Organizational Agility During Crisis: Do Employees’ Perceptions of Public Sector Organizations’ Strategic Agility Foster Employees’ Work Engagement and Well-being?

Abstract

The purpose of this paper is to examine the mediating role of a public sector organization’s perceived strategic agility in relation to employee outcomes in times of crisis. While the need for strategic organizational agility is acknowledged as boosting organizational performance, its value and application for employees are unknown, especially during times of crisis and in the public sector context. We use survey-based quantitative methodology to capture employees’ perceptions (n = 5469) of strategic agility in public sector organizations during the COVID-19 crisis and identify the impact on work engagement and well-being. Data analysed using a structural equation modelling approach. Our results suggest that an organization’s perceived strategic agility has a positive significant effect on employee work engagement and thus on well-being. Organizational learning, leadership, and aim clarity are factors that positively contribute to public sector organizations’ strategic agility. By examining the moderating role of perceived agility, we add to job demands-resources (JD-R) theory by showing that perceived strategic agility serves as an organizational resource that is needed for employees in times of crisis. We conclude that if employees are supported by leaders who sense change, make timely decisions, and act in an agile way, they will experience higher work engagement during a crisis, thus positively contributing to their well-being and organizational performance. This paper contributes to the understanding of organizational agility and discusses the theoretical and practical implications of the results and avenues for future research.

Introduction

The world is facing considerable changes that force leaders to adopt a more resilient and agile way of working to generate positive organizational performance. The COVID shock has impacted European economies and seriously affected some vulnerable firms and sectors (Coard et al., 2022; Caferra et al., 2022; Brammer & Branicki, 2020). Continuous change is increasingly the new normal rather than the exception in contemporary organizations (Singh et al., 2013), and the current volatile environment and the global health crisis call for a new policy approach. Researchers argue that in the face of life-threatening events such as natural disasters, terrorist attacks, and pandemic disease, existing theories of organizational adaptation are inadequate (Mithani, 2020). COVID-19 is unlikely to be the last global health crisis; however, organizations’ preparedness for this high-probability event has appeared to be low (Phan & Wood, 2020). The ability to respond effectively to changes is a necessity that characterizes successful organizations, and agility thus becomes imperative for survival rather than a choice (Harraf et al., 2015; Chandler, 2014). This situation leads to growing interest in organizational agility for practitioners and researchers (Singh et al., 2013).

Organizational agility, a combination of flexibility, nimbleness, and speed, is increasingly regarded as a source of competitive advantage (Singh et al., 2013); however, it is rarely associated with public sector organizations (Dowdy et al., 2017). The body of research concerning strategic organizational agility is growing, but its value and application in the public sector are underresearched, especially during times of crisis. While the importance of organizational agility is commonly recognized (Arteta & Giachetti, 2004), there are limited studies that interpret agility in the context of the public sector. However, as indicated by McKinsey & Company, crises require a coordinated response by both the public and private sectors (Brende & Sternfels, 2022). Governments in industrialized societies are facing a historical adjustment challenge, and continuous change puts pressure on public sector organizations, which are traditionally bureaucracies. In public sector bureaucracies, traditional strategic planning has performed well in a more stable environment (Hamalainen et al., 2012), but they are currently facing increasing problems in a context that calls for rapid adaptation to environmental changes.

The OECD Public Governance Committee Report indicated that governments should find new systemic solutions for increasing complexity and societal challenges and stressed the need to build more resilient and adaptive government and public administration institutions (OECD, 2017). The current environment has created a major need and opportunity for systemic and structural change for public sector organizations. However, they also face constraints specific to the public sector, such as democratic decision-making, the need for public support, lack of market pressure, and employment constraints (e.g., lower salary). Moreover, the outcomes of public sector organizations are difficult to measure since the link between inputs and outcomes is not evident (Mulgan, 2009). This poses some questions: is organizational agility needed in public sector organizations, and what might be the gains for organizations themselves? Researchers indicate that the agile approach could help public sector leaders and decision-makers cope with increasing complexity and volatility (Doz et al., 2018). Similarly, resilience is seen as the ability to deal with adversity, withstand shocks, and continuously adapt and accelerate as disruptions and crises arise over time (Brende & Sternfels, 2022). Nevertheless, empirical evidence of these claims is scarce.

Researchers widely advocate organizational agility as a fundamental characteristic for business survival and competitiveness (Nejatian et al., 2018), as the key to organizational success and survival (Nafei, 2016) in turbulent and unpredictable environments (Chandler, 2014), and as a source of competitive advantage (Singh et al., 2013; Nsour, 2021). Most researchers focus on the value of agility for organizational-level outcomes, but is it necessary for employees inside the organization? Can organizational agility as perceived by employees serve as a resource to counterbalance job demands in times of crisis?

It is argued that human resources have a strategic role in the creation of organizational agility (Saha et al., 2017). We argue that in times of health crisis when economic implications become less important in the face of life-threatening events, employees want to know that their organizations will be able to succeed and sustain. Indeed, as stated by Gallup (2018, p.3), organizational agility is related to employees’ optimism regarding their organization’s overall performance and ability to succeed. Researchers argue that currently, the importance of the physical and emotional well-being of organizations and their participants has become of primary importance (Mithani, 2020). Prior to the COVID-19 crisis, researchers found that organizational agility positively affected the work engagement of employees (Nafei, 2016, 2017); however, empirical evidence is scarce.

Despite the growing body of research on organizational agility and resilience, there is still a limited amount of research in public sector organizations and a lack of research about the value of organizational agility for employees of the organization, especially during a crisis. We address this research gap by arguing that in times of crisis when organizations have to restructure and even downsize their workforce, perceived organizational agility is valued by employees and could provide a kind of safety net, as employees will feel that their organization is resilient enough and will be able to survive. Specifically, we argue that during a crisis, perceived organizational agility will positively impact employee work engagement and work well-being.

