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Do not test strategy understanding with a single question such as “Do you understand our strategy?” A useful assessment asks employees to explain the strategy without prompts, recognize it among plausible alternatives, describe its markets and economic logic, and connect it to decisions their team and role should make. Compare those results by level, function, location, and manager, then investigate the communication and participation conditions behind weak scores.
What “understanding the strategy” actually includes
Strategy understanding is not one thing. An employee may recognize a slogan but not know which customers the company is prioritizing, or may know the corporate direction but be unable to change a day-to-day decision because of it. Assess the dimensions separately.
General familiarity
General familiarity covers broad knowledge of the organization’s strategy, mission, and vision. It answers questions such as: Can the employee describe where the company is heading? Can they name its major priorities and explain why those priorities matter?
Concrete strategy knowledge
Concrete knowledge is more specific. It includes the markets or customer groups the company is choosing, its intended competitive position, and the economic logic expected to make the strategy work. A 2024 study by Michael Stadler and Nicoline Scheidegger reported that greater openness in strategy processes was positively associated with employee knowledge across hierarchy levels. The association was smaller when the questions concerned concrete strategic details than when they measured general understanding. The study was reported through an abstract, so its finding should be treated as evidence of an association, not proof that openness alone causes knowledge or execution.
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Recognition
Recognition tests whether employees can distinguish the company’s actual direction from realistic alternatives. This is different from asking people to rate their confidence. Pat Auger, Timothy M. Devinney, and Grahame Dowling used a matching task in which employees selected their employer’s strategy from statements associated with competitors and other companies. The University of Manchester’s record reports that, on average, 29% correctly matched their employer to its publicly espoused corporate strategy. That figure describes the study population and method; it is not a universal pass mark.
Line of sight
Line of sight is the application test. Employees should understand the strategy and accurately identify which actions support it. Cornell’s record of Boswell, Bingham, and Colvin’s 2006 article summarizes the requirement this way: “employees not only understand the organization’s strategy, they must accurately understand what actions are aligned with realizing that strategy.” A person who can recite the strategy but cannot use it to choose between competing priorities has incomplete understanding.
A practical measurement system
Use several short tasks rather than one long opinion survey. The following combination distinguishes confidence, knowledge, recognition, and application.
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|---|---|---|---|
| Open recall | Whether an employee can explain the direction without seeing official wording | Accuracy of priorities, direction, and rationale in the employee’s own words | Answers require consistent coding; wording differences are not automatically misunderstandings |
| Recognition task | Whether the employee can identify the company’s strategy among plausible alternatives | Direct evidence that the employee can distinguish the organization’s position | Guessing remains possible, so use several realistic alternatives and examine patterns |
| Specific-knowledge questions | Knowledge of markets, customers, positioning, and economic logic | Shows which strategic content is understood or missing | Questions must be tailored to the actual strategy and current planning period |
| Line-of-sight questions | Whether employees can connect strategy to team priorities and personal decisions | Evidence that knowledge can guide work, trade-offs, and resource choices | A weak answer may reflect conflicting processes or incentives, not only poor communication |
| Confidence rating | Self-perceived understanding | Reveals confidence and helps compare confidence with demonstrated knowledge | Confidence is not evidence that the strategy was recalled or applied correctly |
How to run the assessment step by step
- Define the reference strategy for the measurement period. Write a short internal answer key covering the intended direction, two to five priorities, target markets or customers, positioning, and the economic logic. If the strategy has changed recently, specify the effective date so employees are not marked against an obsolete version.
- Start with an unprompted recall question. Ask: “In your own words, what is our company trying to accomplish over the next planning period, and what are the most important choices that support it?” Do not display the strategy statement first. Ask respondents to include the rationale, not just a slogan.
- Code recall against the answer key. Use a simple internal rubric: zero for an unrelated or blank answer, one for a partly correct answer that omits or confuses a material priority, and two for an accurate account of the direction and main choices. Add a separate note for contradictions, such as naming a market the strategy explicitly deprioritizes. These coding bands are an operating tool for your organization, not an externally validated threshold.
- Use a recognition exercise. Present the company’s strategy and several statements that could plausibly describe another organization. Keep sentence length and specificity similar, randomize the order, and ask: “Which statement best describes our company’s publicly stated strategy?” Include an “unsure” option so a respondent is not forced to guess. Record both the selected statement and confidence.
