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  Most organisations exhibit “unhealthy” traits and behaviours that prevent them from turning decisions into action, according to new research by management consultants Booz Allen Hamilton.
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More than 50,000 respondents completed an online evaluation to identify the “organisational DNA” that affects employee behaviour and corporate performance at www.orgdna.com.

Booz Allen’s research has found that healthy organisations are defined by their ability to turn important decisions into action. “Healthy organisations are good at execution – they get things done,” said Gary Neilson, Senior Vice President of Booz Allen, “by contrast, unhealthy organisations stumble and eventually stagnate – they can’t execute.”

Key findings of the study include:

Most organisations are unhealthy. Nearly two-thirds of respondents declare their own organisations are ineffectual. Only 31% of those who filled out the survey reported traits found in a healthy organisational profile. The survey found “passive-aggressive” to be the most common corporate type, at 27%. Such an organisation is congenial and conflict-free, yet resists meaningful change.

Every country in Europe has a higher rate of effective organisational profiles than the US. Only Japan, Canada and Australia ranked lower than the US. China is one of the most robust nations when it comes to organisational health with more than half (54%) of all surveys completed in China resulting in a healthy profile, versus 31% globally and 33% in the US. Japan had the lowest percentage of healthy profiles, at 19%.

Larger organisations are more unhealthy. Large organisations are more likely to exhibit dysfunctional traits and report an unhealthy profile than smaller firms. Smaller organisations, those with revenues up to $500 million, reported 41% healthy and 59% unhealthy profiles, compared to only 27% healthy and 73% unhealthy for those with revenues over $10 billion.

The utilities industry had the highest proportion of unhealthy organisations, with 76% unhealthy and 24% healthy profiles. Other “unhealthy” industries include energy, healthcare, capital goods and technology hardware. The “healthiest” industry is real estate (45% healthy vs. 55% unhealthy), followed by commercial services and supplies, food/beverage/tobacco, and retail.

Unhealthy organisations lack clear decision rights and don’t share information effectively. Overall, only 45% of respondents believe that people in their organisation have a clear idea of what they are accountable for. Amongst the “unhealthy” profiles, that number drops to 23%. In ineffective organisations, only 16% believe information flows freely within their organisations, and only one in five feel that they and their colleagues have the information they need to understand the bottom line impact of their day-to-day choices.

Healthy organisations are nearly twice as likely to be profitable as their unhealthy peers. Not surprisingly, 48% of respondents who generated healthy profiles report better-than-industry-average profitability versus 27% of those who describe their organisations as unhealthy.

Senior management sees a far rosier picture than the rest of the organisation. Sharp differences emerged between the attitudes of senior management and those of lower-level groups. Senior management was consistently more optimistic in their assessment of organisational health, suggesting that executives are out of touch with the rest of their organisation.

Statistical analysis:

  • Within Europe; Switzerland (64% healthy vs. 36% unhealthy) ranked highest, followed by Italy (55% vs. 45%), Finland (46% vs. 54%), France (45% vs. 55%), Sweden, (44% vs. 56%), Germany, (43% vs. 57%), the Netherlands, (38% vs. 62%), and the UK (36% vs. 64%). The U.S. had 33% healthy profiles, compared to 67% unhealthy profiles.
  • Overall, 54% of senior managers view their organisation as healthy, compared to 33% in middle management, 30% of business unit staff, and 29% of corporate staff and line management.
  • 78% of respondents in healthy organisations feel that everyone has a good idea of the decisions/ actions for which he or she is responsible, compared to 23% of respondents in dysfunctional organisations. In addition, 77% of respondents in unhealthy organisations said that decisions were often second guessed, compared with only 37% in healthy ones.
  • Information flows freely across boundaries more often in healthy organisations vs. unhealthy (61% vs. 16%); In healthy organisations, 78% said conflicting messages are rarely sent to the marketplace, compared to 39% of unhealthy organisations.
  • The organisational types most likely to be more profitable than their peers are Resilient (51%), Just-in-Time (47%) and Military Precision (40%). Passive Aggressive (28%), Fits-and-Starts (27%), Outgrown (26%) and Overmanaged (23%) are least likely to have above-average profitability.

    Booz Allen designed this evaluation tool to provide insight into the basic elements of organisational effectiveness. “The first step in resolving execution breakdowns is to understand how the inherent traits of an organisation influence – and even determine – how each individual thinks and acts on the job,” said Jake Melville, London based Vice President of Booz Allen. “That behaviour is what drives results.”

    More than 50,000 respondents completed an evaluation to identify the “organisational DNA” that affects employee behaviour and corporate performance. Of these, approximately 30,000 respondents identified their organisation’s structure by completing Booz Allen’s online evaluation, which is available at www.orgdna.com. An additional 20,000 participated in client-specific surveys set up for corporate, government, and not-for-profit organisations. The data includes responses from twenty-four industries, 100 countries, and more than ten internal departments and functions. Position or level within an organisation as well as revenue size is included in the data.

    Organisational Profiles

    Of the seven organisational types identified by Booz Allen, three are considered “healthy”:

  • Resilient: Flexible enough to adapt quickly to external market shifts, yet steadfastly focused on and aligned behind a coherent business strategy.

  • Just-in-Time: Inconsistently prepared for change, but can turn on a dime when necessary, without losing sight of the big picture.

  • Military Precision: Often driven by a small, involved senior team, it succeeds through superior execution and the efficiency of its operating model.

    Four organisational profiles were identified as “unhealthy”:

  • Passive-Aggressive: Congenial and seemingly conflict-free, this organisation builds consensus easily but struggles to implement agreed-upon plans.

  • Outgrown: Too large and complex to be effectively controlled by a small team, it has yet to “democratise” decision-making authority.

  • Overmanaged: Multiple layers of management create “analysis paralysis” in a frequently bureaucratic and highly political environment.

  • Fits-and-Starts: Contains scores of smart, motivated and talented people who rarely pull in the same direction at the same time.

    A complete copy of the report and more information on Organisational DNA can be found at www.orgdna.com.
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