You cannot establish strategy understanding with a single question such as “Do you understand our strategy?” A credible assessment asks employees to explain the strategy without prompts, recognize it among plausible alternatives, and connect it to decisions their team and role should make. Comparing those answers across levels, functions and locations shows where understanding is strong and where communication or priorities are breaking down.
This approach separates confidence from demonstrated knowledge. It also tests both broad familiarity with the organization’s direction and concrete knowledge of its markets, positioning and economic logic.
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What “understanding the strategy” actually means
Strategy understanding has at least three layers. Treating them as interchangeable produces misleading results.
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Employees should be able to describe the organization’s direction, major priorities and underlying rationale in ordinary language. This is more than recalling a slogan or naming a plan. A person who repeats official wording but cannot explain what the company is choosing to do—and not do—has memorized terminology, not demonstrated understanding.
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Concrete strategy knowledge
Employees also need to know the specific choices that make the strategy distinctive: which markets or customers matter most, how the company intends to position itself, and what economic logic is expected to make the choices work. A 2024 study by Michael Stadler and Nicoline Scheidegger examined both general knowledge of an employer’s strategy, mission and vision and more specific knowledge of markets, positioning and economic logic. Its abstract reports that greater openness in strategy processes was positively associated with employee knowledge across hierarchy levels, with a smaller effect for concrete aspects than for general understanding.
Line of sight from strategy to work
Knowledge becomes useful when employees can apply it. “Line of sight” means understanding the strategy and accurately understanding which actions support its objectives. Employees should be able to explain how their team’s priorities contribute to strategic objectives, how their own work contributes, and what they would change when priorities conflict. Cornell’s record of Boswell, Bingham and Colvin’s 2006 article summarizes the requirement: “employees not only understand the organization’s strategy, they must accurately understand what actions are aligned with realizing that strategy.”
Why a confidence rating is not enough
A survey item such as “I understand our strategy” measures perceived confidence. Confidence can be useful as a starting signal, but it does not show whether an employee can recall, recognize or apply the strategy accurately. Someone may feel informed because they attended a town hall, while still being unable to identify the company’s intended market or explain what their team should stop doing.
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A practical assessment framework
Use several short tasks, each testing a different kind of knowledge. Keep the core prompts consistent when you repeat the assessment so that changes can be compared.
| Method | What it tests | Strength | Limitation |
|---|---|---|---|
| Self-rating | Perceived confidence | Fast way to identify where employees feel uninformed | Does not demonstrate accurate knowledge |
| Open recall | Ability to explain direction and priorities without prompts | Reveals what employees can retrieve in their own words | Answers require a clear scoring rubric; wording may vary |
| Recognition or matching | Ability to distinguish the company’s strategy from plausible alternatives | Tests recognition directly and limits slogan-based answers | Requires realistic alternatives and careful question design |
| Specific-knowledge questions | Knowledge of target markets, positioning and economic logic | Shows whether broad familiarity reaches the substance of the strategy | Must be tailored to the company’s actual choices |
| Line-of-sight questions | Ability to connect strategy with team priorities and personal actions | Tests application and exposes conflicting priorities | Needs context about the respondent’s role |
| Group comparison | Differences by level, function, role or location | Identifies where understanding or communication is uneven | Small groups may require privacy safeguards and cautious interpretation |
How to test strategy understanding step by step
1. Define the strategic content employees are expected to know
Before writing questions, list the few choices that define the current strategy. Include the intended direction, priority customers or markets, desired positioning, the rationale for those choices and the outcomes the organization is pursuing. Then identify the decisions that should change at team and individual levels.
Do not turn every detail in a strategy document into a test item. A focused definition lets you distinguish essential knowledge from peripheral facts and gives managers a common basis for interpreting answers.
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2. Add a self-rating, but label it as perception
Ask employees to rate how confident they are that they understand the strategy. You can also ask whether they know the organization’s priorities and whether they receive enough explanation from their manager. Keep these items separate from knowledge tasks in the survey and report them as perceived understanding, not proof of comprehension.
3. Use open recall without showing official wording
Ask an open question such as: “In your own words, what is the company trying to achieve, where will it compete, and what are the most important choices behind that direction?” Do not display the strategy statement first. Allow enough space for a concise paragraph or several bullet points.
Score answers against a short rubric built from the strategic content you defined. Look for:
- An accurate statement of the organization’s direction or objective.
