the industry. Since that the strategy
emanates from the board and its top executive’s policy directions becomes action and
performance oriented.

The negative effects could be possible when the members of the board and the top executives
have their own personal agenda rather than the interest of the corporation. When the members
of the board and its chairman appoints cronies and serves as rubber stamps of top
management then the negative effects in strategic decision is felt that may cause operational
problems in the long run. These are some of the negative effects in the downfall of some
multinational and local business corporations.

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 The management of the firm is a complex matter and it is not the sole responsibility of either the
board or the chief operating officer. The management team with capabilities and expertise
coupled with the democratic process of strategic formulation and implementation would develop
better performance and achieve the corporate return on investments. The top management and
the board must work hand in hand in developing strategic policies and decisions that are
consistent with its mandate of corporate growth and expansion.

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