Business agility, the ability to rapidly and efficiently adapt to changes in the economic environment, is the only way organizations can survive amid the current volatility – but is your practice nimble enough to shift with the market?
In its annual Focus report, consultancy firm Hay Group says organizations have the opportunity to capitalize on the rapid shifts in the market and become known for expert responses.
“The ability to adapt to change stands as the single most important differentiator for organizations successfully dealing with the current volatile business environment. The task of becoming more agile is not easy; however, we are increasingly finding that the more agile organizations are better placed than their peers to make decisions, reinvent their business models and redeploy effort and resources to pre-empt and respond to the needs of the market,” says Hay Group Pacific MD Henriette Rothschild.
By studying the movements of agile organizations both globally and locally, Hay Group compiled eight differentiating characteristics that underpin ‘organizational agility’. Is your brokerage on top?
1. Market intelligence
There is overwhelming information available to businesses on their market, customer preferences, competitors, new trends and ideas. The truly agile organizations are those that have identified ways of turning random information and analytics from various sources into insights by the leadership team, and taken decisive action on these.
2. Enterprise-wide perspective
To be agile, an organization needs to be led by an aligned executive team. However, what lets down many is a lack of enterprise-wide perspective, sacrificed on the altar of structural silos and, at times, self-interest.
The common killer of agility is slow decision-making processes involving too many people, lack of clarity of outcomes, and decisions easily overridden or forgotten. Agile organizations channel decision-making to the right (usually lower) level, including key people who need to have input and those who feel accountable for the outcomes of the decision.
Leaders are often no longer able to create the level of clarity of end results that may once have been possible in more traditional, hierarchical environments. However, employees are more likely to be engaged and retained in organizations that provide clarity of purpose and direction. The most successful leaders manage this balance by providing confidence and clarity of the values and overall goals of the organization while openly acknowledging the ambiguity of charting the right course.
5. Performance focus
Locally we often struggle to hold people to account, feeling that in volatile times we may be ‘changing the goalposts’ if we reinforce performance expectations. As a result, many leaders shy away from setting and holding people to account for performance expectations. In contrast, leaders in agile organizations remain focused on organizational and individual performance goals and maintain these, even though the milestones may shift to respond to changes caused by market volatility and changes in customer expectations.
6. Flexible reward
Often cited as a reason organizations struggle to change, reward – in particular executive reward – is often seen as a millstone around the neck of boards and organisations. A well-designed incentive plan should be able to respond to the change in game plan. Flexible incentive schemes are a key underpinning of success in quickly adapting to market changes and will continue to give boards the flexibility required to meet increasing shareholder demands.
As leaders we deal with complex issues and have to be realistic that there are not always quick fixes for complex issues. However, the most effective executive teams are those who make strategic decisions on what not to do. Similarly, the most agile organizations recognize the critical role of middle managers in stripping out unnecessary complexity and activity from the organization.
Often an outcome of getting the other seven building blocks right is a resulting ‘culture of agility’. This is a challenge as organizations continue to struggle with outdated cultural elements relevant to a traditional ‘command and control’ environment. While not easily tackled in isolation, by addressing other building blocks a more agile and responsive organizational culture can emerge.