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The word "strategic" gets kicked around a lot in the business world. There are strategic goals, strategic objectives, strategic communication plans, strategic planning to prevent union organizing, strategic operational planning, strategic leadership, and on and on. These are often independent strategic plans with unique goals and objectives important to business success in specific areas. However, are they working towards the same strategic end goals as defined by the organization's mission, values, and purpose? Ultimately, strategic alignment is the umbrella term referencing the importance of all the organization's operations, workforce, and leaders working together toward achieving the organization's mission and vision. You need leadership alignment, strategic initiative alignment, operational alignment, and employee alignment to develop organizational strategic alignment.
Strategies drive your business results. Strategic planning is the process of identifying the strategic priorities for the organization, but plans need implementation before they produce results. Strategic alignment is defined in various ways, but it's where strategic planning meets strategic execution, requiring all leaders to be onboard. Your leaders need to know the strategic priorities and have them in mind when making decisions and leading teams.
Strategic alignment is a business status in which all the business elements are executed to fulfill an organizational purpose, with a purpose defined by the mission, values, and strategic goals. The elements, says the Saïd Business School at Oxford University, "form an enterprise value chain, which is only as strong as its weakest link. Whilst an organisation's purpose is the north star to which all other components should be aligned, other links in the value chain are dynamic and should change in step with a fluid external environment, especially in times of disruption."
Harry Hertz, with the Baldridge Performance Excellence Program and writing for the National Institute of Standards and Technology, discusses strategic alignment from a different angle. He suggests that organizations can best achieve strategic alignment by adopting a systems perspective built on core values and concepts. Strategically aligning the organization shouldn't focus only on a planning process or specific leadership goals that others align with. "A systems perspective means "managing all components of your organization as a unified whole to achieve your mission, ongoing success, and performance excellence."
Your organization is comprised of internal and external resources. There is organizational design, technologies, governance, employee skills and capabilities, values, culture, and leadership. You also have external stakeholders that include suppliers, partners, financial organizations, and customers or clients. When you consider strategic alignment as an execution process, it merges with the systems perspective. This is why.
Strategic alignment views the organization as a whole made up of interdependent operations, functions, and activities that work together in a unified manner. The systems perspective is more comprehensive in that it adds elements like core competencies, action plans, strategic objectives, and workforce needs. From this perspective, strategic alignment is important to employee engagement because it considers employee needs, workforce design, organizational culture, and leadership skills.
Are there areas where your organization seems unable to thrive, sluggish when it involves adopting innovation, that received resources but is not producing planned results, or leaders who are making decisions that are not within the context of the company's strategic priorities? Is your organization in strategic alignment? This question doesn't get asked enough, which is why organizations struggle to manage the complexity and constant change of the business environment today. It usually comes down to leadership. Leadership alignment means your leaders throughout the organization are aligned behind the organization's goals and objectives that support priorities.
In a MITSloan Management Review article, a description is given of a CEO at a technology company who conducted an annual employee engagement survey. There were five strategic priorities that were communicated two years ago and have not changed. The leaders were then asked to list the five priorities. Strategic alignment was an area of strength, with 97 percent of the leaders saying they had a good understanding of the company's strategic priorities and how their work contributed to the company's objectives.
The results shocked the CEO. Only 25 percent could list three of the five priorities. One-third of the leaders couldn't list one of them. The team of surveyors and data scientists at MIT Sloan School of Management has found that these results apply across industries. Only 28 percent of executives and middle managers responsible for strategy execution could list three of their company's strategic priorities.
Multiple surveys have found that one of the main reasons for the lack of strategic alignment is that senior management either doesn't agree on the strategic priorities or fails to effectively communicate the priorities to the managers and supervisors responsible for the execution of strategies to meet priorities.
Strategic alignment brings crucial advantages to a company. It involves the entire organization.
There are different ways to implement strategic alignment, depending on the organization's current status. For example, a common reason a business is not strategically aligned is due to a lack of agreement at the C-suite level on what the priorities should be. So coming to an agreement is a critical first step. Following are some steps you can take to begin moving toward strategic alignment.
This is a skeleton plan, and within each step is a series of meetings, training, opportunities, and communication between leaders and between leaders and employees. Employee voice is an important element of success because it improves management decision-making and ensures employees have an active role in meeting priorities.
Remember that strategic alignment is execution. Your leaders direct and guide employees, but the employees enable success. Giving employees a voice in the process increases engagement. Engaged employees are more likely to take ownership of organizational culture and success and will share issues, suggestions for workflow improvements, and new ideas.
You want to regularly assess how well your organization and its leaders are achieving and maintaining strategic priorities. You will utilize data from multiple sources as input to the development of priorities, including industry data, market data, internal division or unit data, employee surveys, etc. Some of that data is eventually used as benchmark or baseline data for measuring operational performance against strategic goals.
To determine the status of your current alignment, you ask each leader questions like the following (these are examples).
You can conduct an employee survey that assesses current alignment by asking them to scale their understanding of the business model, company purpose, areas needing improvement, and how well their work is aligned with the organization's purpose. This data will help your senior leaders identify gaps in knowledge and determine whether all the teams are aligned with the strategy.
Once the steps are taken to close the knowledge gaps, like leadership training, you can link employee performance to strategic goals. Reviewing processes regularly is a must because the business environment changes rapidly. A strategy will need continuous adapting at the unit level, impacting the strategic alignment needed to achieve organizational alignment.
Organizations use various tools for converting strategy into operations and then evaluating the strategy's execution regularly. They include Strategy Maps and Balanced Scorecards, to name just two. The metrics established should be easy to understand and communicate. You need an effective communication plan to make sure all employees get the information they need to make good decisions as they perform job responsibilities. There are many communication tools you can use to reinforce the strategy, including digital communication tools, leadership training, and employee training. Your managers are role models, demonstrating through their behaviors and decisions how purpose is embedded in job performance.
Achieving strategic alignment is not a simple process. In some situations, leadership training in employee engagement is needed first because coaching leaders are more likely to successfully develop high-performing teams that execute strategy. With the right leadership skills, they can successfully implement and execute strategic alignment processes. Senior leaders can count on IRI Consultants to help clarify strategy and align the organization to ensure successful execution.
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