Leadership is the key determinant factor for sustaining organisational superior performance outcome. In fact, there is growing interest in applying strategic leadership concept to strengthening public sector performance, and to expand more stages of traditional strategic management in four ways: promote employee involvement to create strategy, map the vision publicly, empower followers to lead, and push concrete action and networking (Nutt and Backoff 1993). Some researchers belief that strategic leadership concept may become the most apt concept to embracing better value driven culture in public sector in the era of the 21st century (Draft & Pirola-Merlo 2009 ; Jing & Avery 2008, Ireland and Hitt 2005).
Leadership in public sector tend to face the great challenges due to the prominent rule-based and too bureaucratic leadership styles, non performance based HRM culture, and lack of innovative management practices. Several key roles of strategic leadership can be offered as strategies to sustain public organisation performance outcome, as follows (Evans, 2009; Ireland & Hitt, 2005; Stoker, 2006):
1. Determine Clear Organisation’s Vision.
The first important role of the strategic leader is to determine clearly the organisation’s vision and develop strategic direction involving the whole component of organisation (Hamel & Prahalad, 1989; Ireland & Hitt, 2005). In the public sector, creating long term strategic directions actually demands an improvement of the existing concept of strategic management process (Schall, 1997).
Strategic leadership concept is superior compare to two other most prominent leadership paradigms known as managerial leadership and visionary leadership (Ireland & Hitt, 2005; Jing & Avery, 2008). Strategic leadership practically can be defined as a process of transforming an organisation through its vision, mission and values based on sustain assessment of internal and external organisational factors: culture and climate, structure and systems as well as through its strategy (Hughes and Beatty 2004). Strategic leadership probably is a key for the future success of the organisation. Without ability to anticipate and envision the future opportunities and challenges, maintain flexibility in the midst of internal and external changes, facing greater pressures from broad stakeholders and on the other hand dealing with potential shortage of resources, leadership in the organisation should employing the concept of strategic leadership. It will enable them to reach success in terms of winning sustainable competitive advantage for the organisation (Draft and Pirola-Merlo 2009).
2. Develop Human Capital and Organisational Culture “fit”.
Strategic leadership may be considered as the key success factor for any change initiatives especially on developing human capital and reshaping current organisational culture to “fit” with the organisational strategy (Ireland & Hitt, 2005; Shields, 2007). Human capital relates to the people knowledge and skills in the organisation. To develop and make it align with the organisational strategy and culture, a leader needs a workable framework in practice.
Theoretically, a better strategic leadership framework can be defined as a tool for the aligning of HR practices and business strategy, cascading performance management system from top level to the individual level in order to achieve organisational performance outcomes (O. Hughes, 2003; Kaplan & Norton, 2004b; Rao, 2008; Shields, 2007). Furthermore, in order to hinder the misuse of various leadership frameworks available in implementation, organisation needs to have better guidance in how to explores necessary variables and determine what should be considered to improve organisational performance rather than just providing a list of effective leadership qualities (Bolden et al., 2003).
3. Establish Balanced Organisational Performance Controls
The strategic leadership role in the public sector reform under the New Public Management paradigm places a strong emphasis on how to lead and manage public sector performance based on the result/outcome and establish balanced organisational controls to promote excellence on performance (Hood, 1995; Ireland & Hitt, 2005; Rose & Lawton, 1999). The term performance management system (PMS) can be referred as the current most appropriate term for the balanced and comprehensive control system for leading a public sector organisation to achieve high performance (Bouckaert & Halligan, 2008).
However, Rao (2008) observed that there are five problems found in PMS including: inadequate managerial focus, insufficient managerial skills to improve performance, narrowly defined ownership, disconnect with strategy or inadequate linkage to business drivers and failure to execute. Therefore, growing study on PMS continues and it should involves other disciplines especially leadership and strategic management/human resources studies (Draft & Pirola-Merlo, 2009; Shields, 2007). An important empirical development of the leadership framework and PMS tools has been the emergence of multidimensional performance management system including the European Foundation for Quality Model (EFQM) and Business Excellence Model (Michalska, 2008), the Malcolm Baldrige National Awards Framework (MBNA, 2009) and the Balanced Scorecard (Kaplan & Norton, 1996, 2001; Kaplan & Norton, 2004a, 2004b; Rhodes, Walsh, & Lok, 2008). Implementing these approaches requires more leadership roles to focusing organisation to better serve broad organisation’s stakeholders, setting high value standard for financial and non-financial performance indicators as the key factor for the performance improvement (Brignall & Modell, 2000).
