Would You Invite Employees to Vote on Strategic Direction?
Executives often fear that they’ll lose control and speed by engaging employees in strategic planning. But here’s a new playbook that works.
Tang Yau Hoong/Ikon Images
As the newly appointed CEO of Hema, a struggling European retail chain with 750 stores and 19,000 employees, Saskia Egas Reparaz faced a daunting challenge. The year before, in 2020, the company had posted a loss of 215 million euros despite having generated 1.1 billion euros in revenue. Hema had been through several private equity owners and leadership teams over the past 15 years, all of whom had failed to turn things around. Yet the new private equity owners had high expectations of Egas Reparaz and were confident that she could get the company back on track.
She did just that, most notably by reversing the company’s long-established strategy of expanding beyond the home market. Hema was operating stores throughout Western Europe and had even franchised some outlets in the Middle East and Mexico. Egas Reparaz closed dozens of stores and focused Hema’s operations in the Benelux countries (Belgium, the Netherlands and Luxembourg) as well as nearby France. By the end of 2021, the company was profitable again, and in 2022, gross sales rose 20%.
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It’s easy to say that this successful turnaround came from making the right strategic choices. But it was equally important that Hema involved its people in strategic planning. Successful strategic planning goes beyond setting the right strategic priorities; it involves putting your people at the heart of it.
Executives often resist engaging employees in strategic planning due to fear of losing control and speed. A participative approach takes more time and is more complicated. However, excluding employees from strategic planning may hinder strategy adoption and overlook valuable input.
We need a new and fresh playbook for strategic planning — one that breaks from tradition and actively loops in employees. Let’s explore why and examine four keys to doing this well.
The Case for a New Type of Strategic Planning
Strategy became a clear domain in companies in the 1960s. Before then, strategizing was primarily something generals and politicians did. In his 1962 book Strategy and Structure, Harvard Business School professor Alfred Chandler showed that companies needed a long-term plan to give a company structure, direction, and focus.
By the 2010s, however, corporate leaders were looking down on strategic planning. They celebrated “emergent strategy” in an era of ongoing disruption from new technology and shifting global trade. Traditional strategic planning seemed hopelessly formal and rigid, oblivious to the outside turmoil.