Similar to many other theories that businesses use to gain the driving forces, upper echelons theory is one of such significant ideas which have a lasting impact. This theory by Hambrick, Donald C and Phyllis A. Mason has a great significance with the business organizations. Here is what you need to know about the upper Echelons theory.

What is the Upper echelons theory?

The upper echelons theory is an idea that elaborates the views of top executives. The top executives view the situations with their highly personalized perspectives.

These individualized construals of the situations arise for differences among executives in their values, personalities, experiences, and other necessary human factors.

What notions does this theory include?

The upper echelon theory is based upon some of the important notions. Here are the two important notions that the upper echelon theory uses.

• It includes the understanding of the senior executive for an organization who is responsible for the enactment and strategic formation. For a specific viewing strategy and in the interpretation of the strategic possibility, the members of the organization's upper echelon are more likely to do so through the lens driven by their personal experiences and other human factors.
• The behaviors of the executives are of the consequences which help in shaping or a strategy or in influencing the actions of others which ultimately become the reflection of their higher managers.
• The central theme of management is dependent on determining how strategic decision-making helps one organization to perform better than the other.
• On the other hand, the upper echelon theory works on the idea of strategic decisions, which are connected to the background characteristic of the management of the organization.

Which influence can affect the role of the upper echelon?

The upper echelon in an organization gets affected by some of the influences which affect their decision-making. Here is what mostly affects the decision-making in the upper echelon of an organization.

Community

The community plays a great role in influencing the individual’s decisions. Also, it is highly difficult to make a decision that is independent of the environment where the executive is living. The social presence and the environment have to do with the decision making which impacts the enactments of the upper echelon in the company. The community can also be referred to as a group where the individual seeks psychological relatedness and emotional bond.

Which argument is made up by the upper echelon theory?

The Upper echelon theory connects with the specific attribute of the company performance and with the top employee management. This theory also argues that the attributes of a person can affect the attitude and preference of the top members and the dynamic of groups.

Conclusion

The upper echelon theory is one of the most used theories that discuss the upper strata of organization management. It helps in better understanding the role of company executives and helps to determine the circumstances that affect their decision-making. Moreover, the organization executives must make use of their best senses and observations during decision-making.

“A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them.” – John C. Maxwell, CEO of The John Maxwell Company.