We introduce two concepts, action alignment and interest alignment, that we propose to help explain the linkages between employee behaviors and organizational strategy. We first examine the problem of action alignment, developing employee ability to identify and engage in behaviors that most effectively lead to the realization of the goals of organizational strategy. In particular, our discussion of action alignment focuses on the issues of employee line of sight to organizational strategy and the development of shared mindsets within the organization. We argue that aligned actions involving employee behaviors that are discretionary and difficult to specify in advance are especially important because they hold the potential for sustainable competitive advantage leading to organizational value creation. Then we turn the problem of interest alignment, how to motivate employees to engage in such discretionary/unspecificable aligned actions. We argue for moving beyond the common emphasis on incentive compensative in achieving interest alignment and explore the role of distributive issues in compensation and the role of intrinsic factors deriving from the inherent value and meaningfulness of work for employees.