CREATING ALIGNMENT IN MULTI- BUSINESS COMPANIES WITH PROFESSIONAL

Excellence Lecture Zurich 2005 © Prof.dr. Cees B.M. van Riel 11

Second Second MsComMsCom Excellence in Communications Lecture Excellence in Communications Lecture

CREATING ALIGNMENT IN MULTI-BUSINESS COMPANIES WITH

PROFESSIONAL EMPLOYEE COMMUNICATIONS

Prof.dr. Cees B.M. van RielRSM/Erasmus University Rotterdam, The Netherlands

Managing Director Reputation Institute

Zurich Financial Services/HarbourclubOctober 12, 2005


Table of Contents Table of Contents

1. The What and Why of Strategic Business Alignment (SBA)

2. Employee Communication as a vital tool to impact SBA

3. Measuring the impact of Employee Communication on SBA

4. Take aways


1 1 The What and How of Strategic Business Alignment (SBA)The What and How of Strategic Business Alignment (SBA)


The What and Why of Strategic Business AlignmentThe What and Why of Strategic Business Alignment

• Strategic Alignment means that all employees understand, buy into and are able to enact their organizations strategic objectives.

• Building Strategic Alignment is vital: Companies depend on employees to achieve strategic initiatives.

• Ultimately, strategic alignment leads to better organizational performance. Hence, organizations should create strategic alignment to facilitate their functioning.


TNT ExampleTNT Example

• Building SBA is vital because companies depend on their employees to achieve successes. TNT’s CEO Peter Bakker states that his job as CEO is primarily to build employee capabilities by having conversations with those people who can make the difference in the firm, asking questions as: – Do they understand and agree with TNT’s strategy?

– Have they been asked to contribute to the strategy?

– Have their opinions and support been sought?

– Have they been encouraged to contribute in an open and unthreatening way?


Key Question to Ask: Key Question to Ask: Do employees live up to the Strategic Initiatives of the Firm?Do employees live up to the Strategic Initiatives of the Firm?

The purple promise

“I will make every FedEx experience

outstanding”What should be done to make this

work?


Report Conference Board USAReport Conference Board USA

Various globally active firms forge alignment in many ways – by breaking down silos, integrating systems. coordinating business unit activities to achieve strategic initiatives. Strongly aligned companies have a shared vision of what they want to achieve and why.

Getting there requires the unwavering support of top management and the sustained commitment of every stakeholder to the change effort.

Companies can apply hard and soft-wiredinitiatives to create an aligned company. Replacing executives, variable pay, performance contracts, etc. are examples of ‘hard’ tools. Soft tools are leadership development, empowerment, internal communication and storytellingSoft-wired initiatives work best

Source: The Conference Board 2003


Strategic AlignmentStrategic Alignment

STRATEGIC ALIGNMENT:

Trends explaining the increased

attention for SBA


Dominant Global Trend: Creating Clarity about Ownership


Increased tendency to endorse ALL business unitsIncreased tendency to endorse ALL business units

‘


Same situation in Switzerland?Same situation in Switzerland?


Aligned Company?


Evolving from a group of companies...


Towards ONE Aligned Company Towards ONE Aligned Company


SBA can be strong or weak: SBA can be strong or weak: however if you have one name a minimal level of SBA is requiredhowever if you have one name a minimal level of SBA is required

Culture

Educations Youth

Relaxing

Sport Nature


KantonalbankKantonalbank: ‘: ‘gemeinsamgemeinsam wachsenwachsen’’

Klik hier voor de film


Creating Alignment: Practical Examples (1)Creating Alignment: Practical Examples (1)

• Daimler Chrysler– Unifying a German and US

conglomerate in automotive

Creating integrated services in mail, express and logistics with one brand name


Creating Alignment: Practical Examples (2)Creating Alignment: Practical Examples (2)

– Promoting internal synergy to justify the external claim of providing products/services that supply “sense & simplicity”

– Re-building a collection of individual partner practices among one roof into an integrated company on a global scale

– Shifting from a collection of national representatives within an international network, into an integrated legal service provider serving major multinationals with integrated global practice groups


SBA is stimulated by a mixture of specialistsSBA is stimulated by a mixture of specialists