- Test specific knowledge. Tailor three to six questions to the strategy. Examples include: “Which customer or market is receiving increased priority?” “How are we positioning ourselves relative to alternatives?” and “What has to be true economically for this strategy to create value?” Accept equivalent wording, but score whether the underlying choice is correct.
- Test line of sight at team and role level. Ask: “Which team priority most directly supports the company strategy?” “What would you do differently in your role because of this strategy?” and “If two requests conflict, which one should take precedence and why?” Require a concrete behavior, decision rule, or trade-off rather than a general statement about working harder.
- Add a confidence item after the tasks. Ask respondents to rate their understanding on a consistent scale, such as one to five, and whether they know where to find the current strategy. Put this after the knowledge tasks so the rating does not prime the answers.
- Protect the quality of responses. Explain the purpose, keep individual results confidential where feasible, and report only groups large enough to avoid identifying people. A manager should not coach an employee during the assessment, and respondents should know whether results will be used for learning, planning, or performance decisions.
- Repeat the core items. Reuse the same recall, recognition, and line-of-sight prompts after a major communication effort or strategy update. Keep the wording and scoring stable; change only the strategy-specific answer key when the strategy itself changes.
How to interpret the results
Look at the pattern across measures instead of collapsing everything into one score. A composite can hide an important failure, such as high confidence combined with poor recognition.
Confidence versus demonstrated knowledge
Compare the self-rating with recall and recognition. High confidence with incorrect recall suggests overconfidence, stale information, or exposure to a competing narrative. Low confidence with accurate answers may indicate that employees need reassurance or easier access to the strategy, even though the underlying knowledge is present.
General understanding versus specific understanding
Employees may explain the broad direction correctly while missing target markets, positioning, or economic logic. That pattern points to a content gap: communications have conveyed the “where” but not the strategic choices that make the direction distinctive.
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Recognition versus recall
Correct recognition with weak open recall can mean employees have seen the strategy but cannot retrieve or explain it independently. Strong recall with weak recognition may indicate that the strategy is being paraphrased inconsistently, or that alternatives were poorly designed. Review the task quality before interpreting the result as a communication failure.
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Understanding versus line of sight
Accurate strategy answers with weak team or role application indicate an execution-translation problem. Check whether goals, budgets, incentives, approval rules, and workload priorities reinforce the stated strategy. Employees cannot reliably act on a strategy that daily systems contradict.
Compare results across the organization
Produce cuts by organizational level, role family, function, geography, tenure, and reporting line when sample sizes permit. The overall average can look healthy while a critical group—such as frontline staff, a newly acquired unit, or a particular region—has little knowledge.
- Hierarchy: Compare executives, middle managers, and individual contributors. A large gap may show that information is being lost during translation between levels.
- Function: Compare customer-facing, operational, technical, finance, and support teams. Different functions may need different examples, but the underlying strategic choices should remain consistent.
- Location: Check whether language, local market priorities, or uneven access to town halls creates geographic differences. Do not assume a lower score means less effort or commitment.
- Manager: Where confidentiality and sample size allow, examine patterns by manager or business unit. Managers are often the channel through which enterprise priorities become team decisions, so variation can reveal a translation gap.
- Tenure and recent change: Separate new hires and people who joined after a reorganization from longer-serving employees. A low score immediately after a strategy change may be expected, but it should improve on a defined follow-up schedule.
Use confidence intervals or minimum reporting thresholds appropriate to your survey design, and avoid ranking tiny groups. The purpose is to find where explanations, priorities, or decisions diverge—not to create a league table of employees.
What published figures can—and cannot—tell you
| Finding | Context | How to use it |
|---|---|---|
| 29% correctly matched their employer to its corporate strategy | Average reported by Auger, Devinney, and Dowling in a study using a strategy-matching task | Shows why recognition is a useful test; it is not a target that every organization should adopt |
| 40% put the corporate strategy into words | Same 2022 study and method context | Supports testing open explanation rather than relying on agreement ratings |
| 14% put the environmental strategy into words | Same study; environmental strategy was assessed separately | Illustrates that understanding can vary by strategy domain |
| 7% put the CSR strategy into words | Same study; CSR strategy was assessed separately | Should not be compared with the corporate figure as if all respondents answered identical content |
| About 25% unclear about company direction at companies with the healthiest organizational-health scores, versus nearly 60% at companies with poor scores | McKinsey’s 2011 report based on survey results from more than 765,000 employees at about 600 companies | Provides historical context for the importance of clarity; it is not a current universal estimate or a causal threshold |
These studies use different populations, definitions, and methods. Do not combine their percentages, treat them as benchmarks for your organization, or infer that a particular score predicts financial performance. Use them to justify a multi-method diagnostic and then establish your own baseline.
