KEY CONCEPT

It’s not enough to ‘cascade’ strategy down through the chain of command. Senior leaders need a ‘direct line’ of communication with employees. Decisions about the future of the business need to be explained by those who make them. Supervisors and middle managers help to embed strategy by creating the working conditions that make it possible — not by ‘parroting’ the ideas of senior leaders

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IDEA SUMMARY

Strategic embeddedness is a priority for companies; a strategy is much more likely to succeed if a critical mass of employees understands and accepts it. Despite this, articles on strategic alignment have tended to focus more on organizational structures, systems and processes than on employees.

Why do some people understand and accept their company’s business strategy better than others? How can senior leaders increase the chances of embedding their strategy in the workforce — and aligning the actions of employees with their business goals?

A study of a multinational media organization calls into question the popular ‘cascading’ model. Based on 60,000 responses to an employee survey spanning 363 companies (business units with profit and loss responsibilities), it looked at the relative impact of three ‘drivers’ of strategic embeddedness: local job conditions, supervisors and middle managers, and senior leaders.

The results show that:

• Favourable job conditions (for example, adequate resources, teamwork and training and development opportunities) lead to higher levels of ‘buy-in’ – particularly if they’re linked to strategic goals.
• Supervisors have no direct influence over whether a strategy is understood and accepted — their importance lies in creating favourable job conditions.
• Senior managers have the biggest role to play by far — employees are much more likely to understand and accept a strategy if it comes directly from senior management and if they believe their feedback and ideas will be welcome.

Given that supervisors and middle managers work most closely with employees, the last two findings may seem surprising. Why is the direct involvement of senior leaders so important?

First, because complex ideas and the ‘competitive intentions’ of companies are much better communicated at ‘source’ — otherwise, like Chinese whispers, they’ll get mangled in the telling. Second, because people are naturally more likely to take notice of something a senior leader says — and naturally more likely to value engagement from the top of the company. (The head of the company has a symbolic influence over employees.)

If senior leaders want to embed strategy, therefore, they’ll need a direct line of communication to the workforce. They might have to work harder with some employees than with others, though. The study also found that ‘buy in’ was often lowest among long-serving employees of lower rank.

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BUSINESS APPLICATION

• Make sure supervisors and managers understand their role in creating the right context for strategy — local task conditions linked to strategic goals significantly increase employee ‘buy-in’.
• Encourage a ‘bi-directional exchange’ with employees — either by meeting them face to face or by using virtual forums, etc. (New technologies mean it’s easier for senior leaders to be visible — irrespective of the size of the company.)
• Be aware of the risks of ‘strategy fatigue’ — employees who’ve seen ‘fads’ come and go can be the hardest to convince. Target long-serving members of staff who’ll be involved in implementing the new strategy.
• Don’t underestimate the importance of supervisors and line managers, but don’t depend on them to deliver the message — their role is to build relationships with employees and to craft and maintain positive job conditions.

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REFERENCES

Embedding Strategy, Galunic, D. Charles, Hermreck, Immanuel, INSEAD Working Paper (2012)

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