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Article

A Conceptual Model of Developing an Agile Work Environment

by
Katja Crnogaj
1,*,
Polona Tominc
2 and
Maja Rožman
2
1
Department of Entrepreneurship and Business Economics, Faculty of Economics and Business, University of Maribor, 2000 Maribor, Slovenia
2
Department of Quantitative Economic Analysis, Faculty of Economics and Business, University of Maribor, 2000 Maribor, Slovenia
*
Author to whom correspondence should be addressed.
Sustainability 2022, 14(22), 14807; https://doi.org/10.3390/su142214807
Submission received: 27 September 2022 / Revised: 5 November 2022 / Accepted: 7 November 2022 / Published: 10 November 2022
(This article belongs to the Section Economic and Business Aspects of Sustainability)
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Abstract

:
This study has highlighted the need for an agile work environment to enhance companies’ performance, growth, and sustainability. In today’s rapidly changing business world, the goal of every individual and team in a company should be to deliver value to customers. The paper highlights theoretical and empirical evidence on the importance of an agile work environment and its positive effect on company performance. In addition, the paper provides insights into the important concept of developing an agile work environment and offers a conceptual model with five selected constructs, which can be leveraged to build an agile mindset in companies. Moving away from traditional leadership models, this paper highlights the significant role that agile leadership can play in enhancing effectiveness and performance, even in long-established large companies. The empirical research was based on 468 randomly selected medium and large Slovenian companies. Structural equation modelling (SEM) was used to test the model. The empirical results show that changing and adaptive agile companies are the ones that thrive more easily in an environment that is unpredictable and characterized by rapid change.

1. Introduction

Digitization, increasingly rapid innovations, and increased customer expectations have created an extremely competitive, complex and rapidly changing business environment for companies [1,2]. Many companies respond to today’s turbulent situation through the agile development of their products and services, and with good reason, as agility brings with it well-tested practices that improve speed in the organization and increase customer satisfaction [3]. For companies to enjoy lasting success, they need to develop a certain level of organizational agility that is commensurate with the increasing rate of change and complexity in their business environment [4]. Today, this is still more of a trend than a reality for most companies. The main reason for this is the need for agile leaders who are capable of leadership in conditions of rapid change and high complexity. However, the need arises not only at the organizational level but also at all company levels [5]. Agility is related to an organization’s ability to become competitive, reinforce its advantage by intelligently, quickly, and proactively seizing opportunities and responding to threats [6]. Today, most companies that implement some form of agile management, e.g., by improving efficiency or improving quality, allow the team, unit, or entire company to adapt and upgrade existing products and services with rapidly changing technology to meet customer’s needs [7].
When leaders cling too much to traditional ways of working, learning, developing, and planning, they greatly reduce the possibility of change [8]. Flexible companies have a better chance of survival, so a company’s human resources department must adapt its systems and principles to increase flexibility and autonomy. Agility is a mindset, a way of thinking, a collection of values around how all the processes in the company must be carried out for the best and fastest adaptation to changes in the environment [5]. Agile approaches are based on the division of work into short cycles, during which there is a constant flow of feedback between individuals, teams, departments, and management. Therefore, agile leadership in the organizational environment is becoming an increasingly sought after and desired competency [9].
Today, most companies do not completely understand agile approaches. As a result, leaders unknowingly continue to lead in the way that they are used to and that they have used in previous years. However, this is contrary to agile principles and practices, which undermines the effectiveness of agile teams and units under their leadership [6]. The agile leader differs from the traditional leader in almost all respects and does not follow a hierarchical organization, from the top down. The traditional leader is focused on consolidating their position in the company by exploiting the influence of their hierarchical position. The goal of agile leadership is to hand over power to the employees, thus enabling them to take responsibility for their organization and performance [10]. The agile leader uses a bottom-up approach. Instead of supervising, the agile leader focuses on motivating employees and encourages continuous informal communication. Thus, agility supports full transparency, where everyone is involved in decision making [8]. According to Naslund and Kale [11], part of a common problem in many companies is that leaders spend too much time making successful decisions. Therefore, agility requires strong leadership that facilitates knowledge sharing, seeks consensus, trusts people, and provides a working environment for people to incorporate tacit knowledge as much as possible.
However, the key challenge in the initial shifts in the implementation of agility in companies is the opposition to change, which has also affected Slovenian companies. Challenges include a lack of knowledge and experience in this field, inconsistency of organizational culture with agile values, the prevalence of traditional ways of working, and the lack of time. There is a desire in Slovenian companies for greater company performance, which is the main reason for developing an agile work environment [12]. There is not much research that is systematically based on theoretical knowledge or studies about developing an agile work environment with selected constructs for building agile leadership skills, leadership support in the company, organizational culture in the company, forming agile teams in the company, or drivers for shifting towards agility. The study contributes to the existing literature with new insights related to the design of an agile work environment, which could lead to an increase in the performance of Slovenian companies. Therefore, we designed a conceptual model of developing an agile work environment, with important constructs that statistically significantly impact on the performance of Slovenian companies. In the conceptual model, we present the formulated hypotheses and the effects of the independent variables on the dependent variables.

