Aligning everyone in your
organization with your strategy is one of the most important things you can
do ...
Specialty stores need specialty salespeople -
this much is obvious - but your strategies may introduce a twist into your
thinking. Let's say there are two kinds of specialty computer stores: those
that appeal to neophytes and those that appeal to technologically oriented
users. If your strategy is to be a neophyte-oriented store, you want your
staff to be good at hand-holding, explaining technology, and patiently
answering simple questions. Deep technical knowledge may be less important
than the ability to reassure customers who might otherwise be fearful about
computers.
At the more sophisticated store, you want a
very different sort of employee. Employees who are very knowledgeable about
the product will be much more valuable, and a willingness to figure out
answers to difficult questions will keep the specialty "power user" coming
back. The wrong person in the wrong store will be a disaster in either case,
despite the fact that both might be specialty computer stores.
Imagine a new computer user encountering a
sales person who is just right for the techie store. The techie salesperson
will overwhelm the neophyte with information about AGP slots, Frontside bus
clock speed, and BIOS configurability (most of which most computer users
don't need to - or want to - know). The new user will likely go along with
this, but may not make the purchase, simply because the salesperson has only
convinced him or her that this is indeed a very complicated purchase. Even
if he or she does buy that day, you may never see that customer again (if
there is a choice) because the experience was more frightening than
reassuring. This is a problem in three ways: it's bad for your store, it's
bad for the customer, and it's bad for the career of a salesperson who would
be really good - in another store.
How do we get this alignment? There are five
basic steps that you must take to assure your employees are aligned with
your company’s strategies.
First,
employees must have the conceptual tools required for good strategic
thinking about their work.
Second,
employees must understand the strategy.
Third,
strategic alignment needs to be built around the structure of the
organization.
Fourth,
strategy must be reflected in the structure of individual jobs - especially
those in critical areas.
Fifth, you
must have buy-in to the strategy.
Lets look at each of these requirements.
First, strategic alignment can only work
if the employees already have the tools required for good strategic thinking.
This is because employees must be capable of making decisions with strategic
impact in order to be aligned with the company's strategy. Anything less
than this calls for a strategy that treats people as machines. While such
strategies have worked in the past - one could argue they were the
foundation of the industrial revolution - they cannot work in places where
labor costs are above the absolute minimum. These tools include examples,
role models, and training. This does not mean that every employee needs to
be a great strategic thinker, but employees must be able to understand how
their work fits into the success of the organization.
Another thing to do to get people on board is
to make sure your people understand enough of the basics of business that
they can see how the strategy is going to make them better off, increase
their job security, increase the likelihood that they get promotions, and
how it will increase the likelihood that they see pay increases in the
future. Without these conceptual tools, it will be much more difficult to
get buy-in and intelligent support of the strategy from an employee. Several
companies with whom we have worked have had well-designed performance
compensation systems fail simply because the employees didn't understand
income statements.
The second item, understanding the
strategy, can only happen if employees have the conceptual tools covered
in the previous paragraphs. This is mostly necessary because good strategy
requires focus. There are three main ways to satisfy customers: price,
quality (in the broad sense, including product features, technology,
packaging and a host of other value-adding features), and service (again, in
a broad sense, including delivery, support, etc.).
In a strategically focused organization,
there are fewer ways to satisfy the customer. In simple terms, a company
that targets specialty customers will excel in quality and/or service, but
will likely be middle of the road or worse at price. Commodity companies
excel at price, usually fall down on quality or service, and sometimes both.
"Front line" employees - those that have contact with customers - often want
to please customers by offering satisfaction in these three ways, but to fit
with the focus of the company usually should be willing to leave some
customers dissatisfied (for example, a Rolls Royce salesperson should not
get upset that a customer didn't buy because he/she did not like the price).
Without a clear understanding of the strategy, this kind of alignment is
impossible, especially when "front line" employees are far removed from the
strategic planning process.
It's very important that
the way you hire, train, compensate and retain the employees you have in key
strategic areas
works with your strategies ...
Third, organizational structure can
greatly help or hinder strategic alignment. There are several ways this can
happen, but let's look at one example. It's very common in larger
organizations to find a "silo effect", where the organization is very
effective vertically within a department or division, yet lacks efficiency
and flexibility in activities which require cross-departmental cooperation.
This effect will play in your favor if you create these "silos" around areas
which may become separate strategic business units, but may present
obstacles to integrating an acquired company, or tackling organization-wide
strategic change in areas like quality or IT, which typically require
cross-functional teams to succeed.
Some very successful organizations, such as
Hewlett-Packard, have taken this concept into account by creating "matrix"
organizational structures. These structures attempt to break down "silo"
walls by creating reporting structures by both operational function (i.e.
manufacturing, accounting) and market or product (i.e. home office printers,
banking industry).