The purpose of this paper is to examine the mediating role of perceived organizational strategic agility in relation to employee outcomes in times of crisis in public sector organizations.

In formulating the theoretical framework, we apply job demands-resources theory (JD-R) (Bakker & Demerouti, 2007), which argues that occupational well-being derives from characteristics of the work context, which can be classified into two categories: job demands and resources. We suggest that while job resources are needed for organizations to be agile, perceived organizational agility also serves as a psychological safety net, providing specific job resources in times of crisis when the stability of jobs might be threatened and thus having a positive impact on employee-level outcomes such as work engagement and well-being. We empirically analyse the impact of perceived organizational agility on work engagement and well-being using data collected in public sector organizations (n = 5469) at the end of 2021 during the third wave of COVID-19 after a strict lockdown.

This study offers two main contributions to the literature. First, integrating our findings in the JD-R literature, we show that perceived strategic agility serves as an organizational resource that is very much needed for employees in times of crisis. Moreover, we show that if organizations are perceived as agile, employees will demonstrate higher work engagement, leading to higher well-being. Second, we provide empirical evidence of factors that contribute to organizational agility, namely, organizational learning, top management, and clear aims.

The rest of the article is organized as follows. Section 2 presents the historical development and definition of the term organizational agility, its antecedents and consequences, and the hypotheses. In Sect. 3, we describe the design of the survey and research context. Section 4 presents the results obtained using the partial least squares structural equation modelling (PLS-SEM) approach. The discussion and conclusions are given in Sect. 5.

Theoretical Foundation and Hypotheses

In the present study, we use JD-R theory to examine the role of perceived organizational agility as a kind of job resource that contributes to explaining variance in employee outcomes (work engagement and well-being). JD-R theory argues that occupational well-being and employee outcomes (e.g., work engagement) derive from characteristics of the work context, which can be classified into two categories: job demands and resources (Bakker & Demerouti, 2018; Schaufeli & Bakker, 2004; Demerouti et al., 2001) defined job demands as those physical, social, or organizational aspects of the job that require sustained physiological and psychological costs (e.g., they may lead to exhaustion). They are a kind of stressor that, as an external factor, harms workers. Job resources refer to those physical, psychological, social, or organizational aspects of the job that may help in achieving work goals, reduce the impact of job demands, and stimulate personal growth and development (Demerouti, et al., 2001).

We argue that in times of crisis and life-threatening events (e.g., COVID-19) when psychological and social job demands increase and this increase does not depend on the organization, perceived organizational agility may serve as a counterbalancing job resource. Indeed, according to Demerouti et al. (2001), it is very important to maintain a balance between job demands and job resources. If employees perceive their organization as strategically agile, they will feel safer and demonstrate higher work engagement and well-being.

Organizational Agility

Before discussing the impact of perceived organizational agility on employee outcomes, it is necessary to clarify what organizational strategic agility is. Agility is a movement that took off in 2001 as a set of values and principles articulated by the Agile Manifesto. In due course, the Manifesto spawned various management methodologies including Scrum, DevOps, Lean, and Kanban. Over time, it evolved into a movement of people with a specific mindset (Denning, 2018), and the term ‘agility’ has become a commonly cited business imperative and has spread to various sectors (Gallup, 2018). The agile mindset focuses on delivering continuous value to customers as the primary goal of work; it embraces iterative, incremental approaches to working in small teams and aims for enterprise-wide agility by operating as a network (Denning, 2018).

The use of the term ‘agility’ in organizational research emerged in the late twentieth century and was assigned to a combination of flexibility, nimbleness, and speed; it was increasingly regarded as a source of competitive advantage in competitive and fast-changing environments (Singh et al., 2013). Because the term ‘organizational agility’ is still developing, different authors offer essentially similar definitions that differ in wording. For example. agility is explained as a comprehensive response to the business challenges of achieving profitability in dynamically changing global markets characterized by high quality, performance, and personalization of the goods and services offered (Stachowiak et al., 2018). Alhadid (2016) formulates the term organizational agility according to the field of application or dimension. He suggests that organizational agility relates to a quick response to change and uncertainty in an environment, where organizations must act to overcome obstacles or gain and win opportunities. For example, innovation agility is a more effective way for an organization to provide solutions to customers than just selling products by expanding its horizons and employing creative ways throughout the newly designated processes. Another definition of organizational agility is related to a core competency and competitive advantage and is a differentiator that requires strategic thinking, an innovative mindset, exploitation of change, and an unrelenting need to be adaptable and proactive (Harraf et al., 2015). Similarly, organizational agility is defined as the ability of a firm to sense and respond to the environment by intentionally changing (1) the magnitude of variety and/or (2) the rate at which it generates this variety relative to its competitors (Singh et al., 2013, p. 10).

The term agility in organizational discourse is closely related to terms such as strategic flexibility (Singh et al., 2013), speed and adaptability (Gallup, 2018), resilience (Holbeche, 2015), meta-capabilities (Doz & Kosonen, 2010), and dynamic capabilities (Teece et al., 2016). Researchers and practitioners often use the abovementioned terms interchangeably, thus adding ambiguity and confusion (Gallup, 2018). Nevertheless, some authors differentiate between the terms. For example, Holbeche (2015, p.23) defines organizational agility as a capacity to move quickly, flexibly, and decisively and states that it needs to be complemented by resilience, which she defines as the ‘ability to anticipate, initiate and take advantage of opportunities while avoiding negative consequences of change’. Holbeche advocates the need to distinguish between the two terms. However, a combination of agility and resilience as defined by Holbeche (2015) seems very similar to the meaning of strategic agility, which is discussed further with regard to public sector organizations.

