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The Dynamic Organization: 6 keys for success in the post-industrial economy

Human Resource Executive
Josh Bersin and Kathi Enderes
Josh Bersin is an analyst, author, educator and thought leader focusing on the global talent market and the challenges and trends impacting business workforces around the world. Kathi Enderes, Ph.D., is a senior vice president and global industry analyst at The Josh Bersin Company, supporting clients and the market with evidence-based insights on all areas of HR, learning, talent and HR technology. She is a frequent keynote speaker, author and thought leader.

In our ever-evolving world—with the rapid evolution of AI, acute talent and skills shortages, and widespread industry convergence—businesses are grappling with a unique set of challenges. Companies today need to transform and reinvent themselves faster than ever before, not just occasionally, but as an ongoing, continuous process.

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While the concept of transformation is not new, what’s different today is the shift from “episodic transformation” to “continuous transformation.” No longer can organizations rely on periodic change programs. Instead, they must cultivate the ability to be “change adaptable” at all times.

Pioneers of always-on transformation: The Pacesetters

Through our Global Workforce Intelligence Project, we uncovered fascinating insights on the top 10% of companies within each industry that have helped us understand what sets them apart.

Josh Bersin
Josh Bersin

These top companies—we call them “Pacesetters“—not only have advanced technical and professional skills but operate in a completely different way than others. They have embraced an agile operating model, prioritizing transformation roles over execution roles. These companies foster a culture of collaboration and change, with HR departments that are high-performing across many disciplines. Most importantly, they operate in a systemic, interconnected manner, rather than isolated silos. In essence, they aren’t just “transformation-ready”; they are constantly transforming, driven by insights from the market, exponentially increasing their lead over competitors.

Operationalizing the Pacesetter secrets

Kathi Enderes, The Josh Bersin Company
Kathi Enderes

About a year ago, we set out to understand on a deeper level how these companies are doing this. Our initial hypothesis was that talent mobility, career progression and employee development played central roles in organizational agility. However, we found something even more groundbreaking: The most successful companies simultaneously focus on many strategies together. They not only develop, reassign and nurture their employees with continuous investment but also build transformation-centric reward systems, leadership frameworks, work practices, team frameworks and cultures. This is what we call “The Dynamic Organization.”

Defining the Dynamic Organization

A Dynamic Organization is one that anticipates environmental changes and continually transforms at a rapid pace, driving exponential growth in business, people and innovation outcomes. They are essentially “architected for change.” In today’s post-industrial economy, these companies set the standard for all others.

6 keys to becoming Dynamic

Dynamic Organizations rethink every aspect of their operations, from business models to organizational structures, talent management to reward systems, and from culture to leadership support. Here are six key areas to consider on the journey to becoming dynamic:

1. Develop well-rounded leaders and managers to lead into an uncertain future

When companies rotate managers and leaders around the company, develop leaders’ skills in more than one area and support managers to serve as coaches and mentors to their teams, they are much more transformation-ready and “full-stack”—understanding the full scope of the business, not just their domain. For instance, going well beyond old-school manager rotational programs, Syngenta aimed at rotating leaders around its four different business units, helping create collaboration and teamwork, using a talent marketplace to match people with opportunities, mentoring and jobs.

2. Redesign pay and rewards systems for teamwork and mobility

When organizations reward teamwork, not just execution, and reward managers for encouraging people to work on new roles and projects, they move toward becoming a Dynamic Organization. This also counteracts the dreaded “talent hoarding”—one of the biggest cultural barriers to talent mobility. SAP set out on a journey to be the model for fair pay for its 105,000 employees around the world, relentlessly mitigating biases in all talent processes, considering pay equity first when allocating compensation budgets and fostering teamwork across siloes for more innovation and inclusion.

3. Foster a skills-based meritocracy among roles, projects, jobs, promotion and pay

In a skills-based meritocracy, good ideas win, no matter where they come from. To develop the right skills, Dynamic Organizations create skilling and career opportunities to continuously upskill, reskill and support people to reinvent their careers. They also empower managers to foster team members’ skills and careers, thereby creating the support network for the skills-based meritocracy that doesn’t rely on hierarchy or favoritism to match people with roles, projects, jobs, promotions and pay—based on the skills of the people. Realizing the legacy focus on static jobs no longer worked in a rapidly changing world, Novartis set out on a journey to become “skills-based at the core,” answering key business questions with skills insights.

4. Operate as a network of teams, not a hierarchy of managers

As companies select people for projects based on skills, not on connections, the traditional hierarchy becomes less important. Many project teams exist, and people can work on multiple projects at the same time. Team leaders are not necessarily people managers but people who have skills in a certain area—and the company supports them with support and development for team leaders. Consulting companies operate like this as a matter of practice, with flat structures and no hierarchy, with consultants working on agile projects.

5. Create a culture of growth and inclusion in all areas of management and operations

In order to actively promote a culture of internal mobility, companies need more than internal hiring goals and to expand the focus to projects, promotions and internal gigs. In order for this to happen, companies need to work hard to mitigate bias in all talent processes—recruiting, growth and development, career, promotions, performance management, succession planning, pay and rewards, and recognition. For instance, Standard Chartered saw a significant increase in diverse teams when people started working on projects and opportunities around the company based on skills, not just existing relationships.

6. Leverage next-generation technology to transform your company

In the post-industrial era, the focus shifts from experiences and education to skills. However, skills are evolving rapidly, and legacy HR technologies are built for stability and predictability, not change. Next-generation HR technology—including people analytics, talent intelligence, and talent marketplaces—complements traditional HCM systems and enables faster and more accurate matching of skills supply and demand. These AI-based systems are much faster and better at matching skills supply and demand than any human. Schneider Electric cut the time to match people with opportunities from two weeks to two minutes, using a talent marketplace. Beyond efficiencies, the talent marketplace also resulted in an incredible increase in employee retention, drastic improvement in productivity and innovation, and much more cross-functional collaboration and teamwork.

Hear Josh Bersin discuss the impact of AI on the future of HR technology live at the upcoming HR Technology Conference, Oct. 10-13 in Las Vegas. Click here to register.

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For companies aspiring to become Dynamic Organizations, there’s much work to be done. The majority of companies are still deeply rooted in the Industrial Age and have a long way to go. As the business landscape continues to evolve, becoming a Dynamic Organization is a business necessity for growth and productivity.

For more, tune in to our upcoming webinar, The Dynamic Organization (11 a.m. PST Sept. 21), where we’ll unpack more of these insights (and stay tuned for our full report coming out later this fall). For members of  The Josh Bersin Company,  we offer industry studies, collections, reports, tools, case studies and advisory sessions including our Definitive Guide to Organization Design. Join the Josh Bersin Academy for our new SuperClass on Organization Design and other courses to help you transform your company for the future.