• The variety of Change Methods applied by international firms are rooted in three disciplines:

• Human Resources

• Information Technology

• EMPLOYEE COMMUNICATION


Five PreFive Pre--conditions to achieve SBAconditions to achieve SBA

Understanding Developing Capabilities

Awareness

Attitude

SupportiveBehavior

HRM IT


Tools used by winning firms to create Strategic AlignmentTools used by winning firms to create Strategic Alignment

Awareness

Understanding

Awareness

Attitude

DevelopingCapabilities

Internal MediaIntranet, Town Hall MeetingsSymbols

Open book managementGlobal Life Audio Conference

Cascade TourChallenge & ConnectAccountability management

Knowledge Management Corporate Universities Group Decision Room

SupportiveBehavior


2. Employee Communication as a vital tool to impact SBA


Rules & DirectivesEfficiency

e.g., (Former) Governmental organizations, high risk

production/storage firms

Shared MeaningCreating commitment by

sense-making e.g., IBM,INVE, J&J, 3M

AccountabilityHigh output/profit

e.g., Consultancy, Accountancy, Law firms

Living Apart TogetherEmbracing ideology

e.g., Greenpeace, Amnesty

EC does not mean One Size fits allEC does not mean One Size fits all

Centralization Formalization

High

Low

External turbulence

Low High


However, all paradigms in EC focus on 4 dimensionsHowever, all paradigms in EC focus on 4 dimensions

FlowFlow•Upward•Downward•Lateral

StructureStructure•Line•Parallel•Grapevine

ContentsContents•“Me-”•“We-”

ClimateClimate•Openness•Participation•Seriousness

Dimensions of EmployeeDimensions of EmployeeCommunicationCommunication

Employee Communication is the process through which organizations share information, build commitment, and manage change by a professional application of four dimensions of EC: structure, flow, contents and climate

© Van Riel, 2000

Definition of EC


Structure of Employee Communication Structure of Employee Communication

• Condition sine qua non in EC: channels distributing information are necessary tools.

– Line channels to support upward and downward flow

• E.g., reports, memo’s, general meetings, meetings with direct manager

– Parallel channels are functional for cooperation and creating unity between the different departments and for lateral EC flow

• E.g., newsletters, brochures, intranet, phone, website, email, workgroups, lateral meetings, corporate university

– Grapevine channels are functional to create interpersonal trust, cooperative climate, and to enhance unity in the organization

• E.g., Company bar, restaurant, company organizations and non-work related activities



ContentsContents•“Me-We”


EmployeeEmployeeCommunicationCommunication


Which structure of Employee Communication will catalyze SBA best?


First Corporate than CommunicationFirst Corporate than Communication

• Communication follows strategy and structure as…. “structure follows strategy” (Chandler, 1962)

• In other words: decision making about the desired structure for EC has to be a logical consequence of the nature of the organizational structure


Organizational StructureOrganizational Structure

• Purpose of Organizational Structure:– to achieve more calculable and

predictable control over organizational members in order to enhance organizational performance

• Means to implement structure:– specialization: division of subtasks; grouping

people together in similar task groups

– centralization: the locus of control within a system

– formalization: standard procedures, rules and documentation aimed at controlling behavior


As a consequence ….As a consequence ….

• Employee Communication is primarily communication between organizational members in the same area of specialization, being informed by and reporting to the person in charge of their unit about tasks they agreed to do based on their function description


Structure of Employee Communication

Top Mgt Front line

Grape vine

Line Communication

Parallel Information


INFORMATION FLOWWhat is most effective to stimulate alignment?


Flow of Employee CommunicationFlow of Employee Communication





EmployeeEmployeeCommunicationCommunication • H2: The upward, downward and

lateral EC should be judged as sufficient, trustworthy, actual, and useful

• Flow/structure of EC increases alignment with the organization because it provides the glue that keeps the constituent parts of the organization together by the exchange of information about the organization’s goals and the clarification of the roles individuals are supposed to have in the realization of these objectives


Information Flow through the Line

Board

Top Management

Higher Management

Middle Management

Employees

1

23

4

5


Information FlowInformation Flow

• Flow will be better if there is High Trust in Management resulting in:– more upward information ..– more favourable upward information …

• Flow will be better if there is High Trust in Management preventing:– Negative mechanism of corporate silence– Mechanisms applied by the dominant coalition (implicit and explicit)

create a ‘spiral of silence’ in an organization, resulting in the application of their dominant logic to solve problems

– Causes: fear for debate in which they can be confronted with negative criticism

– © Morrison & Milleken, Academy of Management Journal, 2000


When does the content of ECincrease alignment?