The above definitions of organizational agility are related to winning competitions and are thus appropriate for the business sector. Public sector organizations are concerned with providing a high-quality service but not with competing. Recently, authors researching agility in the public sector have introduced the term strategic agility. For public sector organizations, strategic agility refers to the capacity to proactively identify and respond to emerging policy challenges to avoid unnecessary crises and carry out strategic and structural changes in an orderly and timely manner (Doz & Kosonen, 2008; Doz et al., 2018).

It can be concluded that strategic agility is a combination of organizational agility and resilience as advocated by Holbeche (2015). Park (2011) identified three dimensions of organizational strategic agility, sensing agility, decision-making agility, and acting agility, which are somewhat similar to the dynamic capabilities introduced by Teece, Peteraf, and Leih (2016). Strategic agility involves responding strategically to change; it combines the benefits of decentralization and centralization. It is more than flexibility or responsiveness; it is a longer-term, purposive creation of value for society. The strategic agility framework includes strategic sensitivity, collective commitment, and resource fluidity, which help public sector organizations (Doz & Kosonen, 2008).

Drivers of Organizational Strategic Agility

Organizational agility drivers are usually considered a consequence of external environmental forces, but there may be and are internal factors, such as internal changes in the organization. Teece categorizes an organization’s dynamic capabilities into three main clusters: (1) identification, development, and assessment of technological opportunities and threats (‘sensing’); (2) mobilization of recourses (‘seizing’); and (3) continued renewal (‘transforming’/‘shaping’). The enhancement of dynamic capabilities determines the company’s ability and capacity to adapt to change, innovate and create change that is demanded by customers and outstanding competitors (Teece et al., 2016). Employees and their ability to act independently allow organizations to use a simple structure, thereby increasing their ability to act agilely. This further emphasizes the importance of employees as a resource for achieving agility (Dowdy et al., 2017). Human resource management and human capital have been considered to have a strategic role in organizational agility (Saha et al., 2017).

Researchers agree that organizational agility requires special organizational capabilities and resources. Agility must be integrated into all components, including organizational structure, culture, technology, leadership, and management. According to McKinsey report, organizational leadership should promote an agility culture by emphasizing its importance to the staff at all levels of the organization (Dowdy et al., 2017). Organizational structure, information systems, and mindset are used together to enable organizations to act quickly and efficiently. Communication is considered the most important ability to operate in agile mode. Communication enables organizations to integrate staff at various hierarchical levels as well as through organizational structure and culture. As indicated in Gallup (2018) report, it is difficult for individuals to respond quickly and nimbly when they are unsure of their responsibilities. Thus, aim clarity in addition to communication and direct management may be important drivers of agile work.

Researchers examined dynamic capabilities, organizational structure, and customer orientation as antecedents of organizational agility. The author identifies flexibility as one of the critical capabilities for agile organizations, expanding the term to product volume flexibility, people flexibility, and organizational flexibility. Researchers generalize the most important blocks of an organization’s human resource capabilities, such as learning capability, knowledge management, efficient decision-making, and quick solution generation, as a response to changing conditions (Kanten et al., 2017).

Organizations are only as adaptable as their members, which indicates the importance of continuous learning (Gallup, 2018). The importance of organizational learning has been frequently mentioned in connection with the manifestation of organizational agility as a contributor to organizational performance (Saha et al., 2017). A learning organization is defined as ‘one that learns continuously and transforms itself’. Learning also enhances organizational capacity for innovation and growth. The learning organization has embedded systems to capture and share learning (Watkins & Marsick, 1993, p. 8).

Contrary to drivers of organizational agility, there are some barriers highlighted in the literature, such as organizational resistance to change, a rigid framework of the organization, concerns about planning and control from managerial aspects, concerns about the ability to implement agility effectively, and concerns about the possible cost of the transition period (Obrutsky & Ertuk, 2017).

The Consequences of Organizational Agility

Many studies have indicated that organizational agility is a fundamental necessity for business survival and competitiveness, the key to organizational success and survival in turbulent environments (Nejatian et al., 2018; Nafei, 2016; Chandler, 2014), and a source of competitive advantage (Singh et al., 2013). For example, organizational agility is considered a critical factor in achieving sustained competitive advantage in knowledge-intensive industries (Nsour, 2021).

Most researchers focus on the value of agility for organizational-level outcomes; however, empirical evidence on its value for an organization’s internal environment is very limited. For example, studying hospital employees, Nafei (2017) found that organizational agility impacts work engagement and thus organizational performance. Work engagement involves the expression of the self through work (Kahn, 1990) and is understood as a positive, fulfilling, work-related state of mind (Schaufeli et al., 2006). It is related to behaviours such as initiative and learning, which are especially necessary and valued in public sector organizations. Two dimensions are recognized as a source of engagement, organizational support and work itself (Robinson et al., 2004), in line with JD-R theory (Demerouti et al., 2001). Work specifics or job meaningfulness describes the degree of significance employees believe their work possesses (Wrezesniewski et al., 2010). In the public sector, and especially in times of crisis, the meaningfulness of work might become an important source of happiness at work. While there is a substantial body of research on the factors that drive employees’ work engagement, the question concerning the added value of perceived organizational agility for employees remains unclear.

