March 14, 2022
Flawed organisational design thinking continues to hold businesses back
The Josh Bersin Company, a research and advisory company focused on HR and workforce trends and issues, has revealed new research which claims to show how organisational design has a direct relationship to the ability of any business to prepare and scale for the future. The study concludes that traditional approaches to organisational design, usually centred around job roles and reporting structures, are holding companies back and in some cases, exacerbating current and future talent challenges.
The report also claims that approximately 58 percent of companies are using haphazard organisational structures or heavily relying on role-based organisational design principles. Only 11 percent are using organisational design approaches that are agile, have clear accountability for work, are continuously modified as needed for business change, and encourage employee growth in addition to business growth.
“The big ‘aha’ of this research is that job and organisation design is now one of the biggest root causes for the Great Resignation going on today,” said Josh Bersin, global industry analyst and CEO of The Josh Bersin Company. “Too many companies are just posting ‘jobs’ without looking at redesigned roles and responsibilities to make work easier, more productive, and more engaging. The traditional approaches to organisation design, which typically deal with span of control, are not keeping up. The good news is that our research shows that the companies who do this well are hiring people faster, driving higher retention, and transforming their businesses more quickly.”
The report, The Definitive Guide to Organisational Design: The Journey to Agile, lays out the seven elements and 20 dimensions that must be considered in business-driven organisational design, and the 15 organisational practices with the biggest business impact. Some of the report’s key takeaways include:
- How companies operate is more important than how they are structured. Of the seven elements studied, organisational structure design had least business impact, while work design was the greatest driver of business outcomes. However, most companies are lacking in work design capabilities, and only one in ten organisations currently use advanced technologies like organisational network analysis to help understand how work actually happens.
- Agile organisations separate work management from people management, redefining the role of the manager. In today’s world of work where business models, services, and work locations change all the time, the hierarchical “span of control” model no longer works.
- Employee experience must be front and centre of all design practices, not an afterthought. Companies that have taken this on board perform better financially, see much higher customer satisfaction rates, and are considered by employees as great places to work–but only 12 percent of companies directly involve employees in organisation design
- Accountability is key. In fact, identifying accountable parties and the work they do, along with identifying the rewards for accomplishing results, is the most impactful organisational practice.
The research report also includes a framework for business-driven organisation design, an organisational design maturity model, as well as the steps companies can take to improve their organisational practices and obtain better financial, customer, people, and innovation outcomes. Examples and case studies of companies that have applied these approaches hone in on the journey to agile for companies in traditional industries, including German manufacturing giant Bosch Power Tools, Australian telecommunications company Telstra, and US energy firm DCP Midstream.
“Our research makes it clear that it’s time for organisational design to take center stage. The significant talent-related challenges companies are currently facing will not be solved in the long run until companies take a close look at all aspects of organisational design, including rethinking the work itself,” said Kathi Enderes, PhD, senior vice president of research.
The Definitive Guide to Organisation Design: The Journey to Agile is available for complimentary download for a limited time.