2. Literature Review

The agile organization is dawning, becoming the new dominant organizational paradigm. While a traditional approach is characterized by a rigid, sequential, and well-defined process that originates too much documentation, the agile approach is based on principles of flexibility and the participation of the customer of the process, with minimum documentation required [7,10,13]. For example, successful agile transformations typically delivered approximately 30% gains in efficiency, customer satisfaction, employee engagement, and operational performance, and made the companies five to ten times faster [14]. The principles derived from the agile manifesto are as follows: (1) satisfying customers by the early and continuous delivery of valuable work; (2) welcoming changing requirements, even late in development; (3) adhering to the decided timeframe for the delivery of a working product; (4) people working together daily, throughout the project; (5) creating processes that promote sustainable efforts; (6) maintaining a steady pace to complete work; (7) measuring progress based on the work completed; (8) agile processes promoting sustainable development; (9) using change to gain a competitive advantage; (10) simplicity—the art of maximizing the amount of work not completed—is essential; (11) the best output emerges from self-organizing teams; (12) at regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly [15].
In the following paragraphs we present a literature review and the theoretical framework on which we built a conceptual model and put forward hypotheses, which have been tested with the model. Five various factors were formed, as follows: building agile leadership skills, building leadership support in the company, building an organizational culture in the company, forming agile teams in the company, and establishing drivers for shifting towards agility. These were hypothesized to shape the agile work environment organizations, further shaping companies’ performance.

2.1. The Importance of an Agile Work Environment through the Prism of Sustainability

In the current business environment, companies face fierce competition due to globalization, market instability, and dynamic customer demands regarding price, required features, quality, and product supply [16]. Therefore, the industry chooses and implements proactive strategies, taking due account of the awareness of end consumers and fierce competition, with shorter product life cycles, a faster supply of markets with new products, and a reduction in operating costs [17]. This means that companies must be agile, flexible, and sustainably oriented in their business. While the responsibility for adapting to a companies’ environment is shared within the company’s departments and members, the responsibility truly rests with leaders and those in power to influence transformation efforts [18]. The task of a sustainable development leader is to align the company’s business model with its sustainable development strategy. It examines and anticipates changes in the external environment and accordingly helps to include various factors of sustainability in the business model [16,17,18]. The adaptation of organizational structures and processes is a prerequisite for the sustainable enabling of agile measures, as organizational structures and processes determine how work is planned and distributed in the company [12]. Furthermore, an important function of an agile company is the strategic acquisition of talent, as it affects the development and training of human capital. Human capital is defined as the set of competences, knowledge, commitment, and abilities of individuals within the company. An individual who is part of a company’s human capital, makes an important contribution to the company’s sustainable development and performance [17,18].
Agile processes promote sustainability. For example, the agile manifesto contains principle number eight: “agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely” [15]. Working on a project often requires long working days. As a result, agile teams need to operate sustainably and in a work environment that minimizes situations where people might experience stress, burnout, and illness [2,7]. From this point of view, we wanted to present important aspects that have a positive effect on the implementation of an agile work environment in a company and, thereby, increase a company’s performance.

