Successful strategy formulation and execution requires securing strategy commitment of managers and employees on all levels of the organization. Managerial commitment to the strategy and its execution is especially important for strategy execution success. Explicit management support of the strategy is crucial because management provides leadership and rewards to organizational members and serve as a role model for them.
Successful strategy formulation and execution requires the commitment of managers and employees on all levels of the organization. Strategy commitment is the extent to which organizational members comprehend, support and intend to carry out a strategy. Strategy commitment consists of two parts: managerial commitment and employee commitment. Managerial commitment to the strategy and its execution is especially important for strategy execution success. Explicit management support of the strategy is crucial because management provides leadership and rewards to organizational members and serve as a role model for them.
Unsuccessful strategy implementation is often caused by middle managers who are either ill-informed or unsupportive of the chosen direction. Middle management’s involvement in strategy formulation enhances their commitment to that strategy and its implementation. If middle managers and lower-level employees are not involved in the strategy formulation process they won’t be very committed to that strategy resulting in very negative effects on its implementation.
When management is not committed to a strategy they will not be motivated to make the execution a success. Managers may even delay or sabotage an implementation effort when they are not committed it. As management serves as an example for the rest of the organization, a lack of managerial commitment will result in a lack of commitment by lower-level organizational members. If management really believes in the strategy and its execution then they can make their employees believe or they can replace those who do not believe in the strategy.
Not only is managerial commitment to the strategy required for strategy implementation success but also employee commitment. Without employee commitment, the strategy implementation is likely to fail. Employees who are not committed to a strategy will not be very motivated to implement that strategy and achieve its goals. In the end, employees are the ones who have to execute the strategy in order to make it a success. The extent to which organizational members agree with and are willing to cooperate with a strategy decision has a great influence on the ability of the manager to implement it. When employees are committed to a strategy and its implementation they are more motivated to implement it. Organizational members who strongly believe in the strategy and its goals are more likely to be willing to make extra efforts on its behalf. This in turn results in better strategy execution performance.
SOURCES OF LOW STRATEGY COMMITMENT
Many executions fail because of a lack of commitment of managers and employees to the strategy. A lack of commitment to the strategy often results in implementation failure. Low organizational member commitment often results in frustration and even resistance to change. A lack of commitment can have the following five reasons.
Employees do not understand the strategy. When a strategy is implemented in a top-down fashion in which little is explained to organizational members, few employees understand the reasons for a new strategy and its implementation resulting in low commitment. Strategies are often vague and abstract in the view of employees. Strategies are often communicated using complex management concepts that most employees do not understand and are not interested in. They want to know how a strategy influences their day-to-day work.
Top management is not committed to the strategy. When management is not perceived to be committed to the strategy implementation, organizational members will not become committed either. A reason for a lack of managerial commitment can be that management has little influence on the formulation of the strategy and area afraid to lose positions of power and preference. This is especially the case in public organizations where the strategy is often imposed top-down by politicians in the governing body.
Employees have little confidence in management. Especially when employees have experienced several executives or managers who tried to change things and failed, they will have little confidence in the latest manager who wants to change things. When the new manager or executive wants to change things, subordinates will expect him to fail as well.
Employees do not participate in the strategy process. Organizational members are more committed to a strategy execution effort when they perceive that they can exert some influence over the strategy and its implementation. Strategy commitment can be increased by involving middle manages and employees in the strategy formulation and implementation process. When employees think that it is (partly) their plan, they are more committed and supportive of the plan. Another way of increasing employee commitment is by clearly communicating the strategy to employees.
