Master thesis, MscBA, specialization Change Management, Faculty of Economics and Business, University of Groningen
ACKNOWLEDGEMENTS
It is a great pleasure to thank Dr. Mobach for his constructive criticism and excellent guidance in every phase of my thesis. I would like to thank Drs. Peet for her useful comments on the final version. Furthermore, my thanks go to Guido van Casteren and other colleagues at MeyerMonitor for their assistance during my internship. Especially, I am grateful to my parents and sisters, Sophie and Dorien for their endless support during my study.
ABSTRACT
Many organizations experience challenges in effectively implementing strategies. Regardless of what type of strategy, involvement of people is crucial. The present thesis measures perceptions of people coming from different hierarchical positions in order to asses whether these positions explain perceived awareness of the strategy, commitment to the strategy, and belief that the strategy is feasible. Prior research emphasized the hierarchical position of the middle manager in strategy implementation so the interpretation of the findings is related to that. Findings show that the perceptions differ and therefore, this thesis suggests that organizations should actively manage the perceptions towards strategy implementation so that employees at different hierarchical levels show positive strategic behavior and thereby contribute to more effective strategy implementation.
TABLE OF CONTENT
1. INTRODUCTION 5
1.1 Research focus 6
1.2 Research question 6
1.3 Sub-questions 7
1.4 Data-collection and analysis 7
1.5 Content thesis 7
2. THEORY 8
2.1 Middle managers 8
2.2 Strategy implementation 9
2.3 Awareness of the strategy 14
2.4 Commitment to the strategy 16
2.5 Perception of feasibility of the strategy 17
2.6 Summary 19 2.7 Conceptual model 19 3. METHODS 20 3.1 Qualitative method 20 3.2 Quantitative method 20 3.2.1 Measures 21 3.2.2 Data analysis 22 4. RESULTS 24 4.1 Descriptive results 24 4.2 Findings 25
4.3 Summary of the results 29
5. DISCUSSION AND CONCLUSION 31
5.1 Awareness of the strategy 31
5.2 Commitment to the strategy 32
5.3 Perception of feasibility of the strategy 33
5.4 Hierarchical positions 33
5.5 Practical implications 35
6. REFERENCES 38
7. APPENDIX - QUESTIONNAIRE 45
7.1 English 45
1. INTRODUCTION
Well-conceived strategies have little value unless they are effectively implemented (Smit, 2000). The implementation of new strategies and adaptation in strategies of organizations are indispensable for organizations to stay ahead, to adapt to change, to grow, and to continue their economic existence. The pressure and the ambition that organizations have to continuously improve their performance and therefore to change their strategies requires organizations to effectively implement their strategies and thereby involve their people. The implementation of the organizational strategy is a participative process that results in new ways of doing business, not only for higher levels of managers but also for middle managers and lower levels of employees. Not only the people who originally described or initiated the strategy should be able to successfully implement and execute the strategy, the organization is dependent on the contribution of other employees as well. Successful strategy realization is identified by the coherence of decisions of all employees (Sorooshian et al., 2010). In order for people to contribute, to know what to do, to put some extra effort, and to be able to execute the strategy throughout their organizations, three factors among other factors are assumed to be important: awareness of the strategy, commitment to the strategy, the perception of feasibility of the strategy. Common perception between people of these factors ensures that the strategy is aligned to ensure the companies’ growth and profitability. It is not possible to effectively implement the strategy if the people in the organization are confused about the strategy. Therefore the
implementation of the strategy often becomes the responsibility of the company’s middle and front line management in order to break the strategy down in to pieces and prevent confusion about the strategy (Martin, 2010). The middle manager is seen as ‘linking pin’ in the organization because they link senior management with the rest of the organization: “They are the glue across upper and lower levels” (Wharton, 2008). Even when some organizations tried to flatten their hierarchies in the past by eliminating some layers of middle managers, the result was not improving as was expected (Wharton, 2008). In fact, middle manager’s contributions in interpreting, nurturing and developing new strategic ideas are important as organizations strive to increased levels of profitability (Van Kuyvenhoven & Buss, 2011).
managers make an important contribution both upwards and downwards in the strategy implementation.