2.2. Building Agile Leadership Skills

An agile leader recognizes that management needs are changing. In the past, leaders focused more on advancement and planning [6]. Today, the mindset of leaders is focused on perceiving and responding to changes in the environment, which is the essence of agile thinking. Thus, today’s leaders are aware that the future is unpredictable and that things are constantly and unexpectedly changing, sometimes even in undesirable ways [7]. Thus, leaders with an agile mindset use real-time planning. They first carry out activities to increase learning and then adjust thinking, planning, and activities based on newly acquired knowledge [19].
Additionally, agile leaders make decisions quickly and based on their information. All the activities of the organization are visible and transparent. Moreover, they practice a high degree of flexibility in structure design, organization, coordination, and work execution [20]. Thus, the new mindset in the company requires a leader who is able to quickly and correctly perceive what is happening around them and then respond effectively to these changes in a way that is consistent with the vision and mission of the company [3].
Agile leaders lead and set the direction, as they are not afraid to expose themselves and take control, as they clearly see the goal and know how to communicate it to others easily. They implement the practice’s needs and follow plans to achieve goals, while responding quickly to change when critical business opportunities arise [4]. An agile leader knows how to balance resources effectively, even when the budget is low and resources are scarce. However, they also quickly detect possible obstacles, remove the obstacles, and allow their employees to continue (with as little interruption as possible) in the direction of goals [5]. An agile leader inspires employees to achieve seemingly unattainable goals, knows how to pass on their passion to their employees, and helps them achieve their own goals. This motivates employees when agile transformation becomes difficult [21]. An agile leader shows a high level of emotional intelligence and shifts the focus of attention to their employees. In addition, they know how to read the needs and emotions of the people around them and respond to them accordingly [22]. To build and lead an agile company, leaders must develop new mindsets and capabilities to transform themselves, their teams, and their companies. Moreover, agile leaders know how to build small, diverse, and connected teams. This new kind of agile company requires a fundamentally different kind of leadership. Leadership and how leadership shapes culture are the biggest barriers to successful agile transformations [23]. According to this, the following hypothesis was proposed:
Hypothesis 1 (H1).
Building agile leadership skills has a positive effect on the agile work environment.

2.3. Leadership Support in the Company

Leadership is a process in which the leader—based on their special skills, personality traits, and knowledge—influences people with their characteristic behavior to achieve the set goals [24]. The leadership process in an organization can also be defined as a social process of directing organizational complexity and conceptualizing organizational changes in a rapidly changing environment [25]. However, modern leadership is increasingly based on mutual trust, which is based on ethical conduct. Only a leader who is morally sound acquires trust and authority in the eyes of their employees. The foundation of the best modern leadership is as follows: leaders clearly tell their employees what results they expect, are kind to employees, and cultivate good relationships with them, while being flexible [26].
Many companies are struggling with how to develop truly agile teams and agile work environments. The need for agility does not only arise from unpredictable changes in the external world, but often internal changes also require organizations to become more agile [27]. One of the main reasons for this gap is the need for agile leaders at all company levels. Although leadership development programs are a priority for most major companies, too little attention is paid to understanding and developing the necessary capabilities and skills that an agile leader should have [28]. Thus, agile leadership is directly related to the agility of the entire company. Agile leadership creates conditions for highly effective teams and maintaining a strategic direction, with the help of a company’s values and structures. Such a leader strives for the positive performance of the entire company. Agile leaders strive for humility and empathy, demonstrating qualities such as compassion, kindness, and showing concern for colleagues [10]. Therefore, the following hypothesis was proposed:
Hypothesis 2 (H2).
Leadership support in the company has a positive effect on the agile work environment.

