U.S firms caught in the headlights

Nov 09 2005 by Nic Paton Print This Article

More than over half of businesses are unable quickly to translate decisions into action, with employers in the U.S among the least nimble in the world, a new study has suggested.

Research by management consulting firm Booz Allen Hamilton has found that most organisations exhibit what it calls "unhealthy" traits, traits that prevent them from turning decisions into action.

Globally, the U.S. had a higher rate of unhealthy firms than every country in Europe. China, by contrast, ranked near the top of the study.

The study was based on more than a survey of 50,000 people in 100 countries and was intended to look at a company's organisational "DNA", with firms gauged on their structure, decision rights, motivators and information.

By a margin of nearly two to one, people polled declare their own organisations to be ineffectual.

Just 31 per cent reported traits and behaviours commonly found in a "healthy" organisational profile.

Most organisations (27 per cent), it found, were "passive-aggressive" in that they seemed congenial, even conflict-free, yet still resisted meaningful change.

"Healthy organisations are good at execution Ė they get things done," said Gary Neilson, Booz Allen senior vice president.

"By contrast, unhealthy organisations stumble and eventually stagnate Ė they can't execute," he added.

Every European country had a higher ratio of healthy to unhealthy profiles than the U.S.

Only Japan, Canada, and Australia ranked lower. A second arresting finding was that China was one of the most robust nations when it comes to organisational health.

More than half of all surveys completed in China resulted in a healthy profile, versus 31 per cent in the overall sample and 33 per cent in the U.S. Japan had the lowest percentage of healthy profiles, at 19 per cent.

Larger organisations were more unhealthy and more likely to exhibit dysfunctional traits and behaviours
Larger organisations were more unhealthy, the study also found, and were more likely to exhibit dysfunctional traits and behaviours.

Some industries were unhealthier than others. No industry emerged as particularly healthy, but the utilities industry had the highest proportion of dysfunctional organisational types.

Other "unhealthy" industries included energy, healthcare, capital goods, and technology hardware.

The "healthiest" industry was real estate (45 per cent healthy versus 55 per cent unhealthy), followed by commercial services and supplies, food/beverage/tobacco, and retail.

Unhealthy organisations lacked clear decision-making and did not share information effectively.

Overall, only 45 per cent of those polled believed people in their organisation had a clear idea of what they were accountable for.

Among "unhealthy" profiles, that number dropped to 23 per cent. In ineffective organisations, just 16 per cent believed that information flowed freely and only one in five felt they and their colleagues had the information they needed to understand the bottom line impact of their day-to-day choices.

Healthy organisations were nearly twice as likely to be profitable as their unhealthy peers.

Perhaps not surprisingly, 48 per cent of those that generated healthy profiles reported better-than-industry-average profitability against 27 per cent of those that described their organisations as unhealthy.

Worrying for managers, senior management often saw 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 executives were out of touch with the rest of their organization, said Booz Allen.

In the UK, healthy compared with unhealthy came out at 36 per cent to 64 per cent.

The company has drawn up seven organisational types it argues signify a "healthy" or "unhealthy" organisation.

Healthy or unhealthy?

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 "democratize" 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.