APPOINTING PEOPLE FOR STRATEGY EXECUTION

APPOINTING PEOPLE FOR STRATEGY EXECUTION

January 21, 2016
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Strategies are as good as the people developing and executing it. My research found that competent employees and especially competent managers are by far the single most important success factor for strategy development and execution. The people who have to execute the strategy must have the required skills, attitude and knowledge to do what is necessary to make the strategy a success. Organizational members are in the end the ones who have to perform the implementation activities to make the strategy a success. Organizations must make sure that their have employees have the right skills and temperament to achieve the targets of the strategy. Appointing people for strategy execution is a key task for executives and managers

APPOINTING THE RIGHT PEOPLE

Competent management is by far the most important success factor for strategy execution. It is crucial that management and especially top management is skilled in developing and executing the strategy of the organization. Successful strategy development and execution starts at the very top of the organization. When top management is incompetent, the whole organization will be affected and thus the strategy implementation effort as well. Top managers are the ones who appoint their fellow board members and the middle managers that report to them. When the right people are not appointed in the right managerial positions this is very destructive for any organization.

Appointing the right managers in the right place is a key task of executives and leaders. Nothing is as important to the overall performance of an organizations as the quality of its higher and middle middle management. Executives have to make sure that their direct reports have the required capabilities to do their work and successfully develop and even more important execute the strategy. However, this is easier said than done in may public sector organizations where many employees are difficult to fire due to civil service rules that are meant to protect public workers from political pressure.

Incompetent middle managers are a key barrier to strategy execution. Many studies have found middle managers to be particularly influential in the implementation of strategies and strategic decisions. Inadequate leadership skills and development of middle managers are a major barrier to strategy execution. My research also found that competent middle management is key for successful implementation, but not as important as competent higher management. When top management is competent they can make sure that middle is competent as well or they can appoint managers who are. Appointing the right people in the right place is one of the key tasks of top managers. My research found that strategy executions go well when top management has the required skills to successfully develop and execute strategy. However, such competent leaders tend to be very rare.

Managers often lack strategy development skills. Many organizations lack competent managers with the required skills and knowledge to successfully develop and execute strategy. A recent study in Harvard Business Review found that only 8 percent of executives are good at both strategy and execution. To come up with a sound and clear strategy, executives and managers must have a thorough understanding of the current strategy, the organization, its strengths and weaknesses, threats and opportunities, its business model, products and services and the business environment in which the organization operates. This is a daunting task giving the increasingly complex and turbulent business environment. Such expertise can to a large extend by supplied by subordinates and external consultants but executives still need to have an in-depth understanding themselves. Sound strategic decision-making is impossible without in-depth knowledge. When such an understanding is absent, the developed strategy is likely to have flaws. Furthermore, strategists must have a thorough understanding of strategy methods and tools, finance, marketing, customer needs and increasingly relevant technological developments. Organizations and their environments have become increasingly complex making it very difficult for executives and managers to keep up with all the developments. Executives and managers do not always the in-depth expertise to make sound strategic decisions and not always involve those who do have the often specialized expertise resulting in suboptimal or flawed strategies that result in strategy execution failure. No execution can save a strategy that is flawed to begin with.

Managers find execution not as important as strategy. Many executives and managers view strategy execution as a relatively straightforward operationalization of a strategic plan. Once a strategy has been formulated, its implementation is often viewed as a matter of operational detail and tactical adjustment. Thus, strategy execution is treated by some managers as a strategic afterthought. Strategy formulation is often viewed as an intellectual and creative act, and execution as a hands-on and action oriented activity which requires leadership and managerial skills. Strategy execution is often perceived to be as not as important as strategy development and about details, and mundane problems. Whereas strategic decision making is often viewed as glamorous, exciting, even heroic. As a result, managers and especially executives tend to spend more time on strategy development than strategy execution. Executives tend to involve themselves more in strategy development and often view strategy execution more as a matter of delegation and thus a task of middle management.

Executives and managers often lack execution skills. Managers and executives often also lack the required competence and knowledge to successfully manage or lead an implementation effort. They often lack the required managerial skills, such as supervision, delegation, budgeting and planning and control. Managers also often lack the people skills for dealing with their subordinates. Motivating, developing and empowering subordinates to successfully execute the strategy is a key skill that managers often lack. Managers can also be reluctant to be strict, decisive and discipline subordinates because they want to avoid conflicts. Managers are often focused on the day to day operations of the organization and lack vision about how to plan and execute strategy and managing people. Finally, managers may lack knowledge and skills about functional management disciplines such as strategy, finance, human resources and marketing. Managers tend to become caught up in day to day operations and issues and may lack the time, interest and expertise to deal with more tactical and strategic issues that are important but less urgent.

