1. IMPLEMENTING STRATEGY: BUDGETS, POLICIES, BEST PRACTICES, SUPPORT SYSTEMS, AND REWARDS

2. “If you talk about change but don’t change the reward and recognition system, nothing changes.”
Paul Allaire
CEO, Xerox Corp.

3. Overview Link Budgets to Strategy
Establish Strategy-Supportive Policies
Institute Best Practices & Strive for Continuous Improvement
Installing Support Systems
Implement Motivational Practices
Implement Incentive Compensation Systems

4. Linking Budgets to Strategy
Allocating resources in ways that support effective strategy execution involves
Funding capital projects that can make a contribution to strategy implementation
Funding efforts to strengthen competencies and capabilities or to create new ones
Shifting resources - downsizing some areas, upsizing others, Killing activities that are no longer justified, and funding new activities with a critical strategy role

5. Strategic Management Principle
New strategies usually call for significant budget reallocations.

6. Strategic Management Principle
Depriving strategy-critical groups of the funds needed to execute their pieces of the strategy can undermine the implementation process!

7. How Policies and Procedures Aid Strategy Implementation
Provide top-down guidance regarding expected behaviours
Help align internal actions with strategy, channeling efforts along the intended path
Enforce consistency in performance of activities in geographically scattered units
Serve as powerful lever for changing corporate culture to produce stronger fit with a new strategy

8. Creating Strategy-Supportive Policies and Procedures
Role of new policies
Channel behaviours and decisions to promote strategy execution
Counteract tendencies of people to resist chosen strategy
Too much policy can be as stifling as:
Wrong policy or as
Chaotic as no policy
Often, the best policy is a willingness to empower employees

9. Instituting Best Practices and Continuous Improvement
Searching out and adopting best practices is integral to effective implementation
Benchmarking has spawned new approaches to improve strategy execution, reengineering, TQM and continuous improvement programs

10. Installing Support Systems
Essential to promote successful strategy execution
Types of support systems
On-line data systems
Internet and company intranets
Electronic mail
Web pages
Mobilising information and creating systems to use knowledge effectively can yield competitive advantage

11. Examples: Support Systems
Airlines
Computerized reservation system
Federal Express
Computerised parcel-tracking system and leading-edge flight operations systems

12. Strategic Management Principle
Innovative, state-of-the-art
support systems can be a basis
for competitive advantage if
they give capability that rivals can’t match!

13. Formal Reporting of Strategy-Critical Information
Accurate, timely information is essential to guide action
Prompt feedback on implementation activities is needed before actions are fully completed
Key strategic performance indicators must be tracked as often as practical
Barometers of overall performance from:
Statistical information
Reports and meetings
Personal contact

14. What Areas Should Information Systems Address?
Customer data
Operations data
Employee data
Supplier/partner/collaborative ally data
Financial performance data

15. Exercising Adequate Control Over Empowered Employees
Challenge
To ensure actions of employees stay within acceptable bounds
Purpose of diagnostic control systems
Relieve managers of burden of constant monitoring
Control methods
Establish boundaries on what not to do, allowing freedom to act with limits
Face-to-face meetings to assess performance

16. Gaining Commitment: Components of an Effective Reward System
Monetary Incentives
Salary raises
Performance bonuses
Stock options
Retirement packages
Promotions
Perks
Non-monetary Incentives
Praise
Constructive criticism
Special recognition
More, or less, job security
Interesting assignments
More, or less, job responsibility

17. Approaches: Motivating People to Execute the Strategy Well
Inspire employees to do their best
Get employees to buy into strategy
Structure individual efforts in teams to facilitate a supportive climate
Allow employees to participate in decisions about their jobs
Make jobs interesting and satisfying
Devise strategy-supportive motivational approaches

18. Linking the Reward System to Performance Outcomes
Rewards are the single most powerful tool to win commitment to the strategy
Objectives
Generously reward those achieving objectives
Deny rewards to those who don’t
Make strategic performance measures the dominant basis for designing incentives

19. Strategic Management Principle
A properly designed reward structure is management’s most powerful strategy-implementing tool!

20. Strategic Management Principle
The strategy implementer’s standard
for judging whether individuals, teams, and organisational units have done a good job must be whether
the performance targets in the
strategic plan are achieved!

21. Key Considerations in Designing Reward Systems
Create a results-oriented system
Reward people for results, not for activity
Define jobs in terms of what to achieve
Incorporate several performance measures
Tie incentive compensation to relevant outcomes
Top executives – Key measures to performance
Department heads, teams, and individuals - Strategic areas of responsibility