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Assessing Employee Understanding of Your Strategy and Your Organization’s Capability to Execute It

Are you sure that your employees are all on the same page when it comes to answering one of the most critical business questions there is: “Why does our customer do business with us?”?

Oh, and by the way: Is your business model and organization fully aligned with your customer value proposition? and Is your company well positioned to execute your customer and business strategy?

These are just some of the important questions every business must be able to answer if it is going to be successful over the long-term. However, it’s not just good enough to answer these questions, it’s essential to validate the answers and assess the level of organizational alignment with your strategy on an ongoing basis.

While measuring customer and business performance outcomes is one way of doing this, it’s important to realize that you aren’t getting all the insights you could if you stop your measurement efforts there. When you measure outcomes without also looking at the performance of the drivers of your outcome results, you run the risk of building your business success on a shaky foundation. While there is a chance that your successful customer and business outcomes are a result of solid business practices and organizational behaviors, you just can’t be sure if you limit yourself to measuring outcome success alone. Also, if your outcome results start to slip, and if you’re missing information on the performance of the critical results drivers, you will be hampered in your ability to identify, solve, and eliminate the key organizational problems that are getting in the way of your customer and business success.

To be confident that your company is going to enjoy sustainable customer and business performance results and achieve your targets for profitable growth and market leadership over the long-term, you must be absolutely sure that your employees understand your customer and business strategy and that your organization is optimally positioned to, and fully capable of, executing your strategy.

Assessing whether your employees understand your customer and business strategy includes determining whether they are clear on: who your target customer is; what your primary value proposition is (and how it differentiates your company in the marketplace); the essential elements of your business model that deliver your customer value proposition and competitive advantage (and how they do that); and the role individual employees play in contributing to customer and business performance success.

Assessing your organization’s capability and readiness to execute your customer and business strategy includes looking at: whether your current business model helps, or hinders, the delivery of your customer value proposition; the strength of organizational communication in supporting employee and business performance; the ability of your company’s leaders to lead the organization in strategy execution activities; how business and day to day work are prioritized to focus on the things that deliver the most value; whether your financial resources and employee learning and development investments support the execution of your customer and business strategy; and how your organization uses measurement to assess progress, focus effort and make decisions, learn about what is and isn’t working, and change and improve the way your company works to produce results.

I know. This is a lot of information to evaluate but you need to look at every component outlined here if you want to be sure that your company will achieve customer and business success. And, ideally, you need to know what each and every one of your employees is thinking about in relation to these elements if you want to have confidence that everyone, and everything, is on the same page.

The fastest and least resource-intensive approach to getting this comprehensive snapshot is through measurement. However, the measurement I’m talking about here has a different focus from your business performance/balanced scorecard measurement so you need a different measurement approach and vehicle.

I realized that this difference existed many years ago when I was managing our strategy formulation and execution efforts at a large Canadian insurer. So, in addition to our balanced scorecard measurement framework, I introduced a 20 question survey that was sent out to all employees on an annual basis. It included questions on the themes outlined above and we believed that it gave us great insights into the level of organizational alignment with our strategy. Because responses were segmented by regional office, functional team, and employee level, we received excellent feedback on what was, and wasn’t, working and where the points of potential organizational misalignment were. We used this information to modify our overall approach to communication and strategy management and, when indicated, implemented targeted actions to resolve specific issues. I believe that having this capability contributed to improvements in our company’s business performance, customer outcomes, and financial results.

While our survey provided us with great insights and actionable information, it had one serious limitation – it only scratched the surface and didn’t really help us assess whether our employees truly knew and understood our business strategy. For example, when we asked the question: “Does our balanced scorecard help you have a good understanding of our strategy?” we just asked our employees to rate their agreement to the question/statement on a scale from 0 to 5 (with 0 being don’t know, 1 being strongly disagree, and 5 being strongly agree). Most surveys like this take this approach to evaluating responses and this is a big limitation.

The problem is that collecting your employees’ responses this way doesn’t evaluate the quality of their knowledge about your customer and business strategy and this limits your ability to assess the capability of your organization to execute that strategy.

When it comes to knowledge, quality can be defined as being both the correctness of that knowledge and an individual’s confidence in that knowledge. It turns out that when your employees have the correct knowledge about your customer and business strategy AND they are confident that their knowledge is correct, your employees act decisively and in alignment with your strategy.

Confidence should be of high interest to all business leaders because level of confidence is the MOST important factor in translating knowledge into action.

The quality of the knowledge employees have about their company’s strategy is one of the factors what separates high growth, market leading companies from the rest.  However, most traditional employee and organizational surveys don’t help you get at this important success factor. Your challenge is to find the best way to answer the question: “Are we sure that our employees and organization are fully aligned with our customer and business strategy?” with the confidence that the responses you are getting from your employees are giving you real insights into the true quality of their knowledge about your strategy.