According to Gallup (2018) report, agile companies can give employees a sense of optimism, which might be especially important in times of environmental turbulence. Indeed, optimism and well-being have implications for mental and physical health and are important to people in the workplace, especially in times of crisis. Subjective, workplace-related well-being includes positive attitudinal judgements and integrates physical, emotional, cognitive, and social manifestations (Fisher, 2014). According to the JD-R, occupational well-being derives from characteristics of the work context (Bakker & Demerouti, 2018; Novales et al., 2018), and perceived organizational agility may provide such a context. While the body of research on factors that impact work well-being is growing, the question of the added value of perceived organizational agility has not been addressed.

Based on the above considerations, we formulate the following two hypotheses:

H1

Perceived organizational agility moderates the impact of job and organizational factors on employee engagement in times of crisis.

H2

Perceived organizational agility moderates the impact of job and organizational factors on employee well-being in times of crisis.

We describe the variables of the research and the theoretical grounds of the research instrument designed to test the hypotheses in the empirical setting of public sector organizations.

Methodology

For the survey instrument, a structured questionnaire with 88 statements was developed to measure the variables of the model (i.e., employee well-being and work engagement, perceived organizational strategic agility, job meaningfulness, and energy) as well as organizational resource-related factors (i.e., aim clarity, top management support, and direct management and organizational learning) (see Fig. 1).

Fig. 1.

Inner model (developed by the authors with smartPLS4)

Variables

The following subsections present our dependent, independent, and mediating variables and our approach to operationalization and survey design. These variables are summarized in Table 1.

Table 1.

Descriptive statistics and data validity and reliability

Variables	No of indicators	Mean	SD	Cronbach’s alpha	Composite reliability (rho_a)	AVE
Engagement*	17	5.37	0.89	0.94	0.95	0.50
Well-being	4	3.73	0.77	0.82	0.85	0.66
Agility	9	3.62	0.78	0.94	0.94	0.66
sensing	3	3.57	0.83	0.86	-	-
decision-making	3	3.81	0.78	0.82	-	-
acting	3	3.48	0.93	0.89	-	-
Aims	4	3.92	0.77	0.83	0.86	0.67
Energy	8	2.76	0.71	0.85	0.88	0.50
Job meaningfulness	10	3.65	0.61	0.90	0.92	0.53
Organizational Learning	21	3.58	0.70	0.97	0.97	0.59
Management	7	3.87	0.89	0.94	0.94	0.72
Top management	8	3.61	0.85	0.93	0.94	0.68

* 7-point Likert scale

We apply job demands-resources theory (JD-R) (Bakker & Demerouti, 2007) to design our survey instrument. JD-R theory argues that employee outcomes and occupational well-being are derived from characteristics of the work context, which can be classified into two categories: job demands and resources (Bakker & Demerouti, 2018; Schaufeli & Bakker, 2004). Following Kahn (1990), we treat job demands from the perspective of positive psychology as job meaningfulness and energy as opposed to exhaustion.

Mediating variable

The main variable of interest in this research is organizational strategic agility, and we aim to assess its mediation impact. It is an endogenous variable since it is also a dependent or outcome variable for the six independent variables representing organizational resources and job characteristics (see Fig. 1).

Despite the widespread understanding that organizational agility is becoming critical for businesses to achieve sustainability and competitive advantage, there is little consensus on how agility can be assessed by organizations (Baskarada & Koronios, 2018). The so-called 5 S organizational agility framework consists of capabilities such as sensing, searching, seizing, shifting, and shaping (Baskarada & Koronios, 2018). Another source is the Agile Onion (Powers, 2019), which represents the model of agile values, processes, and capabilities, where an agile mindset is the most important and primary intangible asset of all aspects of an agile organization. The agile mindset is also emphasized by Dank and Hellstrom (2021). For other researchers, agility is a bidimensional concept that involves flexibility and/or speed in a firm’s product and service offerings for sensing and responding to environmental changes (Singh et al., 2013).

To measure strategic organizational agility, Park (2011) and Nafei (2016) propose a nine-item scale measuring three dimensions of organizations’ strategic agility: sensing, decision-making, and acting agility. This approach is in line with the dynamic capabilities view (Teece et al., 2016) and the agility resilience combination (Holbeche, 2015). Therefore, we apply the nine-item scale to measure organizations’ strategic agility as perceived by employees. A sample item for sensing agility is ‘My institution can see changes in customer needs in time’; for decision-making agility, a sample item is ‘My institution can assess the impact of external conditions on its operations’; and for measuring acting agility, a sample item is ‘My institution can change the strategic direction in time if necessary’.

Dependent variables

Two dependent (endogenous) variables in our study are employee work engagement and occupational well-being. To measure well-being at work, we used the 4-item scale proposed by Cheung (2002), who developed it from the General Health Questionnaire (GHQ-12). For example. respondents are asked to indicate the level at which they are ‘Able to concentrate on whatever you are doing’ (Cheung, 2002).

To measure engagement, we used the 17-item Utrecht Work Engagement Scale (UWES), which is widely used to measure employee engagement and includes the three constituting dimensions of work engagement: vigour, dedication, and absorption (Schaufeli et al., 2006).

Independent variables

We model six independent or exogenous variables (see Fig. 1). Our hypotheses revolve around the interaction of organizational factors that we develop based on JD-R theory. Demerouti et al. (2001) defined job demands as physical, social, or organizational aspects of the job that require sustained physiological and psychological costs that lead to exhaustion. They are a kind of stressor that, as an external factor, harms workers (Demerouti et al., 2001). To shorten the survey, we measured the outcome of high job demands: employee exhaustion as perceived by employees. Exhaustion is defined as a long-term consequence of prolonged exposure to certain and excessive job demands (Demerouti et al., 2010). We used the exhaustion subscale of the Oldenburg Burnout Inventory (OLBI), which has eight statements that relate to sentiments of vacancy, work overburden, the ability to rest, and physical, cognitive, and passionate depletion (Demerouti et al., 2003). This scale covers cognitive, physical, and emotional viewpoints of fatigue, which may encourage the utilization of the instrument with labourers of diverse sorts of movement (Halbesleben & Demerouti, 2005). The eight original items of the exhaustion scale refer to feelings of emptiness, a need for rest, and a state of physical exhaustion. Half of the items are reverse coded.

