When it comes to organization design, the last few years have seen companies continuously experimenting with it, with changes in business dynamics, geographies, and new product or service launches. Organization design is a specific science. However, according to Josh Bersin’s latest study, many companies seem to be practicing it inconsistently or have very simplistic approaches. According to the study, as more than 90% of jobs are service roles today, traditional organization models do not work anymore; companies need models that empower people and encourage innovation. The study also found that organization design is one of the most important things to do today. It found that a great organization design is agile and accountable, creates clarity and productivity, and encourages growth. The study covered a few topics to help business and HR leaders develop a more agile and accountable design. Here are a few findings and recommendations from Josh Bersin’s latest study. See more: 4 Key Trends That Will Guide HR Strategies in 2022 Organization Design Matters Now More Than Ever Last year was one year of hope where businesses worldwide were looking to return to pre-pandemic levels. Just as they were starting to recover, the Great Resignation happened. Millions of people started quitting their jobs in droves in the U.S. alone. There were various reasons for this mass resignation. So, how can companies hire or retain great talent? According to the study, one way is to design models around remote and hybrid work, considering both are becoming a norm now. Simultaneously, the new models should also consider essential or deskless workers. Then, there is digital transformation industry convergence they must take into account. So, how should companies design their organization models? Josh Bersin’s study proposed seven major elements as part of its Organization Design Framework. They are business model design, operating model design, work design, job design, organizational structure design, methodology and approach, and implementation and adoption. Organizational Design Framework The Organizational Design Framework Source: Josh Bersin Company, 2022 According to the study, several management practices contribute to organization design. Hence, the framework groups them into seven elements instead of analyzing them independently. Leaders Lack Confidence in Their Organization Design The study surveyed over 350 companies and discovered a lack of confidence among leaders in their organization design. Most companies were not agile and accountable. They felt unsure when it came to managing their organization design and did not have clear guidelines for optimizing the redesign. The study also found that a few things worked, and a few were missing in the existing organization designs. Here are a few things that worked:
About 60% of respondents could clearly define the market segments they served.
About 51% consistently communicated their strategic direction.
About 50% understood the founder’s history and cultural impact.
Much of this clarity seems to have come about due to the pandemic. However, there were also a few critical elements missing.
Only 9% said they used agile organizational models
Only 11% used advanced methods to understand how work happened
Only 12% involved employees directly in organization design
The study further found that the organization design in most organizations surveyed was inconsistent, hierarchical, reactive, and traditional. To understand where companies are in the maturity level of their organization design, the study drew up an organization design maturity model as shown below. Organization Design Maturity Model Organization Design Maturity Model Source: Josh Bersin Company, 2022 While companies at level 1 have no expertise and perform poorly, companies at level 4 outperform others and can be considered role models. According to the study, 25% of the surveyed companies were at level 1, and 33% were at level 2. About 31% were at level 3, while only 11% were at level 4. Some Organization Design Strategies and Practices Are of More Importance The study tried to understand if all the strategies and practices of organization design matter or some have a bigger impact on business outcomes. After analyzing its organization design framework, it found that a few dimensions have a bigger impact. Accountability and rewards, flexible structure, and effective change management were found to have a very high impact on organizational outcomes. They were followed by purpose and business strategy, talent strategy, culture and leadership, skills and experience focus, and flexible role design. On the other hand, traditional job architecture and team-based structures had minimal impact. How can companies climb up the maturity model to become both agile and accountable at scale? Great organization design solutions are more strategic than having an agile manifesto and using traditional design models, jobs, and organizational structures. Here are five findings that can help.
As mentioned earlier, most companies feel insecure or inexperienced about organization design. Many of them also lack a dedicated organization design team. The study proposed that creating a dedicated team that owns, demystifies, and defines the domain pays off by enhancing business efficiencies.
Many companies have traditional hierarchical structures suitable for the industrial age and are least impactful on business outcomes today. Work design is the most impactful element, yet companies are least effective in the area. Hence, companies should focus on how they operate than how they organize.
Many companies think they need to be tech companies to work in agile ways. However, with the right approaches, any organization can become agile and accountable.
When many companies think of organization design, they focus on individuals when implementing the model. However, employee experience and capability considerations should be part of the design and not an afterthought.
A major finding was that accountability is vital to organization design. A focus on accountability and rewards makes success sustainable.
To help companies start, the study laid out 15 essential practices and strategies that have the biggest impact on business outcomes, including innovation, financial performance, and people metrics. 15 Essential Practices 15 essential practices of agile and accountable companies Source: Josh Bersin Company, 2022 See more: Tips for HR Leaders To Overcome 5 Common Objections When Proposing Change How Companies Can Move From One Maturity Level to the Next So, how can organizations move from Level 1 of the organization design maturity model to Level 4? The study lays down a few steps. However, before following these steps, organizations should know which level they are at. They should also realize that they cannot skip a step to reach the highest level. Further, they should commit the necessary resources and efforts to achieve the next level. According to the study, the following steps will help organizations move from one level to the next.
To move from Level 1 to Level 2, organizations should become intentional about organization design.
To advance from Level 2 to Level 3, companies should focus on strategy and culture.
To move from Level 3 to Level 4, companies should translate strategy into work activities.
With a good organization design becoming necessary, companies should also focus on operationalizing it. Here are a few steps they should take.
Identify the business problem to solve and define measures
Bring a cross-functional team together
Run organization design as a business process instead of a project
Build HR capabilities for organization design
To Conclude Organization design is no longer an option but a necessity for businesses to grow and thrive in a continuously changing world. Simultaneously, it need not be a mysterious black box that cannot be decoded. By identifying their level in organization design maturity, what capabilities they need to build, what elements they need to focus on to create the best impact on business outcomes, and what actions they need to take, companies can become agile and accountable. This will set up organizations for success, mitigating cost pressures, empowering employees, and finding the right solutions for partners and customers.