Think Defining organisational alignment of any successful organisation in any industry. Chances are that this success is driven by true organisational alignment — leaders synchronise core strategies, operational structures and processes to make sure they all work in harmony, pulling in the same direction. Organisational alignment is a powerful way to build collective goals and can be instrumental in maximising employee potential, motivating organisational leaders and creating a positive culture.
The numbers back this up too. A study of 410 companies across eight industries by consulting firm LSA Global found that highly aligned organisations grew their revenue 58% faster and were 72% more profitable than their unaligned counterparts. Meanwhile, McKinsey reports that when employees are aligned with a company’s direction and goals, the company’s profit margins are twice as likely to be higher than the median.
These high-achieving companies were also more capable of turning their vision into feasible strategies that drive sound operational planning — something that eludes 45% of executives, whose planning processes fail to track the implementation of strategic initiatives.
Despite being difficult to achieve, it’s a prize worth aiming for .Organisational alignment offers many benefits, from improved efficiency to higher employee productivity and profitability. In this guide, we define organisational alignment and discuss best practices to help you align your organisation.
Defining organisational alignment
Organisational alignment is when an organisation's goals, strategies, structures and processes all work in harmony. Aligning these elements enables a business to function like a well-oiled machine — all the parts are working together efficiently to reach the company’s goals.
Organisational alignment seeks to ensure all elements within an organisation — from senior leaders to the most junior members of the workforce and the operational processes — all work towards the same goals, objectives, mission and vision.
In other words, organisational alignment means creating a shared understanding of the direction of the company and aligning all activities and functions towards it.
In the context of employee performance management, alignment means all departments, teams and individuals work towards the same set of goals and objectives — a feat made possible by clear internal communication. It’s also why true alignment can be highly elusive; ensuring your entire workforce is focused in a single direction requires consistent coordination.
But when executed correctly, organisational alignment gives companies a major advantage because it provides clarity and ensures things get done. The result, as McKinsey explains, is an “organisation that can focus less on deciding what to do — and more on simply doing.”
The 3 components of organisational alignment
There are three main components of organisational alignment: strategic, structural and process alignment.
1. Strategic alignment
Strategic alignment is the alignment of an organisation’s goals with its strategies. In practice, all aspects of an organisation have a clear understanding of the company’s strategy and how it should be executed. In other words, the organisation knows what it wants to achieve and has a plan for how to get there.
Strategic alignment involves several key elements, including:
- A clear vision and mission: Clear and concise mission and vision statements that reflect the company's values and purpose is the foundation of strategic alignment. It ensures all stakeholders understand the overall strategic direction of the company and how their work contributes to it.
- Goals and objectives: An organisation’s goals and objectives should be well-defined, measurable and achievable. They bring the company’s mission and vision to life, outlining how to achieve its strategic direction.
- Culture: A company's culture, how people act within it, accounts for the intangibles of organisational success. Things like accountability, performance and continuous improvement, as well as open communication, collaboration and a spirit of innovation, are critical elements of a strategy’s success.
2. Structural alignment
As the name suggests, structural alignment is a state in which an organisation's structure (such as hierarchical levels and reporting relationships) supports its goals and objectives. This allows a company to execute strategic goals and objectives more effectively. Businesses with a well-designed structure can efficiently coordinate tasks across departments and teams and adapt quickly to change.
Research by Google and the Boston Consulting Group (BCG) shows that alignment between senior leaders is a defining characteristic of leading digital companies, with 72% of digital leaders reporting that collaboration amongst top management is essential to digital growth.
We can break down the components of structural alignment into the following:
- Organisational design: Your organisational structure — including the number and types of departments, teams and reporting lines — should support your goals and objectives and facilitate effective communication and collaboration between employees.
- Job design: This describes individual jobs and the roles and responsibilities of each employee. Alignment here means employees have a clear understanding of how their work contributes to the overall strategy and the value they bring.
- Decision-making: The company's decision-making processes should also support the achievement of its goals and objectives. This can involve establishing clear decision-making authority, setting decision-making criteria and ensuring decisions are made in a timely and efficient manner.
3. Process alignment
Process alignment involves identifying the key business processes that are critical to your organisation’s success and aligning them with your overall goals and objectives. The elements of process alignment include:
- Process mapping: Identifying, analysing and documenting key business processes enable organisations to understand how work is done and how to align processes with their strategic goals.
- Metrics and KPIs: Developing performance metrics and targets for each process allows organisations to track progress and identify areas for improvement.
- Governance: Governance structures and processes provide accountability to the right people involved in the process alignment effort.
- Performance management: Aligned companies also have performance management processes that support them to achieve their goals and objectives. These include providing regular feedback and coaching, and recognising and rewarding performance that supports a company’s overall strategy.
