Why Strategic Alignment is Important

Why Strategic Alignment is Important
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Strategic Alignment is Important

Strategic alignment is important because it is all about performance — for your people, for your customers, and for your business.  Just as the tires on your car need to be in alignment to keep the all elements working at their peak, so, too, do the elements of your organization need to be aligned to perform at the highest level.

Why Strategic Alignment Matters
Just as a car has an engine, dashboard, brakes, and wheels, an organization has various business practices, strategies, systems, processes, and people.  When a car’s suspension is out of alignment, it results in uneven tire wear, a decrease in fuel economy, and the potential safety risk of a tire blowout.  When an organization is misaligned, it results in decreased performance and disengagement.

In fact, according to our organizational alignment research, the proper alignment of strategy, culture, and talent allows organizations to grow revenue 58% faster, be 72% more profitable, retain customers 2.23-to-1, and to engage employees 16.8-to-1.

The Organizational Elements Required for Strategic Alignment
Usually designed as part of an executive strategy retreat, three main elements must be aligned to create organizational alignment and higher performance.

  • Your Strategy
    Strategic alignment starts with having a clear, believable, and implementable game plan for success. Strategic clarity accounts for 31% of the difference between high and low performing teams.

    To succeed, leaders must be crystal clear on strategic goals (where the organization is headed) and strategic actions (how it is going to get there).

    A good strategy guides the entire organization, provides rationales for resource allocation, and sharpens decision-making A bad strategy creates ambiguity and opens the door to workplace politics, bad choices, and lower performance.

  • Your Culture
    Because your strategy must go through your culture to be successfully implemented, your workplace culture can directly help or hinder your strategic plans for success.

    We define culture as how and why things truly get done in an organization. Once your strategy is clear enough to act, it is time to understand, shape, and align your culture to best accelerate your strategic priorities.

    A healthy and aligned culture makes it easy to get stuff done in way that makes sense for the business and for your people.  An unhealthy or misaligned culture disengages employees and makes it difficult to do the right things for the right reasons.

  • Your Talent
    Once your strategy is clear enough and you have shaped and aligned your culture to be healthy, high performing, and aligned with your strategy, it is time to consistently attract, develop, engage, and retain talent that fits your unique strategy.

    And getting talent right matters. On average, companies spend over one-third of revenue on employee salaries and benefits.

Three Steps to Make Strategic Alignment a High Priority
Making strategic alignment happen should be the top priority of every organization that wants to win.

  1. Create Strategic Clarity
    Alignment starts with strategic clarity.  Senior leaders must agree and commit to where the company is headed to begin the organizational alignment process.

    You will know you are headed in the right direction when:

    —  The strategy is clear to all key stakeholders
    —  All key stakeholders agree with the direction in which you are heading
    —  People have the right mindset to execute the plan
    —  The quality of your plan is equal to the challenges that you face
    —  Your performance measures are aligned with your strategic priorities

  2. Ensure that Your Culture is Healthy, High Performing, and Aligned
    Once your strategy is clear, believable, and implementable enough, your next step is to assess your corporate culture in terms of organizational health, performance, and strategic alignment.

    You will know you are headed in the right direction when your culture is:

    —  Healthy: Healthy cultures have strong levels of leadership, trust, capability, and climate.
    —  High Performing: High performing cultures create a performance environment for people to perform at their peak.
    —  Aligned: Strategically aligned cultures get work done in a way that is aligned across ten cultural dimensions with the business strategy.

  3. Build a Differentiated Talent Management Strategy
    Once your strategy and culture are aligned, it is time to optimize talent.

    You will know you are headed in the right direction when your talent management strategy is proactively and explicitly linked to your business strategy and culture.

    That means treating different talent and different roles differently by prioritizing getting the right people, in the right roles, with the right capabilities to both execute your strategy and live your desired culture.

The Bottom Line
As businesses are becoming more complex and competition for customers and employees continues to intensify, winning companies make strategic alignment a top priority.  They do not let things happen by default; they ensure that their strategy, culture, and talent are aligned for high performance.  Is your organization firing on all cylinders?

To learn more about why strategic alignment is important, download Alignment – The Missing Leadership Ingredient for High Performance

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