Since we approach this research from the perspective of positive psychology (Kahn, 1990), we recoded half of the original exhaustion items so that they measured the opposite: energy. Sample statements are ‘There are days when I feel tired before I arrive at work’ (reversed) and ‘When I work, I usually feel energized’ (Demerouti et al., 2010).

Another variable from the category of job demands in our study is related to the specifics of the work: job meaningfulness. In public sector organizations, job meaningfulness appears to be an important contributor to employee engagement. We used the 10-item Work as Meaning Inventory proposed by Steger et al. (2012).

Job resources refer to physical, psychological, social, or organizational aspects of the job that may fulfil any of the following roles: be functional in achieving work goals; reduce job demands together with their associated physiological and psychological costs; and stimulate personal growth and development. Demerouti et al. (2001) focused more on external factors of the person, such as organizational and social factors, than on internal factors, such as cognitive features and action patterns. As the most important job resources, we measured aim clarity, top management support, and direct management and teamwork. The items were original and based on interviews with representatives of the organizations and were designed to measure the processes specific to the public sector organizations.

Concerning employee engagement as well as organizational agility, organizations’ ability to learn has been frequently mentioned as an important job resource-related factor. Therefore, it is included in the model and measured using the 21-item Learning Organization Questionnaire (DLOQ), which is designed to measure learning culture in organizations and aims to capture employees’ perceptions (Masrick & Watkins, 2003).

Control variables

We controlled for several employee-level characteristics: age, gender, tenure in the organization, and position.

Survey Design and Measures to Avoid Common Method Bias

Since the research aimed to measure the impact of organizational agility as perceived by employees on their engagement and well-being during the crisis, obtaining measures of the predictor and criterion variables from different sources was not an option; therefore, the possibility of common method bias (CMB) was recognized in the design and execution of the survey. СMB may occur when variations in responses are caused by the instrument rather than the actual predispositions of the respondents that the instrument attempts to uncover (Podsakoff et al., 2003).

To address the possibility of CMB or common method variance, psychological separation was used in the survey design as an ex ante control to address potential common method bias (Kock et al., 2021). The following measures were applied: (a) the survey item measuring the dependent variables did not directly follow those measuring the antecedent variables because the demographic data were placed in between; (b) survey items measuring organizational resources were mixed, and there was no indication to the respondents of how these components would be combined and what was measured; and (c) while the survey items for antecedent (independent and mediating) variables were measured using a 5-point scale, the dependent variable (engagement) was measured on a 7-item scale. The questionnaire measured all items (except engagement) on a 5-point Likert-type scale, where 1 = strongly disagree and 5 = strongly agree. Employee engagement was measured on a 7-point Likert scale following Schaufeli, Bakker, and Salanova (2006). Moreover, respondents were assured that the survey was anonymous, that there were no right or wrong answers and that they should answer questions as honestly as possible (MacKenzie & Podsakoff, 2012).

Research Context and Respondents

The empirical context of this research was public sector organizations in Latvia. Since becoming a member of the OECD in 2016, Latvia has shown substantial progress in public administration reform; however, problems remain, as Latvia ranks in the bottom half in the EU-27 comparisons on government effectiveness (World Bank, 2022). Recent human resources management reforms aimed at creating a small and open administration increase the importance of organizational agility.

The survey took place in the autumn of 2021. By that time, employees had experienced all types of COVID-19-related restrictions, including lockdown. Social distancing during COVID-19 forced organizations to reorganize work in the virtual environment (Phan & Wood, 2020). By the end of 2021, employees who had worked at public sector organizations for more than a year had experienced all types of COVID-19 crisis-related uncertainty and turbulence, including remote or virtual work, job, and personal insecurity, which makes this timing appropriate for achieving the aim of this research.

The survey was organized online and resulted in 5469 valid responses. A total of 76.4% of the respondents were female, 22.7% were male (this corresponds to the gender distribution in public sector organizations), and 0.9% did not indicate their gender. The most represented age group was between 35 and 44 years (31%), followed by 45–54 (26%). A total of 26.4% of the respondents were managers, 66.4% were specialists, and the remaining 7.2% indicated their positions as administrative support functions. The respondents’ average tenure in the public sector was 8.3 years, while their average tenure in the organization was 5.5 years.

Results

First, a common method assessment was performed. Sinсе thе research rеliеs on sеlf-rеportеd mеasurеs and information about dеpеndеnt and indеpеndеnt variablеs сomе from thе samе rеspondеnts, the potеntial for сommon mеthod bias should bе rесognizеd. In line with the ex-ante measures described in par 3.2, Harman’s onе-faсtor tеst is a сommonly usеd post hoc mеthod to addrеss СMB (Podsakoff еt al., 2012). The tеst was pеrformеd with SPSS using all 88 indicators. Faсtor 1 aссountеd for 36.2% of thе varianсе, indiсating that СBM is unlikеly to affесt thе data.

