Great Resignation and has given rise to anew market currency: the skills currency.But assuming recent conditions persist,businesses — much to their detriment —inevitably will just end up repeating whatthey’ve done in thepast.A round of mass layoffs today doesnot guarantee a leaner, more agiletomorrow. It does, however, adverselyaffect the employer’s brand, which makesorganizations that undergo repeated costsaving programs less attractive to high-caliber, in-demand talent. Layoffs alsoreduce morale and increase voluntaryattrition due to a reduced sense of jobsecurity, particularly among criticaltalent whose value may be overlookedwith simple headcount- or payroll-basedreductions. Such moves also often neglectto consider the longer-term costs ofrehiring andretraining.The solution for organizational survival and competitiveness,therefore, lies in developing a fit-for-purpose infrastructure toattract the right talent, nurture it in an environment that providesrecognition, and enable its continuous development throughupskilling and reskilling for current and futureneeds. © MarshMcLennanIn 2023,Citigroup conducted areorganizationeffort that reduced itsmanagement layers from 13 to eight inwhat was dubbed its “biggest overhaulin decades.” The year also was markedbymass layoffs at Goldman Sachs, whichlet go of 3,200 employees accountingfor 6.5 percent of its headcount, as wellas Big Tech firms includingDropbox,Yahoo, and Zoom. These headline-making organizational changes shareone common trait: Companies feel theneed to make dramatic changes to theiroperating model to stay competitive in anincreasingly changingmarket.Part of the impetus for these moves isthe companies’ desire for the skills theyneed to succeed. Despite workforcereductions and reorganizations, the warfor talent possessing certain types ofskills has been increasing since the 2022 © MarshMcLennanA FRAMEWORK AND APPROACH FORCREATING A MORE COMPETITIVEFUTUREORGANIZATIONEffective organizational transformation that embeds strategic workforce management intocore operations requires a holistic methodology that captures value across the diverse pillarsof structure, roles, activity, and skills. Exhibit1 represents the relationship between thesepillars. Structure is the backbone of effective organizational design, providing the basisfor role definitions and strategic career paths. Within these role definitions, organizationsrequire a definitive understanding of “Activity” (that is, what people areactuallydoing) and“Skills” (or, the abilities people need to meet the expectations for theirroles).Exhibit 1:Organizational optimizationframeworkStructureData-basedorganizationalstructuring based onrevenue, cost, location,and workforce sizeanalysisRolesFuture-directedrole-based evaluationof careers andcompensationstructures that enableagility through talentdeploymentembeddednessActivityAI-enabled jobdeconstruction intotasks optimizing workarchitecture designSkillsRole-based skillmapping and individualassessment to identifycurrent and future skillsneedsSource:OliverWyman © MarshMcLennanFirstlensLOOK AT THE STRUCTUREOF YOUR HEADCOUNTAND FORECAST THEWORKFORCENEEDSOrganizations undergoing a restructuringmay often reflect on the present-daycosts and consequently deliver cost-outprograms that serve only in reducingthem. Restructuring conducted within theframe of a cost-out program examinesworkforce size from the inherentlyflawed lens of headcount cost rather thanheadcount value-add. Such an approachin the medium-to-long term results in theunderlying costs of tacit knowledge loss,damage to the employer brand, and directrecruitment and trainingcosts. An analysis of organizational structuremust take the element of cost intoaccount through a broader lens, exploringan organization’s global locationdistribution strategy, seniority mix,and peer-benchmarked organizationalshape evaluation. However, cost is onlyone part of a larger organizationalhealth analysis that should focus onefficiency and sustainability, examininginternal governance, headcount sizeand mix, reporting line imbalances,and redundancies in both layers andactivities. To complement this analysis,organizations can use workforceanalytics that help identify gaps inskills and capabilities, as well as areaswhere the organization may be over- orunderstaffed. This involves creatingmodels to forecast future workforceneeds, which can help organizationsdevelop strategies to address thegaps. © MarshMcLennanSecondlensDESIGN ROLES TO MAKETHE WORKFORCE MOREAGILE ANDADAPTABLEAt the core of individual performanceis effective job design that enablestalent deployment to secure longer-term organizational agility. On theindividual level, the absence of thisfactor disincentivizes performance andthreatens the loss of high-potentialtalent. In the broader organizationalscheme, effective job design is criticalto preventing redundancies, inefficiency,and lower productivity while alsopromoting a vision of how talentcan be leveraged in diffe