Building the Dynamic Organization: Critical for the Post-Industrial Era

by Kathi Enderes , SVP Research and Global Industry Analyst

Change is accelerating faster than ever. Global issues like climate change, the rapid growth of AI, and the power and agency of workers have created a new set of business challenges. In our conversations, C-level leaders cite “transformation” as their number-one priority, because companies, industries, products, and the workforce need to transform faster than they can keep up.

Transformation is not new, but today, it’s a paradigm shift: from “episodic transformation” toward “continuous transformation.” In other words, companies can no longer look at “change programs,” they must think about becoming “change agile.”? This is what motivated us to study this issue.

Our original hypothesis was that talent mobility, career growth, and employee development were core to organizational agility. When companies develop their people, move them around, and give them new careers, the company itself can adapt.

But our research found something even bigger: Fast-moving companies do many things simultaneously. Not only do they develop, move, and support employees with continuous investment and opportunities, they build transformation-oriented work practices, reward systems, leadership frameworks, and culture.

Operationalizing the Pacesetter Secrets

Through our Global Workforce Intelligence (GWI) Project, we study industry-specific trends in skills, jobs, career pathways, and talent innovations, and we looked at the top 10% of companies in each industry: the pacesetters . In a nutshell, they are not just “transformation-ready” but rather constantly transforming based on insights from the market, and therefore always increasing their lead against others. This doesn’t just mean they operate faster or are more efficient; it means they deliver market-leading products and services, grow faster, satisfy their customers more, and innovate better than any other company.

We extended our pacesetter research and dug deeper by studying the topics of talent, skilling, careers, and internal mobility, in a broad-based, year-long, quantitative and qualitative study of 97 organizational, business, and management practices of 772 companies, and dozens of interviews with C-suite executives from leading companies.

The Dynamic Organization: Architected for Change

While most companies are stuck in the industrial age, a small number of companies not only execute HR practices like career management, internal mobility, leadership support, internal hiring, and learning and development better, but they also move faster, innovate better, and generally outpace the competition. They rethink their organization and all its practices, leaving behind industrial models and instead they constantly transform. It’s a new way of doing business, and we call it the dynamic organization.

Dynamic organizations proactively anticipate changes in the business environment and continuously transform at speed and scale to drive exponential business, people, and innovation outcomes. People and their skills are strategically moved to new opportunities, improving productivity and competitiveness in tandem.?

These companies are essentially architected for change and have implemented the post-industrial talent model: Shifting from jobs and roles to skills and work.

The Big Shift: The Post-Industrial Talent Model

At the center of this, a new idea is taking hold: “jobs” as currently defined are getting in the way. Rather than design a company around jobs and functional areas, dynamic organizations organize around people and skills, optimizing output through projects, initiatives, and services.

In the Industrial Age, the job description, level, title, and competencies were fixed, designed by a specialist, and expected to outlast the worker. This worked well when workers were abundant.

Today, in a massive and ongoing labor shortage, companies need to organize around the person, and support teamwork, collaboration, and project based work.

Healthcare companies are good examples of organizations advancing through this shift. Dealing with a massive shortage of nurses and clinical professionals, these organizations are automating administrative work, using AI to schedule shifts and direct nursing workflows, enabling lower-skilled workers to unburden nurses, and giving patients more personal advice through software. This enables the nurse or clinician to work “top of license” – doing work they are uniquely qualified to do. This accounts for 40% to 50% of productivity growth, while only 10% to 15% comes from hiring.

A Framework for Dynamic Organizations

Our Dynamic Organization Framework comprises eight major elements and 24 dimensions.

We explain each of these elements and dimensions in our?Definitive Guide to Becoming a Dynamic Organization .?The key insight: it’s a new way of approaching everything, from talent acquisition to mobility, skilling and careers to work design, and pay and rewards to leadership, building adaptability into the fabric of the organization.

How are companies doing this? And where do you fit in?

The Dynamic Organization Maturity Model

Based on in-depth statistical analysis and many hours of discussions with HR and business leaders, we developed our four-level Dynamic Organization Maturity Model.

Companies fall into four distinct levels of rewards maturity, with level 1 the least impactful, and level 4 the most. These levels are found across industries, geographies, and organizational sizes (although there are some distinctions, with industries that are more people-centric performing better than others).

Only 7% of surveyed companies are at the highest maturity level—the dynamic organization. They balance productivity and innovation, and are highly dynamic in its business model, operating system, and work structures. As a truly skills-based organizations, mobility is approached as a meritocracy, not based on favoritism or “who knows whom.” Work is agile and cross-functional, and good ideas win no matter where they come from. Culturally, there is a strong sense of psychological safety, learning from mistakes, experimenting, and reinventing constantly.