Incompetent managers destroy team performance. Few things are as devastating to an organization as incompetent managers and executives. The higher a manager is positioned in the hierarchy, the more damage he or she can do to an organization. The presence of incompetent executives and managers has a very negative influence on the performance of subordinates and and thus the team, department and ultimately the organization. When a person is competent and that person’s manager is not, this most likely reduces the level of motivation, commitment and work performance of that individual. Few things are as demotivating for people as working for an incompetent superior. Successful organizational members tend to leave an organization when they have to work for incompetent managers and feel that their performance is not appreciated or sometimes even worked against. Incompetent managers may perceive competent subordinates as a threat as we discuss further on.

Competent employees are also crucial for success. While competent executives and managers are the most important success factor for strategy execution, competent employees are important as well. In the end they are the one how have to execute the strategy and make it a success. They are the ones who perform the execution activities, deal with customers and manage processes. One of the most important tasks for managers and executives is to optimally facilitate and support the strategy execution activities of those who have to execute the strategy.

Incompetent team members bring down team performance. Having incompetent members within a team has a negative influence on the performance of other team members and thus the strategy execution. Well-performing organizational members have their motivation and work performance reduced when they have to work with or are dependent on poor performing colleagues. Research has found that individuals respond to the expectations of fellow employees especially in cohesive groups. When group members have low expectations because they do not perform well, they tend to influence the performance of co-workers in a negative way. In the organizational behavior literature, the concept of collective efficacy illustrates this phenomenon. Collective efficacy refers to the beliefs that individuals hold about the ability of their group to successfully perform its work tasks (Riggs and Knight, 1994). Despite a person believing she has the ability to perform the task successfully she is less likely to persist if she has the belief that the group with which she has to perform the task does not have the ability to perform the task. Thus when competent people work in a poorly performing team, their performance tends to be drawn down too. Clearly, this has a negative influence on the execution of a strategy as it is by definition a team effort.

The threat of performance. Not only can poorly performing co-workers bring down the performance of competent employees they may even try to sabotage such an individual. When a person is successful in his work, other organizational members may become envious of that person or feel inadequate or even threatened. Successful organizational members can be disliked because their accomplishments can make their less performing colleagues look bad. This has been called the threat of performance. Successful co-workers can make make their poorly performing colleagues look bad in comparison.

Competent and ambitious people tend to want to improve their work and the performance of their team or department. As a result, they tend to want to improve and thus change things. This is unlikely to be appreciated by poorly performing colleagues as they tend to want to keep things as they are and maintain the status quo. Consequently, successful organizational members can be worked against having a negative influence on their work performance.

Sabotage and the crab mentality. When successful persons are being worked against, they are less likely to remain successful. This has been called the ‘crab mentality’ phenomenon. When crabs are imprisoned in a barrel and one them tries to climb out, the others will attempt to stop it by clinging on to it. When this happens successful employees lower their performance or leave the organization. Most people have an inner need to be appreciated for the work they do many people want to develop themselves as much as they can. They are likely to leave the organization when they do not receive and have the opportunity to find another suitable job.

Successful subordinates may threaten superiors. Not only may co-worker feel threatened or envious because of successful colleagues but superiors as well. When an organizational member is confident and performs well that person may also become a threat to her manager because she could take over her job. Given this threat, attempts can be made to stop the successful person. For example, managers may criticize the successful person very harshly in order to keep that person in line. They may also deliberately give the person a bad performance review.

Restriction of performance in cohesive groups. Research has shown that there is a relationship between peer pressure and performance. Because of peer pressure, successful organizational members can become reluctant to outperform their peers. Especially in groups with a high level of cohesion, there is often more uniform productivity within the group, which may also lead to a ‘restriction of output’ (Locke et al., 1988). This was also the case at several organizations in my research where performance was restricted because of group norms. Well-performing organizational members adjusted their performance downward and more in line with colleagues. This mechanism also works the other way around. Individuals in cohesive groups with high performance are pressed to perform well. Such a high performance culture can for example be seen in high-end management consultancies, multinational corporations, elite army units and successful sports teams.