To enhance leadership accountability at all level in public sector, Balanced Scorecard (BSC) can become not only as a measurement system, but as a strategic performance management tool to achieve competitive advantage and sustain performance excellence (Kaplan, 2009; Kaplan & Norton, 2004b; Kraines, 2002). Arguably, BSC as a strategic management tool for leaders became more popular among organisations across the globe. In a study conducted by the BSC Collaborative, based on 300 web-based respondents from various industries (approximately 50% users of the BSC), and the most common reasons that drove their organization to the BSC and strategy focused organization are “alignment between strategy and the organization, organizational synergy, build a strategic management system, link strategy to planning and budgeting” (Downing, 2000). In addition, to promote continuous improvement in achieving performance outcome for an organisation, it is possible to enhance BSC framework by internalizing leadership as a strategic driver and emphasizing cultural changes based on MBNA and EFQM as world class quality award model (Dror, 2008).
In the hand of strategic leaders, BSC is a set of performance measures that gives them a fast and comprehensive view of strategic business performance (Kaplan & Norton, 1996, 2001). It includes financial measures that tell the results of actions already taken and also non financial or operational measures i.e.: customer satisfaction, internal process, and the organizations innovation and improvement activities. Operational measures are also known as the drivers of future financial performance.
The implementation of BSC in government institution deals with the process on how leadership provide direction and lead the government institution to focus on the customer perspective ie. society, and achieve high performance in terms of public services value (Estis, 1998; Niven, 2005). Leaders in the public organisation may design organisation’s strategy map in order to create strategy focused organisation and promote organisational alignment (Yee-Ching Lilian, 2009). It is basically such a comprehensive tool for the strategic management process under BSC approach to achieve performance improvement and promote better communication to organisation’s stakeholders (Kaplan & Norton, 1996, 2001; Kaplan & Norton, 2004b).
4. Promote Performance Governance and Create Value Based Outcome
Governance system can be defined as “a process whereby societies or organizations make their important decisions, determine whom they involve in the process and how they render account” (Graham et al., 2003). The governance system as deserves leadership accountability and performance as two of five principles of good governance in 21st century (Graham et al., 2003). This philosophy also promotes so called ‘performance governance leadership’. It encourages public sector to strengthen emphasis on customer focus strategy, and adopts private sector performance management tools, design better budgeting, and promotes clear individual and departmental/organisational accountability (Behn, 2006). Additionally, there is growing evidence that with regard to the public financial management within the UK and Australia public sector is now linked to the achievement of externally imposed performance targets (Halligan, 2008; Propper & Wilson, 2003).
It should be noted that in the era of governance, NPM has several limitations to serve better outcome in terms of public value (Evans, 2009; Stoker, 2006). For instance NPM has too much focus on customer and market rather than citizen, NPM still promotes the dominance of public servant role, and it considers less on politics’ influence and deliberative public policy making (Evans, 2009).
So, the new concept of creating public value then emerged and promoted to be the next public sector reform agenda by reforming the governance norms, values and operational rules theme in the new millennium (Evans 2009, Stoker 2006). Governance studies in 21st century emphasize leadership accountability and performance as two main principles of governance (Graham, Amos, & Plumptre, 2003). Leadership accountability deals with how the decision making by leaders in government, the private sector and civil society are accountable and transparent to the public and its stakeholders (Graham et al., 2003; UNDP, 1999; UNESCAP, 1997). Implementing performance principle is about promoting institutions responsiveness and effectiveness and efficiency in making best use of resources to produce result and serve all stakeholders (Graham et al., 2003; UNDP, 1999). In implementing good governance principles, public sector leaders should improve public services efficiency and public service capacity (Chou, 2008). Overall, the obstacles to the effective application of good governance in some countries (China, Japan, and some Europe countries) have been identified and those include: political problem mainly due to leadership resistance or lack of political will, resource constraints and complexity problem (Chou, 2008; Ding, 2005; Evans, 2009; Yamamoto, 2008).
Therefore in order to be successful, reform in the country where the administration is not well protected from political influence, too much bureaucratic practices, lack of leadership commitment to the value of the public service delivery, leaders need to consider strategies offered by the strategic leadership concept as a framework to aim more structural reform in the government to improve public service capacity and efficiency.