Breaking Strategy Into Measurable Employee Actions

All organizations have strategies that help them define their approach to competing on the market. In the corporate world the development of strategy is one important aspect of executive management while successful implementation of that strategy is a second. Solid strategies, that can compete on the market, should be implemented throughout the organization creating deep alignment and competitive advantages. Breaking strategies into executive, managerial, and employee functions helps in finding an improvement blueprint.

The far majority of strategies don't fail at actual design but fail during the implementation process. As strategies are implemented throughout the organization they do not move deep enough to ensure that actions are integrated with operations. Understanding the activities needed at each level of the organization has its benefits for implementation and management.

The process of breaking down strategy into definable actions helps companies convert employee action into measurable outcomes. It provides a larger framework for understanding how each employee either contributes to or detracts from the organization. Likewise, it also offers a better understanding how departmental actions contribute to financial success.

Executive Level

High level corporate strategies are developed to define the needs of the organization and what major functions fulfill those needs. These corporate strategies help in directing departments on their major functions and goals.

Example: The fastest seating and service within the local dining market.

Managerial Level

Each department will have their own goals and functions. Managers break these goals into daily activities and actions. Managers oversea these processes to ensure that everyone is working according to the definitions of the department and the strategies that guide the department. 

Example: Employees should seat and provide drinks for customers within ten minutes of entry.

Employee Level

Employees are trained on very specific functions that might include taking customers orders, refilling machines, or greeting customers. The definition of these functions is finite and offers the ability of the employee to understand their position. 

Example: Greet the customer within two minutes by saying "hello", "welcome", or "good day".

Each level (executive, managerial, and employee) have functions that correspond to their designed spheres of influence. Each of these functions are under the control of the appropriate position. Executives offer higher level strategies, managers provide daily actionable direction to employees, and employees complete specific functions. The level of flexibility is dependent on the actual position itself.

Having a working definition of the functions and objectives of each department and position helps in managing the entire process. It becomes much easier to see how an adjustment in one area can impact the entire chain. For example, adjusting from the fastest service to the friendliest service in the local market will create corresponding adjustments at the departmental and employee levels.

Part of the strategic planning should be to understand how each individual piece fits within the large pie. It is possible to review the market and find where competitive advantages are likely to be found and then break them down throughout the organization until you get to individual actions. Such analysis and planning affords an opportunity to better align actions to strategies that produce higher results.

Aligning Organizational Strategies to Market Needs

Corporate competitiveness is a process that requires continually adjustment to the market to increase efficiency and effectiveness. A paper by Bhattachariya and Gibbons (1996), discusses in further depth how this environmental alignment can be achieved. By ensuring organizations are structured in a way that improves competitiveness, they can also help secure a place in the global economy.

Greater internationalization, consumer choice, fragmented markets, and short product cycles are some of the challenges organizations face.  Companies increasingly are forced to change with  environmental demands and are attempting to do this through transformation of their structure. A proper transformation should align the organization and everything within it to corporate strategies that match the market environment.

Two primary constraints influence businesses, which include the external environment and a level of performance that is sufficient to deal with that environment. To find the balance means one must find a strategy that positions the organization into a competitive stance. That strategy is a way to achieve an objective; it is a path to a goal.

The external environment is the environment, which the organization is currently working. It may be global in nature, could include the local labor market, or focus on regulatory environments. It is all of the pressures and factors found through a proper environmental scan. The performance level of the organization should be able to compete effectively in that market if there is to be success.

 The entire structure should be aligned to the environmental needs. This requires the ability to ensure processes and procedures are fulfilling the organizations functions. If these processes and procedures do not fulfill a competitive need or are not aligned to the market, then it is necessary to reduce them as waste.

Success can come through creating number of adjustments within the layers of structure and the alignment of related processes. This includes the strategy, the business unit strategies, the functional strategies, processes, and competencies/capabilities. The business unit strategies take into consideration actual functional aspects of the firm. This includes marketing, financial, purchasing, and manufacturing, etc…

Each strategy should focus on what the organization does well. If innovation is a core competency, all processes and procedures should align to the environment in a way that further enhances these abilities. For example, innovation would require a level of experimentation, collaboration, flatter organizational structure, and open-minded management, and constant communication. The organization should seek to develop processes and procedures that enhance this innovation to compete in an environment with lower product cycle times and competitive offerings.

