Home Articles and Publications Proven Results Associate Partners
The Strategic Alignment Survey:
Giving the CEO More Levers to Push to Improve Organization Performance
Introduction:
When seeking to improve business performance, CEO’s frequently turn to examining the balance sheet. It provides crucial information with regard to such key financial measures as cost of goods sold, operating margins, return on equity (or assets), sales revenue, general and administrative expenses, etc. Often, the balance sheet can provide specific clues as to how to improve profitability through more careful management of operations on either the cost or the revenue side of the business. And since the CEO’s job can be boiled down to one simple statement – “To create value for customers and shareholders through managing all of the company’s resources” – understanding and managing the company’s financial resources is a critical competency that most CEO’s learn to do very well.
And although the balance sheet provides a wealth of information regarding how well company resources are being managed, it provides little to no information on what is often touted by company mission statements as their “most valuable resource” – namely, people. What the balance sheet does show is how much is being spent on direct and indirect labor, and how much is being spent on the capital equipment and overhead used or absorbed by people to manufacture or deliver the company’s goods and services. And in this respect, it provides useful trend information to the CEO to show when labor expenses are rising or falling in relation to the revenues generated through sales. But what it doesn’t show are the following:
- How well people are organized around and within the company’s core work processes to efficiently and effectively produce its goods and services
- How management practices, corporate policies and procedures, and technology systems may be influencing (adversely or positively) employees’ ability to effectively execute their day-to-day work responsibilities
- How well various human resource management systems (performance assessment, compensation, planning, goal setting, promotion and termination, succession planning, training and development, communication, culture maintenance, etc.) are working to reinforce a climate of high commitment and high performance
- How well managers and employees at all levels of the organization are able to respond quickly to change, whether that change be driven by customers, new technologies, market dynamics, economic forces, regulatory trends, or other internal dynamics
How much would it be worth to a CEO and his/her executive staff to have information about how these various elements in the organization could be affecting overall profitability? Quite a lot, I would think. Particularly so if the information provided some clues or directionality on how to re-align some of these areas to improve operational and organizational performance.
The authors suggest that an effectively conducted Strategic Alignment Survey has the potential to provide additional and critical information to the CEO and his/her staff regarding operational and organizational performance as it relates to the areas described above. The authors present a way of looking at organizational performance based on Open Systems Theory that provides additional levers to “push” and “re-align” in order to have a direct and lasting impact on overall business results. Further, they suggest that executives should include data from a Strategic Alignment Survey in the mix with other key operational, financial, technological, and competitive data during the annual operations review, and that this data can serve to augment the company’s short and long-term strategic plans for achieving growth. By having reliable data on key aspects of the organization’s people, process, and technology systems, executives can carefully plan and implement changes in these areas to continually re-align the organization to achieve greater flexibility, agility, creativity, and adaptability leading to improved organizational performance.
What Is A Strategic
Alignment Survey?
Unlike most surveys which gather employee opinions and ratings of “climatic” issues (management and supervisory practices, compensation and benefits, communication practices, work-life balance, company values, work relationships, etc.), a Strategic Alignment Survey targets specific areas that have been shown to have a direct relationship with organizational performance. And while Climate Surveys have a place in providing useful data to management, often that data is not actionable. In other words, either because management is unable or unwilling to take action in response to employee opinion about a given issue, or because the data itself fails to provide clues as to the appropriate action to take, nothing gets changed. The result is that employees’ expectations for change fail to be met, and they become less motivated to pour their hearts and minds into their work.
The Strategic Alignment Survey (SAS) is based in Open Systems Theory - a proven theory about how organizations function and how they change. The SAS is based on the notion that there are key elements, or subsystems, that make up an organization, and that have a direct influence on overall organizational performance. These major subsystems include:
- Strategy
- Structure
- Work processes
- Management practices or processes
- Technology
- Policies and procedures
- People processes
* Definitions of these categories appear in the appendix
These categories are depicted in the model below:
This Input/Output model shows the organization as having several key Inputs (energy, material, capital, people, ideas, etc.) that are transformed into Outputs (products or services). However, it is the transformation process that we are interested in here. More than just the mechanics or step-by-step movement of material and information through the organization (Core Processes), we are concerned about the dynamic interaction of technology, management practices, policies and procedures, structure of jobs and the organization, and the “people” processes that surround these core processes. The idea is that if the dynamic interactions of these subsystems are “out of alignment”, the result will be sub-optimal business performance. Conversely, if these subsystems are in alignment, they serve to foster a climate of high performance, high commitment, and improved business performance.