- Training and development: Delivering training and development programmes ensures employees have the skills and knowledge needed to effectively carry out their roles and responsibilities in support of the organisation's overall objectives.
Best practices for achieving organisational alignment
While there is no single accepted approach to achieving organisational alignment, there are several steps and best practices you can follow to position your business for success.
1. Define the company's vision and mission
Developing a mission and vision statement enables your organisation to create a clear sense of purpose and direction and rally stakeholders around shared goals and values. However, this is easier said than done. In one Gallup poll, only 27% of employees said they believe in their employer’s values.
Here are some steps business leaders can take to develop a mission and vision that everyone can buy into.
- Review your current position: Get a clear understanding of your organisation's current position in terms of its strengths, weaknesses, opportunities and threats. This may involve conducting a SWOT analysis or another type of strategic review.
- Identify your core values: Your company’s core values represent its fundamental beliefs and principles. You can identify these by examining your culture, history and existing mission and vision statements.
- Define your purpose: An organisation's purpose should answer the question, "Why do we exist?" This may involve considering your products or services, your target customers and the needs you seek to fulfil.
- Develop a mission statement: A mission statement is a concise explanation of your company’s main long-term goal and how you plan to achieve it. It should be specific, measurable and achievable, in addition to aligning with your organisation’s values and culture.
- Develop a vision statement: A vision statement is a long-term aspirational statement that communicates your desired future state. It should be inspiring yet challenging and achievable.
- Review and refine: Once you have developed your mission and vision statements, you should periodically review and refine them as needed. This may involve soliciting feedback from stakeholders across the business, testing the statements against your organisation's goals and objectives and ensuring they are clearly communicated and understood throughout the company.
2. Set SMART objectives
Achieving organisational alignment also involves setting concrete and achievable goals for your company. This is where the SMART framework for goal-setting comes in.
SMART (Specific, Measurable, Achievable, Relevant and Time-bound) goals provide a clear and structured approach to goal setting, and they’re particularly useful for businesses that want to ensure organisational alignment and performance.
- Specific: The goal should be clear and well-defined. Consider what you want to accomplish and why it is important.
- Measurable: The goal should be quantifiable, allowing you to track your progress and measure success. For example, you might use a metric such as revenue, profit or customer satisfaction.
- Achievable: The goal should be realistic and achievable given your resources, time and constraints.
- Relevant: The goal should align with your organisation’s overall strategy and objectives.
- Time-bound: The goal should have a specific timeline for completion. This ensures accountability and focus on achieving the objective.
3. Develop strategies that will help you achieve your objectives
Now that you have SMART goals informing your alignment efforts, the next step is to build strategies that are realistic and achievable given your organisation’s resources (e.g. time, money and resources). Your strategy should be ambitious but not impossible.
A strategic plan outlines the actions your business will take to achieve its objectives. It should cover all aspects of the organisation, including marketing, operations, finance and resources. The plan should also include a timeline for implementation and a system for tracking progress.
4. Assess your current organisational structure
At this point, you’ll want to determine if your current organisational structure aligns with your goals and objectives. Take a moment to assess the departments, teams and existing roles within your organisation. Are any areas misaligned? Are there any structures that could potentially overlap?
Depending on your findings, you may need to make structural decisions, such as moving employees laterally, creating new teams or departments or bringing in more staff. For instance, if spending more on digital transformation is your goal — something 60% of executives in large companies expect to do — but you don’t have the in-house expertise to lead the project, you may need to hire a consultant or work with a third-party provider.
5. Evaluate your current processes
As with your organisational structure, you’ll need to assess whether your processes and policies are relevant to your goals and objectives. Can you streamline processes to better align with your strategy? Do you need to retire certain processes and create new ones? Can any current processes be improved?
Look out for common barriers to your process-alignment efforts. These include:
- Outdated policies and procedures
- Practices that need updating
- Employee habits
- Cultural blockers.
6. Provide training and support employees
Shifting to organisational alignment requires getting all your team members to fully understand your company goals and how they each contribute towards success. To do this, you may need to update employee handbooks and introduce new policies and procedures to reflect your new values and shared objectives.
It’s important you have a way to build a constructive dialogue with employees, so they know what is happening and have a meaningful way to contribute their ideas and insights.
7. Monitor progress regularly
Finally, organisational alignment is a marathon, not a sprint. It’s important to review how things are progressing on a regular basis. Be ready to make adjustments to your strategy, organisational structures and processes as needed — especially when things don’t go according to plan. This agile mindset will keep you on track towards achieving your desired results.
Bringing it all together
During periods of uncertainty and market volatility, organisational alignment enables business leaders to steer the ship in the right direction by focusing on company goals and objectives. This clarity of purpose can also help motivate employees and give them a sense of direction, leading to higher levels of productivity.
Learn how Appraisd can support organisational alignment in your business by reading our success stories and seeing our platform in action.