Investigate the conditions behind weak understanding
A low score tells you where to look, not automatically what to fix. Examine the communication and management conditions associated with the gap.
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Manager communication
Ask employees where they first heard the strategy, which manager explained it, and whether they received examples relevant to their work. Compare answers with recall and line-of-sight results. Inconsistent explanations often reveal that managers have received information but not a usable translation into team choices.
Participation and openness
The 2024 Stadler and Scheidegger study associated greater openness in strategy processes with greater employee strategy knowledge. In practice, investigate whether employees can ask questions, see the reasoning behind major choices, and provide information from customers or operations. Treat openness as a diagnostic condition, not a guaranteed cure: participation that is symbolic, inaccessible, or disconnected from decisions may not improve knowledge.
Communication about initiatives
An Erasmus Research Institute of Management report defines strategic business alignment as employees understanding, supporting, and being able to execute initiatives. It identifies management communication, communication about initiatives, and the internal communication climate as important to alignment. Check whether launch announcements explain what will stop, start, or change, and whether later updates resolve conflicts between initiatives.
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Review goals, dashboards, project intake, incentives, and resource approvals. If leaders say one priority matters but reward another, employees may give answers that sound inconsistent because the organization itself is inconsistent.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Common failure modes and fixes
Everyone gives the same slogan
Symptom: Recall answers repeat approved wording but omit customers, choices, or rationale.
Fix: Ask for a concrete trade-off, such as which request should be deprioritized, and score the explanation rather than phrase matching.
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Recognition scores are unexpectedly high
Symptom: Nearly everyone selects the company statement, but open recall and specific knowledge are weak.
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Fix: Check whether alternatives were obviously wrong, shorter, or more familiar. Rewrite them to be plausible and similar in length, then retain recall and application tasks.
Managers understand the strategy but teams do not
Symptom: Scores fall sharply below the management layer.
Fix: Give managers a small set of non-negotiable choices, examples, and answers to likely questions. Reassess team-level line of sight rather than merely sending another enterprise announcement.
Teams know the strategy but cannot act on it
Symptom: Recall and specific knowledge are accurate, while employees cannot name a changed behavior or resolve competing priorities.
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Fix: Align objectives, decision rights, budgets, staffing, and escalation paths with the strategy. Ask leaders to identify which existing work will stop or receive fewer resources.
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Results differ by location
Symptom: One country, site, or shift performs poorly while others do well.
Fix: Check translation, channel access, time-zone coverage, local examples, and whether regional leaders received the same strategic rationale. Keep the core choices consistent while adapting examples to local work.
Scores fall after a strategy update
Symptom: Employees describe the previous direction or mix old and new priorities.
Fix: Publish the effective date, identify what changed, explain what is discontinued, and repeat the same assessment after a defined interval. Do not interpret the immediate transition score as a permanent level of understanding.
How often to measure
Measure at three points: establish a baseline before or immediately after a major strategy communication, repeat after employees have had time to discuss and apply it, and include a short version in regular engagement or operating reviews. Keep the core items stable so movement is interpretable. Add a few strategy-specific questions when markets, positioning, or economic assumptions change.
Use results as a diagnostic signal, not as a standalone measure of strategy execution or business performance. Pair knowledge data with evidence such as decision-cycle changes, priority completion, resource allocation, and customer outcomes, while keeping those outcome measures analytically separate from the understanding test.
A compact question set you can deploy
- “In your own words, what is our company trying to accomplish, and which choices make that possible?”
- “Which of these statements best describes our company’s strategy?”
- “Which customers or markets are we prioritizing, and which are we not prioritizing?”
- “How are we positioning ourselves relative to alternatives?”
- “What economic logic must hold for this strategy to create value?”
- “What is your team expected to do differently because of the strategy?”
- “What would you change in your own work if two priorities conflicted?”
- “How confident are you that you understand the current strategy?”
Score the first seven for demonstrated knowledge and application, then compare the eighth with those results. Review the distribution and the explanations behind incorrect answers, not just the average.
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