How to Set and Communicate Business Strategy to Your Workforce

Goal setting is a perennial topic in business forums. And for a good reason: goals are important. According to management professors Barney and Griffin, organizational goals serve four essential functions:

• Provide guidance and direction,
• Facilitate planning,
• Motivate and inspire employees,
• Help organizations evaluate and control performance. ¹

Everyone being in agreement on these four points, the argument usually centers on setting appropriate goals, communicating the goals, and measuring performance against them. However, none of these guarantee that you will achieve your goal. Let me give you a quick example.

Let’s say you want your teenage daughter to get better grades. First, you sit down with her and ask about her plans after high school. She tells you she wants to go to college. You ask her if she has any specific schools in mind. She says that Boston University has a program in hospitality administration that sounds like a lot of fun and promises immediate employment anywhere in the world. You say, alright, shall we look up the admission stats for BU? You Google the average GPA for admitted students, and it’s 3.6.

The two of you agree that, given her college ambitions, a 3.6 GPA is a very reasonable goal to set. You put this goal in writing and pin it to her bedroom door. You also set up monthly meetings with your daughter to check on the progress toward her goal. You regularly bring up her grades during breakfast, dinner, family outings and other such opportune times.

At the end of the semester, the report card arrives. What are the odds her grades improved? If that’s all you’ve done, her grades most likely stayed the same. There’s a small chance they went down, and a small chance they went up. Why?

You never set a strategy for improving her grades. You never discussed specific subjects she needed help with and where she would get it. You might get lucky if she already knows what to do. Or you might not—and she’ll have one semester less to catch up to her goal.

I haven’t met any parents who are this clueless, yet many companies practice this kind of goal setting with their employees. They go quarter to quarter trying to “make their numbers,” without having a clear idea of what needs to change.

In an earlier post (Are Performance Goals Motivating or Demoralizing My Employees?), we looked at the case of Wells Fargo and its recent cross-selling scandal. Few companies are as clear and persistent in setting, communicating, and tracking performance goals as Wells Fargo was just before the scandal broke out. Only one piece was missing; neither the bank employees nor the management had any idea why customers would want to sign up for additional services. Absent real customer strategy, under unrelenting pressure, massive fraud ensued.

Quality pioneer W. Edwards Deming warned about this scenario when he argued against management by objectives. Without a reliable system to guide them, employees will compromise quality to achieve goals. This is as true of sales targets as it is of production quotas. You must provide your people with the means of reaching the goal before you demand it of them.

A solid business strategy comes from filling a gap in customer experience. In mergers and acquisitions, as in organic growth, the success depends on meeting the market demand in a new and improved way. This is the conclusion management consultants Alan Lewis and Dan McKone reached when they examined a series of high-profile M&A deals in recent history.

In the article, “So Many M&A Deals Fail Because Companies Overlook This Simple Strategy” (Harvard Business Review, May 10, 2016), Lewis and McKone point out an easy way to tell whether a deal is good. They call it “helping customers complete their journey.”

They cite P&G’s 2005 acquisition of Gillette as an example of a successful deal. They attribute the success to improved customer experience:

“While some cost synergies were realized, the real payoff came because each company independently recognized that it had the permission to expand what it was offering to its core customers and that the capabilities to deliver on this potential resided in the other company. Gillette dominated the men’s shaving market with its Mach series of razors. P&G was able to combine Mach blade technology with its women’s skin care expertise to market women’s shaving products under the Gillette Venus brand. Gillette introduced new shave lotions, deodorants, and shower gels for men using P&G’s soap, lotion, and antiperspirant technology and expertise.” ²

Unfortunately, many companies use mergers and acquisitions to cover up the fact that they have nothing new and exciting to offer to the world. Their strategy is to squeeze extra margin by cutting out “fat:” jobs, benefits, bonuses, and pay raises. This is not the kind of strategy you want to communicate to your workforce. If you have nothing else up your sleeve, you will have a hard time “informing people on business objectives and how people can contribute.” And Internal Communications will not be much help either.

P&G was in the news again when an activist investor pushed the company to set more aggressive goals. A.G. Lafley, the former CEO who oversaw the Gillette acquisition, was not impressed:

“But my point is, what matters is the last thing you want to do is go out and set aggressive goals externally,” Lafley told me. “You want to set commitment goals. You want goals that you can meet or beat 80 or 90 percent of the time and only miss if there’s a natural disaster like an earthquake or hurricane or some other act of God. It’s just not responsible CFO or CEO behavior.” ³

Here, Lafley is talking about promises to shareholders. But the same logic applies to internal goal setting. The responsible thing to do is to set a goal employees can commit to—because your business strategy bears it out, and your systems and tools support it. Then Internal Communications can communicate its heart out about what the objectives are and how people can contribute. Then it would be up to the employees to deliver the goods.

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If you like to achieve goals through leadership, you might like my book, because it makes you a better leader.

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^{[1] J.B. Barney, R.W. Griffin, The Management of Organizations: Strategy, Structure, Behavior, 1992}

^{[2] Alan Lewis, Dan McKone, So Many M&A Deals Fail Because Companies Overlook This Simple Strategy, Harvard Business Review, May 10, 2016}

^{[3] Barrett J. Brunsman, Lafley slams former P&G CFO for role in proxy battle, Cincinnati Business Courier, October 3, 2017}