Smart-PLS4 software and the variance-based structural equation modelling (PLS-SEM) technique were used to test the model and to predict the most important factors relevant to perceived organizational strategic agility, employee engagement, and well-being. The particular technique was chosen because it implies the features of multiple regression and does not assume the normality of data distribution. The K-S test performed with SPSS indicated that the data were not normally distributed, as frequently happens with Likert scales. In addition, this technique allows the inclusion of a larger number of indicators, 88 in this research. The statistical objective of PLS-SEM is to maximize the explained variance of endogenous latent constructs or dependent variables (Hair et al., 2011). This method is particularly useful when the study’s focus is on the analysis of a certain target construct’s key sources of explanation and has enjoyed rapidly increasing usage in various disciplines in the social sciences in recent years (Ringle & Sarstedt, 2016). Furthermore, PLS-SEM allows the analysis of mediator effects in nonparametric tradition (Hair et al., 2019).

To evaluate reflectively measured models, the following should be examined: outer loadings (size and significance); composite reliability; average variance extracted (AVE) or convergent validity; and discriminant validity (Hair et al., 2011). To do so, the model was designed (see Fig. 1) with the help of Smart-PLS4 software and algorithms calculated. Figure 1 presents the inner model with variables, path coefficients, and their p values, but the construct indicators are hidden.

Measurement Model Results

The outer model (also called the measurement model) shows how correctly each construct is measured or how each set of indicators is related to the latent variable. All except four manifest variables exhibited outer loadings above the minimum threshold value of 0.708 (Hair et al., 2011); they were therefore high enough and were a good measure of their latent variables. Four indicators of engagement had loadings below 0.7 but above 0.5. It was decided to leave them all as they corresponded to the well-developed measurement model (UWES scale), and Cronbach’s alpha coefficient for the engagement construct was 0.94. The bootstrapping procedure was used to determine statistical significance. All loadings were statistically significant (p < 0.000).

The convergent validity of the reflective constructs was examined with average communality or AVE (average variance extracted). It should be higher than 50%. All the scores were above 0.5 and thus were acceptable. Composite reliability is an estimate of constructs’ internal consistency and should be above the threshold level of 0.7. The composite reliability scores were well above the minimums, thus indicating sufficient reliability (see Table 1).

Discriminant validity represents the extent to which measures of a given construct differ from the measure of other constructs in the same model. The heterotrait-monotrait (HTMT) ratio of correlations is used to measure discriminant validity (Hair, et al., 2011). HTMT is the ratio of the within-construct correlations to the between-construct correlations. All HTMT values should be lower than 0.85 for conceptually distinct constructs and lower than 0.9 for similar constructs. The HTMT values ranged from 0.38 to 0.79, and since all values were lower than 0.85, the validity was confirmed. In addition, bias-corrected confidence intervals showed that neither the high nor the low confidence intervals included a value of 1. Thus, discriminant validity was demonstrated by the HTMT method.

Collinearity statistics revealed that VIF values ranged from 1.28 to 4.64 and thus were less than 5, thus indicating that collinearity was not a problem for the model.

The descriptive statistics presented in Table 1 show that public sector organizations are perceived as moderately agile. Decision-making agility is perceived as higher than the other two subscales, and according to the Friedman test, the differences were statistically significant (chi-square = 1381.641; df = 2; p < 0.000). Public sector organizations are quite good at sensing agility (Mean = 3.57; SD = 0.83) and making necessary decisions (Mean = 3.81; SD = 0.78), but they lack acting agility (Mean = 3.48; SD -= 0.93).

The Structural Model Results

The primary evaluation criteria for SEM are R2 results. R2 values of 0.75, 0.50, and 0.25 for endogenous latent variables indicate substantial, moderate, or weak predicting capacity, respectively (Hair et al., 2011). As seen in Table 2, the adjusted R2 values are approximately 0.5 and higher; thus, the model has a moderate predicting capacity for agility, engagement, and well-being.

Table 2.

Model path coefficients and their statistical significance

Dependent variable	Agility		Engagement		Well-being
Variables (Code)	Path coefficient	p value	Path coefficient	p value	Path coefficient	p value
Adjusted R2	0.59		0.584		0.609
Management (Man)	-0.101	< 0.000	0.051	< 0.000	0.011	0.392
Top management (Tman)	0.299	< 0.000	-0.043	0.015	-0.055	0.001
Job meaningfulness (Job)	-0.011	0.368	0.455	< 0.000	0.022	0.096
Energy (En)	0.02	0.065	0.288	< 0.000	0.399	< 0.000
Aim clarity (Aims)	0.167	< 0.000	0.109	< 0.000	0.087	< 0.000
Organizational learning (Learn)	0.441	< 0.000	0.038	0.025	0.127	< 0.000
Agility (Agil)	-	-	0.057	< 0.000	0.001	0.963
Engagement (Eng)	-	-	-	-	0.392	< 0.000

The individual path coefficients of the PLS structural model are interpreted as standardized beta coefficients of OLS regressions (Hair et al., 2011). Data analysis reveals a positive statistically significant relationship between perceived organizational agility and employee engagement; however, there is no significant relationship between agility and employee well-being (see Table 2).

Factors contributing to perceived employee agility appear to be organizational learning (path coefficient = 0.44; p < 0.000) followed by top management (path coefficient = 0.3; p < 0.000) and aim clarity (path coefficient = 0.17; p < 0.000).

Interestingly, direct management has a negative effect on perceived organizational agility but a positive effect on employee engagement. Other factors that impact employee engagement are job meaningfulness, energy, and aim clarity. Employee well-being is primarily impacted by energy, followed by job meaningfulness and organizational learning, but is not significantly impacted by perceived organizational agility.

Perceived Strategic Agility as a Mediator Between Organizational Variables and Employee Engagement and Well-Being

A variable functions as a mediator when it varies the level of the independent variable. The aim of mediation analysis in this research is to understand whether perceived organizational agility accounts for the relationship between organizational variables and DVs (engagement and well-being) or to understand whether it is necessary for the employees in the organizations and what the value is for them. To test the mediation, Hair et al. (2011) suggest looking at the direct, indirect, and total еffесt and variance accounted for (VAF), which are presented in Table 3.

