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Does Strategic Leadership Impact Organizational Performance Outcomes Mediated by Crisis Management Practices in Faith-based Health Institutions in Malawi?

Does Strategic Leadership Impact Organizational Performance Outcomes Mediated by Crisis Management Practices in Faith-based Health Institutions in Malawi?

Martha Kanchiputu Kamwiyo1, Josephine Ganu PhD2

1RNM, HSM, MSN, PHD Student at Adventist University of Africa

2Director, Research & Grants Development Associate Professor of Management

DOI: https://dx.doi.org/10.47772/IJRISS.2024.802181

Received: 19 February 2024 Accepted: 24 February 2024; Published: 27 March 2024

ABSTRACT

The paper aims to identify the links between strategic leadership practices, crisis management and organizational performance. Specifically, the paper will examine the characteristics of the top management team, their decision-making process and skills, and how they influence crisis management practices and organizational performance. All data were gathered by means of a methodical review of the literature. Based on the COVID-19 circumstance, it was observed that crisis management was difficult in many firms. The gap that was discovered during the COVID-19 timeframe served as the basis for the paper. This study is a component of the ongoing main research project. Top management makes decisions and presents them to staff members in strategic leadership. A crisis is an unwelcome event that could occur in an organization and affect the organization negatively or positively. In healthcare crisis management must be effective from the onset to achieve organizational performance outcomes. Therefore, strategic leadership will enhance crisis management to achieve organizational performance outcomes. Strategic leadership has been identified to have been critical in crisis management because it is visionary. The findings of this literature review identified that organizations must train employees to become strategic leaders because strategic leaders are visionary. Crisis management training should be conducted and have crisis management committees in place. Crisis preparation must be done in all organizations to manage any disaster/crisis.

Keywords: Crisis management, Organizational performance outcomes, Strategic leadership, Top management team.

INTRODUCTION

Crises are inevitable, and organizations of varied sizes and natures are not immune. A crisis is an abnormal situation or disruption affecting normal organizational operations and threatening survival. Corporate crises can be sudden, emerging, and hard to control (Coombs & Costantini, 2019; Hazaa et al., 2021). According to Hazaa et al. (2021), organizations face crises because of their actions and inactions. Some crises are acts of God, but most are related to human activities such as erroneous decisions, miscalculations, disregarding warning signs, and lack of strategic foresight (Hazaa et al., 2021; Yordanova, 2020). Brandebo (2020) narrated that a crisis is a condition that requires specific leadership behaviors. Some of these leadership behaviors are attached to strategic leadership.

A typical example of a crisis was the Coronavirus Disease 2019 (COVID-19) pandemic that took on the world. The severe pandemic challenged governments, organizations, people, and societies on a global scale and highlighted the value of leadership in times of crisis. An essential leadership function during a situation is to explain what is happening, create understanding, and show others how to respond and move forward. In that way, crisis management can lead to organizational performance outcomes. Crises have affected organizations in Malawi, and the country has faced challenges that have led to financial losses. For crisis recovery, there is a need for collaboration and coordinated actions in all sectors, including hospitals and colleges (Malawi Government, 2021). Strategic leadership is efficient in managing crises leading to organizational performance outcomes.

In Malawi, studies on strategic leadership and crisis management are rare. There have been very few studies discussing crisis management and the role of leadership and performance outcomes in other industries unlike in hospitals and colleges. The concept paper is derived from a research paper which is underway.

Statement of the Problem

Mismanaged organizational crises affect various aspects of an organization and potentially undermine its survival and performance outcomes. Such situations may cause substantial damage to the organization and stakeholders, leading to poor performance outcomes. Yet, organizational leaders often do not think strategically about crisis management.

According to a World Health Organization report, one of the major challenges in the health sector of Malawi is inadequate management in emergency preparedness and response (World Health Organization, 2023).  This includes fragmented crisis preparedness and response interventions, inadequate resources, and inadequate core capacities such as the ability to detect, assess, report, and respond to crises.

Organizations such as faith-based health institutions are vulnerable to many types of crises. In the health sector, crises may arise due to staff shortages, lack of strategic leadership, erroneous decisions, miscalculations, disregarding warning signs, brain drain, or externally induced crises, such as global pandemics (Abubakar & Kathuria, 2020; Hazaa et al., 2021). When crises occur, confusion and distrust are triggered (Hazaa et al., 2021; Verma & Gustafsson, 2020). Therefore, employees need to be trained in crisis management practices.

