In this contemporary society, many business organizations have a design of hierarchy made of layers where decisions influencing the direction of the company are made. These hierarchies range from top management and rank down to departmental managers who all make decisions on behalf of the organization. Decisions are a significant part of the business as they dictate the direction of the firm while determining how successful a company will be in the end. There are three different hierarchies in the levels of management, and these are strategic, tactical and operational management also known as top management, middle management, and lower/operational management. Each hierarchy only can perform a certain level of decision-making that aligns with their role in the organization. Decisions are often from the top management, and they are passed down to the employees, and this develops what is known as an organizational structure. The top management is critical because it makes the strategic decisions and this paper aims explaining decision-making in the upper hierarchy.
The Top Level Managers
The first level of management in any organization is known as the top level management or sometimes referred to as strategic management. The top management is made up of senior executives who hold the most responsibility for ensuring the well-being of a company both in the internal and external environment (Hellriegal & Slocum, 2010). These managers are responsible for dictating the overall direction of the business and ensuring that key organizational objectives are achieved. This group is often known as strategic management because of their key responsibilities such as ensuring that the business is efficiently and successfully tackling its responsibilities, managing the demands of the stakeholders, implanting strategies, defining the role of the organization and targeting the resources that help the business excel.
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It is significant to understand that the way the strategic management operates differs from one company to another and this is primarily because the top managers have different levels of expertise. Despite this, the roles of the top managers in any business remain the same, and that is to influence the direction of the business through making strategic decisions. The leadership roles of the top managers though tend to differ depending on the idea that there are managers who practice authority over the whole organization, while there are others who have distinct divisions that they are in charge of such as the finance, operations, human resource or marketing department.
Decision Making at the Top Management
The top management is involved in making strategic decisions, and these affect the direction of the business. Such are often major decisions, and they include areas such as defining the mission and values of the company, determining and defining the market, coming up with the new products and services, strategic alliances, and finding new areas of investment. It thus means that the success and failure of the business are weighed on the efficiency of this level of management. Decision making is a multiphase system that demands the managers must combine both intuitive and rational approaches in making unstructured decisions. In doing so, these individuals must also consider the political feasibility of their decisions as this majorly affects the internal environment. This is to mean that the organizational leaders must be aware of the alternatives and consequences to their decisions as a means of maximizing their advantages.
Decision making is a critical function of any manager and to make decisions simply means making a judgment concerning how to act in a particular circumstance after considering alternative courses of action. The top management is involved with the decision that deals with the future of the organization rather than the day-to-day operations (Hellriegal & Slocum, 2010). It is from strategic decisions that tactic decisions arise and finally creating the foundation for operational decision-making. The top management is more proactive and less reactive in their perspectives of decision-making (American Psychological Association, 2010). Though certain decisions based on their effects may appear to be short-term, these decisions possess the ability to make long-term improvements that can enhance the brand and value of the company.
Top management primarily takes part in strategic decision-making, and this is why it is known as strategic management. This form of decision-making entails setting objectives and long-term goals based on the vision of the company. Such forms of decisions include becoming a global business, franchising the company, attaining new financial benchmarks, entering new markets and creating diversity in the market. When the organizational leaders set strategic goals, they give the tactic and operational managers a backbone of the image of the business that they need to maintain. Decision making in this level of management hence involves future orientation of an organization. This type of decision emerges from both the company and the society.
The other characteristic of decisions made by the top management is that they are value-oriented as they alter the value system of the ethics and philosophy of the firm. In turn, this influences the scope of the activities that the business carries while operating. Unlike the decisions made in other levels of management, the decision made by the organizational leaders are means to achieve an end, that is, to accomplish the goals and missions of the company (Hellriegal & Slocum, 2010). In making these decisions, the corporate leaders must have in mind what are the long-term goals of the enterprise and what are the necessary steps that the company must take to achieve its end.
Businesses majorly rely on the available resources to attain its goals and thus it is critical to understand how to use the available resources while acquiring others. Strategic decisions are long-term and are engraved within the scope of the business, and this hence implies that the top management must design how to relocate the available resources and future acquisition of resources. The reason for this is that these decisions must have a strategic fit. Strategic fit in decision-making helps in establishing a sustainable company within its environment. The ability of the top management in making strategic decision helps in the deployment of the organization’s resources and capacity to exploit opportunities within its environment while combating any environmental threat. Lastly, the other reason top management must be involved in strategic decision-making is to gain competitive advantage. Unlike other levels of management, this is the only level of management that explicitly interacts with external competition, and thus by analyzing the external environment, they should be able to make decisions that affect the operational and administrative decisions.
Decision making at the top management is mainly about sustaining the business while maintaining and improving the brand of the business. Therefore, it means that to handle the critical and sensitive decisions, only well-skilled individuals must manage this hierarchy of management. These people must possess critical and skillful decision-making skills that can positively impact the business and its environments (American Psychological Association, 2010). Some of the individuals found in this hierarchy are the CEOs, COOs, Departmental Directors and the business owners and they formulate and implement the strategy that helps the business operate better to gain a competitive advantage in its market. The top management defines the structure of the organization and operationalizes the various elements of strategy so that disturbing factors can be eliminated from the environment, evaluate control and manage the direction and image of the business. In this context, it is critical to understand and define the different roles that each manager at this level of the company to ensure that all the functional areas are covered.
Conclusion
Decision making in any business is vital, and in making it, the makers have to make sure that all the ranks within the organization benefit from it as this will ensure success. The top management is the head of business, and as the leaders, they must be well-skilled to make a critical decision that influences the direction of the company while protecting the business. Decision making at the top management is known as strategic management because of its significance on the business and its environment. Therefore, in their role, they must balance the interests of the firm and community as a whole. The best way of achieving this is by managing the resources and defining the market that will benefit from what the company offers. Decision making at the top-level management strategize and implements the goals of the organization while guiding the members in the right direction.
References
Hellriegal, D., & Slocum, Jr., J.W. (2010). Organizational Behavior (13th ed.). Mason, OH: South-Western Cengage Learning. ISBN: 9781439042250
American Psychological Association. (2010). Publication manual of the American Psychological Association (6 th ed.). Washington, DC: Author.