2.4. Organizational Culture in the Company

Today, in these turbulent times, companies are trying to revamp their working methods by adapting to agile philosophies to increase flexibility and to meet the demands of an increasingly competitive market [2]. Transformation means moving from a rigid control structure to a more flexible process. This can mean changes in culture, which, in turn, also support changes in a company’s structure [19].
The transformation from a traditional structure to a more agile one requires a change in thinking in the general areas of management, knowledge, and culture. Change is not a one-time phenomenon, but a constant development cycle that determines the core of agile processes [29]. According to Ehrhart et al. [30], organizational culture is stable, which means that it is stable over a long period of time and develops regardless of changes in the social and natural environment, as it plays a central role in the identity of the company’s members. Organizational culture is a source of collective identity and commitment, due to shared values, beliefs, and basic assumptions—individual identity becomes intertwined with the identity of the group, as a whole of the company. Robbins and Judge [31] believe that the more employees accept the core values of the organization, the greater their engagement with those values and the stronger the organizational culture. An agile culture has to be built on an agile mindset. This allows business processes to move more quickly, as there is less hierarchy in decision making and responsibility is handed to agile teams to successfully achieve business goals [6]. Some companies are in the phase of transitioning from traditional to agile approaches, and some companies have found that a combined approach, a hybrid, is best for their successful operations. For example, a hybrid approach uses different approaches and practices from different agile methodologies. Some companies consider agile software development methodologies too extreme and adopt a hybrid approach, which mixes elements of agile software development and plan-based approaches [32,33]. Therefore, the following hypothesis was proposed:
Hypothesis 3 (H3).
Organizational culture in the company has a positive effect on the agile work environment.

2.5. Forming Agile Teams in the Company

An agile team is self-organized and knows how to develop a product or a service in the best way. The agile team is responsible for identifying and assigning different tasks within the team [7]. Furthermore, agile teams have enough knowledge and power to make decisions so that they can be responsible for the result. One of the principles from the agile manifesto refers to the delivered product, which is supposed to be what the customer values and demands [15].
An agile leader makes sure that agile teams have everything they need to function successfully and that they are able to engage in practices that allow them flexibility and help them become more determined. Their goal is to become self-organized in terms of work [6]. Agile teams have high transparency in information about the goals and content of projects. Team autonomy is achieved in the widest possible way through the specialization and versatility of each team member. The responsibility for the result and the assignment of tasks is the same for all members [29,34]. Thus, the following hypothesis was proposed:
Hypothesis 4 (H4).
Forming agile teams in the company has a positive effect on the agile work environment.

2.6. Drivers for Shifting towards Agility

The rapid development of new products, and the innovation of products, services, and business models distinguish the companies that win [35]. Organizational agility increases when companies create autonomous, market-focused teams that can move quickly to create and define new opportunities and can adapt themselves to changes that happen quickly. These companies are continually experimenting; improving; removing boundaries inside, between silos, and outside, with customers; and creating networks or ecosystems for improvement [36].
Agile transformation (or agile implementation) is a process in which a company moves from traditional business approaches to a more flexible and reactive approach, based on agile principles [11]. Understanding agile transformation begins with understanding that agility presents something different for every company. It is not a one-time activity, after which the company has guaranteed results and success [21]. Agile transformation is, in fact, a process that takes place over a long period of time, and its purpose is to learn and adapt through the process, while responding to changes in the environment [4]. It is about transforming the entire company. The goal of an agile transformation is to create an environment and culture that promotes creativity and innovation, empowers employees, and reduces unnecessary layers of management. The results of agile transformation include more functions and self-organized teams (focused on customer satisfaction); a reduction in unnecessary processes and plans; and an increased level of internal communication and information exchanges [9,10,20].
Hypothesis 5 (H5).
Drivers for shifting towards agility have a positive effect on the agile work environment.