Table 3.

Mediating effects of organizational agility on employee engagement and well-being

	Engagement			Well-being
	Indirect effect through agility	Total effect	VAF	Indirect effect through agility	Total effect	VAF
Management (Man)	-0.006	0.046***	13.04%	-0.002	0.007	28.57%
Top management (Tman)	0.017***	-0.026	65.38%	0.000	-0.065***	0.00%
Job meaningfulness (Job)	-0.001	0.454***	0.22%	0.000	0.200***	0.00%
Energy (En)	0.001	0.289***	0.00%	0.000	0.512***	0.00%
Aim clarity (Aims)	0.009***	0.167***	5.39%	0.001	0.093***	1.08%
Organizational learning (Learn)	0.025***	0.063***	39.68%	0.000	0.152***	0.00%

***p < 0.000

Dirесt еffесts are indiсatеd by the path coefficients and are presented in Table 2. Indirect and total effects are produced by SmartPLS4 and are indicated in Table 3. The total еffесt through organizational agility on employee engagement is stronger than the dirесt еffесt and is statistically significant for organizational learning (0.043 < 0.063), thus indicating mediation.

To understand whether there is mediation of perceived organizational agility, it is necessary to assess the variance aссountеd for (VAF). If the VAF > 80%, there is full mediation; if the VAF < 20%, there is no mediation; and if the VAF is between 20 and 80%, there is partial mediation (Hair et al., 2011). Thus, based on the VAF results (see Table 3), perceived organizational agility mediates the relationship between organizational learning and top management and employee engagement. Interestingly, top management has no statistically significant impact on employee engagement; however, it has a strong impact on organizational agility, which in turn impacts employee engagement. VAF indicates that perceived organizational agility mediates the relationship between top management and employee engagement, thus providing evidence to support H1.

The VAF analysis presented in Table 3 does not show any mediation effect of perceived organizational agility on employee well-being; thus, H2 can be rejected. However, the path coefficient between employee engagement and well-being is strong and statistically significant (path coefficient = 0.393***), showing a positive impact. Thus, the results show that engaged employees feel better and indicate higher well-being than those with lower work engagement. However, smartPLS4 allows testing for serial mediation. Serial mediation through agility and engagement appears to be positive and statistically significant (p < 0.000) for top management (Tman -> Agil -> Eng -> Welb), organizational learning (Learn -> Agil -> Eng -> Welb) and aim clarity (Aims -> Agil -> Eng -> Welb). Therefore, taking serial mediation into account, we conclude in favour of accepting H2.

Discussion

The purpose of this research is to examine the mediating role of perceived strategic agility in relation to employee outcomes in times of crisis in public sector organizations. Using survey data from public sector organizations in Latvia, we investigate the level of perceived strategic agility, factors affecting organizational agility, and the moderating impact of agility on engagement and well-being.

Our empirical findings support the value of perceived strategic agility for employees of an organization as positively contributing to work engagement and well-being. Our results show that perceived organizational agility positively impacts employee engagement. This finding is in line with Nafei (2016), who found a statistically significant relationship between organizational agility and job engagement. Similarly, the importance of organizational agility has been identified as an important factor that contributes to human resource effectiveness, which can be characterized as an engaged workforce (Saha et al., 2017). This study shows that serial mediation for employee well-being and work engagement serves as a second mediator after perceived agility. Similarly, a study in hospitals revealed that organizational agility affects organizational performance through the mediating role of employee engagement (Nafei, 2017). However, it should be noted that the mentioned studies were conducted in business organizations, and our study is the first to use the public sector as a context. Our results show that perceived organizational agility does not impact employee well-being directly, but it does impact well-being through employee engagement, as support was found for serial mediation. Thus, we find evidence of agility as a ‘safety net’ in times of crisis.

In addition to findings related to the hypothesized relationships, our results have additional value related to factors that contribute to organizational agility in public sector organizations. The findings show that Latvian public sector organizations are perceived as moderately agile, are quite good at sensing changes, and are good at making necessary decisions; however, they lack acting agility. This can be explained by the specifics and long decision-making process in the public sector, e.g., the democratic decision-making process, lobbying by special interest groups, multiple and often contradictory goals, and heterogeneity of public sector stakeholders (Mulgan, 2009), which results in late actions in response to decisions. Low decision-making agility can also explain the lack of a direct impact on employee well-being. Public sector employees feel that decisions are made, but actions do not follow; thus, they are not sure of the outcomes. Similarly, Doz, Kosonen, and Virtanen’s (2018) analysis of the characteristics of strategically agile government in Finland and Scotland emphasized large hierarchical organizations and traditionally performed long-term planning as characteristics of current government institutions. These structures and systems worked well in stable socioeconomic environments, but there is now a need for decentralization of the activities. Doz and Kosonen (2008) propose a new governance framework that is decentralized and less hierarchical and therefore able to solve problems faster.

We find that organizational learning, top management, and aim clarity are drivers of public sector organizational agility. These findings are in line with Gallup (2018) report, which indicates that continuous learning is a prerequisite for organizational agility and that organizations cannot be agile without great leaders. Interestingly, according to our findings, top management has no direct impact on work engagement but can impact it through perceived agility. Other researchers have advocated the relationship between organizational agility and organizational learning strategy (e.g., Saha, et al., 2017). Similarly, Kanten et al. (2017) found learning capability to be the most important block of an organization’s human resource capabilities.

