The age of alignment.

• Author: Berger, Lance
• Position: The role of the corporate chairman in creating organizational adaptiveness; includes related article - Chairman's Agenda: Being a Global Leader

The Age Of Alignment

The 1980s was an age of turmoil - of tearing companies apart. The 1990s will be an age of alignment - of putting companies back together again. Only this time, to compete in the tempest of accelerating change, organizations must be aligned as never before in terms of shareholder expectations, company strategy, and management and employee performance. The following article discusses the alignment imperative and the Chairman's crucial role in implementing it. It is a collaborative work of four authors drawing on their individual expertise in the areas of organizational design, business integration methodologies, managing strategic transformation, and human resources management. They are: Lance Berger, Managing Director of MLR Publishing Co. (which publishes Directors & Boards), who formerly was a Vice President and Managing Director of The Hay Group; Francis J. Gouillart and William C. King, both of whom are Senior Vice Presidents of Gemini Consulting; and Michael Useem, Professor of Sociology and Management at the University of Pennsylvania.

As business historians look back on the 1980s, the era is likely to be seen as one of those fateful periods when American business underwent fundamental restructuring. Earlier periods of restructuring carried distinctive casts. Large multidivisional firms emerged from the business turbulence near the turn of the century; diversified multinational firms emerged during the postwar era. A still different cast characterized the tumult of the past decade. The precise form of the emergent corporate form is yet uncertain. What is certain is that new principles of organizational design of management process are in the offing.

The turbulence from which the new corporate forms of the 1990s are emerging is evident in almost any measure of the era. Consider just four: * Public Companies Privatized. At the start of the decade, only 4% of the dollar value of public-firm mergers and acquisitions involved buyouts; by 1988, the proportion had increased nearly tenfold. The purchase value of divisions and companies taken private during the decade exceeded $ 200 billion. * Corporate Employment Declined. Reversing a historic trend, employment among major manufacturers sharply declined. While total manufacturing employment rolls were off little during the decade, employment among the Fortune 500 declined by more than one-fifth, from 15.9 million to 12.4 million. Employment among many large service firms declined as well. * Institutional Investments Expanded. Pension funds and other institutional investors grew and concentrated their holdings. Institutions held 29% of the value of all company equities in 1980; by the decade's end they held 46%. Among some major firms, their stakes had reached 60% or more. Impatient with management's value-building strategies, but constrained in trading their large holdings...