In a way, the Strategic Alignment Survey is like an extra set of instruments on the dashboard of your car. Because of advances in the use of computers and technology in automobiles, many cars today provide a wealth of additional information on aspects of vehicle performance not previously available, including things like “instant fuel economy”, “personal and business trip mileage and economy”, “percentage oil life remaining”, etc. The Strategic Alignment Survey can be thought of as providing data on how efficiently and effectively various aspects of the organizational “fuel” (namely employee and management creativity, commitment, and performance) are being applied in the production of the company’s outputs. And once known, management can take appropriate actions to improve the company’s overall “fuel economy”.
Information from a SAS enables management to develop and implement actions aimed at improving each organizational subsystem, as well as the alignment, or “fit” between these subsystems. The objective is to root out the problems that lead to poor organizational performance, not to simply go after band-aid solutions that make employees happier at the expense of improved performance. Management should expect survey results to help them achieve lasting, measurable improvements in organizational performance. To go after anything else by conducting a survey is a waste of time and money.
An effective survey process, therefore, has with four major objectives:
- To assess the efficacy of each organizational element (independent of one another) in reinforcing or building a high performance, high commitment organization
- To assess the alignment among all of these elements to ensure that in concert, they are aligned and are reinforcing a high performance, high commitment organization
- To achieve lasting and measurable improvements in organizational performance and employee commitment.
- To demonstrate executive commitment to the kind of whole systems change that leads to overall organizational improvement
When viewed from an Open Systems model point of view, there are implications for the content/design of the survey, for managing expectations through an effective communication strategy, for data analysis, for the approach to data feedback, and for defining and implementing an appropriate change program or strategy.
Piece-Meal Change vs.
Whole Systems Change
Unless executives are committed to implement any kind of change, it’s best not to conduct a survey at all. It’s understandable why some executives refuse to conduct any kind of employee survey at all, because the typical survey fails to provide any constructive or actionable information. When employees use the survey to complain about such things as working conditions, compensation, and their perception of an uncaring executive team, executives feel attacked and become defensive. When this happens, nothing positive is accomplished. And it is usually because the design of the itself provides the wrong kind of data to lead to any constructive change in organizational performance.
The traditional “survey-guided feedback” process typically leads to piece-meal change that addresses only the top problems identified, leaving the truly important issues out of the picture. It also tends to lead to the formation of “task forces” responsible for making recommendations to address a specific category of problems, but who fail to offer an integrated or holistic proposal for lasting improvement.
The Strategic Alignment Survey is designed to achieve whole systems improvement. For one company, that may simply require a re-alignment or redesign of one or more of its human resource management systems, or tossing out antiquated policies that tie the hands of employees attempting to better serve their customers. For another company, there may be a more extensive change program required that could involve changes to organization structure, changes in the design of key jobs, changes in management decision practices, or even a re-engineering initiative to improve the efficiency and output of its core processes. The results of the Strategic Alignment Survey are used in concert with other operational, financial, and organizational data to provide a more complete or holistic, view of what needs to change. Used in this manner, survey data either validates or invalidates strategies for change that may be based on an incomplete picture of the situation, or worse yet change strategies based on a management “hunch”. Survey data is used to plan a systematic change program designed to deliver a measurable return on any costs required to implement the change. Improvement targets are established based on current financial and operational performance measures, and upon reasonable estimates of the amount of improvement that might be achieved over time.
A key element to improving a company’s performance centers on identifying the appropriate organizational levers that, if improved, can make step-wise improvements in business performance. When changes within these organizational levers occur, it can positively alter the conditions within which employees work. This, in turn, leads to changes in employee behavior and, ultimately, to changes in organizational performance. The goal is to foster the kind of conditions that grow employee creativity, originality, agility, passion for excellence, and speed of execution.