- The priorities that distinguish the strategy from routine business activity.
- A plausible explanation of why those choices matter.
- Recognition of trade-offs, exclusions or activities that should receive less emphasis.
Do not require employees to use executive terminology. Accurate plain language should receive credit; polished wording without the right choices should not.
4. Test recognition with plausible alternatives
Present the company’s publicly espoused strategy alongside several statements that could realistically describe competitors or other organizations. Ask employees to identify which statement represents their employer. Alternatives should differ on meaningful choices—such as customer segment, value proposition or growth logic—rather than on obvious vocabulary.
This method was used by Pat Auger, Timothy M. Devinney and Grahame Dowling. The University of Manchester’s record reports that an average of 29% of employees correctly matched their employer to its publicly espoused corporate strategy. That figure is a finding from their study, not a universal pass mark. Recognition tasks are useful because they test whether employees can distinguish the company’s direction from similar-sounding statements instead of simply agreeing that they understand it.
5. Ask about concrete strategy knowledge
Tailor specific questions to the choices your organization has actually made. Examples include:
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- “Which customer or market is the current strategy prioritizing?”
- “How does the company intend to be positioned relative to alternatives?”
- “What economic logic is expected to support this position?”
- “Which activity is deliberately not a priority under this strategy?”
Use a mix of multiple-choice and short-answer formats if that makes scoring more consistent. Make incorrect options plausible; an item that can be answered from general business common sense does not test your strategy.
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6. Measure line of sight to team and individual work
Ask employees to connect the strategy to decisions they can influence. Useful prompts include:
- “What should your team do differently because of the strategy?”
- “Which of your current priorities contributes most directly to a strategic objective, and how?”
- “If two priorities conflict, which would you favor under the strategy and why?”
- “What is one activity your team should stop, reduce or redesign?”
Evaluate whether the proposed actions genuinely support the stated objectives, not whether they sound enthusiastic. A person may recall the strategy accurately yet choose actions that undermine it. That gap is an application problem rather than a simple information deficit.
7. Compare answers with confidence ratings
Create a simple cross-tabulation of perceived understanding against demonstrated performance. Four patterns are especially informative:
- High confidence, strong answers: evidence of both perceived and demonstrated understanding.
- High confidence, weak answers: possible overconfidence, ambiguous strategy language or ineffective testing.
- Low confidence, strong answers: employees may understand the choices but lack confidence in terminology or in how much detail is expected.
- Low confidence, weak answers: a clear signal to investigate access to information, manager explanation and priority clarity.
These categories are diagnostic, not employee labels. Use them to decide what to examine next.
8. Analyze differences across organizational groups
Review results by role, hierarchy level, function and location when sample sizes and privacy rules permit. Compare the same measures: self-rating, recall, recognition, specific knowledge and line of sight. A company-wide average can conceal a serious gap in one plant, region, shift or customer-facing function.
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When groups differ, avoid assuming that the lower-scoring group is less capable. Check whether it receives different manager briefings, has less access to strategy discussions, works under competing local targets or has a role for which the strategy has not been translated into decisions.
What published findings can—and cannot—tell you
Recognition and putting strategy into words
In the Auger, Devinney and Dowling study, an average of 29% correctly matched their company to its publicly espoused corporate strategy. The same study reported that 40% put the corporate strategy into words, compared with 14% for environmental strategy and 7% for CSR strategy. These percentages come from that study’s population and methods; they are not benchmarks that every organization should expect to meet.
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Clarity of company direction and organizational health
McKinsey reported that about 25% of employees at companies with the healthiest organizational-health scores were unclear about company direction, compared with nearly 60% at companies with poor scores. Its database contained survey results from more than 765,000 employees at about 600 companies. The figures describe McKinsey’s database findings from 2011 and should not be treated as a current universal estimate or as proof that unclear direction alone causes poor organizational health.
Openness in strategy processes
The 2024 Stadler and Scheidegger study found a positive association between openness in strategy processes and employee strategy knowledge. Its abstract reports that “the degree of openness has a strong positive effect on strategy knowledge,” while also indicating a smaller effect when specific knowledge was assessed. This supports examining participation and transparency as possible explanatory factors; it does not establish that one communication intervention will improve understanding in every organization.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Diagnosing weak results
Once the assessment shows a gap, investigate the conditions around the gap instead of immediately sending more announcements.