2.7. Agile Work Environment and a Company’s Performance

Agility in a company exists on an individual, strategic, and organizational level and is already becoming part of the daily lives of some companies—namely, it encourages the organization to learn to look at changes in the environment as opportunities, respond quickly to them, and turn them into its own interests, which bring it a competitive advantage in the market [37].
In terms of a company, agility means the ability to deliver and develop products and services more efficiently and quickly [22]. When a company adopts an agile philosophy, it becomes faster at realizing opportunities and connecting these with customers and their needs. Thus, the company is able to control the market and steer it in the desired direction, instead of lagging behind and risking falling out of competitive leadership [8].
Agility as a mindset and different agile approaches bring different benefits to the company. The agile approach, however, accepts and even expects change. If the agile team discovers that a different solution to a particular problem is better than the current one and would yield better results, flexibility allows them to test this other solution and change the decision. Agile teams are always learning, collaborating, and adapting through regular analyses and reviews, finding what works well and what could be improved [2]. Such an approach allows each individual who is a part of the company to spread knowledge, allowing them to share and use their own knowledge at every stage of the work process. Maintaining operations in short time periods throughout the project allows the team to know exactly how much work can be completed and what their costs will be for that particular time period [6].
An agile approach reduces the risks and chances of failure. Regular collaboration, communication, and updates between agile teams increase visibility throughout the company. Daily updates and progress information offer concrete, tangible ways to track progress and manage expectations at all company levels [29]. Agility allows employees to detect any problems quickly and make quick adjustments. Agility in teams encourages employees to embrace innovation and technological excellence as part of everyday life [37].
Due to the increasing competitiveness of the market, companies have to adapt to market trends in order to survive. The most important source of success for any company is still its employees. In the event that employees are not satisfied and engaged with the company’s operations, this can be seen in the company’s performance [38,39]. In order for individual work performance to be high, every individual in the company must be engaged to work. Thus, the company must use individual methods to ensure the success of its employees [39]. Every employee has their own career goals that they want to achieve. If an employee feels good psychologically at their workplace, they achieve a higher degree of belonging in the company, are satisfied with their work, and are motivated in the performance of various work tasks, which strengthens the company’s performance [40]. An agile working environment has a positive effect on a company’s work performance, as the agile way of operating emphasizes the individual and their wellbeing at work [7,10]. Therefore, we proposed the following hypothesis:
Hypothesis 6 (H6).
Agile work environment has a positive effect on a company’s performance.
In Figure 1, we present a conceptual model of developing an agile work environment.

3. Methodology

3.1. Data and Sample

The main survey involved 468 randomly selected medium and large Slovenian companies. For medium-sized companies, it was considered that in the financial year there were no more than 250 employees, on average; that net sales revenue did not exceed EUR 40,000,000; and that the value of assets did not exceed EUR 20,000,000 [41]. From each company, the owner or the manager participated in our research. According to gender, 59.4% of male and 40.6% of female respondents participated in the study. According to the standard classification of companies’ activities, companies were from manufacturing (26.7%); wholesale and retail trade, repair of motor vehicles and motorcycles (23.3%); financial and insurance activities (16.7%); information and communication activities (13.5%); real estate activities (9.6%); professional, scientific, and technical activities (6.8%); human health and social work activities (2.3%); and administrative and support service activities (1.1%). More than half of the companies were large companies (53.6%). Medium-sized companies comprised 46.4% of the sample.

3.2. Research Instrument

As a research instrument, we used a questionnaire, which included 47 questions of a closed type. On a 5-point Likert-type scale, the respondents indicated their agreement with the listed statements, where 1 = strongly disagree, and 5 = completely agree. Items for the construct, building agile leadership skills, were adopted from Lindskog and Netz [6]; items for the construct, leadership support in the company, were adopted from Hall and Rowland [42]; items for the construct, drivers for shifting towards agility, were adopted from Ajgaonkar et al. [19]; items for the construct, organizational culture in the company, were adopted from Yener et al. [43]; items for the construct, forming an agile team in the company, were adopted from Peeters et al. [2]; items for the construct, agile work environment, were adopted from Golgeci et al. [44] and Mani and Mishra [7]; and items for the construct, company’s performance, were adopted from Mikalef and Gupta [45].