Contents of Employee CommunicationContents of Employee Communication





EmployeeEmployeeCommunicationCommunication – Content of EC facilitates alignment

because it discloses the goals, values and achievements of the organization (Cheney, 1983)

– Effective EC pays attention to topics that are relevant for the organization as a whole (management perspective) and for the individual organizational member. More precise:

• Information about the company (We)

• Individual feedback (Me)

• H3: ME, WE, should be evaluated as useful and trustworthy


When will communication climate impact SBA positively?


Communication ClimateCommunication Climate

• An ideal communication climate is characterized by :– supportiveness

– participative decision making

– trust, confidence, credibility

– openness and candor

– high performance goals

Source: Redding, 1972


Communication ClimateCommunication Climate





EmployeeEmployeeCommunicationCommunication Climate

• The EC-Climate affects alignment because it satisfies the need of self- categorization(Turner, 1987) and the need for self enhancement (Tajfel, 1981), which requires that group membership is rewarding, (Morrissen & Milleken, 2000)

• Effective EC is especially characterized by a positive EC-climate, more precise:

• H4: EC should be evaluated by organizational members as open

• H5: EC should be evaluated by organizational members as providing an opportunity to participate in decision making

• H6: EC should be evaluated by organizational members as creating a climate in which one is taken seriously


Rules & DirectivesEfficiency

e.g., (Former) Governmental organizations, high risk

production/storage firms

Shared MeaningCreating commitment by

sense-making e.g., IBM,INVE, J&J, 3M

AccountabilityHigh output/profit

e.g., Consultancy, Accountancy, Law firms

Living Apart TogetherEmbracing ideology

e.g., Greenpeace, Amnesty

Again: EC does not mean One Size fits allAgain: EC does not mean One Size fits all

Centralization Formalization

High

Low

External turbulence

Low High


Resulting in the following consequencesResulting in the following consequences

Paradigm

Flow-Upward-Downward-Lateral

Structure-Line-Parallel-Grapevine

Content- Me-We

Climate-Participation (P)-Openness (O)-Seriousness (S)

Accountability Mainly upwardReporting Results

Line is vital Focus on Me

Focus on WeMe only relevant as control

Focus on WEMe only relevant as part of the award systemClarity about WE, Me topics irrelevant; only the ideal counts

Goal orientedCubbyhole cultureP + O medium; S high

Rules & Directives

Downward and Lateral EC

Line is vitalThe larger the organization, the more parallel media are needed.

Regulated/ rigid, plans/policiesPOS low to medium

Shared meaning All directions, however, only if this will stimulate acceptance for core values

Strong parallel media and persuasive Line EC

Visionary: one company, one visionPOS high

Living Apart Together

Mainly upward and lateral

Strong Parallel and GrapevineEC/ Hardy Line EC

Innovative/ Intimacy/ cooperativeP and S extremely high


3 Measuring the impact of Employee Communication on SBA


General assumptions from academic research……General assumptions from academic research……



ContentsContents• WE• ME


EmployeeEmployeeCommunicationCommunication

AlignmentAlignment

EfficiencyEfficiencySelf Self

CategorizationCategorization

Self Self EnhancementEnhancement

It increases….. Resulting in….