The problem is that top leaders underestimate potential sources of organizational crises and vulnerabilities, and it may be difficult to respond to and recover from crises effectively. The recent COVID-19 pandemic provides a classic example of a crisis that tested the quality of leadership in organizations of all sizes, industries, and geographic areas (Nguyen et al., 2019).  Hence, strategic leadership plays an important role in anticipating and detecting crisis signals and making strategic plans to navigate the unknown effectively and recover from unexpected crises.

Although some studies have been conducted on strategic leadership and performance outcomes, strategic leadership research in Malawi, especially in the healthcare and educational setting is rare.  More so, prior researchers have not examined the role of strategic leadership in crisis management and its impact on performance in an integrated model.

The purpose of this review therefore is to investigate the links between strategic leadership practices, organizational performance, and crisis management. Specifically, they will examine the characteristics of the top management team, their decision-making process and skills, and how they influence crisis management practices and organizational performance. The paper will contribute to knowledge about developing strategic leadership in faith-based health organizations to handle various crises for effective organizational performance, which will help to plan, prepare, and respond to different crises.

Significance of the Paper

The results will benefit faith-based institutions in developing strategic leadership to handle various crises. The outcome will heighten organizational performance such as organizational effectiveness, employee creativeness, and operative human resource management. In addition, organizations will plan, prepare, and manage crises of any nature.

THEORETICAL FOUNDATION AND CONCEPTUAL FRAMEWORK

A theoretical framework is an outline that gives the entire research project structure; it is a basic analysis of the ideas currently in use that direct the investigation. This paper is supported by three theories, game, resilience and upper echelons.

The theories provide an overview foundation of the paper. A theoretical foundation for analyzing strategic leadership and performance results is provided by game theory. First, game theory was first created in 1944 by John von Neuman and Okcar Morgenstern as a mathematical model in the field of economics. Since then, it has been extensively used in many academic fields to investigate how people make decisions. (Neumann & Morgenstern, 1944).

Second, according to resilience theory, recovering from upsetting circumstances involves handling the shock and carrying on with daily activities. By achieving a favorable performance result, the organization is likely to develop resilience and the ability to withstand obstacles (Duchek, 2020; Walker, 2020). Finally, the upper echelon theory, which suggests that the top management team be in charge of organizational performance and strategic direction, is influenced by the top executives and their decision-making experiences (Hambrick & Mason, 1984).

The conceptual framework states that strategic leadership techniques have an impact on performance outcomes and crisis management protocols. Rehman et al. (2020) asserted that the conduct of an organization’s leaders influences its performance outcomes. Therefore, the age, education, and years of service of the top management team show an impact on employee motivation and performance outcomes. Longer service times indicate a wider range of obligations. Furthermore, the age and educational background of the leader effectively influence performance outcomes and crisis management (Rehman et al., 2020). Thus, crisis management techniques and ultimately, organizational performance results are influenced by characteristics of top management, the decision-making process, and decision-making abilities. The relationship between strategic leadership techniques and performance results is mediated by crisis management strategies.

Conceptual Framework

Figure 1: Conceptual Framework

LITERATURE REVIEW

Strategic Leadership

Leadership is an umbrella and encompasses different leadership styles. Leadership is critical in the health sector and helps to direct business in organizations. According to Barr and Dowding (2022), leadership is associated with influencing others and informally sharing ideas. Healthcare leaders have a responsibility to think critically about issues for better outcomes.

Strategic leaders are important in hospitals and colleges because of the diverse problems that institutions encounter. Strategic leadership is competitive in the volatile, uncertain, complex, and agile environment.

Meanwhile, Samimi et al., (2020) defined strategic leadership as the “functions performed by individuals at the top levels of an organization (CEOs, top management team members, directors, general managers) intended to have strategic consequences for the firm.” (p. 3). More so, Ojogiwa (2021) and Murithi and Sije (2021) emphasized strategic leadership reinforcement in the healthcare sector for optimum healthcare delivery. Kitonga (2017) identified a positive correlation between strategic leadership practices and organizational performance.