1.1 Research focus
Ikävalko (2005) states in his study that the main contribution from literature on strategy
implementation and its difficulties is the interpretation of organizational actors. There is a body of research that shows that the lower in the organization the less urgency, focus or feeling people have for strategy implementation (Alexander, 1991; Floyd & Lane, 2000; Galpin, 1998). The view that the middle manager is a link between organizational actors in different hierarchical positions applies across a wide range of organization types and organizational context (Buss & Van Kuyvenhoven, 2011).
This thesis starts by emphasizing on the position of the middle manager in strategy implementation and continues by comparing different hierarchical positions. Finally, this thesis contributes to the management of strategy implementation in which higher levels of managers, middle managers, and lower levels of employees all have to work together and to be aligned to implement a strategic change.
1.2 Research question
The goal of this thesis is to investigate whether the position of an employee in an organization explains the perceived presence of the three key factors for strategy implementation in that particular employee: awareness of the strategy, commitment to the strategy and the perception of feasibility of the strategy. Because strategy implementation is a top-down initiated process, awareness of the strategy, commitment to the strategy and the perception of its feasibility are assumed not to be the same for every organizational player. This results in the following research question:
For strategy implementation, does the hierarchical position of an employee in the
organization explain his degree of awareness of the strategy, commitment to the strategy and the perception of feasibility of the strategy?
For the management of an organization effective strategy implementation is an important component of the strategy process. It is very important to obtain superior organizational performance. Differences in interpretations could influence misalignment of strategic actions of people working in different hierarchical positions that might be harmful for effective strategy implementation. From literature review about strategy implementation, this study restricts to three factors and assessed the hierarchical positions. Assumptions will be made about the presence of the three key factors for strategy
1.3 Sub-questions
In order to come to an answer on the research question, five sub-questions are formulated. The first two sub-questions serve as preliminary research. In order to indicate the differences in hierarchical positions the other three sub-questions lead to the hypotheses:
-‐ How to define the distinctive position of the middle manager? -‐ What is strategy implementation?
-‐ What is awareness of the strategy and how does the position in the organization explain awareness of the strategy?
-‐ What is commitment to the strategy and how does the position in the organization explain commitment to the strategy?
-‐ What is feasibility of the strategy and how does the position in the organization explain the perception of feasibility of the strategy.
1.4 Data collection and analysis
The collection and analysis of data consist of three phases. In the first phase, literature was collected and reviewed. In the second phase, an internship was taken at a research, dialogue and consultancy firm in Amsterdam, MeyerMonitor. Four interviews with HR directors from four different client organizations were held and helped in setting up the quantitative phase of this research. In the third phase, the quantitative part, a questionnaire was sent out to respondents coming from different types of organizations.
1.5 Content thesis
4. THEORY
The theoretical perspective consists out of seven sections, including the summary of the theory and the conceptual model. The order of the first three sections is based on the sequence of the sub-questions presented in the introduction. As mentioned in the introduction the first two sub-questions are part of preliminary research. The first section will elaborate on the distinctive definition and position of the middle manager and the second section will define strategy implementation and contains an
introduction of the hypotheses. Awareness of the strategy, commitment to the strategy and the
perception of the feasibility of the strategy will subsequently be defined and this section will include a review of the middle manager, higher levels of management and lower levels of employees upon these three factors.
2.1 Middle manager
In order to understand the perspective of this thesis, some relevant definitions of the middle manager will be discussed in this section. This section explains why the position of the middle manager is distinctive and moreover, guiding in this study.
There is no general definition of a middle manager and middle managers do not form a well-defined homogeneous group that can be easily differentiated. A frequently used definition in middle management literature is Likert’s definition (1961). He defines middle managers as ‘linking-pins’. In congruence with Likert (1961), Vogler (2007) states that the middle manager’s role is a ‘tie between top management and operational workers’. Stoker (2006) uses in her research on middle managers and organizational change the definition of the Dutch employer federation. They define middle managers as the group that gives and receives direction. As they give and receive direction they are obviously ‘in the middle’. Rouleau (2005) defines middle managers as managers hierarchically located between top managers and above first-level supervision.
defines the role of the middle manager as a brokerage role. An organizational actor that fulfills a brokerage role is in the position to mediate between unconnected parts in the organization. Top managers have corporation-wide responsibilities to make strategic decisions in the context of strategy implementation (Frohman & Johnson, 1992). The middle manager consumes these decisions and supplies them to the employees lower in the hierarchical level of the organization (Judge & Stahl, 1995).
