Leaders need to think differently," advises the Josh Bersin Company's The Definitive Guide to Organization Design: The Journey to Agile report. "It's time to take organization design seriously."

Companies are facing industry reinvention and a wide range of challenges, from engaging deskless employees to managing the digital transformation and addressing hybrid work. "Every one of these industry changes presents a new set of business models, operating models, and accompanying job design, work design, reward systems, and capability models," according to the report.

While organization design may be a puzzle for many companies, the ones that do it right earn large dividends in the forms of financial performance, happier clients, innovation, and higher employee engagement and retention.

The report details the Organization Design Framework with seven overarching elements:

• Business model design, such as talent strategy and culture and leadership

• Operating model design, which involves role definition, governance, and customer orientation

• Work design, including accountability and rewards and skills and experience focus

• Job design, involving job architecture, workforce planning, and flexible role design

• Organization structure design, such as agile models, flexible organization structure, and team-based structures

• Methodology and approach, including organization design roles and skills

• Implementation and adoption, which encompass change management and communication, and measurement and evaluation Effective organization design, the report notes, is based on the tenet that "how you operate matters more than how you organize." Collaboration among HR, IT, employees, and managers is necessary for well-designed work.

Another important principle involves separating work management and people management. "In traditional functional organizations, work management and people management are the same," the report states. A work manager focuses on deliverables and milestones and needs strong project management skills, while a people manager leads and coaches in functional areas and needs strong people leadership skills.

Employee experience and capabilities are also critical components of organization design. That involves understanding adjacent skills and what clusters of skills belong together. Skills are granular, according to the report, and don't always point to business success: "As part of the organization design process, companies need to define the business capabilities that drive success annually."

A final key point from the report is that accountability and rewards sustain long-term organizational success. Accountability helps provide clarity around responsibility for outcomes—and without rewards, accountability doesn't work.