For example, while cooperation across organization entities is a business requirement of good horizontal integration, over-integration (cooperation) can drive organizational costs to greatly increase. Conversely, under-integration (cooperation) can cause the enterprise to be unresponsive to market dynamics. The real question to address is how much integration (cross group cooperation) is required to meet specific business targets.
Checklist for
Conducting a Survey
In preparing to conduct a survey using a systems approach to change, executives need to be directly involved in planning for the survey. The planning effort should address these questions:
- Why conduct a survey at all?
- What are we willing to change and what are we not willing to change?
- What do we tell employees about the objectives of the survey, and how do we manage their expectations about the kinds of changes we’re willing to make?
- What information, capabilities, and resources do we need in order to confidently make changes?
- Who “owns” the data, and who is responsible for identifying the changes that need to be made once the data are in?
- How do we roll out survey results, who receives it first, how do they receive it, etc.?
- What other actions should be taken before, during, and after conducting the survey in order to achieve the desired results?
- How are we going to know if the changes made as a result of the survey are what led to improvements in organizational performance?
Let’s look at each question separately.
Why conduct a survey at all? This answer to this question should be “To improve organizational performance and employee commitment to the organization’s goals and objectives, both of which will lead to improvements in employee attitudes about working here”. If there is no plan to use the survey data as part of a comprehensive change program, do not conduct a survey. Surveys can provide invaluable information and insights, and for that reason they are very powerful tools. But used without a clear purpose and a clear plan for change, they can raise expectations and create unintended consequences such as increased discontent, decreased employee commitment, and erosion of management credibility.
When conducted on a routine basis (at least annually), a survey can provide a valuable and legitimate input to the company’s annual planning process along with other key inputs such as market and industry trends, customer analyses, economic trends, new technology trends, shareholder feedback, key vendor analyses, etc. Some companies survey a stratified sample of employees quarterly and track results as part of a balanced performance scorecard.
Finally, given that any organization is an open, rather than a closed system, it makes great sense to consider surveying key customers, vendors, and business partners as part of any survey process. This provides executive management with a true 360° view of what’s working and not working in the total organization.
What are we willing to change and what are we not willing to change? Before conducting the survey, and as survey content is being defined, the executive team should agree on the “boundary conditions” or scope of the planned change program. For every item and every category on the survey, thought should be given to the question, “What if…..”. What if employees say they are unhappy about compensation or benefits? What if respondents say there is no trust in the organization? What if respondents say the organization is overly bureaucratic? What if there is a lack of cooperation between work groups? And so on…. Is everything up for grabs, or are there some issues that are not open for discussion? Agreement among the executive team about what they are willing to change and what they are not willing to change is an essential component of an effective change program. This analysis determines the content of the survey, and if areas are not open for change, questions raising issues and expectations around them are not included in the survey. More importantly, survey items should be constructed to identify actionable issues, and certain survey questions should be administered to specifically targeted audiences in order to increase the value and validity of the data that is collected.
What do we tell employees about the objectives of the survey, and how do we manage their expectations about the kinds of changes we’re willing to make? Defining the objectives of the survey requires discussion among the executive team to ensure that everyone is “on the same page”. There may be several reasons for conducting a survey, but the primary one should be to improve organizational performance vis-ŕ-vis the business strategy. Some of these reasons could include:
- Improving customer satisfaction and retention
- Market or sales growth
- Profitability
- Product or service quality
- Shareholder value
Without being placed in the context of these kinds of business objectives, employees are likely to react to the survey with cynicism and skepticism, and most of all mistrust about the business rationale for conducting a survey. Worse yet, they will allow their expectations for change to build to unrealistic proportions, only to have them dashed when they fail to see the kinds of change they hoped to see.
In communications to employees about the reason for the survey, it should be made clear that the survey is only one element of a comprehensive change strategy to achieve improved organizational performance. Let them know that the feedback received through the survey process is one source of data that will be weighed with other concrete measures of organizational performance to define an appropriate change program or strategy for improving the organization. Also, be clear that while the intent of the survey is to identify and act upon opportunities for improvement, they should not expect these changes to occur overnight. Rather, the kinds of changes you plan to make could take several months to fully implement. There is no “silver bullet” that is going to fix everything at once. Finally, employees must be assured that the survey is anonymous, and is not intended to be used in Reduction-In-Force initiatives, to weed-out those with “bad attitudes”, or to affix blame.