The fourth item, job structure, is a
pretty broad topic. It's very important that the way you hire, train,
compensate and retain the employees you have in key strategic areas works
with your strategies. If you target commodity customers, for example, you
definitely want all these things to reflect your commodity orientation. For
example, in your hiring you want to be hiring people with an eye towards the
fact that they might be driving costs up or down through their skills. Your
commodity outlook is going to be reflected in one of two ways: either you
want high-quality people who by virtue of their quality and productivity
keep your costs down or you want cheap people who will keep your costs down
simply because they cost less to pay.
Any place where you are hiring smart
expensive people, you want to be sure you can use the skills of those people
to drive your costs down, otherwise all you're doing is driving your cost
up. On the other hand, if you have a specialty strategy, you definitely want
to be looking for people who add value to your product or service, so smart
expensive people in your company will need to add value commensurate with
the cost of hiring them. At the same time, you may have ways to add value
with inexpensive people and if you do, you need to manage them to think
about the customer and the product or service the right way. This is
especially important because inexpensive people may have difficulty
understanding certain specialty marketplaces. In any case, you need to
remember that you will be challenged by the cost of rejecting otherwise
well-qualified job applicants who won't fit with your strategy.
A major challenge that companies face beyond
this is the tendency to use specialty people in places where they should use
commodity ones - or vice versa. In a commodity company, this drives costs
up, and the potential for added value is lost on the targeted commodity
customers. In specialty companies, commodity people and commodity job
structures drive value out, which will devalue your offering and drive
specialty customers away. There is no question that matching employees and
their jobs to strategy has a big payoff.
Fifth item: buy-in. If you have an
employee who thinks the strategy isn't good, you won't have alignment no
matter what you do. The first two items, tools and communication, will go a
long way towards getting buy-in, but there are people who just won't buy
into some strategies - especially if they are smart. The techie salesperson
in the new-user computer store may not buy into the strategy of targeting
new users as a market. This makes sense, as the strategy doesn't fit with
the salesperson’s skill set - but it will create problems for both the
employee and the company.
Often, this kind of buy-in problem arises as
the result of a failure to fit the job design to the strategy, or some
related activity, such as hiring. Occasionally, however, you will find some
employees just don't buy in to the strategy. In a non-strategic position, it
might be possible to overlook a lack of buy-in, but this can be a real
problem in a strategic position, especially one on the "front line". It's
always useful to ask yourself if the lack of buy-in stems from a valid
objection to the strategy (front line employees do have a unique perspective
on the customer, after all). If this is not the case, you - and your
employee - will be best off parting ways as soon as possible, since such a
basic strategic conflict won't be good for either your company or the
employee's career.
Even if the employee performs, not adhering
to strategy will cause basic problems and conflicts which will hinder that
person's growth. Achieving buy-in is a toughie, because, unless people come
up with the idea themselves, it is going to be very hard for them to feel
bought in. In addition, it's hard to get people to feel bought into a
strategy that might not always be in their best interest. It is also
difficult to get people to feel bought in to a strategy that doesn't improve
their job security.
Getting people to buy into a strategy means,
in part, you have to get them to believe in it. This means the strategy
itself has to have some credibility with your employees. It's much easier to
add credibility in a company where management puts the money where their
mouth is and is willing to spend a little extra money to make employees
happier and make working conditions better for people. Probably the most
difficult situation is when you're in a company that has a lot of employees
who are paid at the lower end of the pay scale. Often, input from these
people is strategically critical and they have a critical effect on the way
your products or services are created, delivered and perceived by your
customers. The fact that these people aren't making a lot of money to begin
with usually means that they're willing to consider anything management says
as suspect. It's hard for these people to believe that management is on
their side.
An interesting challenge for you as a leader
in this position is to ask yourself "How could I be happy paying these
people a lot more than they're currently getting paid?" What would it take?
It doesn't always take pay, but if you can't offer pay, you need to offer a
real and valuable substitute.
Let's say you are in a situation where you
just can't offer pay. For example, if you're facing heavy price competition
from overseas, extracting extra value from the marketplace may become
significantly more difficult. It's easy to get people really excited about
strategy if they participated in creating it. Also people may be very
excited about your strategy if they understand and believe in the concepts
involved. Of course an ideal way to get people aligned with strategy is to
make it their strategy. Buy-in is much easier if you can actually make your
strategy a strategy that employees made up themselves. This is one of the
reasons why we push for involvement in the strategic planning process for as
many people as is practical.
There are limits to what is practical. We
have always taught that it's really difficult to have effective, efficient
strategic planning meetings when you have too many people as well as when
you have too few people. What you want to look for are ways to make people
feel like they are contributing to the strategic decision-making process,
even when there are not directly involved in the decision-making part of the
process.
Our experience has been that companies that
take these few simple steps to build alignment between their employees and
their strategies find greater success. Clearly, you will find better support
for implementation of your strategies and more effective day-to-day use of
your strategies at all levels of your organization when you achieve
alignment. This will make the difference between struggling to make your
vision a reality and smoothly flowing into the future you have defined.