While most companies recognize the need for a robust strategy, only one-third are highly effective at executing their strategies, according to i4cp's 2014 Critical Human Capital Issues study. Given that strategy execution is one of the five lynchpins required to build a high-performance organization, that's a serious problem.
Through our research, we've identified the 25 key performance indicators (KPIs) that have the highest correlation with market performance. Of those, five are related to strategy execution--one stands above the rest: the alignment of executive behavior to the strategy.
The research reveals that the behavior of leaders is crucial--it sets the tone and reinforces important values and ways of acting--in effect, by leading through example. What separates a high-performance organization from the rest is not only how strategy is communicated, but how it is carried out. The key ingredient is consistency.
It makes sense to assume that your company's executives are aligned with the strategy because, after all, they're probably the ones who developed the strategy in the first place. But a separate i4cp study on strategy execution found that the behavior of executives is consistent with the behaviors needed to successfully execute the strategy in only 37% of organizations with 1,000 or more employees.
When comparing high-performance organizations to low-performance organizations, the numbers speak for themselves:
- A majority of high-performance organizations (57%) see consistency between executive behavior and the behaviors needed to execute the strategy
- Only 9% of low-performance organizations see the same
To highlight what we mean by executive behavior alignment, look no further than Isadore Sharp, CEO of Four Seasons Hotels and Resorts. He emulates the behavior required by the company's luxury service customer strategy--he treats his employees as he wants his guests to be treated. Among other things, Sharp makes sure the company pays as much attention to employee satisfaction as he does guest satisfaction. Four Seasons ranks at the top in J.D. Power and Associates' annual Hotel Guest Satisfaction Index and is one of just 13 companies in the world to appear on Fortune magazine's annual list, "100 Best Companies to Work For®" every year since its inception.
So… are your executives truly aligned to the strategy? While this checklist isn't exhaustive, here are a few questions to help you get to the answer: