We’ve described in detail the development of a corporate strategy plan in our first 3 blogs. Now, it’s important for us to discuss how departments and employees outside management are critical in strategy implementation. As soon as the plan is communicated at all levels of the firm, employee contributions are more easily understood by everyone. Clear communication is a prerequisite for this understanding, and it must be exercised ongoing. This tactic is indispensable for the training and education of employees.
It’s important to note that any business plan must state its desired results. As such, the plan inherently appoints responsibilities to departments and employees outside of management. Management ensures that everyone clearly understands their contribution to the implementation of the plan. Strategically, everything is set from the top, but operationally, goals must be intertwined, lived and accomplished at all levels.
This process – i.e. strategic plan development and any revisions – should be part of an annual exercise by company management. With ongoing and effective communication about the plan in team meetings, opportunities and threats are uncovered, analyzed and incorporated with appropriate plan changes.
Strategic leadership with a defined frame of reference
The frame of reference of strategic leadership is divided into the following areas and is adapted to the respective participants:
- Normative leadership – here, above all, the guiding principles and values are to be defined and concern mainly the shareholders and boards of directors. The questions of where to, why and for what purpose are then covered by the vision, mission, values, and mission statement.
- Strategic management – this includes the strategic goals, implementation, and tactics, which must be covered by the board of directors and the management with cadre. What, with what and how the basic strategy, market and functional strategy should be anchored and implemented in the strategy implementation plan. The business plan is the final elaboration of the broken-down strategic plan.
- Operational management – this is where the execution and activities for the management, cadre and employees occur. The who, when and where ends in the clearly defined target agreements.
We attach great importance to this instrument, the goal achievement process, because employees work more effectively when they understand and identify with the goals they must achieve. Finally, performance is noticeable when it meets the exact needs of the company, and thus the strategy, as to how employees are targeted. Therefore, a regular informative exchange (the feedback) about the results of their activities is considered an important approach and at the same time an intermediate control.
The associated dialogue and relationship between supervisor and employees are enormously important and motivating. Support on the part of superiors must function impeccably and lead to absolute job satisfaction. Efforts can be rewarded as well as encouraged and should have a clear basis of career development, which in turn allows higher positions to be achieved by employees if the potential is there.
In all these tools, however, there must be an element of freedom; If we give employees the resources and space to maneuver, they have a positive motivational desire to achieve goals, often faster and more efficiently!
Here it’s important for employees to agree on goals, which result from the annual planning and budgeting processes. Only when these two processes are linked can the plan be driven forward by all employees. Parameters that are clearly defined drive individual motivation. At the end of the day, measurement of employee performance is what counts.
Management by Objectives (“MBO”) is the process that ties employee performance to goals set for the overall company. MBO contains important qualitative and quantitative targets, which are to be specified and each of which is to be described according to the weighting of the degree of target achievements.
Measurability is a prerequisite gauge that should yield clear results that are realistic and aligned with deadlines. These results should be SMART goals, which cover specific, measurable, achievable, relevant and time-bound objectives. We suggest these targets to be discussed by the company 2xs per year, because they are ideally linked to performance incentives that depend on the achievement of specific goals. These targets increase company output and drive forward strategy achievements at the same time.
Target agreement tools
With these targets we draw relevant goals for the target agreement with employees. These are to be discussed in detail twice a year and are aligned with measures and activities of oversight meetings. The alignments are substantiated because they represent deviation from plan and help to get the plan back on track.
Clearly defined goals are the basis for the evaluation of the completed work. We therefore distinguish between two types of goals:
- Quantitative goals – these include those of mainly monetary value, the quantity, and deadlines, which are to be met or delivered. Quantitative goals have the advantage of being unambiguous, which facilitates the verification of their achievement.
- Qualitative goals – these include the behavior, the way of working and their resulting quality. Qualitative goals are to be evaluated after judgement and, therefore, it is important to be as precise as possible in the description of them because there must be a uniform understanding of them. For this purpose, there are three types of such goals.
- Performance goals – serve to describe targeted final results in terms of quality and quantity.
- Behavioral goals – serve the description of targeted behaviors concerning reliability, diligence, conduct and interaction.
- Leadership goals – serve to describe leadership characteristics such as planning, delegating, deciding, informing, etc.
Only with clear formulations such as mutual understanding can the desired effects be triggered. The more clearly the goals are defined, the less misunderstanding there is for the measurability of the degree of goal achievement.
Target agreement dialog
For strategy implementation, the target agreement meeting, i.e. the constant dialog about cooperation, is the essential instrument and ultimately the success factor. Openness, honesty, willingness to change, transparency and clear communication are required here.
How do we prepare ourselves or the employees for this? What is the optimal prerequisite for preparation? Some food for thought goes in the following direction:
- Employees – reviewing their contribution to achieving the goals, setting annual specific goals to be achieved and individual goals as well as the necessary form of support.
- Supervisors – reviewing the contribution to the achievement of the goals of the organizational unit, defining specific goals to be achieved for the coming year and his/her own contribution to the support of the employees and the nature of that support.
Only with sufficient time, a well-defined framework, and clear points of agreement, will such discussions lead to success. Personality differences must be respected, and any related appreciation shown – only a positive atmosphere will guide the cooperative and successful goal agreement process.