What information, resources, and capabilities do I need in order to confidently make changes? A key point about Open Systems theory is that all of the core work done to produce goods and services is influenced by the interaction of people, the work process itself, and the technology used to create those outputs. The core process works well, or it doesn’t work well, depending on the interaction of the various subsystems, or elements, depicted in the model – all of which directly influence the behavior and commitment of the people in the organization.
|
Illustration: There is a story that employees
at a nail manufacturing plant were paid by how many nails they made. They made thousands of small finishing
nails, but did not make enough larger nails to support the housing industry
in In another example in a customer service department, employees were measured and rewarded on how quickly they picked up phone calls, as they were punished for calls that weren’t picked up in the first 30 seconds. Even though there were company policies and suggestion programs that encouraged employees to speak up about problems, everyone knew that management only cared about short queue times on the call system. Employees quickly figured out that if they picked up the call and put the customer on hold….or even hung up on the customer….that they would meet performance objectives. |
Clearly, both of these examples
illustrate situations where there was a lack of alignment between compensation,
performance management systems, management practices, and desired outputs. A key point here is that in order to
confidently diagnose what needs to be changed, it is necessary to gather data
on a variety of subsystems in the organization in order to define appropriate
strategies for aligning these subsystems.
This is the path to whole systems improvement, rather than the arduous
piece-meal approach implied by most traditional surveys.
Who “owns” the data, and who is responsible for identifying the changes that need to be made once the data are in? This is an important question to consider, since the “owners” of the data have the ultimate accountability for making change happen in the organization. Clearly, any company involved in designing or administering the survey is involved in generating the data and providing some level of analysis. Also, there may be consultants who have a hand in generating some level of diagnosis and recommendations. But ultimately, the owners of the data are the management and employees who participated in the survey. That being said, we recommend some guiding principles to be applied here regarding who has responsibility for identifying, planning, and implementing any changes to be made as a result of the survey.
- Only executive management has the authority and responsibility to authorize change in any of the organization’s key subsystems. Without the direct involvement of the executive team in directing these changes, the likelihood of actual change is diminished.
- The direct involvement of key business leaders in implementing prescribed changes is a critical factor for a successful change. A comprehensive strategy for surfacing and addressing the questions and concerns of all key stakeholders in the organization is required.
- While whole systems improvement requires employee involvement for success, that involvement needs a support infrastructure and needs to be chartered, planned, measured, reviewed, and supported by senior management.
Very simply, changes to most of the organization’s subsystems can only be authorized or sanctioned by senior management. These include changes to organization structure, core business processes, technology architecture, and most human resource management processes including performance management, compensation, and other areas dealing with the utilization and deployment of the organization’s human resources. Change to other subsystems may need to be driven by senior management, but can be implemented and managed locally at each of the organization’s sites.
How do we roll out the survey
data, who receives it first, how is it delivered, etc.?
Too often this question is left unanswered until the survey data comes back and is ready for distribution. Sometime the data is negative, surprising the senior levels of the organization. How confidential is this information? What if customers see it? What if top corporate leaders see it? There are often ethical dilemmas presented around candor, openness, and truth. Second, some thought needs to be considered around how the various management levels will receive the findings. Will survey results and conclusions be presented in small groups, all hands meetings, newsletter, etc.? There are important and powerful political elements that should go into these decisions that can reinforce the negative elements of a culture, or that can demonstrate a “new beginning.” Senior management will need to think about the front line supervisor’s role and involvement in the communication process.
What other actions should be taken, before, during, and after conducting the survey in order to achieve the desired results? Any change initiative requires careful planning and a systematic execution for success. Consulting support from experienced and seasoned practitioners should be given careful consideration in order to help identify and manage any risks associated with the implementation. Elements of a comprehensive change program that should be considered include:
- Change readiness assessment
- An assessment of key stakeholder concerns to ensure global support for the change
- A strategic communication strategy
- Business case assessment including benefits realization targets
- Competency profiling
- Training (technical, skills, leadership, etc.)
