November 2015

   

Gary Grates Sarab Kochhar Andrew Tucker W2O Group IPR Mettle | PwC New York Florida London

 

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Facing the new reality

•  Shift from top down to horizontal axes of communication

•  Democratizing power of digital •  Rise of influence in purchase behavior •  Relevance replacing reputation •  Loss of control in an age of reference •  New sphere of influence in a multiple

stakeholder society •  Behavioral change driven by technology •  Shift from shareholder to stakeholder •  Consumer politics & private sector

diplomacy •  “New era of responsibility and citizenship” •  Mutual social responsibility

Current Situation Making Progress

1. Drawing a line of sight between individual employees’ jobs and the marketplace, against the backdrop of the company’s strategy, results in a clear picture from which to achieve organizational success

2. Clarity is particularly important for MNCs expanding beyond the US and Europe. Lack of clarity has impeded the expected high growth.

3. To fill this gap, IPR established a research program in 2014 to answer the research question: ‘Does organizational clarity drive organizational success?’

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Organizational Clarity definition

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… the degree to which employees recognize a line of sight between their job and the marketplace they operate in, against the backdrop of the company’s strategy.

1. We found that, overall, clarity appears to be strongly correlated with performance and can act as a leading indicator of future performance

2. We found that leaders’ communications tactics (the how, how often, who, when and what of communicating organizational strategy) tend to vary according to which sector the organization is in and which country the organization’s affiliate is located in.

3. We found that the variation in leaders’ communication tactics seems material to the levels of organzational clarity measured. For example, strategy should be communicated by senior leadership in the US and India but by managers in the UK, Brazil and China.

Research Program Research Findings

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What’s the approach

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Our approach

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Literature review, model building Survey design and execution Analysis, Index building

H2 2014 H1 2015 Q3 2015

Stage 1

Literature Review Building on IPR’s 2014 ‘Best n Class’ report and Tucker’s 2011-3 work on governance, isolate the gap in the literature where Organizational Clarity can make a meaningful contribution

Model building Derive model from literature review and test qualitatively with experts in the field for construct validity

Survey Writing Build on existing survey constructs and filling in gaps, build and test survey in 5 markets and 6 sectors for face validity. Construct dependent variable (‘organizational success’) from World Bank data using expert insight

Data gathering Execute survey in markets to professional standard, ensure all quotas met. Gather and test World Bank data

Generating Index Analyze survey and World Bank data for correlations. Construct Index based on discovered relationship between independent and dependent variables

Insights Based on quantitative and qualitative results, write ‘How to use the Index’ at strategic and tactical levels

Stage 2 Stage 3 Stage 4 Stage 5 Stage 6

Report

Nov 2015

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Model of Organizational Clarity

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1. The model is complete and comprehensive •  we observe the relative change in one dimension

when there is a change in one of the other dimensions and we are able to tell how well the three dimensions relate to each other

2. The three dimensions are robust •  under testing we found that the questions included

in the results had correlations within their dimensions at 65% and higher (a highly robust score for this kind of questionnaire).

3. The model works as we hypothesized •  the Job dimension and the Strategy dimension

increase the score, and the Market dimension decreases the score

•  we found the that organizational clarity leads to performance - that is, sectors with high clarity scores outperform sectors with low clarity scores

Job

whether an employee looks inside their organization to understand their organization’s strategy.

Marketplace

whether an employee looks solely outside their organization to understand their future employment prospects

Strategy

whether an employee looks inside their organization to understand their organization’s strategy but also looks outside the organization to ‘reality check’ the strategy against their own perceptions of the marketplace.

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Using the Index

How do I show progress? Does your organization have organizational clarity?

What specifically can you do to improve your organizational clarity?

Actio

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It is essential for leaders to balance all three dimensions of organizational clarity

There is an ideal Org Clarity profile for each country that leaders can drive towards

There is an ideal Org Clarity profile for each sector that leaders can drive towards

Analyse the best performing and worst performing questions in each dimension, decide which ‘levers’ could to be pulled to improve your organizational clarity

Use the survey question to benchmark your organization’s Clarity score pre-intervention

Publish your Org Clarity scores annually, correlated to business performance indicators

Start the conversation at Board and sub-Board levels

Work with authors to tailor Index insights to your organization

Instigate your own Org Clarity survey and report progress

Que

stio

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Gain insights both from the quantitative and qualitative elements of the surveys

Create Clarity advocates across your organization to provide feedback on interventions in real time

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Insi

ghts

Challenge 01 Analysis 02 Action 03

To pull those levers, leaders should refer to the reported experience of employees in their sector and in their country.

