- Poor organization design and lack of focus on job roles are among the biggest causes of recruiting, retention, and wellbeing problems in business leaders today
- Only 11% of companies have clear accountability and strategic job design in place
The Josh Bersin Company, a research and advisory company focused on HR and workforce trends and issues, revealed new research showing how organizational 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 organizational design, usually centered around job roles and reporting structures, are holding companies back and, in some cases, exacerbating current and future talent challenges.
The Josh Bersin Company also found that approximately 58% of companies are using haphazard organizational structures or heavily relying on role-based organizational design principles. Only 11% are using organizational 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.
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“The big ‘aha’ of this research is that job and organization 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 organization 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.
“In the light of this, getting organizational design right now is vital, as it’s going to prove much harder to hire in the years ahead. The fertility rate in the U.S. is 1.84 (replacement is 2.11) and all developed economies are going to have the same problem. Organization and job design is the only solution to maintaining productivity as the overall size of the global workforce shrinks.”
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The report, The Definitive Guide to Organizational Design: The Journey to Agile, lays out the seven elements and 20 dimensions that must be considered in business-driven organizational design, and the 15 organizational 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, organizational 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 organizations currently use advanced technologies like organizational network analysis to help understand how work actually happens.
- Agile organizations 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 center 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% of companies directly involve employees in organization 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 organizational practice.
The research report also includes a framework for business-driven organization design, an organizational design maturity model, as well as the steps companies can take to improve their organizational 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 organizational 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 organizational design, including rethinking the work itself,” said Kathi Enderes, PhD, senior vice president of research.
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