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Organization design: Business goals need to be supported by the right operating models

As organizations mobilize to achieve their business goals, they must make complex decisions. Yet, in the face of competing priorities, limited resources, and unsuitable operating models, many fail to achieve their objectives.

 

The opportunities, challenges and barriers organizations may face include:

 

  • Enabling growth, faster decision making, innovation and greater agility
  • Organizing work in the post-Covid world
  • Becoming truly customer-focused
  • Aligning workforce transformation to according structures
  • Making their strategy work

Under increasing internal and external pressures, there may be a temptation to implement reactionary initiatives that might look good in the short term but do not deliver lasting impact. To overcome challenges and deliver on the business strategy, leaders need to rethink how their organization functions and design operating models that are fit-for-sustainable outcomes.

 

Organizations can achieve their business objectives by getting the fundamentals right, beginning with holistically (re)designing: business models, structures, processes, capabilities, governance, ways of working, metrics, incentives, funding and resourcing.


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Greater adaptability delivers clear business benefits. Responsive companies’ revenues grow 37% faster and they generate 30% higher profits than non-responsive companies.
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The pillars of agile organizations

To thrive in times of transformation, organizations are continuously required to assess and align their business models, organization models, people practices, and culture. High performing organizations consistently ensure alignment of these aspects to sustain success and deliver on business strategies.

 

High-performing, agile organizations:

Right arrow   Have an aspirational purpose and a clearly communicated strategy

Right arrow   Monitor the environment and respond quickly

Right arrow   Know how they create, capture and delivery value

Right arrow   Test, learn and iterate

Right arrow   Have the ability and capacity to change and reconfigure their resource base quickly


Continuum of choices in organization design

Each dimension represents a spectrum of choices leaders must make, and any choice has broader organizational implications.

The graphic lists five dimensions of organization design. Under each dimension sits a spectrum of options labelled at each end with corresponding characteristics. The first dimension of organization design, stakeholder engagement, ranges from focused to complex. The second dimension, breadth of focus and scope, ranges from narrow to broad. Structure and governance ranges from locally embedded to centrally managed. Resource management ranges from stable to fluid. The fifth dimension, metrics, incentives and funding, ranges from role/project based to embedded organizationally.


Organization design options

 

There is no one-size-fits all approach to create an agile organization; there are a number of different ways to inject agility. Certain approaches will be more suitable for different areas of your organization, with ease of implementation reducing and the level of agility increasing as we move along the continuum. A few of the options that Mercer recommends include:


Agile overlay

People work primarily in line organization, but also contribute to cross-functional initiatives or projects (e.g. 80/20 split).


Self-organized teams

Self-organized (not self-directed) teams define their ways of working and are jointly accountable for employee-to-employee performance.


Ecosystems and platforms

Leveraging and sourcing capability across platforms or defined ecosystems (managing access rather than ownership of resources).


Flow-to-work staffing teams

Pool of individuals staffed to different activities full time, based on priority of needs – assignments can vary from hours to months.


End-to-end (cross-functional) agile teams

Coordination between product owners and chapter leads on priority and vision; outcomes through cross-functional teams (e.g. organized in squads and tribes).




Our experts 

Kai Anderson

Kai Anderson

Global Workforce and Organization Transformation Leader, Mercer

 

 

Ephraim Patrick

Ephraim Patrick

Pacific Workforce Transformation Leader, Mercer

 

 

Laura Manescu

Laura Manescu

Senior Associate, Workforce Transformation, Pacific 

 

 

 

 

Connect with our experts to find out more.