Throughout the course of human history, one thing has become particularly apparent: While ideas, inspiration and inventions may come from extraordinary individuals, long-term success is only possible with help from others. Teamwork is and remains the key element in whether an undertaking is successful or fizzles out. But it is not enough to put the most intelligent, skilled and hardest-working employees in a room and expect something great to come of it. The way they work together plays an essential role. Is every member of the team organizationally aligned with the same overarching goal and do they know what they need to do to reach it?
This guide will show you what organizational alignment is all about and how to apply it to your business or team.
Those in leadership positions know the multitude of advantages organizational alignment can bring to their own companies. That means the biggest challenge with company alignment is not knowing its importance, but rather a lack of knowledge in how it can be applied.
- Are there different types of alignment?
- What type of alignment is right for my team?
- What needs to be considered during alignment?
These are just a few of the many questions that may arise before even taking the first step.
What is organizational alignment?
With organizational alignment, various departments, products, services and individual work processes are all geared towards one clearly-formulated goal. Companies that value alignment do so to increase employee productivity and the associated profitability of the entire company. There are different levels and types of alignment to consider, each looking at a different area of organizational alignment.
Horizontal vs vertical alignment
Horizontal alignment focuses on the various teams within the company. Each team has its own goals, but it is still important to see how these goals relate to those from other departments. Are there overlaps and commonalities with these goals? Do some goals depend on goals from other teams? If teams have these insights, it is much easier to prioritize capacity and, as a result, increase employee productivity.
As the name suggests, vertical alignment looks at the relationships between individual hierarchies. How can one’s own work and the resulting outcomes support those on the level above them to accomplish their goals? If this is taken into account with organizational alignment, all hierarchical departments will automatically be working together towards the highest-level strategic goal.
Other types of company alignment
- Strategic Alignment
To understand the direction the company should be going, it is essential to develop a company strategy. With strategic alignment, employees in every department and every area of the value chain are all aligned to the same specified strategic goal. In this way, all work processes within the company perfectly mesh together, running like a well-oiled machine. This makes each employee and department much more efficient.
- North Star alignment
This type of alignment is very product-based. That means the company is, for example, focused on maximizing the sale of a specific product. To do so, the company collects data to get a better overview of the current situation and then develops a strategy and goal to improve the data situation. This allows all employees to receive the overarching goal in a simple and clear manner, and they know what needs to be done to reach it. In a sense, it is the “shining star” everyone can see and work towards.
- Customer alignment
Most would assume customer alignment, or stakeholder alignment, is the one area that does not require any alignment at all. After all, “the customer is always right” and everything should be aligned towards them anyway. Yet, there are still dissatisfied customers in every area of business. With customer alignment, employees and their areas of responsibilities are geared towards satisfying the needs of their customers in the best possible way—from product customization to customer support. It is, therefore, of great advantage to visit the topic of customer alignment regularly and ensure the company’s strategic alignment is reviewed accordingly.
- Incentive alignment
Incentive alignment is, as the name suggests, all about creating incentives for employees. But how does this work in practice? The fact is that company founders and employees have inherently different motivations for the company. An employee will always see the company as its employer and not as the valuable project that was independently built from the ground up. Naturally, the interests of both parties will be different. At the management level, that means finding out what they have in common with their employees as well as special motivators. With this information, incentives that sustainably improve employer motivation can be created. These can be either monetary or non-monetary incentives. Monetary incentives for specified goals could be various remuneration or vacation models, while non-monetary incentives could include things such as more autonomy at work, more freedom to choose work location or something similar. Both ways, however, require measurable proof of performance, which can be established through regular feedback loops or other systems.
Can different teams be aligned together?
When a company has grown to a size that includes different departments, it is often advisable to align teams together on a horizontal and vertical level. They should be interdependent and working towards the same goal. For this reason, alignment can be based on different structures - for example on OKRs, the overall organizational structure and value streams.
The OKR framework supports alignment through regular coordination processes. At the beginning of each quarter, organization-wide priorities, dependencies, and capacities are aligned. Only then do the teams begin to work towards a common organizational goal.
The organizational structure provides a clear overview of which teams are functionally linked with one another. Common alignment is particularly important there.
Value streams are particularly interesting for more experienced teams using OKR solutions to identify similarities between different departments. If different teams are on the "same stream", common alignment should be executed. Ideally, value streams can be used to map the entire value chain along customer benefits. Since all streams have to mesh in order to create added value, they represent a good basis for alignment.
A good example of this is the relationship between sales and marketing. Marketing often has a major impact on the work of the Sales Team, which makes the Sales Department directly dependent on marketing. Communication initiatives developed by the Marketing Team “sell” the company’s brand, the product or philosophy. The Sales Team can use these to their advantage and refine their own sales strategies.
It can, of course, be argued that plenty of companies around the world are successfully going about their business without having addressed the issue of organizational alignment. But isn’t striving for improvement what drives every executive? There are many executives that are unable to recognize individual problem areas due to lack of alignment. They know they want to improve something, but do not know where they should start. Not to mention that lack of or faulty alignment can be expensive.
