John Kotter’s July 19, 2013 article in Forbes, “When CEOs Talk Strategy, 70% Of The Company Doesn’t Get It” and Harvard Business Review’s June, 2013 article, “When CEOs Talk Strategy, Is Anyone Listening?” are two credible sources citing research and experience proving that, even in companies who take the time to communicate about the strategy, only a small percentage of employees actually take in the information. Let’s discuss why this matters, and what leaders can do about it.
Why is it Important For Your Employees to Understand the Business Strategy?
Achieving plant objectives requires countless decisions to be made by people throughout an organization each day. From deciding how to prioritize tasks, to evaluating quality, to purchasing materials and equipment — each employee in your organization makes decisions and spends time in ways that either contribute to your company’s differentiation and competitive strategy, have no impact on it, or that actually undermine the strategy. We believe you’ll agree that achieving your company’s unique differentiation is critical to business success. Yet, people often get sidetracked and, without having a clear, personal understanding of the strategy, employees make decisions and take actions without considering what matters most.
What do we know?
- The more certain an employee is about the strategy, the more likely s/he will talk about it, take actions to support it, and initiate efforts to improve on achieving it.
- A personal understanding of the strategy aligns your people, both individually and across functions and teams, with a clear, actionable shared direction. It gets everyone rowing the boat in the same direction.
- Understanding the strategy and how s/he fits enables an employee to see what difference he makes in the way he does his job, and creates opportunity for the employee to find meaning in what he does — short and long term meaning that builds commitment and enthusiasm for the work. The stronger the understanding, the more likely it is that employees will take initiative to make a difference every day. This impacts the organization-wide achievement of the strategy and the sustainability of the business.
- A clear understanding of the linkage between the strategy, competitors, customers, metrics and an employee’s impact is critical to employee engagement and fosters commitment.
How Can Leaders Most Effectively Communicate About Strategy?
To build a strong understanding of business strategy among all employees, leaders at every level can be prepared to:
- Share interesting information that is meaningful to your people, about the strategy, daily.
- Tell compelling stories from your experience or the organization’s history that explain what makes the company different from its competitors, who the customers are and why they buy from the company.
- Use a variety of media to update employees on performance vs. metrics, and show the relationship between what they do, the strategy, and the metrics. Remember that people forget 70% or more of information they hear, so stand-up group meetings can be ineffective by themselves in building understanding and retention. If people cannot remember these key details, they cannot be certain and therefore they cannot act on them. Use large postings and simple charts and take time to teach, coach and recognize people who take action to solve problems and make improvements that positively impact strategic performance.
- Celebrate performance results that relate directly to the strategy.
- Use simple, everyday language and examples to be certain everyone understands and can relate to the information you provide.
- Make it routine to discuss the strategy and performance individually in one-on-ones as well as in groups.
For strategic communication to be effective, leaders need to share information face to face with genuine enthusiasm, using language that employees understand and can relate to their work. The communication needs to be clear and actionable. When employees understand the strategy, it provides a context for daily decisions and actions, aligns people in a common direction and provides a rationale that enables them to support organizational change.
How well do your people really understand your company’s business strategy? If asked, can each individual explain:
- Why customers buy from your company?
- Who the competitors are and how you differ?
- How customers use your products and/or services?
- How his job impacts achievement of the strategy?
What activities could you set up to engage people in knowing these things?