Poor past execution and organizational performance. When employees have experienced failed implementations in the past, they expect the next one to fail as well and thus are likely to be cynical about a new strategy. A low expectation or confidence in the strategy execution leads to low effort and commitment leading to poor implementation performance. Organizational members can become very cynical when they have experienced failed implementations in the past. Such cynicism can become a self-fulfilling prophecy when the cynics refuse to support the new strategy. Cynicism to change is an important barrier to successful strategy execution. My research found that organizational members can become cynical of strategy implementation when they do not understand the reasons for it, do not believe that management is committed to it, and are not allowed to participate in decision-making related to the execution effort. Reichers et al. (1997) found in their research that employees are likely to be cynical about organizational change because of the following reasons: feeling uninformed, lack of communication and respect from supervisors, negative disposition, and lacking participation in decision-making.
HOW TO SECURE STRATEGY COMMITMENT
Securing the commitment of employees to the strategy and its execution is not an easy task and requires the following eight practices that reinforce each other.
Display top management commitment to the strategy. Perhaps most important way to secure strategy commitment is that top management is perceived to be fully committed to the strategy and its execution. There should be no disagreement in the top of the organization about the strategy. When top management is not committed to its strategy the rest of the organization will never be. It is also crucial that top management is not only committed to the strategy but also to its execution. Often top management develops a strategy but delegates the execution to others lower in the organization and thus gives less importance and attention to execution. Employees often perceive this very clearly and tend to take the new strategy not too seriously. Displaying strategy commitment by top management can be done in many ways and involves the other seven practices.
Clearly explain the strategy, its reasons and advantages. Employees cannot be committed to a strategy that they don’t understand. Therefore, it is crucial that the strategy is communicated in a way that is understandable for employees on all levels of the organization. This involves explaining what the strategy is, why it is important, what its rationale its, its advantages and how it impacts the daily work of employees. It is especially important for employees to understand why the strategy is important for the organization. Research has shown that people tend to accept even undesirable decisions and policies when they have received a clear and honest explanation for them. When organizational members understand the strategy and are convinced that the strategy is sound and effective they tend to support it.
Make the strategy concrete and tangible. For most employees a strategy is an abstract concept that they don’t understand or are not interested in. Most people just want to do their job well and don’t want to be bothered about ‘management stuff’. When a strategy is made concrete and employees and employees understand how it impacts their daily work they tend to become more supportive of it.
Involve employees in the strategy process. Involving employees in decision-making about the strategy and its especially its execution is one of the best ways to gain the commitment of employees.
Really listen to feedback from employees. When people are taken seriously and have the feeling that they are being listened to this greatly increases their commitment to the strategy. Lower-level employees often have valuable specialized knowledge about processes, customers and many other important operational matters.
Achieve quick wins and make change visible. Most people are skeptical about new initiatives. However, when they see for themselves that the strategy is producing results then most people become committed to the strategy. Furthermore, it is very helpful to make the strategy change as visible as possible. This can be done by new corporate logos, new products and services, refurbished offices, new uniforms and so on. When employees see that things are really changing they tend to become more committed to the strategy.
Ensure that managers and employees have the required skills. A new strategy often involves new tasks and behaviors. People tend to fear tasks that they don’t feel confident about performing successfully. When managers invest in their employees by training them, coaching and counseling them and serving as a role model, employees may become confident that they can perform the new tasks that are required by the new strategy.
Deal with cynics. No matter how hard management tries to gain commitment from employees there will always be persons who will remain cynical about the new strategy and its execution. Especially influential cynics can have a negative influence in the level of commitment of co-workers. As discussed in my post on strategy involvement management must deal with such individuals respectfully but swiftly and in a way that is perceived as fair by co-workers.
Align rewards and execution performance. One of the best ways to secure strategy commitment is to reward execution performance. By aligning reward systems to strategy execution performance top management can show it is committed to the strategy and its execution.
THE STRATEGY EXECUTION SERIES
This article is based on my PhD research at Rotterdam School of Management, Erasmus University – one of the top business schools in Europe. Research has shown that most strategies fail in the execution phase. The aim of my research was to understand why strategies succeed or fail. This series of articles gives a comprehensive overview of the best practices that contribute to strategy execution success or failure. Collectively, the best practices allow executives and managers to successfully executie their strategy and achieve the goals of their organization.