Only 14% of employees understand their company’s strategy and direction

Why don’t more employees do what they are supposed to do?  Author and consultant William Schiemann might have part of the answer—only 14% of the organizations he polled report that their employees have a good understanding of their company’s strategy and direction.

He shares that fact and some of the causes as a contributing author in Performance Management: Putting Research into ActionUsing the results of a Metrus Group survey he identifies six gaps that get in the way of organizational alignment. While each factor on its own isn’t enough of a problem to explain the overall poor alignment figure, Schiemann believes that it is the cumulative effect of each gap that explains the overall misalignment.

How would you score?

Take a look at some of the key alignment factors that Schiemann identifies below.  As you look at the numbers from other companies, ask yourself, “How many of these alignment factors could I cumulatively answer “yes” to on behalf of my company?”

From Performance Management: Putting Research into Action (2009) page 53, Figure 2.2 “Why Strategies and Behavior Disconnect: Percentage of Rater Agreement.” The percentages represent the cumulative agreement of raters for each element and for the ones above that element.

Strategies for closing the gap

For leaders looking to close the alignment gap in their organizations, Schiemann recommends seven key steps:

  1. Develop a clear, agreed-on vision and strategy.
  2. Translate the vision and strategy into clear, understandable goals and measures.
  3. Include and build passion for the vision, strategy, goals among those who are implementing them.
  4. Provide clarity regarding individual roles and requirements and link them across the organization.
  5. Make sure that people have the talent, information, and resources to reach the goals.
  6. Give clear, timely feedback on goal attainment.
  7. Provide meaningful incentives to encourage employees to develop or deploy sufficient capabilities to achieve the goals.

All good performance begins with clear goals

No organization can perform at its best with only 14% of its people rowing in the same direction.  Take some time this week to check in with your people.  Are their key goals and work objectives in line with the overall strategy of your organization?  Do they see how their work fits in and do they have the tools, resources, and authority to get the job done?

Take the time to set (or reset) a clear direction today.  It can save a lot of time, work,  and wasted effort down the road.

24 thoughts on “Only 14% of employees understand their company’s strategy and direction

  1. ‘Great post, Lolly, and I appreciate the Schiemann reference. As I learned long ago, there are any of four reasons people don’t perform as we expect: they don’t know what, they don’t know how, they don’t want to or there are barriers. Clear strategic direction and measurable goals that workers can identify with address all four. Keep up the good work.

    • Hi Rick,
      You can see all of the research that William Schiemann shares in his chapter of the book Performance Management: Putting Research into Action (see active link in the post above). It’s available through Amazon, and it has a lot of other great research from other authors as well. I highly recommend it.
      Dave

  2. Really? Only 14% of employees understand their company’s strategy and direction. The statement in this article is not surprising, it’s the percentage results. Anyone in a leadership role should take a moment to pause. Communication should always be a top priority for any business. The results of this survey is a nice reminder to pay attention to details, what are you trying to say, to whom, when and, how you’re saying it. Then, do more than just field questions to garner results. Remember, employee’s actions speak louder than words.

  3. In many of my client organizations, even the senior executive leadership team doesn’t know what the strategy is, or they have different variations on it. First I’ll work 1:1 with each team member to understand strategy, objectives & targets in their business function (and then drill into the value-drivers from their perspective) and then I’ll consolidate the results and feed them back to the team. The primary objective is to see how the value map goes across functions (and doesn’t tolerate silos), and to see the top drivers of value in the organization. Yet the first thing the client sees is just how far apart they are on strategy alignment!

  4. Further strategies to close the gap:

    In a ‘market-driven, culture-led’ business, it is the market, or customer, that determines what to do; and it is the company’s culture that shapes the ‘how’.

    From this, effective executives synergise what this means for their business (direction); prioritise what needs to be done (focus); know what they need to do within, across, and outside the organisation to achieve this (connectivity); and then lead with positive impact with his or her own teams (engagement).

  5. Awesome post. This really sheds light on how important corporate goals are communicated down the line. #4 in your strategies – individual roles and how they are linked to the rest of the organization is truly important. When employees know what they are expected to do it becomes easier for them to accomplish it. Now if employees know the value of their work to the whole organization, they can be motivated even more.