Strategic leadership has roles to perform such as strategic decision-making, human resource management practices, follower trust establishment, strategy implementation, and attendance to conflicting needs of the organization. On the contrary, Kahwaji et al. (2020) argued that being in a team of strategic leaders does not automatically mean there will be exceptional performance. Strategic leaders must be practical and must evaluate the formed strategies. Strategic leadership is important because of the success it provides to businesses in crises (Fernandez & Shaw, 2020).

According to Osazevbaru (2021), narrated that strategic leaders promote organizational performance   Chen et al. (2022) confirmed that strategic leadership is central to the top management team as they contribute more to performance.

Top Management Team Characteristics

The CEO and the top management team are responsible for the overall organization’s performance. They have authoritative power to make the organization’s decisions over any organizational changes. The top management team establishes policies, procedures, and strategic plans and ensures a quality management system is in place (Zhou et al., 2022). The top management team has to become strategic leaders.

Strategic leaders consider different leadership characteristics for best performance. The strategic leadership characteristics are leadership and organizational tenure, age, and educational qualification of the top management team (Aboramadan, 2020). This paper reviews three characteristics of top management teams – years of service, age, and education qualification that affect organizational performance.

Strategic Decision-Making Process

Strategic decision-making is a process that involves visioning, strategy formulation, and strategy implementation. Alternative solutions to the problems are identified to achieve the organizational goals. Strategic decision-making is a long-term course (Alramdhan & Sattar, 2021; Ntara, 2021). According to Thani and Obeidat, (2020), strategic leadership has visions to change the activities that take place in an organization. The vision of the leader is the organization’s foundation and future for better performance. Vision is an investment in the organization as it opens entries to many opportunities to reformulate the facilities’ conditions and provide rigorous decisions

Visioning

Organizational vision helps in objective identification and contributes to the organization’s goal attainment. A vision outlines the organization’s long-term goals and aspirations. Organizations have similar strategic leadership needs, which are visionary with strategic direction. Strategic leadership’s success requires the following indicators: strategic leadership vision, strategic leadership skills processes, strategic planning, people development, and teamwork (Hıdıroğlu, 2020).

According to Agustina et al. (2022), visionary leadership in an organization improves organizational performance. Nahak and Ellitan (2022) explained that strategic leadership involves visionary and flexible leaders in the organization’s activities for positive performance.  Agustina et al. (2022), identified that visionary leadership in an organization improves organizational performance.

Strategy Formulation

Strategy formulation uses existing information to document the planned business direction and the doable phases to reach the desired goals (Cote, 2020).

Kuhe et al. (2021) described strategy formulation as a process for the achievement of the organization’s goals and vision. Thongsookularn (2019) described strategy formulation as an initial phase of strategic management that deals with strategy assessment, organization, and the environment with new business strategies. Strategy formulation goes along with missions and visions from long-term goal development. According to Taiwo et al. (2016), strategic leaders must have clear vision and mission statements that reflect the organizations’ direction to a competitive advantage; that will attract customers at all levels.

Strategy Implementation

Implementation of the strategy is one of the critical stages of strategy development. At times, organizations produce a perfect strategic plan without implementation. Strategy implementation involves set priorities, and the leadership must be vigilant with the strategy. The strategy implementation translates to the preferred strategy and acting upon it to achieve the set strategic goals (Chartered Management Institute, 2020). Meanwhile, Kuhe et al. (2021) stated that strategic implementation is the way organizations develop, use, and merges the structure using specified strategies for success.

Top Management Decision-Making Skills

Decision-making starts with goal setting and action designing at the top management and budget allocation distributions to different departments. The top management has the power to decide and present the decisions to employees. Action must take place in the organization and the top management team plays a role in all undertakings (Mardani et al., 2019).

Strategic Orientation

According to Masa’deh et al. (2018), strategic orientation is the capacity to link a long-term vision to everyday work and starts from simple to classy awareness influence in feelings and activities. The reason for strategic orientation is the attainment of the organization’s established goals, where the responsibility is to address past risks and put in place measures to prevent the reoccurrence of the phenomena.

Akpa et al. (2020) confirmed that strategic orientation is a choice for creating skills in a dynamic environment to allow quick responses in organizations. Likewise, Uzoamaka et al. (2020) stated that practical strategic orientation would make the organization’s mission and vision attainable. Puspita et al. (2020); Aloulou (2019); Masa’deh et al. (2018) acknowledged that strategic orientation influences organizational performance. Strategic orientation directs business events in the organization and promotes customer satisfaction.