Supportive Supportive BehaviorBehavior

–© Smidts, Pruyn, Van Riel, Academy of Management Journal, –vol. 44, number 5, 2001, 1051-1062)

Two basic motives explain people’s need for OI: the need for self-categorization(helping to define the individuals place in the organization) and the need for

self-enhancement (requiring that group membership is rewarding)


Applying Fundamental Academic Research into PracticeApplying Fundamental Academic Research into Practice

• Based on previous academic research we developed tools to measure involvement of employees with their organizations

• In the nineties this was called the ROIT instrument focusing on the impact of employee communication on organizational identification. The results of this study was published in the Academy of Management Journal 2001

• The most recent development is the EcQ instrument, focusing on the impact of employee communication on strategic alignment, especially the behavior of employees regarding the desired actions of internal audiences: an article* summarizing the main ideas about this newinstrument is submitted to the Academy of Management Journal in 2005 again

*Van Riel, Berens, Dijkstra, The influence of Employee Communication On Strategic Business Alignment, Working paper RSM/Erasmus University Rotterdam, 2005


Newest model predicting the impact of EC on AlignmentNewest model predicting the impact of EC on Alignment

Understanding of Strategic

Initiatives

Awareness of Strategic

Initiatives

EcQ®

Communication Climate

Management communication

Internal media

Cross-departmental

communication

Indicators of Employee

Communication

Indicators of Employee Support

Individual messaging

Corporate messaging

SupportiveBehavior

for Strategic Initiatives

Capabilities for implementing

Strategic Initiatives

Strategic Alignment

Attitude toward Strategic

Initiatives


Where has Where has EcQEcQ® been Conducted so Far?® been Conducted so Far?

• This new model (called EcQ® Monitor) has been applied with employees of 15-20 global companies, including Philips, TNT, INVE, and AKZO Nobel.

• These studies have been applied in more than 40 different countries, including USA, UK, France, Germany, China, Japan, Brazil, Mexico.

• We are actively developing an international database of companies against which to benchmark EcQ® results of each individual company.


Example: Overall results of an Example: Overall results of an EcQEcQ® Survey® Survey

improve

maintain

Immediate action

Maintain (≥70)Improve (60-69)Immediate action (≤60)

61.6 64.961.5

71.2

64.058.6

52.0

0

20

40

60

80

100

EcQ® Cross-departmental

communication

Internal media Managementcommunication'

Individualmessaging

Corporatemessaging

Communicationclimate


Benchmarking Benchmarking EcQEcQ® across Firms Provides Norms® across Firms Provides Norms

Firm X Chemical80 countries

64.000 employees

Financial 24 countries

45.000 employees

Agri Business30 countries

800 employees

Building constructor3 countries

10.000 employees

Pharmaceutical68 countries

18.000 employees

Attitude toward strategic initiatives

60.2 68 75 73 62 78

EcQ® 62.0 68 65 66 74

74 70

60

76

70

70

79

78

7680

68 71

70

64

72

73

68Awareness of


73.1 74

Understanding of Strategic initiatives

51.6 70

76

75


strategic Initiatives

67.5

Supportive Behavior 68.6

Maintain (≥70)Improve (60-69)Immediate action (≤60)


Driver AnalysisDriver Analysis

Indicators of Employee

Communication

Strategic Alignment

Indicators of Employee Support

Understanding Strategic

Initiatives

Awareness Strategic

Initiatives

Communication Climate

Management communication

Internal media

Cross-departmental

communication

Individual messaging

Corporate messaging

Supportive Behavior for



Strategic InitiativesCorrelations &

multivariate analysis

Attitude toward Strategic

Initiatives


4 Take4 Take--AwaysAways


Take Take AwaysAways (1)(1)

• Strategic Alignment is crucial for all organizations; the higher the support for strategic initiatives among employees, the higher the performance of an organization will be.

• Organizations apply various instruments to intensify the degree of support for strategic alignment: HRM-instruments, Management style and Employee Communication

• Companies should select the most appropriate style in Employee Communication, followed by a professional application of all four focus points (flow, contents, structure and climate) of EC in the context of the selected paradigm


TakeTake--awaysaways (2)(2)• Tracking systematically the

degree of employee alignment, allows companies to press the right buttons at the right time, enabling organizations:

1.To assess the degree of employee support for a company’s strategic initiatives

2.To identify the drivers that create strategic alignment

3.To provide comparisonsacross market organizations within the company and across companies.

4.To optimize efforts in the area of employee communications.


FinallyFinally

More information please mail me at:

[email protected]

THANKS A LOT FOR YOUR ATTENTION

Good Luck in implementing some of these ideas in your own organizations

mailto:[email protected]

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CREATING ALIGNMENT IN MULTI- BUSINESS COMPANIES WITH PROFESSIONAL