Manager communication
Ask whether managers explain the choices, trade-offs and implications for local work, or merely forward corporate messages. Compare what managers say with the strategy content used in the assessment. Inconsistent explanations can create different versions of the strategy across teams.
Communication about initiatives
Employees may understand the corporate direction but not the initiatives intended to implement it. Check whether each major initiative states its strategic objective, expected contribution, owner and decision rights. If an initiative cannot be connected to a strategic choice, employees have little basis for prioritizing it.
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Internal communication climate
An environment where questions are discouraged can produce high apparent agreement and low actual understanding. Provide a way for employees to ask for clarification and report conflicting priorities. Treat recurring questions as evidence that the explanation or operating guidance needs work, not as individual failure.
Participation and access
Review who is invited into strategy discussions, who receives information first and whether frontline or distributed employees can see the same material. The association between openness and knowledge makes participation a reasonable diagnostic area, but participation alone is not a guaranteed cure.
Conflicting targets and incentives
Line-of-sight answers often reveal contradictions that a knowledge quiz misses. If a team can state the strategy but is rewarded for a different outcome, employees may rationally follow the measurable local target. Resolve the conflict in priorities, measures or decision rights before expecting communication to fix it.
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Designing a repeatable measurement cycle
Use the assessment as a diagnostic instrument rather than a one-time exam.
- Set a baseline. Run the same core recall, recognition, specific-knowledge and line-of-sight prompts before a major strategy communication or update.
- Record the context. Note which strategy version was in force, when the assessment ran and which groups were included.
- Act on the largest gap. If recall is weak, clarify the direction. If concrete knowledge is weak, explain markets, positioning and economics. If line of sight is weak, translate choices into team decisions and trade-offs.
- Repeat the core items. Reuse unchanged questions where possible, adding only the new items required by a strategy change. This preserves comparability.
- Review subgroup movement. Look for improvement or deterioration by function, level and location, not just in the overall average.
- Pair scores with qualitative follow-up. Ask a sample of employees to explain why they chose an answer. Their reasoning can reveal ambiguous terms or competing priorities that a percentage cannot.
Report results as knowledge signals. Do not present them as a standalone measure of strategy execution, financial performance or employee commitment.
Common design mistakes and fixes
- Using only the official statement. Showing the wording before asking for an answer measures recognition of text. Fix: begin with unprompted recall.
- Writing alternatives that are obviously false. Employees can guess the intended answer. Fix: use realistic alternatives that differ on actual strategic choices.
- Scoring vocabulary instead of accuracy. Non-executive language may be completely correct. Fix: score essential choices and rationale, not jargon.
- Combining all dimensions into one score. A single number hides whether the problem is general familiarity, concrete knowledge or application. Fix: report each dimension separately.
- Publishing tiny subgroup results. Small cells can identify individuals and encourage defensive responses. Fix: aggregate groups, protect anonymity and suppress results where privacy cannot be maintained.
- Declaring a universal pass rate. The published percentages come from different populations, definitions and methods. Fix: establish an internal baseline and track movement using the same instrument.
- Assuming communication is the only remedy. Employees cannot act on a strategy that conflicts with incentives or local targets. Fix: inspect goals, decision rights, resources and trade-offs alongside communication.
- Testing once and stopping. A launch event can produce temporary recall without durable application. Fix: repeat the core prompts after updates and after implementation work has had time to reach teams.
A concise question set you can deploy
The following sequence covers the essential dimensions without asking employees to complete a long exam:
- “How confident are you that you understand our current strategy?”
- “In your own words, what are we trying to achieve and what choices define our direction?”
- “Which of these realistic strategy statements best describes our company?”
- “Which customers or markets are we prioritizing?”
- “How do we intend to be positioned, and what economic logic supports that position?”
- “What should your team do differently because of the strategy?”
- “What would you change in your own work if two priorities conflicted?”
Score and report the questions by dimension. Keep the wording and answer options stable for repeat assessments, while updating the substantive content when the strategy changes.
Interpreting the result responsibly
A strong result means employees can accurately explain the direction, distinguish it from plausible alternatives, identify its concrete choices and connect those choices to work. It does not prove that the strategy is good, that execution will succeed or that performance targets will be met.
A weak result is an invitation to investigate. Determine whether employees lack information, receive inconsistent explanations, face conflicting priorities or understand the strategy but cannot influence the required actions. Use the pattern across tasks and groups to choose the intervention, then measure again with the same core prompts.
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