The Value of Culture and Strategy Alignment

There is a significant relationship between culture and strategy. Managing that relationship can be a tricky business. Alignment of culture and strategy can be a path toward long-term success, while misalignment can inflict significant damage. The issue is magnified in the Not for Profit sector as people are often an organization’s key resource. Leaders must understand how to manage culture and strategy together, recognize and address misalignment and make conscious decisions to maintain alignment, for the long-term health of the organization.

For example, a leading social service nonprofit with a strong history of successful program delivery and unrivaled client support started experiencing issues with funding and staff departures.  The issues got so serious that the Executive Director initiated a project to figure out what was going on.  It didn’t take long to trace the issues back to a new strategy aimed at managing costs.

Two facets of the new strategy were a cut in spending on staff development and a consolidation of administrative positions that were deemed redundant.  Both changes had unexpected consequences.  While always frugal, the organization did not have a low cost culture. The training and the administrative support were focused on identifying creative ways to solve client needs and both enabled employees to have a better work experience.  The cuts impacted staff satisfaction and created gaps resulting in a decline in client service level.

The new strategy was out of alignment with the organization’s culture and eventually caused significant harm to the organization’s viability and reputation.

 

Culture eats strategy for breakfast. – Drucker (attributed)

Culture may eat strategy for breakfast, but only strategy can change the menu. – Cade

What Does It All Mean? – Definitions

Strategy – The thinking, planning and acting aimed at keeping the nonprofit viable and relevant for the long term.

Culture – How a nonprofit functions and its generally accepted core principles, standards and norms.

Alignment – The harmonizing of two separate processes to benefit and reinforce both.

 

Two Forms of Alignment

  • Developing and executing a plan to drive cultural change in areas not aligned with strategy
  • Building strategy based on a clear understanding of the organization’s culture

Two Forms of Misalignment

  • Trying to change culture without a well-defined change strategy and plan
  • Executing a strategy that does not align with the organization’s culture

 

Detecting Misalignment Before It’s Too Late

Misalignment provides two messages to staff, a formal one (strategy) and an informal one (culture).  This situation causes confusion that will lead to problems and those negative impacts of misalignment are often easy to spot. Indicators include;

  • Decreased employee engagement
  • Increase in voluntary terminations or dissatisfaction
  • New or worsening service delivery issues
  • Lack of effective collaboration
  • Intractable problems
  • Failure of strategic initiatives

 

Signs of Good Alignment

Aside from the absence of the items list above, there are clear indicators here as well, including;

  • Positive employee satisfaction
  • Strong performance
  • Measurable progress toward strategic objectives
  • Staff going “above and beyond”
  • Senior level peer employment referrals

 

Alignment Roadblocks – Beware!

There are a large number of issues with aligning strategy and culture, of them two stand out as elephants in the room.

Multi-layered Culture

Culture is tough to identify or measure because it exists within people and as such, it forms at multiple levels within the organization.  Variation in culture is a fact of life.  For instance, the Finance department may have different staff performance expectations than HR or the Development team.  The leaders of those organizations may interpret the corporate guidance on performance differently or adhere to rules more or less stringently.  While there may be a general corporate culture, the departmental culture of the groups may be very different.

Also, staff members have multiple peer groups and organizations may have different divisions or offices in different geographic regions, which may cause inconsistencies in culture.

Question:  In your organization, are things done the same at headquarters as they are in the field?

 

Strategy Is About Pushing the Envelop

Rarely does an organization devise a strategy of simply doing the same as they do now and change is divisive for many people and organizations.  Also, strategy typically involves going out of comfort zones and increasing the risk of failure.  If your organization’s culture is not able to handle these pressures, then the strategy will suffer.

 

Four Steps to Get Started on Culture and Strategy Alignment

Follow these steps to begin the process of aligning culture and strategy (you will be glad you did).

  1. Compete an honest assessment of the as-is culture
  2. Identify areas of divergence between strategy and culture
  3. Develop and execute plan to address non-alignment
  4. Remember that self-assessment is hard individually and even harder at the organization level, so get some outside perspectives and some help.

 

Bottom Line

Organizations function effectively if strategy and culture are aligned while misalignment will lead to serious trouble.  So, leaders must understand how misalignment of culture and strategy can impact the long-term viability of an organization.  They must learn to predict potential issues and quickly identify current problems, as well as, the steps to avoid or overcome them.  It all starts with an honest assessment of the current state of alignment between culture and strategy and an executable plan.  Alignment will supercharge strategy and reinforce positive culture.

 

Has your organization struggled with misaligned culture/strategy or has your organization mastered alignment and is experiencing benefits?  If so, please share in the comments section.

 

For more on the challenges of culture (and some great ways to address them) check out this version of The Culture Chat Podcast:  Culture is Easier Said Than Done, by the folks at Work XO.

 

About the author:

Michael F. Cade is a nonprofit advisor and executive coach, taking the nonprofit sector Beyond the Numbers.  He is a leadership pathfinder, helping nonprofits optimize operations and strategy to attain long-term viability and relevance.  His Framework for Fiscal Sustainability is an innovative approach for evaluating organizational health and securing the ongoing ability to deliver on its mission.

Mr. Cade publishes the nonprofit leadership blog  Not for Profit Beyond the Numbers

If you have questions or would like a consultation on a nonprofit leadership or operational issue, contact him at:  mfcade@nfpbeyondthenumbers.com

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