Romanian companies score low on organizational agility, which limits their capacity to react to crises and their long-term performance

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Nearly all Romanian companies have made organizational changes to address COVID-19-related hardship, according to McKinsey’s “Organizational Agility Index – Romanian perspective” study. Among the changes that 97 percent of companies made, remote work is considered the most helpful by the majority of employees (44%) and is also expected to remain in place as a standard practice in the medium term. While operating models vary across industries, 56 percent of the organizations have adopted either hybrid or remote working models.

The adjustment to the crisis has brought new challenges concentrated along the elements of motivation and collaboration, with almost six of ten respondents in Romania considering these areas to be the biggest internal pain points during the lockdown. The other 21% signaled that companies failed to provide the infrastructure and support needed for work.

The low agility level of Romanian organizations is worrying as a similar McKinsey international study, in collaboration with Harvard Business School, found that, in the face of COVID-19, agile organizations were twice as fast, more adaptable, and managed employee morale better as opposed to the non-agile ones. The research also highlights that many structural elements of agile organizations, such as agile ceremonies and cross-functional teams, helped considerably during the initial stage of remote working; at the same time, behavioral elements, such as empowerment and servant leadership, and outcomes-based performance tracking, goals and resource reprioritization, have gained significant importance for employees as the “next normal” has settled in.

„ When assessing the agility of Romanian companies through the lenses of our Organizational Agility Index, the overall score is relatively low, 4.3 out of 10, with multiple gaps identified over several dimensions, but concentrated around the behavioral elements such as team autonomy, empowered decision making, servant leadership, coaching, and feedback. All in all, a shared vision and a customer centricity approach show medium to high agility across the board, but the people and the structural elements behind them score significantly lower levels of agility,” explained Alexandru Filip, Managing Partner at McKinsey & Company’s Bucharest Office and Leader of the firm’s Digital and Analytics Practice in Central Europe.

Looking across industries, there is discrepancy in agility levels, with IT and financial services being the front-runners, with overall scores being up to 9 percentage points higher than other industries.

Additionally, managers in Romania across all the industries tend to overestimate their company’s level of organizational agility by as much as 25 percent, meaning that some gaps are less evident to them as opposed to non-managerial positions. The biggest gaps identified are in areas of “servant leadership”, “test and learn” and “agile dependency management”. Similarly, the elements of “team autonomy” and “decision making” are seen as less agile by female respondents while “co-location & dedication” is seen as the main agility pain point by older employers (ages 40 and up).

„To shift toward an agile operating model, organizations need to reflect on what they have learned during the crisis and be deliberate about which practices to keep, such as the observed benefits of faster decision making and clarity of purpose. This also requires a comprehensive cultural transformation, which is more difficult than ever, as employees are working remotely. Executives should seek long-term cultural changes, starting with basic tactics, and focusing on substantial behavioral changes,” said Alexandru Filip of McKinsey.

The “Organizational Agility Index – Romanian perspective” was conducted locally in the first half of October 2020 and included over 400 companies with more than 250 employees, from a diverse mix of industries. The Organizational Agility Index analyzes the dimensions of strategy, structure, people, processes and technology.

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