3.3. Statistical Analysis

Structural equation modelling (SEM) was used for statistical data analysis. SEM is a multivariate statistical method that is increasingly found in scientific research to test and evaluate multivariate causal relationships [46]. First, we wanted to establish if the use of an exploratory factor analysis was reasonable, based on the Kaiser–Meyer–Olkin measure of sampling adequacy (KMO ≥ 0.5) [47] and Bartlett’s test of sphericity (p < 0.05). Furthermore, we checked communalities—whether their values were higher than 0.40 [48]. We checked the reliability of the measurement of research within the scope of inner consistency with Cronbach’s alpha coefficient [49] (pp. 297–334). Second, as part of the validity, we examined AVE (average variance extracted) and CR (composite reliability coefficients), keeping in mind the criteria AVE > 0.5, CR > 0.7, and CR > AVE [50]. To check for multi-collinearity, we used VIF (variance inflation factors), considering the criterion VIF < 5.0 [51]. The quality of the structural model was measured by the R-squared and adjusted R-squared coefficients, and the Stone–Geisser Q-squared coefficient (Q2 > 0) [50]. We also used the criterion of quality indicators listed in Table 1 (model fit and quality indicators) to test the model.

4. Results

The results in Table A1 (factor analysis results, in Appendix A) indicate that the values of the communalities for all of the items, in all seven of the constructs were higher than 0.40; therefore, we did not eliminate any measured variable. Moreover, all factor loadings were higher than 0.70. All measurement scales have demonstrated high reliability. The total variance explained for building agile leadership skills was 80.8%; for leadership support in the company, 84.6%; for drivers for shifting towards agility, 87.1%; for organizational culture in the company, 81.9%; for forming an agile team in the company, 74.2%; for an agile work environment, 76.4%; and for a company’s performance, 85.7%.
Table 1 shows that the indicators APC, ARS, AARS (p < 0.001), and the indicators AVIF and AFVIF were suitable. The result of indicator GoF shows that the model was highly appropriate (GoF, 0.626). The values of the indicators SPR, RSCR, SSR, and NLBCD were higher than the minimum prescribed values and were suitable. Table 2 presents the indicators of the quality of the structural model.
Table 2 indicates that the CR values for all seven constructs were greater than 0.7. Additionally, the values of the AVE for all the constructs were greater than 0.5, therefore, we confirmed the convergent validity for all the constructs. The VIF values ranged between 1.042 and 2.301. The results of the SEM and path coefficients for the tested relationships in the model are presented in Table 3. Figure 2 presents the model with the values of the path coefficients.
The results in Table 3 and Figure 2 show that building agile leadership skills has a positive effect on the agile work environment (AL→AE = 0.543, p < 0.001) and that leadership support in the company also has a positive effect on the agile work environment (LS→AE = 0.612, p < 0.001). In addition, drivers for shifting towards agility have a positive effect on the agile work environment (DA→AE = 0.579, p < 0.001). Furthermore, the organizational culture in a company has a positive effect on the agile work environment (OC→AE = 0.481, p < 0.01). Forming agile teams in the company also has a positive effect on the agile work environment (AT→AE = 0.523, p < 0.01). Moreover, the agile work environment has a positive effect on a company’s performance (AE→CP = 0.647, p < 0.001). Based on the results, we confirmed Hypotheses H1–H6.