Theoretical and Practical Implications

Our main findings make at least two contributions to prior research and literature. First, we contribute to JD-R theory by showing that perceived organizational strategic agility can be considered a resource that positively contributes to employee outcomes. Indeed, if employees believe that their organizations are agile in times of crisis, they will be willing to engage more and invest extra effort in their jobs because they know that the organization is managed well enough and will survive and remain efficient despite external turbulence. This contribution of the present study involves the antecedents of perceived organizational agility for employees of an organization. Our results indicate that being agile has a positive impact not only on organizational-level outcomes (e.g., survival and competitiveness) but also inside the organization; it increases employee engagement and well-being.

The second empirical contribution of the present paper is related to the drivers of organizational agility specific to public sector organizations. Our analyses showed that to increase strategic agility, public sector organizations need to (1) ensure learning culture at all levels; (2) include top management’s involvement and commitment to the creation of agile culture; and (3) have clear aims and responsibilities. These findings can be used by organizations to foster their strategic agility.

Our findings also have two types of practical implications for managers in the public sector. There is a prevailing logic that organizational agility is needed for survival and winning completion (Nejatian et al., 2018; Singh, et al., 2013; Chandler, 2014). However, the present research shows that agility is also needed for the employees of an organization. Managers, including human resource managers, can use these findings to increase work engagement and employee well-being during a crisis. The findings suggest that managers should communicate agility-related decisions and actions to employees. If employees perceive their organizations as agile during a crisis, they will feel safer and demonstrate higher work engagement.

The second practical implication is related to actions that might increase organizations’ strategic agility. Learning organizational culture could be recommended for public sector organizations as a driver of strategic agility. Our results show that the main people responsible for creating organizational agility are top managers. They have a very small effect on work engagement, but they can increase it through perceived organizational agility.

Conclusion

Our study is one of the first to provide an understanding of the role of organizations’ perceived strategic agility for employees. Moreover, it is one of few studies to address organizational agility in the public sector. Our empirical results show that an organization’s perceived strategic agility has a positive significant effect on employee work engagement and thus on well-being. We conclude that organizational agility is necessary for organizations to cope with changing environments and for employees, who will be safer and more engaged if they perceive their organizations as agile and thus able to sense, seize and act to counterbalance environmental changes.

There is copious evidence that the value of organizational agility will not lose its importance but will only grow in the future. Currently, societies are experiencing several crises simultaneously, including climate change, the energy crisis, the danger of stagflation, and Russia’s invasion of Ukraine. These crises pose urgent questions about organizational resilience and agility since they are unlikely to be the last global crises (Phan & Wood, 2020). Governments and companies need to develop resilience and agility, which could help organizations deal with adversity, withstand shocks, and continuously adapt and accelerate as disruptions and crises arise over time (Brende & Sternfels, 2022; OECD, 2017). The World Economic Forum Resilience Consortium, which comprises leaders from the public and private sectors, has identified the need to build resilience globally, and developing a shared understanding of the drivers of resilience is among the objectives (Brende & Sternfels, 2022).

Our results identify leadership, organizational learning and aim clarity as the main drivers of resilience in public sector organizations. We argue that if employees are supported by leaders who sense change, make timely decisions, and act in an agile way, they will experience higher work engagement during a crisis. Managers of public sector organizations can use our results to build resilience and thus positively contribute to employee well-being and organizational performance.

Limitations and Recommendations for Future Research

We acknowledge that there are some limitations to this study that open opportunities for further research. First, the cross-sectional nature of the survey increases the possibility of common method bias (Podsakoff et al., 2012). Acknowledging this, we took all the possible procedural remedies that are described in the methodology section, and Harman’s one-factor test indicated that CBM was unlikely. Nevertheless, cross-sectional research prevents us from examining whether perceived organizational agility is related to employee engagement and well-being at a later time. The availability of panel data can increase the reliability of estimates. We therefore need further empirical data to explore whether and how agility is related to employee outcomes over time.

Second, our context involves public sector organizations that have certain specifics, and the impact of perceived strategic agility might be smaller because of the slow decision-making process, the need to reach consensus, lobbying, and other public sector-specific processes (Mulgan, 2009; Doz et al., 2018). Further research might investigate the value of perceived strategic agility in business organizations, and we expect that the effect might be even stronger since organizational agility has been found to impact survival, performance, and competitiveness (Chandler, 2014; Nejatian et al., 2018; Singh et al., 2013) and therefore may be valued even more by employees.

The third limitation is related to the variables in the model. Adding more independent variables might improve the predictive power of the model while simultaneously reducing the mediating effect of strategic agility. Furthermore, interesting insights may be found by identifying additional factors that impact organizations` strategic agility. Future studies might extend the model with additional exogenous variables and investigate their contribution to organizational agility, such as team collaboration, communication, and the job environment.

Fourth, our study was geographically limited. The study was conducted in only one eastern European country (Latvia); thus, the results could be generalizable to culturally, economically, and politically similar countries. There is a need for similar studies in other countries, such as OECD countries, since the need to build more resilient and adaptive government and public administration institutions was highlighted (OECD, 2017).

A fifth limitation is related to the time of the study. The data collection took place during COVID-19 in the autumn of 2021 when employees had experienced all types of COVID-19-related restrictions, including lockdown, social distancing, and virtual work (Phan & Wood, 2020). This allowed us to draw conclusions about the impact of perceived strategic agility during a crisis since the respondents had experienced COVID-19-related uncertainty and turbulence, including job and personal insecurity. Nevertheless, it should be acknowledged that the relationships between our research variables might be different in more stable environments. Future research could also explore the value of organizations’ perceived strategic agility in a more stable environment when and if it occurs. It would be fruitful to examine whether perceived agility provides value for employees and is a necessary organizational resource in noncrisis situations.

Declarations

Conflict of Interest

The authors declare that they have no conflict of interest.