- Lack of agility
- Poor coordination
- Mistakes at work
These are just a few of the circumstances that arise due to lack of alignment. This can then lead to:
- Negative influence on customer relations
- Minimization of sales and profits
In recent years, numerous studies have been conducted on the topic of company alignment. All of them show one result: aligned companies perform better! The global Benchmark Report from MathMarketing and MarketingProfs from 2005 showed that aligned companies lost 36 percent fewer customers than non-aligned companies. In another study, the numbers are even clearer. Companies in which sales and marketing are aligned and which plan their work together have a 30 percent higher rate of return.Successfully doing business without alignment? Sure, that is possible, but study after study shows that transparent, precise alignment produces profitability that was previously thought to be impossible.
What are the reasons for lack of alignment within a company? Are there indicators that can be used to identify this missing alignment?
No advanced planning
At the horizontal level
Teams often start with the execution phase directly after drafting their goals. This can lead to unexpected blockers, as dependencies to other teams’ goals are not determined in advance. Resource bottlenecks are also common because there is no clarity regarding which goals and how many goals require capacity from each respective team.
At the vertical level
If alignment is not taken into account early on, teams may end up working in a different direction than the one specified by the company strategy. This prevents or delays goals from being turned into results.
No dedicated stakeholder
One recurring topic that comes up with cross-functionality is not having someone responsible for identifying all dependencies and managing capacity accordingly. Due to the complexity of many dependencies, it can often be very time and resource consuming to analyze the alignment structures and successfully guide teams through the alignment process. In many cases, this prevents the process from being carried out properly.
Silos and dependencies are not recognized
Silos emerge when teams pursue goals not aligned with the company goals. As a result, they work only for themselves and do not contribute to the progress of higher-level goals. The alignment process makes it clear who is working on what topics and where support from other teams may be necessary.
Lack of transparency about strategic priorities
Transparency regarding the most important priorities helps teams focus. Ideally, each employee has an overview of the dependencies of their own team goals on other goals and the influence their own goals have on higher-level ones.
Lack of monitoring
Just because a goal has already been set, does not mean course correction is not necessary from time to time. Changes in the market or product and service demands can affect the alignment of the entire company and require corrections to the set alignment. Individual departments, however, must also always be vigilant in ensuring their work continues to work towards the established course. It is not uncommon in day-to-day work that one’s own work takes on a life of its own and the existing result is completely different than one originally intended. The reason for this is often a lack of monitoring of the intermediate and final results of individual tasks.
Unrealistic capacity planning
If relevant contributions and concrete projects, initiatives or epics for the set goals are not known, teams will run into unexpected blockers during the execution phase because they don't have clarity regarding their actual capacity in advance .
Unclear role allocation
Does every team member know his or her place in the organization and how exactly their work contributes to the company strategy? If the answer is no, the result is the same as discussed in the scenarios above. Work is done as each sees fit, without considering if the top goal is achieved or not. A simple job title is not enough. Social media management, human resources or consulting say nothing about the exact tasks the individual employees are expected to perform. In some companies, for example, performance marketing is directly taken over by the social media manager. For others, an extra person is hired to exclusively take care of this. If this task is expected from an employee whose strengths clearly lie in the creative development of campaigns, it is almost certain the end result will not be the same as one completed by a specialist.
Proposed solution: Before the interview even takes place, it should be clear exactly what tasks the prospective employee is expected to perform. In this way, the right person for the job can be found. For existing employees, tasks should be clearly formulated and roles distributed accordingly. A balanced scorecard, which serves to define strategic key figures and goals, can be helpful here. With this, it quickly becomes clear what goals are being worked towards and what kind of skilled professionals are needed. As a part of transparent communication, gaps in the teams can be identified and possibly filled by employees from other departments or through new hires.
There are various suitable methods and approaches for determining how well alignment within one’s own company is working and where there is still room for improvement.
Customer and employee surveys
The easiest method to determine the degree of alignment within the company is to survey customers and employees directly. In this way, information on vertical and horizontal alignment as well as all other alignment methods can be obtained, and, with help from this feedback, direct influence can be exerted. It is important, however, to know how to best structure the survey to get as many useful answers as possible. It should start with more general questions, as not to steer the surveyed person in a particular direction. Start general and gradually hone in on particular subjects as the survey progresses. The provided answers for the questions are also important. Each person must be able to find themselves in the answers. If you want to ask your employees about their experiences since OKRs were introduced, for example, the following breakdown might be suitable:
Since the introduction of OKRs…
- … I understand the division/company strategies better.
- … I feel more motivated at work.
- … I personally identify with my company.
- … my personal attitude toward teamwork is more positive.
Organizational Alignment Survey (OAS)
Organizational Alignment Survey is a specially developed tool to quickly and easily determine where exactly a company’s alignment stands. It distinguishes among four external market factors and eight internal company factors. This includes market orientation, company culture and human resource policy. A survey is used to measure the importance and performance of all internal and external factors. Based on this, the company is compared with its direct competitors and learns what actions need to be taken to improve its current position.