Reviewing literature about the distinctive position of middle managers, their role and function in the organization words show up as ‘linking’, ‘translator’, ‘broker’ and ‘both consumer and
supplier’. Due to this connecting role, general management uses middle managers as key actors for success in strategy implementation (Buss & van Kuyvenhoven, 2011). The typology of the middle manager will be used as a starting point of the empirical study. In order to understand the context of the empirical study, the next section will outline why strategy implementation is important for organizations, which perspective on strategy implementation is used and what it requires to succeed. A significant number of studies indicated that strategy implementation plays a positive role in the financial performance of the firm (Sorooshian et al., 2010). For many organizations it is priority to implement their strategies effectively, so that the strategic intent is translated into better organizational performance.
2.2 Strategy implementation
Strategy is frequently described as a deliberate set of actions to give the organizations coherence, guidance and direction (O’Regan, Ghobian & Sims, 2005). Thereby, strategy is described as indispensible for an organization in achieving competitive advantage. Several authors define an organization’s strategy differently: as a competitive position (Porter, 1979), as a systematic process (Ungerer et al., 2007), as a learning process (Senge, 1988), and resources as a strategy (Prahalad & Hamel, 1990). In this thesis, none of these specific definitions is assigned to the definition of the strategy in strategy implementation. The focus of this section is on literature describing that successful strategy implementation is extremely important. The following sentence is often used: ‘Effective strategy of an average strategy beats mediocre implementation of a great strategy every time’ (Sterling, 2003). This is crucial for organizations in moving forward. Strategies that are implemented to some extent can be revised and adjusted so that the organization has a course to attain its goals and profitability. The focus in this study is not on a particular type of strategy, but on the importance of effective and efficient implementation and its aim to achieve superior performance (see conceptual model, 2.7).
While not denying the importance of strategy formulation, it has been argued that organizations face a real challenge in strategy implementation (Qi, 2005; Guth & MacMillan, 1985; Hrebiniak, 2005). The traditional view of strategy implementation is that it is a top-down activity leading to an action plan passed down the line of managers (Buss & Van Kuyvenhoven, 2011). Other views address that the strategy process is emergent and that formulation and implementation are intertwined. Although this research is aware of this discussion, it will move forward now on what it requires to successfully implement a strategy down the line of managers in the organization, regardless of how and why the strategy is defined.
Strategy implementation is actually making a strategy work and executing it through the organization (Hrebiniak, 2005). Dlodlo (2011) defines strategy implementation as the process of transforming wide-reaching ideas into action to achieve broad company objectives. Clearly, strategy implementation is an organization-wide process and requires the involvement of managers and employees to turn strategic decision into reality to achieve strategic objectives. Therefore, strategy implementation is seen as a challenge. Strategy implementation is even often described as the weaker part of the strategy process. Li, Guohui and Eppler (2008) use in their literature analysis a sentence from a White Paper of Strategy Implementation of Chinese Corporation in 2006 that says “strategy implementation is the most significant management challenge which all kinds of corporations face at the moment”. Because failure in implementing strategies causes organizations not only enormous costs in time and money but it loses the trust and moral from it employees as well, in the following section will be discussed what strategy implementation requires in order to be effective (Sorooshian et al. 2010). High costs and lack of support from its employees will hamper organizations in next
is caused by poor communication and mismatches in organizational levers as culture systems and processes. This is just a selection of lists from articles that highlighted the influencers, challenges, and problems for strategy implementation. The focus is now restricted to awareness of the strategy, commitment to the strategy and the perception of its feasibility.
It is assumed that the extent to which people in the organization perceive these three factors is related to strategy implementation. These factors are chosen because, as is shown in Table 2.1, middle managers have a role in achieving a common perception throughout the organization for these three factors. Translating information and knowledge throughout the organization, for example, is related to the power of middle managers in organizations. Other factors such as missing rewards or lacking resources are also important, but less important for investigating the differences between hierarchical positions and within the role of the middle manager. As it is the essence to look for different
hierarchical groups, the next section will combine the hierarchical positions with the three factors in which the middle manager visibly has an influence.