5. Discussion

The results of our study showed the great importance of all the examined constructs for the creation of an agile work environment in medium and large Slovenian companies. However, leadership support within the company proved to be the most influential of all. Leaders at all levels, not just the top managers, must accept agility as an organizational value. According to De Smet et al. [52], this new kind of agile organization requires a fundamentally different kind of leadership. McKinsey’s research [53] confirmed that leadership and how leadership shapes culture are the biggest barriers to—and the biggest enablers of—successful agile transformations. In our research, we found that, of all the items related to leadership support, the most important was the fact that leaders and managers have significantly changed the way they work and interact. This finding is supported by Hopkins et al. [54], who stated that leaders who recognize that speed is a critical factor for success in the 21st century must find a path toward agility, while contending with traditional leadership systems and cultures. The company should adopt an agile management style that involves subordinates in an effective decision-making process and the use of new management tools. This result is in line with Gren et al. [34], who found that appropriate leadership behavior is a key success factor in becoming an agile, self-organized organization. According to Theobald et al. [13], top-down commands and controls are no longer appropriate. While productivity was the primary goal for a long time, nowadays human factors, such as employee motivation, also play an important role, which is also in line with the research of Prabhu and Srivastava [26]. An increase in knowledge and the complexity of the products being developed has led to decentralization, autonomy, and self-organization.
Agility in leadership has become a much-needed competency. During our research, we also confirmed that building agile leadership skills also has a positive effect on the agile work environment. The most important item, however, is that the leader should be a role model for continuous improvement within the company. In addition, the leader should actively work to remove organizational barriers at all levels, should motivate and support individuals to bring their whole selves to work, and should create conditions that encourage team engagement. Poznańska (in Rzepka and Bojar [55]) emphasized the role of leaders in shaping team creativity and engagement, risk-taking, and increasing innovation awareness, as well as the ability to seek for ideas from outside the company. Breu et al. [56] identified the indicators of leadership agility. Furthermore, according to Akkaya and Üstgörül [3] and Stray et al. [57], agile leaders play an important role in overcoming challenges in an agile transformation, such as the resistance to change. The primary skills of an agile leader, as identified by Stray et al. [57], are leadership qualities, project management skills, technical skills, and expertise in agile methods. Theobald et al. [13] also emphasized their role in creating good working conditions, which promote employee motivation and health. An agile leader inspires employees and helps them to achieve their own goals [21]. An agile leader shows a high level of emotional intelligence and shifts the focus of attention to their employees. However, we must also be aware, as Senabre Hidalgo [58] and Niederman et al. [59] pointed out, that leadership in agile environments is particularly challenging when it comes to involving multidisciplinary teams and extending the principles of agile management to other organizational areas of the company. Moreover, to be trusted, leaders must be value-based [60].
Organizational agility is a critical success factor that determines how competitive a company will be in today’s volatile business environment [14]. However, agile methods require agile teams that think differently and work in ways that support responsive delivery. An agile mindset and a set of shared values, principles, and often agile tools contribute to the success of agile teams. We have found that forming agile teams in the company has a positive effect on the agile work environment. The most important item is that all team members have knowledge of the organization’s operations, business environment, and future priorities. According to Ashutosh [61], research on the agile workforce has focused on speed and flexibility from an operational perspective, while studies on the attributes of the agile workforce are lacking. Olteanu [62] emphasized the importance of prerequisites for agile transformation, such as training and workshops, the involvement of agile experts, support and effectiveness, the establishment of a community practice, and a learning organizational culture. For building an agile environment, respondents also emphasized the importance of a great agile team spirit and common company goals. This result was in line with the research of Alahyari et al. [63], who emphasized the importance of the team environment and the team spirit among the success factors. The results show that it is important for the team and the company to work together to improve the aspects of team environment and team spirit.