Software solutions, such as Workpath
Companies such as Workpath have developed software solutions that help with both the creation of OKRs as well as organizational alignment. Using a graph, the Workpath software can quickly and clearly visualize all dependencies within a company. But this is only half of its greatest advantage. It can also function as a motivator, as all employees can quickly see why they and their work are so important for the company. You can learn how Workpath can help support your company alignment here.
Methods and frameworks are not just there to measure alignment within organizations. There are also methods that ensure companies and their employees are aligned towards the same goal.
OKRs (Objectives und Key Results)
The OKR Method is an excellent way to define goals for the entire company as well as individual teams, and to present them clearly and concisely. The biggest advantage of OKRs is that it inspires employees to set ambitious, yet feasible goals, and to reach them. Various set goals are also regularly (e.g., quarterly) reviewed and adjusted when necessary. With Workpath’s software solution, the graph also allows individual departments to identify dependencies and, as a result, carry out both OKRs and alignment in the same place.
Objectives, Goals, Strategies and Measures (OGSM)
Using the OGSM method, it is possible for organizations to display entire strategies and their resulting measures on one page. This method is suitable for both small and large companies who want to describe their strategic plans. In contrast to OKRs, which focus on short-term goals, OGSM is designed for long-term goals. This is, however, also a major disadvantage of the method. Due to the long-term focus, usually annually, it is difficult to make short-term changes with this method.
Four Disciplines of Execution (4DX)
Achieving your goals with four disciplines—as the name suggests, that is exactly what the Four Disciplines of Execution method allows company management to do. The four disciplines are structured as follows:
- Focus on the wildly important
- Act on the lead measure
- Keep a compelling scoreboard
- Create a cadence of accountability
The biggest advantage of this method lies in the simple visualization of measures for achieving a goal. However, the 4DX framework also requires a high amount of discipline and will-power. Without it, the plan runs the risk of failing.
McKinsey 7-S Framework
The McKinsey 7-S model of organizational alignment uses seven elements to examine the internal factors that positively and negatively influence a company’s success. Using this method, it is possible to easily identify a company’s strengths and weaknesses. The seven elements consist of three hard elements:
and four soft elements:
- Shared values
The method is a suitable tool for use within the SWOT analysis. However, this is only the beginning. After the problem has been analyzed, measures should be taken that need to be carried out using other methods.
There are a number of alignment tools that can be used to carry out alignment within a company. The choice depends on company size, team composition, individual needs and other factors. Both collaboration and alignment tools exist, and both have their own advantages and disadvantages. Collaboration tools include software such as Slack, Microsoft Teams or Asana, and alignment tools include, in particular, the software solution from Workpath.
You can read about the differences among the various tools, their respective advantages and what makes for perfect alignment here:
Through case studies, various companies have already examined how much impact alignment can have on company productivity and success.
Strategic alignment case study: Workpath and Ströer
The German company Ströer is one of the country’s leading out-of-home advertisers. In order to reach the overarching goal of becoming the most “customer-centric media house,” Ströer uses the goal management and collaboration framework OKR. To improve the alignment of the entire group of more than 10,000 employees towards defined goals, the media company decided to work together with Workpath. Since then, Workpath has supported the management of strategic capacities as well as communication and transparency between teams. The result: motivated collaboration and increased transparency on all levels, and a better overview for the entire company.
Brimstone pharmacy alignment
“Helping a new leader align her team” was the headline of Brimstone’s case study with a global pharmaceutical manufacturer. After acquiring another company, the manufacturer faced the challenge of a 70 percent increase in workload and the task of aligning various country heads with the company structure. Using alignment workshops, both regional and global goals were reached, and profits improved by more than 7 million US dollars.
World-wide alignment of McDonald’s
McDonald’s is the pioneer for the assembly line manufacturing of burgers, fries and the like. The company has been around since 1955 and has developed a global alignment system for its employees. With this system, it is possible for the major corporation to offer the same products with the same quality across the globe. McDonald’s also concentrates its efforts on the automatization of its processes, which has, among other things, cut staffing costs in half within six years.
What is organizational alignment?
With organizational alignment, various departments, products, services and individual work processes are all geared towards one clearly-formulated goal. Companies that have introduced alignment have done so to increase employee productivity and the associated profitability of the entire company.
What types of alignment are there?
Alignment within a company can take place vertically, focusing on company hierarchy, as well as horizontally. Horizontal alignment focuses on the goals of individual departments and how they relate to the goals of others, for example, whether overlaps exist. Vertical alignment works to establish how departmental goals relate to the hierarchical level above them.
Additional alignment methods include customer alignment, strategic alignment and incentive alignment.
What are the reasons for lack of alignment?
Company alignment may be lacking for many different reasons, starting with the fact that the team is not actively aligned with the company goals at all. In addition, unclear role allocation within the company and lack of communication can also lead to employees from different departments not working towards the same company goal.
How can alignment be measured?
There are various methods and approaches that can be used to find out if all employees are aligned with the company’s strategic goals and where there is still room for improvement. Customer and employee surveys are the easiest ways to accomplish this.