It would be hard to find an organization today that does not have a strategy that has been blessed by the board, and which is intended to drive performance. But there is often a major gap between establishing a strategy and fulfilling its promise – a gap created by defects in management processes.
Questions for your consideration, that might help assess whether your organization has effective processes that link strategy to execution:
1. Have management and the board established a strategy that is clear and well understood by top management?
2. Is it clear what actions are required to achieve the strategy?
3. Is it clear who is accountable for every action?
4. Does every required action have appropriate dates established, both for completion of the action and for any interim milestones?
5. Have the actions and accountabilities been appropriately communicated to those who will not only be responsible for participating in the actions, but also to those whose active participation is necessary (e.g., by providing resources or sharing information)?
6. Does every action have sufficient resources?
7. Are risks to the strategies, and the related activities, monitored and are appropriate actions being taken to ensure success?
8. Have management and the board established, and are they using, appropriate metrics to measure progress on all required actions and achievement of measurable goals?
9. Is compensation linked to completion of the actions and achievement of the strategies? Are individuals’ incentives aligned with the organization’s strategies?
10. Do managers’ goals and objectives include activities that are not relevant to achieving the strategy, and may even lead managers to prioritize other activities over those necessary to the achievement of organizational goals?
This last point is very important.
I have worked at a number of otherwise fine companies where my MBOs (on which my bonus was calculated) were based on what I and my manager thought were my priorities. While we tried to reach up and link to corporate strategies, the MBOs were not the result of a top-down process.
I would like to think that what I and my team did was essential to corporate performance. But there is always a possibility (even a probability) that without a top-down process of cascading top-level strategies, goals and objectives throughout the organization, day-to-day execution is not linked to strategy – and the company will fail to optimize performance.
I welcome your perspectives. Is this an issue at your company? Are there other questions auditors should ask?