Alignment: It’s the term that describes the continuous process of mobilizing enterprise resources to execute company objectives. For several years, organizations have grappled with how to align their most critical enterprise resource—the workforce. Thus f
by Site Staff
April 27, 2006
Alignment: It’s the term that describes the continuous process of mobilizing enterprise resources to execute company objectives. For several years, organizations have grappled with how to align their most critical enterprise resource—the workforce. Thus far, most organizations have charged the human resources department with building an alignment strategy. Although HR is an important stakeholder, the development and execution of optimal workforce alignment will never occur without equal participation of the
corporate strategy and learning organizations.
In an ideal state, all employees understand the company’s strategy and objectives, as well as how their contribution helps the company meet its objectives. Like most theoretical definitions, applying the practice in the real business world is much more complicated and elusive. And the larger the organization, the more complex the problem.
Regardless, organizations understand the correlations between employee engagement and business results. Successful companies are able to articulate company strategies and objectives to their workforce clearly, and the workforce is able to internalize and operationalize those objectives to deliver results.
Some companies have successfully adopted alignment practices, while many have employed the practice with marginal benefits. As with most new business practices, it’s important to learn from early adopters.
A Look Back at Alignment
During the economic downturn of the early 2000s, businesses rapidly shifted from growth mode into preservation mode. Business leaders focused on identifying mission-critical tactics to meet near-term financial targets as well as ensure enterprise resources were mobilized for execution. During this time, many large organizations looked to their performance management process as a way to mobilize employee work activities around these mission-critical objectives.
Specifically, some organizations invoked the practice of cascading goals, whereby employees linked their individual goals to higher-level organizational or manager goals. Cascading goals is a somewhat primitive form of making higher-level management goals more operational. However, the practice rarely involved a rigorous and disciplined look at organizational or employee capabilities. For early adopters, the cascading goals practice provided employees with some insight into how they enabled organizational success. However, most early adopters did not recognize the full potential of alignment because their alignment process was rarely transformed from an administrative goal-setting process into a business management tool. Furthermore, the lack of rigorous capabilities analysis and development planning meant organizations were addressing the “what” but not the “how.” Consequently, managers and employees found cascading goals informative, but only visited their goal plans a few times per year.
What these early adopters failed to realize is the critical role of the learning organization. Defining “what” the workforce should be driving toward does not enable the workforce to achieve those goals. Leading organizations today involve the learning organization in the business planning process, develop learning in support of the business plan and cascading goals, and leverage the capabilities of their LMS to assign learning to individuals to ensure they understand “how” to achieve their goals.
Operationalizing the Business Plan
For organizations to operationalize the company business plan through the workforce, employee performance management and developmental planning must incur a shift in perception and practice. The process must be transformed from an administrative goal-setting process into a business management tool.
Getting the lines of business to take ownership of employee performance management, as well as learning and development, requires a business process that is a value-added extension of operations management. The process must be a natural extension of the business planning and budgeting process. Additionally, the practice must not only address the planning of performance, but also must address the critical employee development required to execute the plan. CLOs need to help the business understand how it can enable the business plan through greater ownership of the performance review proces.
Designing this type of business process requires close interaction of three administrative-support functions: corporate strategy, HR and the learning organization. Unfortunately, in most large organizations, the business planning function is not well connected to either HR or the learning organization. In fact, where independent corporate business planning groups exist, they are most closely aligned with the finance department. More surprisingly, HR and learning organizations are often not well coordinated either.
But for organizations to operationalize their business plans, these disparate functions must work together to build a performance management process that is an operations management tool.
Define Process Ownership
Ultimately, each operational business unit must take ownership of employee performance management. To engage operational business units, the performance management process and supporting L&D tools must reflect the existing business planning, operational budgeting and measurement processes already adopted by the business. Each major operational business unit must view employee performance management as an extension of its existing operational management and reporting function.
There are three primary groups that support the lines of business in performance management. First, many large organizations have a corporate strategy or business planning group, which provides expertise in strategy and objective definition, as well as business performance measurement. Corporate strategy should be the paramount partner in standardizing the process of breaking down organizational objectives into more discrete projects, initiatives and tactics. Additionally, the corporate strategy is often critical in defining the reporting metrics that measure progress and predict potential success.
Second, the learning department provides expertise in developing strategies to ensure the right workforce capabilities are in place. The learning department should analyze critical skills required by key job roles, projects or initiatives, and ensure learning strategies are in place to develop the critical skills.
Third, HR provides expertise in the principles of goal-setting as well as feedback, coaching and assessment. Human resources should standardize these practices across major lines of business to ensure fairness and consistent guidelines, as well as design the compensation strategy.
Reconcile Performance Periods
For the most optimal results, organizations should attempt to align their business-planning period (e.g., fiscal year) with their employee performance and developmental planning periods. Reconciling these two periods can be costly, especially if companies use anniversary review cycles. However, aligning these two reporting periods will provide a concentrated focus on executing the new organizational objectives at the beginning of the year. By creating a focused alignment period at the beginning of the year, organizations can shorten the time required to operationalize business objectives, optimize cross-departmental resource planning for projects and initiatives, and increase the time and effort the workforce spends working on those objectives.