Strategic thinking skills

Strategic thinking skills promote high-performance outcomes in higher education (D’Alessio et al., 2019). Leaders have strategic thinking skills to initiate organizational change. Strategic thinking understands the issues the leader is facing, which links the present and forthcoming performance of the organization (Murithi & Sije, 2021). Leaders have strategic thinking skills that help organizations to succeed (Ershadi & Eskandari Dehdazzi, 2019).

Crisis Management

A crisis is an unwelcome event that could occur in an organization; crises affect organizations differently. In such a case, hospitals and colleges face crises differently as well (Jessop, 2015). In healthcare, crisis management must be effective from the onset, as people are confused, anxious, and worried; therefore, crisis management skills are essential. Successful crisis management determines organizational performance (Jankelová et al., 2021).

A crisis is stressful due to harmful effects and strategic leadership must promote performance (Ertaş et al., 2021). John-Eke & Eke (2020) discovered that strategic planning promotes crisis management and minimizes crisis destruction.

Pre-Crisis Assessment

According to Jankelová et al. (2021), leaders need to identify the early signs of crisis for easy management and effective performance. John-Eke & Eke (2020) discovered that strategic planning promotes crisis management and minimizes crisis destruction. Crisis identification reveals employee involvement, which means all the organizational departments must be aware of what is happening for effective crisis management (Ostaev et al., 2020).

Crisis Preparation

Crisis preparation is significant because it helps proper planning, organizations must prepare to plan. Crisis preparation is the foundation for growth and helps in managing crises. Morris (2022) explored that planning involves environmental control and preparation encompasses training and intuition. A crisis can erupt from anywhere and requires strategic leadership’s active decision-making and strategy reviews (Schaedler et al., 2021).

The COVID-19 crisis impacted the education sector negatively (Dorn et al., 2020). In hospitals, challenges were unavoidable in altering institutional procedures, and other systems (Sharfuddin, 2020), 2020). COVID-19 challenges are a stepping-stone to improving crisis management and strategic leaders will manage crisis efficiently for reputable performance outcomes.

Crisis Response

Response to emergencies is ideal to avoid more harm to the facilities. Krausz et al. (2020); and Fernandez and Shaw (2020), expressed that the move to online services during the COVID-19 crisis was one of the crisis management responses as an immediate interaction in the education sector. Managing crises must be practical and regular with mutual communication using different communication networks initiated by the strategic leader (Fernandez & Shaw, 2020). Delegating employees to have central points for tackling, the crisis in the institutions must be effective. Crisis responses have to be timely and well-calculated for an organizational performance outcome.

Organizational Performance Outcomes

The organization’s performance involves goal response, mission, and visions. As such, it is a requirement that organizations possess measurable objectives and employees must participate in the set objectives (Banna, 2021).

Much so, Hashmi et al. (2020) discussed that the organization’s performance outcomes could be financial or non-financial, and involve many aspects of relationship building. Employee appraisal during a crisis is vital to promote effective performance outcomes (Dirani et al., 2020; Stoller, 2020).

There are many ways in which performance outcomes are measured, this study will use organizational creativity, organizational effectiveness, and employee motivation. All measures of performance are measures of success in an organization. Hospitals and higher education do not have different performance outcomes. Additionally, Dahri et al. (2019) elucidated that knowledge in strategic leadership leads to organizational performance outcomes.

Organizational Creativity

Creativity means to create or produce, and it is a vital foundational component for competitive advantage in organizations; it involves making new concepts, resolutions, and developments (Acar et al., 2019). According to Xu et al. (2022), autonomy enhances organizations’ creativity in all processes. Leaders must uplift creative thinking, and learning to make employees creative is imperative. Where leaders delegate employees, there is creativeness (Tsai et al., 2015).

Creativity involves coming up with valuable thoughts on perplexing issues. In healthcare, creativity is paramount as it permits employees to become more flexible and effectively respond to stress (Helzer & Kim, 2019). Maintenance of resilience even in crises is effective. Mui et al. (2018) confirmed that organizational creativity influences organizational performance.

