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11/1/2005
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Survey: Most Companies Are Dysfunctional

Healthy companies turn decisions into action--something that many U.S. firms are unable to do, according to a survey by management consultancy Booz Allen.

SAN JOSE, Calif. — Most organizations are dysfunctional and exhibit "unhealthy" traits that prevent them from turning decisions into action, according to new research by management consulting firm Booz Allen Hamilton on Tuesday (Nov. 1).

The U.S. has a higher rate of ineffective organizational profiles than every country in Europe. By contrast, China ranked near the top of the study in organizational health, according to Booz Allen (New York).

The firm based its results on more than 50,000 responses to both an online evaluation tool and individual company surveys. Booz Allen said its research found that healthy organizations are defined by their ability to turn important decisions into action.

"Healthy organizations are good at execution — they get things done," said Gary Neilson, senior vice president of Booz Allen. "By contrast, unhealthy organizations stumble and eventually stagnate — they can't execute."

By a margin of nearly 2 to 1, respondents declare their own organizations are ineffectual. Only 31 percent of those who filled out the survey reported traits and behaviors found in a healthy organizational profile, according to the results.

More than half (54 percent) of all surveys completed in China resulted in a healthy profile, versus 31 percent in the overall sample and 33 percent in the U.S. Japan had the lowest percentage of healthy profiles, at 19 percent.

Large organizations are more likely to exhibit dysfunctional traits and behaviors and report more unhealthy profiles than smaller firms. Smaller organizations, those with revenues up to $500 million, reported 41 percent healthy and 59 percent unhealthy profiles, compared to only 27 percent healthy and 73 percent unhealthy for those with revenues over $10 billion, according to the firm.

No industry emerged in particularly good shape. Utilities reported the highest proportion of dysfunctional organizational types, with 76 percent unhealthy and 24 percent healthy profiles. Other "unhealthy" industries include energy, healthcare, capital goods and technology hardware. The "healthiest" industry is real estate (45 percent healthy), followed by commercial services and supplies, food/beverage/tobacco and retail.

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