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Country Org Clarity Index

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India The Org Clarity score for India (73%) is the highest of the five countries in the dataset. However, the equally strong scores for the Job and Strategy dimensions counterbalance the strong scores for the Market dimension. Overall this implies a highly motivated workforce with high commitment to their organizations but, at the same time, a workforce that is very aware of its value to organizations seeking to succeed in the maturing economy.

  The data from India shows a few significant outliers. For example, the question ‘When my organization’s strategy changes, I notice an impact on my job’ (Job dimension) and the question ‘My organization knows what it is doing’ (Strategy dimension) both score very highly in the India compared to other countries. These high scores are counterbalanced by high scores for ‘My organization reacts more often to the market than shapes it’ and ‘I have more connection to my profession than to my current organization’ (Market dimension).

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Sector Org Clarity Index

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Financial Services The financial services sector (94%) shows the highest Org Clarity score of the six sectors in the dataset. It is has particularly strong scores for the Job dimension, suggesting that financial service sector employees understand how their job contributes to the success of the organization’s strategy despite all the recent changes in this market.

At the same time, the sector’s Market dimension score is surprisingly low, suggesting that those employees that have survived the retrenchment since 2008 have bought into the new management’s strategy, so increasingly the likely success of their organizations in future. In this sector, examples of organizations with high levels of clarity include ICBC in China, Banco do Brasil in Brazil, and Nationwide in UK.

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Org Clarity Scorecard - overview

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Automotive / Transport Scorecard The automotive/transportation sector shows weaker net levels of clarity of the six sectors in the dataset. It performs relatively poorly on the Job dimension but relatively well on the Strategy dimension.

Where these two areas are unbalanced like this, it can indicate employees don’t understand the values of the organization and are only chasing competitive success. This can lead to spectacular instances of mispractice like VW being caught by US regulators rigging diesel emissions tests in September 2015. The immediate impact on the company was €14bn wiped off the shareprice. Subsequent impacts include $18bn potential fines, large product recalls, and management time and effort diverted away from the business for months

Automotive/ transport

Target Gap Target Gap

Job 244 267 23 10

Strategy 233 255 22 15

Market 107 94 13 8

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Org Clarity Scorecard – Job dimension

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Automotive / Transport Scorecard The greatest gap is on the driver ‘Overall I have a clear understanding of my organisation's core purpose’. Any score over 10 = Risk; any score over 5 = Monitor, any score under 5 = on target.

To address the Core Purpose driver, the organization’s leadership needs to communicate, simply and effectively, what they are trying to do. Use language and channels that are most directly relevant to the individual employee. Answer the employee’s questions: •  how does my job relate the organization’s core

purpose?

•  what does success look like in terms of close alignment to core purpose?

•  what do I do if my job isn’t aligned to core purpose?

Automotive/ transport

Target Gap Target Gap

Core purpose

67 78 11 5

Strategy Job Changes

51 55 4 5

Impact/ Success

69 71 2 5

Delivers on promises

57 64 7 5

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Insights and Actions

1 Comprehending your workforce

•  Lack of integration and alignment among C-Suite, HR, and Communications •  The lack of real-time knowledge is a significant barrier to Organizational Clarity

2 One Size? •  Organizational clarity is about Relevance •  Relevance means context, importance, variety & access, connectivity, lifestyle, meaning

3 Hear you (again) •  Let employees see you and hear you in a different place •  Make sure the strategy and content connects to employee realities

4 Not broadcast •  It’s a conversation-oriented world so why are you operating in a broadcast model? •  Technology allows for more frequent and more dimensional discussions internally

5 Stop measuring effectiveness

•  Measure performance against strategy rather than measuring communications effectiveness

6 Get Angle right •  Breaking strategy into story lines brings employees into the discussion •  Strategy as corporate speak or enterprise goals as business bingo doesn’t work

7 Corporate narrative

•  Organizational clarity starts with leaders who align on the strategy •  To promote alignment, create a monthly or even quarterly corporate narrative

8 Internal GPS •  The organization’s “voice” must evolve with the customer’s reality to be heard. •  Infuse the organization with stories of what is happening outside the organization

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