Four key elements of strategic alignment.
By Randal Godden
Strategic alignment focuses on the importance of ensuring that the major strategic elements of a business are aligned.
The construct of the aligned elements ensures consistency of strategy and its desired outcome.
The major strategic elements of strategic alignment are :
- Purpose and Direction.
- Structure and Delegation.
- Information and Control.
- Reward and Recognition
And the following are outlines of each element.
1. Purpose and direction.
This relates to how an organization creates, involves and communicates its Vision, Mission, Values, Goals, Objectives and Strategic Thrusts.
It also includes the Leadership behaviour and capabilities of the CEO and key management personnel.
These collectively determine the clear Purpose of the organization (i.e. what does success look like) and the strategic direction it will pursue to achieve the Purpose.
What does organizational success look like and how will we achieve that success?
Wherever possible, key personnel should be included in determining these facets and once agreed need to be clearly communicated throughout the organization so that each and every participant can understand their role in achieving the Purpose and Direction.
- Vision is the long term focus of the organization and provides the Macro purpose and direction i.e. Fedex : On Time, ever time, anywhere.
- Mission – How the vision will be accomplished including relationship management of key stakeholder groups and in particular the Market Product Scope (MPS) of the business i.e. Which markets and or clients to serve or NOT serve AND which products or service to provide or NOT provide.
- Values – The key values which will establish and define the Culture and behaviour of the organization and how it will interact with all stakeholders.
- Strategic Thrusts – What are the key Strategic Thrusts, which will enable us to achieve our overall Purpose. These will change and develop as the organization grows.
2. Structure and delegation.
This element relates to the organization structure (who reports to whom), and the assignment of roles, responsibilities and authorities.
The structure needs to be determined to provide the best possible outcome of the Purpose and Direction.
There are three major organizational structure methods :- -
- Functional – A senior manager responsible for each key function i.e. Sales, Marketing, Operations, Finance, IT, HR, etc.
- Geographic – Key responsibility for business based on geography i.e. countries or regions.
- Strategic Business Units – establish separate business units for specific products and / or customers which manage all the elements of that business although the key common functions i.e. Finance, IT, HR may be managed centrally.
3. Information and control
The systems or processes used to provide information which enables management and control of the organization.
It includes Timing and Accuracy of information including operational, functional, and accounting information on a daily, weekly or monthly basis.
It also embraces management meetings, problem solving processes and communication within the organization.
4. Reward and recognition
The focus of the Reward element is to ensure that how the various employees and / or managers are remunerated (i.e. base salary, incentives, commissions, performance elements etc) is consistent with desired strategic objectives.
The recognition element is to highlight that this element is separate and distinct from Reward and is the culture of how people are recognised and / or praised for success and achievement.
And that recognition is separated from and focussed on more than criticism or correction.
The process is ideally sequential – with Strategy first, followed by Structure, Measurement and Reward etc. It is not a “static” process and requires regular measurement, monitoring and course correction.
Randal Godden is an Ex-CFO and CEO of a company involved in construction, wholesale and retail. The company employed 3000 people and had 200 branches.
In his career he has been a director of every function of the company including financel, sales, manufacturing, distribution, marketing, HR and IT.
He now works as a mentor to CEO's and functional heads.
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