The author does not discuss cognitive processes. As processes and procedures are learned employees naturally begin to change the way they think about proper work functions. The longer such processes and procedures are used the more they become embedded within the organizational culture and the mindset of the employees. To have a truly transformational change requires the changing of thoughts and behavior.

It is possible to make conclusions about environmental alignment as a process:

-Adjusting organizational strategy to match environmental demands. 

-Adjusting business unit (departmental) strategies to match organizational strategies.

-Create functional strategies that are in alignment with the departmental and corporate strategies.

-Adjust processes to fulfill the functional strategies, departmental strategies and corporate strategies.

-Encourage new employee cognitive and behavioral strategies that match the needs of the processes, functional strategies, departmental strategies, business unit strategies and organizational strategies.

Bhattacharya, A. & Gibbons, A. (1996). Strategy formulation: focusing on core competencies and processes. Business Change & Re-engineering, 3 (1).

Implementing Pay-for-Performance with Municipal Employees

Governmental agencies are often seen as ineffective in managing the human capital within their departments. As budgets become strained and tax revenue declines officials will need to find new ways of motivating and managing employees to do more with less. The development of higher employee engagement and performance often starts with the performance appraisal and the standards set within. The use of pay-for-performance can increase both the skill and standards within such agencies.

Human resource functions often set the pay and performance criteria of public service employees. In public agencies the cost of labor can be heavy and accounts for approximately 60% of municipal budgets (Chelladurai, 1999). The effective management of taxpayer dollars often rests on the proper utilization of this resource for greater public service. 

To develop stronger uses of human capital there should to be higher levels of alignment between work criteria and organizational objectives.  An important factor in creating this alignment rests on tying compensation closely to organizational service requirements to minimize human capital waste (Dyer & Reeves, 1995).  Employees need to focus on those tasks which are most important for the function of the organization.

Pay-per-performance is a method of compensating employees for the quality of work they complete. In municipal employees accustomed to universal performance appraisals and minimum performance standards there isn’t much incentive for higher levels of effort. Pay-for-performance systems have been described as one of the most effective methods of motivating and increasing performance (Levy & Williams, 2004). 

Research helps open the door to understanding how environments that may have been opposed to pay-for-performance in the past may be receptive to such measures if employee input is considered. By partnering with employees to develop higher standards the performance system creates higher levels of perceived validity and greater trust with management. Through employee engagement the organization can realign employee efforts to save taxpayer dollars. 

Research conducted by Mulvaney, McKinney, & Grodsky (2012) Study of 70 full-time and 550 part-time employees in the Elmhurst Park District of Illinois help highlight potential new performance measures for public employees. To implement an effective pay-for-performance system within municipal government required six important steps:

• 1.)    Job Analysis: Systematic method of gathering and analyzing information on the content of jobs.
• 2.)    Rating of Tasks: This includes the rating of tasks as to their importance to the success of the organization.
• 3.)    Creating of Appraisal Instrument: The development of the appraisal system based upon job tasks.
• 4.)    Identifying Raters: People who would be most accurate in assessing performance were selected to conduct the appraisals.
• 5.)    Rater Training: Each of the raters was trained to reduce bias and errors.
• 6.)    Performance Interview: Seeking and discussing potential information to include in the performance appraisal system.

The results help indicate that improvement in employee perception are beneficial results of developing employee pay-for-performance systems in which employees are participants in their development. The study was considered a pilot study that briefly tries to grasp the main concepts of transformation in government agencies. Additional research would be helpful in improving the likelihood of positive outcomes. The findings are as follows. 

-Cognitive and affective value of employees’ engagement in developing pay-for-performance evaluations.

-Additional agreement between management and employee perceptions of fairness  and accuracy with evaluations. 

-Noticeable performance improvement with employees who received feedback.

-There were higher levels of perceived procedural trust with the pay-for-performance evaluations.

Chelladurai, P. (1999). Human resource management in sport and recreation. Chicago, IL.:Human Kinetics

Dyer, L. & Reeves, T. (1995). Human resource strategies and firm performance: what do we know and where do we need to go? International Journal of Human Resource Management, 5 (3). 

Levy, P. & Williams, J. (2004). The social context of performance appraisals: a review and framework for the hitwe. Journal of Management, 20 (6).

Mulvaney, M., McKinney, W. & Grodsky, R. (2012). The development of a pay-for-performance system for municipal agencies: a case study. Public Personnel Management,  41 (3).