Organizational Effectiveness

Organizational effectiveness is the ability of an organization to be productive while using minimum resources; organizational effectiveness can be defined as an external standard on how the organization meets demands (Dansomboon et al., 2016). Organizational effectiveness is a measurement of organizational performance outcomes. (Hoshaw et al., 2021) confirmed that institutional effectiveness is a continuous process and it is associated with the integrated quality of the institution’s planning for progress.

Human Resource Management

Human resource management is a strategic process for achieving employee commitment. One of the human resource practices discussed is employee motivation as an organizational performance outcome. (Hecklau et al., 2016). Employee motivation means an individual’s willingness to place greater energy on goal achievement (Maduka & Okafor, 2014). Ubaidillah et al. (2019) commented that leadership must produce employee motivation.

Leaders must respect and educate employees to achieve performance outcomes. Motivated employees are satisfied with their jobs (Alrawahi et al., 2020; Paais & Pattiruhu, 2020). Employee motivation helps organizations to achieve their goals and motivated employees drive the quality of work and promote organizational performance outcomes. Riyanto et al. (2021) clarified that employee motivation promotes effective job performance and upholds retention and advancement.

According to Jankelová et al. (2021), it is important to motivate employees during a crisis for better performance. Specchia et al. (2021), identified that in healthcare institutions, employees are essential resources; hence any chosen leadership style affects employee motivation.

CONCLUSION AND IMPLICATIONS

The paper has surveyed strategic leadership practices for managing crises leading to organizational performance outcomes. The contribution of the literature focuses on the leadership to plan and prepare for crises. Organizations can strive to teach the leaders to become strategic and instill visionary leadership to manage different crises, leading to efficient performance outcomes. According to the review of the literature, strategic leaders’ goals enhance crisis management practices and endorse organizational performance. Through decision-making processes and decision-making skills, employees will manage crises effectively leading to the organization’s performance outcomes.

Bastola (2022) illustrated that strategic leadership is necessary for organizations, and further studies on strategic leadership and organizational performance are encouraged. Strategic leadership has a significant relationship with organizational performance (Astuti et al., 2020; (Chen et al., 2022a; Fahlevi et al., 2022; Kılıç, 2022; Munawaroh et al., 2021; Onu et al., 2018).

It follows that, in their capacity as decision-makers, strategic leaders will empower staff members and committees to plan for and manage crises. These committees will then be outfitted with the necessary training to effectively manage crises, which will improve organizational performance. It will be simple to put into effect as institutions plan and get ready for crises.

In summary, the management of crises of any kind by strategic leadership should be predicated on readiness for successful performance results. Institutional leaders need to always have a clear vision and set realistic, attainable goals. For better performance, leaders might thus be trained to become more strategic.

RECOMMENDATIONS

Since crises often catch people off guard, leaders must improve employee understanding of the value of teamwork in times of crisis and plan for crises in advance. Effective organizational outcomes require crisis management training for staff members. Strategic preparation is a decisive component in crisis management, therefore organizations need to prepare for crisis way before it happens so that employees plan on what to do to handle disasters tactfully.

In the organizations, strategic leadership needs to be strengthened. All institutions should prepare for crisis management (Murithi & Sije 2021). The public’s awareness of the significance of strategic leadership in providing high-quality services will therefore grow; also, organizations that implement strategic leadership will see an increase in the implementation of crisis management techniques, which will result in improved organizational performance.

Strategy implementation must be in place in all the organizations and there is a need for practicality for all the plans. Leaders must respect and educate employees to achieve performance outcomes. Bhaduri (2019) confirmed that organizations must improve leadership capabilities and crisis-prone culture. Readiness in the formation of crisis preparedness is effective as the committee will always be aware of any impending crises.

To improve organizational performance outcomes, employers need to draw in talented workers. Because they have strong decision-making abilities, strategic leaders may impart in their workforce the skills needed to support organizational effectiveness. In universities and colleges, academic performance outcomes can be enhanced by non-academic workers, according to Baltaru (2019).

To improve organizational performance results through employee motivation, strategic leaders must evaluate their workforce. According to Paais and Pattiruhu (2020), motivated staff members will thus handle emergencies skillfully.

Organizations can strive to teach the leaders to become strategic and instill visionary leadership to manage different crises in the organization leading to better performance outcomes. According to the review of the literature, strategic leaders’ goals enhance crisis management practices and endorse organizational performance. Through decision-making processes and skills, employees will manage crises effectively leading to the organization’s performance outcomes.

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