  6. I disagree with the seven steps as a solution. First, regardless of whether or not anyone is doing them or trying to do them, they are obvious. Almost every book, post, blog, article or study on the area confirms one or more of those — these are old news. So, if they are old news, why the 14% number. That may also be obvious — because company leaders are not executing all or perhaps any of the seven steps. Maybe the question should focus on why people aren’t doing what they keep hearing and reading is the “right” way.

    So, to generate discussion, I’ll propose something different.

    1. Articulate a strategy that the company is capable of implementing — this means not only financial resources, but personnel resources, intellectual resources, and cultural resources. I’ve seen far too many strategies that lay out goals that the company is culturally incapable of achieving.
    2. Do not use that strategy to establish goals and metrics — except at the top level. The top-level company strategy reflects the goals (and therefore the metrics) of the top company leadership. With that in place, the top leaders, brief their direct reports on the strategy, answer questions and say, “Come back to me in XX days or weeks and tell me how you are going to implement that strategy and what your goals and metrics are.” Repeat down the chain until the front line supervisors are “briefing” the working folks. At each level, the lower level people should be free to push back and see changes made in the next level up.
    3. Do not even try to clearly and cleanly state the roles and responsibilities down the chain. Can’t be done, so don’t waste your time. Once you get past the new employee who has been around for only a few weeks or months, you want employees who use their brains, not just their hands. They can figure out what needs to be done and they can do it. Writing down their roles and responsibilities limits them – we want to empower them. Look at many of the most successful companies.
    4. Clear feedback is important. The hard part is giving useful feedback without getting wrapped around the legal and regulatory axles. In my career in the US Navy, I got a lot of feedback — almost none of it was formal and almost all of it was very immediate. By the way, at the ripe old age of 27, I was given a multi-million dollar airplane, twelve people and told, “Go out on ‘the circuit’ for three weeks, do your tasking, don’t let anyone get killed and don’t start any wars.” Did that and didn’t even get a tee shirt. Corporate feedback is too rare, too formal and too distant from the action.
    5. I don’t think anyone has the definitive answer on incentives. Seems to be that the best incentives are independence, recognition for a job well done and increasingly challenging jobs. None of those are necessarily monetary.

    Thoughts? Comments? Pushback?

  7. Another report that I read on this topic says only 5% (instead of 14% of this report) but in either case – this report is spot on and concurs that it’s certainly the minority of the employees – and that this abysmally low % explains so much of why firms underperform! Yet i find anecdotaly that most firms pay lip service to strategy. Secondly, to what extent do you think that the “strategists” or Chief Strategy Officers own the responsibility of increasing this % for their firm (ie the awareness of the strategy amongst the employees). Ie going beyond the formation of the strategy, and also owning the communication of the strategy?

  8. Too often the leaders first response to a statistic like this is, “‘they don’t understand what we’ve been telling them.” That is WRONG. The folks that do the real work do understand — what is happening is that either 1) there is no real strategy that links what people do every day to corporate goals, or 2) strategy is so secret that the “peasants” can’t be told because the strategy would leak to the competition.

    The first is obviously the fault (note — not the responsibility, but the fault) of leadership. Leadership needs to spend more time running the company and less a time doing all those things they did so well to become leadership.

    The second — I have one thought. WOULD THE COMPETITION CHANGE WHAT THEY ARE DOING IF THEY HAD ALL OF YOUR STRATEGIC PLANNING IN THEIR HANDS? I suspect they would not. If that supposition is true, why all the secrecy?

  9. At multinationals with fragmented industry lines and in industries with unpredictable mid term future it´s quite difficult to formulate an adequate strategy that employees can follow. More important and scary for me is the fact that most employees and often the senior management too are not able to define the core (the heart) of their business.

  10. I prefer that the vision (and goals) be evident in the product iterations. Measuring goals just allows further delays in the execution of real product outcomes.

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  12. The recommendations to reduce the gap between the expectations and the reality seems a bit too elementary. It is a standard requirement in the event of any strategic drive. Even if everyone agree, their facial expression and body language might be otherwise. Eventually it s the conviction of the top management by working closely with the cluster leaders that drives the process through for the benefit of the organization as a whole.

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