Cross-organizational alignment is often a key indicator of a company’s success. Data shows that companies whose teams are aligned with each other and the overall strategy lose 36 percent fewer customers per year, grow 58 percent faster and are 72 percent more profitable than their non-aligned competitors.
This article will take a closer look at what exactly alignment within a company means and the different types of alignment there are. It will also examine the challenges that may arise and how OKRs and Workpath can help overcome them.
Organizational alignment means employees, products and processes are harmonized and oriented toward a common goal. Achieving cross-company coordination to this extent is the goal of many companies looking to increase productivity and profitability and, as a result, secure their competitive position within the market.
There are three main types of alignment:
- Horizontal alignment
This refers to the dependencies and distribution of capacity between individual teams. It is important to recognize how the various goals of different teams relate to one another—whether there are similarities, overlaps or other forms of dependencies. Based on findings, capacity can be prioritized, preventing teams from running into bottlenecks during the execution phase.
2. Vertical alignment
This refers to the coordination of goals across various hierarchical levels and how they can support one another. If teams do not think about how they (could) support goals from higher levels, the organization cannot pull together. At least, not as effectively as it could. This can lead to organizations failing to reach their goals or not reaching them according to plan. It can also prevent them from executing set strategies.
3. Strategic alignment
Strategic alignment refers to the bridge between strategy development and execution. While this is where most challenges arise, it also holds the most potential for securing competitive advantages. With the help of strategic alignment, department and employee work are consistently aligned with the company strategy.
It can be helpful to look at the value chain, which is only as strong as its weakest link. From company vision and strategy to capacity, resources and management approach, all parts must interlock with one another for the organization to be successful.
Ideally, the company strategy, departments and employees should all be aligned within their work. However, that is not always the case.
Recurring challenges companies face and causes of lack of alignment may include:
- Failing to communicate the strategy across hierarchical levels
- Lack of employee participation
- Discrepancies between team and organization goals
- Unclear role allocation (responsibilities for the various strategies, particularly cross-functional goals and initiatives)
- Stagnant information flow across departmental boundaries
- Lack of monitoring goal progress and corresponding course corrections
A lack of alignment can lead to problems on several levels.
If horizontal alignment is not secured, the following three categories of problems are likely to occur:
- Potential synergy effects are lost
- Multiple teams end up working on the same thing, leading to duplication of work
- Capacity bottlenecks caused by teams being dependent on contributions from others are not recognized
If vertical alignment is missing, teams from different hierarchical levels are not working along the same lines. This can lead to:
- Failure to achieve/execute the actual company strategy
- Wasted resources (or resources being used ineffectively)
- Teams feeling disconnected from the company vision and mission
If there is a lack of strategic alignment, the biggest risk is failing to achieve the entire strategy or achieving it with difficulty and delay. Additional effects include growth and productivity suffering.
Awareness and consistency through alignment processes
OKRs and Workpath can help better involve teams in the alignment process with, for example, an Alignment Workshop. Making alignment a fixed step in the OKR Cycle can help establish awareness of the topic and generally leads to improvement in team collaboration, helping them achieve their own goals and overall goals.
The Alignment Workshop is an integral part of the OKR Cycle. This is where all OKR Owners and leadership come together to coordinate their OKR drafts. The main goal of this workshop format is to ensure all teams and employees are working towards the same company goals and are aligned both horizontally and vertically.
Workpath offers the functionality to proactively align goals. Using the search function, you can search for other teams’ goals and find out if they are working on similar goals (known as shared OKRs). You can also see if there are goals your team can actively contribute to.
Clarity and transparency
Alignment creates clarity and transparency for dependencies and relationships between various goals. If teams coordinate how they can reach their goals together, they can establish clarity regarding dependencies and necessary capacity between goals. In the OKR Cycle, the alignment phase is a fixed step in the process.
With Workpath’s Stakeholder function, you can clearly see what goals your own team is supporting and what teams are contributing to the same goals. In addition, other goals that support the same goals you have can be identified, helping avoid duplicate work.
To achieve this, various roles are assigned in Workpath for set goals. There is an “Owner,” who is responsible for the goal, and supporting “Stakeholders,” who actively contribute to the fulfillment of a goal.
“Viewers” can also be defined. While they do not actively contribute to the goal, they remain informed of its progress.
In this way, all of those involved in a goal remain up to date throughout the entire execution phase. They can react quickly and approach one another if there are changes or blockers.
Workpath also offers the opportunity to request support beyond actual goal dependencies. With the Contribution Request function, blockades can be removed by easily and transparently requesting support from other teams.
As soon as the request has been accepted, the team will automatically be added as a stakeholder for the respective OKR.
Achieving the overall strategy
OKRs help to holistically align an organization in a specific strategic direction. Through goals that contribute to one another across hierarchical levels, the framework helps break down the company strategy, making it clear which teams are working on which company goals, which contributions feed into one another and what progress has been made in reaching the goal.
Using the graph in the Workpath Software, all dependencies within an organization can be visualized on one page. This can help everyone recognize their own impact on the company goals and see why their own work in the team is so important. This can be a great motivating factor. The graph also helps to identify relationships to other goals as well as relationships that do not contribute to other (higher-level) goals, preventing silos.
In addition, the Cycle Steering Report in Workpath Analytics makes it easier to create transparency regarding how aligned the organization is as a whole. Among other aspects, it shows:
- Which goals are receiving contribution from another team and which are not
- Teams that are working in silos and ones that are collaborating
- If an organization’s teams are working cross-functionally
These important insights help continually improve the alignment process.
OKRs allow for clearly-defined responsibilities. They make it easier to track and measure other teams’ contributions to one’s own goals. This can create awareness for what happens when a contribution is not made within the given timeframe as well as the impact changes to one’s own goals have on other teams. Keeping an eye on the dependencies of other teams can help you assess how a course correction or failure to reach goals will affect other teams and, of course, how you should respond.
With Workpath, dependencies between teams in each cycle are made visible through, among others, the “Stakeholder” section or the Goal Graph. Here you can even calculate goal progress based on supporting goals.
Further collaboration development
The OKR process helps you scrutinize your own work cycle by cycle, to learn from it and, as a result, improve future collaboration. For example, you can identify which teams you often work with. This can help in the creation of future team structures within the company.
The Alignment Reports from the Workpath Analytics Suite connect such lessons learned with actual data. This way, you’re not simply going off a gut feeling. The reports include:
- Teams that often collaborate
- Where there is frequent cross-functional collaboration; possibly indicating a need for reorganizing teams
- Teams that are not well integrated into the company’s overall goal system
- How much work is actually aligned with overall company goals
- How well the organization’s alignment process is developing
What types of alignment are there?
Company alignment is divided into three types: Vertical, horizontal and strategic alignment.
What is horizontal and vertical alignment?
Horizontal alignment deals with dependencies between a company’s individual teams and how their goals relate to one another. Vertical alignment looks at how goals at different hierarchical levels align with one another.
What is strategic alignment?
Strategic alignment describes the bridge between strategy development and execution. Using strategic alignment, the work of every department and employee is consistently aligned with the company strategy.
How can I align my company using OKRs?
OKRs can contribute to better company alignment. For example, having the Alignment Workshop as an integral part of each OKR Cycle can help all teams and employees coordinate their goal drafts with one another. This creates goal transparency between individual teams and can prevent duplicate work and frustration.
How can Workpath help with company alignment?
With Workpath, dependencies within an organization can be clearly visualized. Departments can see, among others, which goals their own team is supporting and which teams are contributing to their goals. Workpath also helps teams effectively manage capacity and helps Program Leads for the OKR Cycle steer and continuously improve the alignment process.