To find out about the ONLY survey tool available today that helps you assess the quality of your employees’ knowledge about your company’s strategy AND evaluate your organization’s readiness to successfully execute your customer and business strategy, go to http://pranabusiness.com/ 

5 Comments

  1. Guy Higgins
    Jul 18, 2012

    Surveying employees about their understanding of corporate strategy is, I think, fraught with risk. First, you are finding out what the employees think they know about the strategy, not what they actually know. Second, if you assume the answers to the survey are valid and the results indicate that your employees know nothing about the corporate strategy, what are you going to do — the blog talks about communicating strategy. Does that imply that employees don’t understand the strategy because it hasn’t been communicated to them effectively?
    Strategic alignment throughout a company is critical to company success. The best way to achieve that alignment is to listen to what Steve Bungay says in his recent book, The Art of Leadership, Closing the Gaps. Strategy development should be a company-wide (and deep) exercise — not a C suite exercise. The C suite sets the strategic direction and provides that to the next level of the organization which develops a strategy in response and provides that to the next level — continuing to the people on the shop floor.
    This aligns the organization, generates ownership of the strategy and empowerment and engagement of the workforce. Mr Bungay provides much greater detail and background. It’s good.

  2. Sandy Richardson
    Jul 18, 2012

    Guy – you raise really valuable points here. First, let’s talk about surveying employees about their knowledge and understanding of the company’s strategy. As you mention, organizational alignment with strategy is critical for success. As you know there are many elements in the organization that must line up with the strategy: processes, projects, resources, tools, training, technology, budget allocations – I could go on. Employee understanding of and focus on the strategy is just one part of the alignment requirement. I do think that it’s important to assess employee knowledge about and understanding of the strategy because operations of your company will be sub-optimized if employees don’t understand it. Surveys are an “easy” way to assess all employees quickly and cost-effectively but,as you point out, and I mentioned in the blog, there really haven’t been any good survey tools available to do this well – the validity of the information gained has been questionable and unless you create a survey that looks at drivers and outcomes, it’s hard to know how to take action on the results. I would encourage everyone to look at the new type of survey tool and approach I mention at the end of the blog post. I have used this assessment tool (let’s call it an indicator) with several of my clients and it has proven to be very good at detecting strategy understanding and execution capability problems at all levels of the organization as well as the probable root cause drivers.
    That being said, I really dislike relying on survey results for all of my information. I believe that it’s also important to evaluate employee understanding of the strategy through ongoing strategy conversations and dialogue. The types of conversations employees have, the questions they ask, and the insights they share tell you a lot about what they understand about the strategy and the level to which they understand it (i.e. have they just heard it or do they understand what it really means so that can apply it effectively to make decisions, solve problems, take action, etc. that are in alignment and will move the strategy forward?)
    I totally agree with you that employees at all levels of the organization must participate in the strategy creation, exceution, and reformulation process for the reasons you mention and to produce the best customer and business results. Rather than have the executive level hand down directions to employees, I actually get executives and employees working together to create the strategy (directions and strategy map). This gives employees a better understanding of strategic imperatives from the executive point of view but also prevents the “make it so” situation I often see when execs pass the strategy down to the next levels. Basically, with this approach, executives get to see how the strategy will translate into meaningful action. My clients have had exceptional employee buy in and strategy execution results by taking this approach.
    All this being said, the need for strategy communications and discussions never goes away in my opinion. Everyone benefits from hearing and talking about the “strategy story” numerous times and, besides, new people join and the strategy story evolves over time – communication is critical for keeping everyone up to date with the strategy as it sits “today”. The best results, however, are achieved when employees actively participate in strategy communications rather than being “communicated to”.
    Thanks for the book recommendation – I’ll be sure to take a look! Sandy

  3. Pranabusiness
    Jul 18, 2012

    Hi Guy, I agree surveying employees about their understanding of the firm’s strategy can be risky. However, so is putting wallpaper over termites.
    I also agree with your company-wide approach towards the crafting of strategy. Relying on the C-suite to create and communicate strategy in a vacuum isn’t a smart move either.
    A great place to begin the company-wide approach is through conversation; conversation across the firm that helps bolster an employee’s understanding of the game plan so they can make smarter decisions about hiring, selecting vendors, making capital investments, branding, technology, etc.
    Gauging an employee’s understanding of their comany’s strategy isn’t a scientific process meant to produce statistically valid data-sets. It’s meant to trigger conversation throughout the firm that leads to a deeper level of engagement and alignment. This helps ensure “company-wide” strategy execution and leads to customers who choose to buy their products versus going down the street to the competition. Powerful strategic dialogue can begin by scanning the landscape and capturing an idea of how well the company is set up and ready to execute.

  4. to do list
    Jul 22, 2012

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  5. Steve Clark
    Jul 24, 2012

    I like the opinions that have been shared by all but think alignment to business strategies at different levels of the organisations should be by those “tactical” initiatives that each department has developed and work on to deliver the strategy. This for me is how gain organisational alignment.Too many people do not understand the difference between strategy and tactical initiatives…Good discussion