Management Insight & Control
Too often, alignment benefits are described as for employees only. Although improving employee engagement has its benefits, the business value is often not apparent to executives and business leaders. Therefore, the alignment process should provide business leaders with clear benefits. Executive benefits often focus on insights and reports to understand how the workforce is operationalizing business strategies and objectives. Additionally, managers should have the ability to distribute performance and development goals quickly, as well as correct misaligned work activities. For large organizations, this usually requires automated learning and performance management systems.
As an example of executive insight, one major auto manufacturer recently implemented an automated objectives alignment process. Shortly after the initial employee goal-setting period, the CIO found that one organizational objective had few employee goals aligned to it, while all other organizational objectives had high numbers of employee goals aligned to them. The CIO quickly realized that without correction, his organization was unlikely to accomplish the organizational objective.
Imagine being given the goal of driving a large commercial truck from Austin, Texas, to Portland, Maine, within three days. However, you don’t have a speedometer, gas gauge or navigational tool. Furthermore, you have never driven a large commercial truck. You understand that the destination is Portland, Maine and not Portland, Ore., but do you really have the information and tools to be successful?
This is analogous to simple forms of alignment that only communicate organizational objectives but do not provide critical supporting information or tools, such as progress metrics or learning and development strategies. Alignment strategies should look beyond simply providing descriptions of organizational objectives. They should also analyze the information that is necessary for the workforce to meet those objectives.
For example, one financial services company provides television screens in the employee cafeteria that display critical information on company and business unit objectives, industry news and competitor news. This type of practice disseminates important information about company progress and provokes discussions among employees regarding the state of the business.
Understanding Alignment Models
With increasing market adoption of objective alignment, two alignment-models have emerged: people-centric and organization-centric.
The people-centric alignment model was the first to emerge, often promoted by performance management software vendors. In this top-down model, goals are set first by the CEO. Subsequently, the CEO’s direct reports set their own performance goals, each of which is linked to one or more goals on the CEO’s plan. This process repeats itself (cascades) down the entire management hierarchy until each individual contributor defines goals that are linked to his or her supervisor’s goals.
For large organizations, the people-centric model poses multiple limitations. First, the people-centric model is a top-down approach and often takes too long to achieve alignment. Direct reports are often dependent on the completion of their supervisor’s goals before they can begin building their own goal plan. In the case of executives who often have quantitative goals and metrics, their goal plans are often delayed until the completion of the operational budgeting process, which can often last well into the first quarter of the new fiscal year. The second problem with the people-centric model is workforce mobility. In large organizations, employee transition occurs with high frequency, leading to higher administrative efforts to de-link and re-link goal plans. Finally, the people-centric model builds success orientation toward people, who can often leave the organization, instead of more permanent teams or organizations.
Alternatively, under the organization-centric model, objectives are defined first for the company. Subsequently, the company objectives are broken down across the organizational hierarchy. Cascading is only required until employees understand how their contribution can support their organization’s objectives, and in turn their company’s broader mission. For most organizations, cascading down three to four levels sufficiently describes objectives and tactics. Once organizational objectives are cascaded, employees build goal plans that are linked to their organization’s objectives.
The organization-centric model has some advantages for large organizations. First, the model parallels the business-planning and budgeting processes that most organizations already practice. Second, organizations are less fluid and mobile than people, thereby reducing the administrative effort required to de-link and re-link goals resulting from employee mobility. Third, success orientation is toward the organization, not individuals who might leave the company or change roles within it. Finally, measurement systems are usually designed around organizations, which facilitates tracking and communicating objective progress and results back to the workforce.
Introducing Alignment Practices
Most organizations do not need to start from scratch, because they often have tools and processes upon which to build. Though it might not be standardized across the company, most organizations employ some form of business planning and operational budgeting. Additionally, goal setting, learning and development plans and periodic reviews are not foreign concepts to most employees and managers.
Once the organization begins to define its alignment strategy, it’s important to consider a multi-year road map. Organizations should pilot new alignment practices, rather than implement them at once throughout the enterprise. When looking for an ideal pilot group, it’s important to consider both organizational culture and worker segments. Some organizations are more accustomed to rigorous goal-setting processes than others. Additionally, some worker segments are more accustomed to formal goal-setting practices, as well as quantitative goals and measurement. Often, it’s easier to implement the practice within a group that requires less change management.
As they begin to understand the importance of focusing on both the “how” and the “what” of workforce alignment, more organizations are beginning to put the performance review and learning business processes under a single leader. Expect to see the concept of “goals” or “objectives” introduced into LMSs over the coming years. LMSs of the future will allow organizations to link learning to business, departmental or employee goals.
Additionally, the organizations most successfully adopting alignment practices have leveraged pilots to iron out process issues as well as to introduce change that is sensitive to the needs of each major business unit. When done well, effective change is introduced in a way that is not intrusive to business operations.
Effectively leveraging the workforce to operationalize and execute the company business plan is not an easy undertaking. However, there are key principles that define successful adoption of alignment practices. Corporate strategy, learning and HR must work closely with the lines of business to design a process that is an extension of existing operations-management practices. Organizations that bring these various functions together will be able to transform the performance management practice into a business management tool.
James Harvey is a principle consultant at Knowledge Infusion, where he helps customers develop performance management processes, evaluate software solutions, and design and implement talent management business strategies. He can be reached at firstname.lastname@example.org.