- Strategic team building
- Establishment of a program management office (PMO)
- Possible reengineering of core business processes
- Organization configuration
- Culture change
While it may not be necessary to engage in all of the above activities, each one should be given careful consideration and evaluated in light of the survey objectives and its results to build the supporting infrastructure, and competencies to effectively manage the changes to the organization.
How am I going to know if the changes made as a result of the survey are what led to improvements in organizational performance? One objective of conducting any survey is to achieve measurable organizational improvement. Therefore, it is important to establish baseline performance measures, improvement targets, and a tracking system for key operational, financial, and cultural measures as part of the survey planning process. There should be a clear line of sight between these improvement targets and the business strategy showing how they will help grow market share, improve customer satisfaction, increase sales revenue and profitability, and increase quality. All of this will strengthen the business case throughout the organization and help to gain the support of management, employees, and shareholders alike.
Once improvement efforts are well underway, progress against these identified improvement targets should be routinely monitored through the tracking system and widely communicated to employees. Another means for gauging whether or not the change program is achieving its goals it to re-survey employees using a random sampling technique over the course of several months. This can help determine the effectiveness of the overall change program as well the effectiveness of communication about the program.
Summary:
The Strategic Alignment Survey provides executive management with an additional set of information to aid in improving operational, financial, and organizational performance. Having this data available as part of a routine operations analysis and strategic planning process aids in defining a comprehensive strategy for growth and improvement that addresses the entire organization, and not just the financial or operational aspects of it.
While conducting a survey is an effective tool in an overall change program, careful planning is required to think through the implications of such a powerful intervention in the life of the organization, and even more careful planning is required to think through the range of possible actions to take once the survey results are in. While surveys can be used as a “report card” on the company, a more powerful and value added approach would be to conduct surveys routinely in order to identify opportunities for improvement and to make them a part of an ongoing, whole systems change program.
Management has direct control over determining the company’s work and administrative systems. However, because the way most organizations are designed and focused, it is often very difficult for management to gain a broad and accurate perspective of the organization across functions and the dynamic relationships involved. The survey data not only provide valuable information on attitude barriers from a whole systems, cross functional perspective, but also the insight and intelligence necessary to evolve the organization to higher levels of performance in meeting customer expectations, and competitive threats. This insight and intelligence can be significant in helping management develop a sharper awareness of the consequences of their behavior, and enable them to make targeted modifications to their organization. There is a saying backed by research that says, “Nothing changes until management changes“. While the primary responsibility and accountability for whole systems improvement rests with senior management, successful change and improvement still require employee involvement from all levels of the organization. Seeking experienced support and advice to partner with internal resources in designing, conducting, analyzing, and acting on survey results is highly recommended in order to ensure overall success.
Appendix: Definitions of the key elements of Open
Systems Theory
I. Strategy: The company’s plan for growth and market success
II. Processes: The flow of work activities throughout the organization that takes inputs (such as information, raw materials, components, capital equipment, marketing intelligence, customer feedback, cash, etc.) and transforms them into outputs (finished goods, replenishment supplies, research, service, spare parts, etc.) and outcomes (customer satisfaction, sales revenue, profit, employee satisfaction, etc.)
III. Structure: The division of labor and methods of coordinating work within and across organizational boundaries. This includes the structure of jobs, reporting relationships, and the grouping of tasks within work teams. It also includes the formal and informal communication mechanisms (meetings, e-mail, phone calls, etc.) to coordinate work.
IV. Technology: Technical tools and information technology used to aid in the transformation of inputs to outputs, as well as to provide information on process performance to people working within, or managing that process
V. Management Practices: The actions that management takes to control variability in work processes, to coordinate and integrate work activities across various parts of the process, to solve problems, to communicate to employees, to make decisions, and to build and manage organizational and employee capability
VI. People Processes: All of the processes related to the acquisition, utilization, deployment, development, recognition, compensation, retention, promotion, and management of people and their performance. This includes such things as hiring and interviewing practices, competency modeling, training and development, formal and informal recognition and rewards, compensation, performance management, succession planning, and termination practices. All people processes are aimed at building and effectively deploying organizational capability.
VII. Policies and Procedures: All formal and informal policies and procedures that dictate or influence how work is accomplished. This includes policies and practices related to levels of signature authority, decision authority, ISO and FDA regulatory requirements for documented work procedures, etc.