Should strategic management be a top-down or bottom-up process in a firm?
In every large company, decisions have to be made. Companies differ at how they go about making these strategic choices. Some use the top-down approach, which involves the top executives making the decisions with minimal input from the managers and employees. Another method used is the bottom-down approach, which allows all levels of employees to play a role in the decision making process. Which method is correct? Should strategic management be more a top-down or bottom-up process in a firm?
Some people believe that strategic management should be more of a top-down approach because only the top executives have the experience, knowledge, and responsibility to make key strategy decisions. The top executives also believe themselves to have more at risk than lower level employees. Their salaries are larger, so they have more to lose. Many top-level executives own company stock that is also at risk.
The problem with the top-down approach is that the managers and the employees will be the ones actually implementing the strategies. Strategies cannot be effective if the managers and employees do not agree with them. If all of the decisions are made without the input of the employees, and the employees aren’t committed to the decision, the strategy will never fulfill its potential. The top-level approach and the bottom-level approach both come with benefits and disadvantages so firms need to find a good balance between the two.
The ideal company is good at balancing a top-down and a bottom-up strategy simultaneously. The top management decides the goals for the company but they accept and encourage feedback and participation from employees on the best methods of implementing them. They hold monthly meetings with 2-3 people from every department and from every level of employment to discuss goals and get feedback. They also have suggestion boxes and regular surveys to get our opinions. Of course the final say is up to the top executives but they do value the feedback of the lower-level employees.