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(originally published by Booz & Company)


Profiles in Organizational DNA Research and Remedies

Given the marked increase in Fits-and-Starts profiles in the $1 billion–$10 billion revenue range, the transition to a decentralized organizational model appears to go badly in many cases. Local managers may be given the authority to make decisions, but not the incentives or information to make them well.

Passive-Aggressive profiles also increase in this range, because incoherent and uncoordinated structures and processes create inertia, confusion, and ultimately a failure to execute.

Step 4: >$10 Billion. To survive and grow to this size, companies have clearly had to figure out how to execute and adapt, and Resilient profiles do make a comeback in this segment. Even so, plenty of very large organizations still struggle to execute effectively.

Overmanaged profiles increase and Fits-and-Starts profiles decrease in the over $10-billion range. This finding suggests that many of the largest companies may try to “fix” a badly decentralized organization by adding layers of management and bureaucracy. Passive-Aggressive is the most prevalent profile in companies of this size, indicating that, while people may agree on the strategic plan, few are really implementing it (see When Everyone Agrees, But Nothing Changes).

But nothing is pre-ordained. Companies are not fated to cycle through Military, then Fits-and-Starts, and then Passive-Aggressive phases as they grow. Those that are aware of these patterns can anticipate and break them. Unlike human DNA, organizational DNA is always mutable.

3. Altitude Determines Attitude: Senior Management Is Out of Touch
Survey results indicate sharp differences between senior management responses and those of lower-level groups, suggesting that executives may be out of touch with the rest of their organization. Specifically, they are consistently more optimistic in their assessment of organizational health, a finding that echoes numerous other organizational research studies.

Assessments completed by senior managers generated “healthy” results (i.e., Resilient, Just-in-Time, and Military profiles) more than any other group across the organization (see Exhibit 5). Indeed, the percentage of Resilient outcomes among senior management is more than double that of any other position. Consistent with this comparative optimism, senior management answers translated into unhealthy profiles—Overmanaged, Outgrown, Fits-and-Starts, and Passive-Aggressive—almost 30% less often than did other groups' answers.

These results may indicate a disconnect between senior executives’ perceptions of the organizational structures and processes they believe they have established…and the actual adoption and utilization of those structures and processes, an observation that is certainly consistent with our experience working with many clients.

In contrast, line and mid-level managers and business unit staff tend to be pessimistic in their assessment of organizational effectiveness. Their surveys result in unhealthy profiles almost 70% of the time. Specifically, line managers and business unit staff feel overmanaged (with 23% describing behavior consistent with the Overmanaged profile), whereas mid-level and line managers believe their organizations struggle to pull in the same direction at the same time, as evidenced by the high incidence of Fits-and-Starts assessments.

Corporate staff personnel have staked the middle ground. Their responses are similar to other nonexecutives, but slightly more optimistic. Perhaps they are far enough removed from daily operations that they are less aware of organizational problems. Most notably, they do not perceive the same Overmanaged behaviors that other nonexecutives report.

Digging deeper into individual question responses, it becomes clear that senior management’s positive bias is consistent across the board. On virtually every question that tracks to the Resilient profile, senior management reported the “desirable” response more often than any other segment. Most strikingly, senior managers are far more willing to agree with the statement that “important competitive information gets to headquarters quickly” than are others in the organization. Given that disconnect and the yawning gap between their perception of their organization’s effectiveness and that of every group that reports to them, one might question how well informed these executives really are. As business operations grow increasingly complex and the pressure for greater accountability mounts, top management would do well to reassess data flows within the company and institutionalize access to timely, relevant, and accurate information.

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