Leadership is understood as a process of influence focused on activities that need to be carried out, based on actions that promote individual and collective efforts, in achieving common goals. Leadership in the organization can also be known as an executive position, which has the ability to encourage a group of individuals, turning what was predicted into reality.
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Top management represents organisational leaders that are responsible for controlling and overseeing the whole organisation. Top-level management is responsible for developing goals, strategies, plans, and policies, deciding on the direction of the business and mobilising external resources such as debt instruments or other forms of capital. Leadership is a process of continuous influence between leaders and followers through which objectives are achieved through change. Meaning it is through leadership that employees are motivated to achieve organisational goals. Additionally, it is imperative that decision making becomes a critical component in the success of any organisation. Top-level management decisions are three-fold cascading from strategic to tactical and operational decisions. Effective implementation of any of these decisions rests on the leadership style adopted by an organisation.
According to each theory, leadership is related to its main element of analysis, so for each occasion, a different style of leadership is required. For example, the trait-centered leadership argues that leadership ability is born with the individual; it is not acquired through experience but means the individual characteristics that define their leadership style.
On the other hand, Behavioral Theory believes that leaders are developed throughout experiences; they do not have an innate ability to lead, but they create behaviors according to their daily tasks. The Contingency Theory, on the other hand, argues that leadership styles should be shaped according to different leadership situations. The Transformational leadership theory, on the other hand, is concerned with relationships between individuals, advocating that leaders collaborate with those who identify needed changes, creating a vision to guide the change through inspiration for the good of the organization. Leaders have different styles to lead, which vary and are effective according to the circumstances, attitudes, and preferences of those involved. Leadership style refers to the intended way in which a leader persuade the majority of people within the organization to deeply know the coming situation is better than the present situation.
A central theme in management is determining how strategic decision making allows one organization to perform better than another. Separating the strategies an organization pursues from those individuals that make strategic decisions can be a critical mistake. The top management of an organization exists to a large extent to make decisions regarding the path of the organization. A great deal of literature has focused its attention on both the CEO and top management teams (TMTs), and the role they play in an organization. These are some of the modern theories on strategic leadership and decision making. Upper echelon theory puts forward the idea that strategic decisions are connected to the background characteristics of an organization’s management. A top management team is a formulation of top-level managers and directors within a firm possessing specific expertise in areas that will enable an organization to make informed decisions. This expertise encapsulates the tangible and intangible knowledge and characteristics an individual possesses. According to Hambrick and Mason, individual characteristics and cognitions are developed by past experience, education, and personal values. Cognitions shaped by these, influence the way top managers analyze and respond to situations, and the strategy chosen for the organization. Nonetheless, strategic leadership is vital for strategic decision making because of the strength of having a short and long term focus on organisational objectives and goals. Management needs to be aware of the various characteristics that influence decision making and develop deliberate structural frameworks that derive optimal results from the aspects.
For instance, the experience of employees is critical in decision-making, but an organisation that only employees or have highly experienced employees may indicate that they have a concentration of mature employees. They may be missing out on not having a mix of young, not so experienced leaders. Such a team may be more conservative than risk-taking or may not quickly respond to innovation.