Talent mobility and cross-functional careers are no longer novel ideas or defensive moves because of labor shortages but have rather become a cultural norm and expectation, and these companies use talent marketplaces holistically to support employee mobility and growth, build teams for evolving business needs, and leverage the data that results from the platforms for next-generation workforce and work planning.

The Impact of Dynamic Organizations

So, what practices matter most? We identified fifteen practices?that have an outsized impact on business, people, and innovation outcomes. We call them “essentials” because without them very little else will matter.

What really matters:

• Building well-rounded leaders by moving them around and providing ample development opportunities for leaders at all levels
• Rewarding teamwork and collaboration, not just individual performance and execution
• Creating a skills-based meritocracy where the best ideas win, and people are supported to develop and grow through deep-skilling, upskilling, and reskilling
• Developing a network of teams instead of a static hierarchy of managers, where people work on many projects simultaneously and rapidly align around problems
• Fostering a culture of growth and inclusion, supporting equitable growth for everybody in the company and creating an environment of psychological safety

Companies that use these strategies have much better business, people, and innovation outcomes.

Becoming dynamic has a massive impact on all outcomes: much higher profitability, greater customer satisfaction, being a step ahead on winning the war for talent, greater productivity, massively increased diversity, and outsized change adaptability and innovation. These multipliers are orders of magnitude higher than focusing on any single practice, like employee experience, L&D, organization design, talent acquisition, or diversity, equity, and inclusion. For example, the impact on engagement and retention is six times higher than just focusing on employee experience in isolation.

Six Myths about Talent, Mobility, and Work

As we evaluated all the practices, programs, and approaches of HR, talent, and leadership, we came across various myths and revealed the truth.

Myth 1: Effective innovation has to be retained “at the edge”, in a special R&D group, and then carefully brought into the core of the organization.

Truth:?The most effective innovation today comes from the frontline and is core to how the organization operates.

Myth 2: Company growth is dependent on headcount growth and recruiting.

Truth:?Dynamic organizations grow through internal mobility, job redesign, and training – not just recruiting.

Myth 3: To become skills-based, it’s most important to create a skills taxonomy first.

Truth:?While skills taxonomies can be helpful, what’s more important is to use skills insights to solve business problems – talent gaps, underperforming areas, or business transformation.

Myth 4: To increase productivity, people have to do more with less.

Truth:?The war for productivity will not be won through punitive measures or people working “harder”. Instead, tap into the pent-up capacity and aspirations of employees by enabling them to work on passion projects.

Myth 5: Hierarchical management is key to accomplishing business outcomes.

Truth:?Today’s work happens in cross-functional, agile teams – with the accountability of work manager and people manager clearly defined.

Myth 6: Legacy technologies can spur companies to become dynamic.

Truth: A new talent model – skills and work rather than jobs and roles – requires a different set of technologies, too. Systemic analytics, talent marketplaces, and talent intelligence are key to the dynamic organization.

A New Approach to Talent, People, and Work

In today’s post-industrial world of talent scarcity, constant transformation of industries, and disruptive technologies, legacy, static organizational models no longer work.

Companies around the globe will need to reinvent their organization, operating models, work approaches, and business plans. At the heart of this is transforming the way we approach talent and skills.

Becoming a Dynamic Organization

The dynamic organization is the only viable business approach in the post-industrial era, simultaneously solving for productivity and engagement, financial performance and inclusion, and customer delight and innovation. The journey to the dynamic organization is a challenging one, but one that’s required for business survival and success, now and into the future.

Where to Go Next

• Review the?infographic, executive summary, and video to learn more about the journey to becoming a dynamic organization
• The full Definitive Guide to Becoming a Dynamic Organization is reserved for?Josh Bersin Company Members . You'll find a full description of the Dynamic Organization Framework, the fifteen essential practices, a comprehensive Dynamic Organization Maturity Model, action steps to becoming a Dynamic Organization, and examples from companies like Schneider Electric, HSBC, Seagate, MetLife, Unilever, Novartis, Syngenta, and more.
• Participate in the?Global HR Capability Project ?to assess your talent and organization design capabilities and learn how to improve.
• Contact us ?to become a?JBC Member ?for access to action-oriented, practical research, assessments, and diagnostics, learning programs, community, and much more.
• Join 40,000+ HR professionals in the?Josh Bersin Academy ?to learn the principles of organization design in our Organization Design Superclass, advance your thinking around Talent and Career Mobility in our certificate course, or participate in 25 other courses on topics of HR, leadership, talent, and L&D.

Research in collaboration with Gloat .

https://www.prnewswire.com/news-releases/new-josh-bersin-company-research-finds-that-todays-high-performing-companies-adopt-a-new-dynamic-organization-operating-model-301958693.html