Employees who clearly understand how they contribute to the achievement of a strategy are more productive: simply ensuring that they have goals that are aligned with the strategy is not enough. These are the surprising findings of a recently published research paper - ones that highlight the value of the ACME four-step strategy implementation framework used by 2GC.
It is frequently suggested that aligning individual goals with corporate goals is one of the keys to improved strategic performance. This assertion was made in the original 1992 paper on Balanced Scorecard by Kaplan and Norton, and has been echoed many times in the books and articles that have followed it - but there was (and is) little evidence to support the claim, or about the best way to act upon it. A recently published research paper provides useful insights into whether alignment helps, and on the practical steps organisations can take to fully realise the benefits alignment can provide.
In “Aligning Individual and Organizational Performance: Goal Alignment in Federal Government Agency Performance Appraisal Programs” (Public Personnel Management, Jun 2015, pp 169-191), Rebecca Ayers digs into a uniquely useful US Government database on organisational performance management practices to look for evidence that goal alignment is worthwhile.
Ayers’ research draws upon detailed information and assessments of over 150 performance appraisal programmes within the US Federal Government that together link to the implementation of over 1000 strategic outcomes. Guidance from the US General Accounting Office and from the US Office of Personal Management requires federal bodies to link performance appraisal programmes to organisational strategic outcomes. Ayers looked to see whether there was a link between how well this was done, and the success of the organisational units in achieving their outcomes.
Ayers’ research found four things:
- Simply ensuring employee goals are aligned with the strategy is not directly beneficial
- Helping employees to understand how they can contribute to an organisation’s strategic goals improves strategic outcomes
- The quality / sophistication of the employee appraisal process used does not directly influence strategic outcomes
- An employee appraisal process can provide a mechanism for improving employee understanding (and so indirectly can improve strategic outcomes).
These findings underline how important understanding is to engagement.
When employees understand how their work relates to the organisation’s goals, performance can increase even if other performance management best practices are not in place.
It is clear from Ayers’ research that the focus of strategy execution activity should be on building employee engagement and understanding concerning the strategy, rather than upon the implementation of goal distribution and reporting systems. This is not to say that having mechanisms to agree and monitor goals is not important - but that on their own they are not enough. The organisation’s managers need to actively endorse and support the strategic goals and directly engage about them with their staff:
“A practical outcome of this finding is that managers should spend more time communicating to their employees how their work relates to the goals of the agency”
But this raises another issue. Research by 2GC and others over the years has demonstrated that many managers lack a good understanding of their organisation’s strategy in general, or how they and their team can best contribute to the implementation of the strategy.
A common thread through much of our work is the need for organisations to articulate what they are trying to do strategically in a form that can be easily communicated. This provides a clear context for things like strategic objectives and measures to help people understand how they can translate strategic directives into activities that directly impact the organisation. More information on 2GC’s ACME Strategy Execution Framework can be found here.
Ayers’ research underlines the value of these messages, and highlights the importance of practical management intervention being more valuable than abstract management processes and systems - however well defined.
Practical steps you can take now
- Ensure your strategy is stated clearly and simply and communicated with employees on a regular basis.
- Review the performance appraisal process to illustrate to individuals how their actions fit into the wider organisational goal.
- Contact 2GC to find out more about how your organisation can strengthen its strategic alignment through application of 2GC’s ACME toolkit.