Individual performance is not universally valued. The threat of performance and peer pressure are more likely in collectivist cultures. In such a culture, a person may feel uncomfortable when he or she is singled out publicly for his or her performance. When an individual is recognized or rewarded by her superior, other group members may feel defeated and experience a loss of face. A loss of face can have a negative influence on the level of cooperation with the successful person. As a result, the successful person often reduces his or her work effort to restore face for others in the group. Pushing oneself ahead of others and actively seeking success is not universally valued’ (Markus and Kitayama, 1991: 241). Such an individualistic approach to performance is a key characteristic of the work ethic in some Western countries such as the United States. However, such an approach is less valued and thus effective in Asian and many other non-western and even Western cultures.
CONSEQUENCES OF INCOMPETENT STAFF
Incompetent employees and especially managers can have the following negative consequences for strategy development and execution.

Development of flawed strategy. Effective strategy execution starts with a sound and executable strategy. No execution can save a strategy that is not sound or feasible to begin with. Sound strategy development is impossible without in-depth knowledge of the current strategy, organizational strengths and weaknesses, environmental threats and opportunities, the business model, business processes and products and services. In addition, a thorough understanding of strategy tools and processes is required. When executives and managers lack such an understanding, the developed strategy is likely to have flaws.

Poor strategy execution performance. When organizational members do not have the required competencies, implementation tasks may not be performed as well as required or not performed at all. When implementation tasks are not performed as planned a strategy implementation effort cannot be successful. Especially, a lack of competent managers has a very negative influence on implementation performance. When top management is incompetent, the whole organization is affected and thus the implementation effort as well. In addition, incompetent managers managing an implementation effort will likely have a negative influence on its performance. Furthermore, when employees have little confidence in the ability of management to execute it then their strategy commitment will very likely be low.

Reduced commitment to the strategy. Successful strategy formulation and execution requires the commitment of managers and employees on all levels of the organization, as we have seen earlier in this book. Managerial commitment to the strategy and its execution is especially important for strategy execution success. Explicit management support of the strategy is crucial because management provides leadership and rewards to organizational members and serve as a role model for them. When employees have little confidence in the ability of management to execute the strategy then their commitment to the strategy will be low resulting in poor implementation performance.

Incompetent employees reduce team performance. Having incompetent members within a team or organization has a negative influence on the work performance of coworkers. Well-performing organizational members can have their motivation reduced when they have to work with or are dependent on poor performing colleagues. If a well-performing individual sees that another person performs poorly and gets away with it, his or her motivation will likely decrease.

Incompetent managers ruin team performance even more. Especially incompetent managers can have a very negative influence on the performance level of organizational members. If a person is competent and that person’s manager is not, this tends to reduce the motivation and performance of that person. As a result, the individual performs less well during the strategy implementation effort. The more poorly performing or incompetent organizational members an organization has, the more they pull the group or organization downward. Thus creating a vicious cycle of poor performance.

Competent employees leave the organization. Successful organizational members may leave an organization when they feel that their success is not appreciated or worked against. Competent organizational members may be viewed as a threat by colleagues and can be worked against. As a result, they lower their performance or leave the organization. When competent organizational members start to perform less well or leave the organization, this is devastating for any organization. Therefore, is it crucial for implementation leaders and managers to identify and deal with this destructive behavior.

Incompetent organizational members stay. While competent organizational members tend to leave the organization when their performance is not valued enough, incompetent ones tend to stay. Incompetent organizational members tend to remain at an organization because management is often reluctant to fire them or it is difficult to fire them. Poorly performing organizational members are often tolerated because it is difficult to fire them when they do not perform sufficiently. This can be seen in many public organizations where organizational members often have considerable job security. Consequently, poorly performing organizational members tend to stay at the organization. Furthermore, poorly performing organizational members often lack the the skills, work ethic or ambition to successfully find a job at another organization. The longer they have worked at an organization the less likely they are to leave it. When they know there is only a small chance that they will ever leave the organization they are likely to view well performing colleagues as a threat to their position or career path. As a result, they will likely view such a person as a threat and may even try to sabotage such a person.

Increasing the level of competence of employees. To increase the level of competence of organizational members several practices can be used such as training and education, coaching and counseling, giving feedback about performance, addressing poor performance, hiring and firing of organizational members and bringing in external expertise.

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