Compatibilities and incompatibilities between organizational agility and organizational culture have been identified as one explanation for the difficulties encountered (for example, Felipe et al. [64] and Khalid et al. [65]). According to the results of our research, organizational culture in a company has a positive effect on the agile work environment. The most important role is played by an appropriate organizational culture, which helps to establish common values, opinions, and beliefs about the need for rapid and effective adaptation. This result also fits with prior studies by Lindvall et al. [66], who found that if the organizational culture is not appropriate, it will be difficult for a company to become agile. Moreover, the organizational culture should be based on an agile team spirit—trust, openness, dedication, and experimentation—and the company should create a culture that values the work of agile employees. According to Holbeche [60], the general principles of culture change suggests that, while leaders set the climate and model the behaviors that individuals, teams, and business units should follow, the actual change is rooted in performance and the task at hand. Culture change involves intellect and emotion, so opportunities should be found to try new things and exhibit new behaviors. It is about practicing new behaviors and building trust, not about changing attitudes. Teamwork, collaboration, and self-organization are some of the key attributes of agile teams, and trust acts as the foundation for all of these attributes [67]. Koch and Schermuly [68] pointed out that organizational values drive behavioral expectations, especially when individuals share a company’s values. In turn, these employees find that they are better able to align their behavior with these expectations, which translates into a sense of mastery over their work environment [69].
Agility drivers are environmental changes that put companies in a new, vulnerable position and require the search for competitive advantage. For agility drivers, it can be said that supply chain risk factors, in terms of features, have very close roles to agility drivers and both of these factors impact the uncertainty of the environment [70]. According to our research, the drivers for shifting towards agility have a positive effect on the agile work environment. The strongest points are that agility is necessary for rapid adaptation to market changes and for faster product delivery, adjusted to changing customer needs. Environmental turbulence, which encompasses the idea of continuous, uncertain, and potentially disruptive change in a variety of internal and external factors, is a key driver of agility [71]. According to our results, agile companies mostly strive to ensure that existing products or services are based on new digital technologies that will meet the changing requirements of the business partners. According to Walter [72], market changes, technology changes, and globalization are agility drivers that exemplify the external environment. Given the increasingly turbulent business environment, the ability to identify and quickly respond to market threats and opportunities has become critical to the survival and prosperity of contemporary organizations. Additionally, in line with Abdelilah et al. [73] and Denning [10,21], this emerged as a direct result of market changes such as demand variability, information accessibility, and increasing customer demands. Since customer demand is a variable that continuously changes over time, a company that is better able to adapt to these changes can gain a larger market share than its non-responsive counterparts [74]. Agility providers should both possess and provide agile characteristics and determine an organization’s agility capabilities and behaviors.
Finally, we also confirmed that an agile work environment has a positive effect on a company’s performance. Several studies have demonstrated the positive impact of agility on a firm’s performance (e.g., [9,75,76,77,78,79]). Unlike most other researchers, we used subjective indicators of company performance, which were composed of non-financial indicators that reflected respondents’ perceptions of their company’s performance (adopted from Mikalef and Gupta [45]). According to our results, the strongest impact on company performance resulted from the increase in growth and profitability. Therefore, it follows that a company anticipates future customer needs better than its competitors when it comes to product development and is also more successful in achieving its goals.

6. Conclusions

In brief, this work is one of the rare pieces of research that has built a conceptual framework for an agile work environment, which aims to clarify the relationships between an agile work environment and organizational performance, and includes selected constructs such as building agile leadership skills, leadership support in a company, organizational culture in a company, forming agile teams in a company, and drivers for shifting towards agility. Our results stress the positive influence that agile leadership skills, leadership support in a company, organizational culture, forming agile teams, and drivers for shifting towards agility have on building agile environments and on a company’s performance. These findings provide some support for the idea that agile companies, which are viewed as living systems, have evolved to thrive in an unpredictable, rapidly changing environment.
Leadership and management, in particular, are critical success factors in the agile transformation of a company. To build and lead an agile organization, it is crucial that senior leaders develop new mindsets and capabilities to transform themselves, their teams, and their organization. At the organizational level, agile reduces overhead roles, which leads to more efficiency. Thus, agile leaders create communities based on high levels of trust, respect, and working relationships. Their job is to provide employees with everything they need to function effectively, and then allow them to operate independently, within their boundaries. An agile leader understands that a positive attitude, generosity, and gratitude are important building blocks in a healthy work environment [7,24]. Creating a healthy workplace and maintaining the psychological safety of employees allows an agile manager to encourage learning and development, while also seeking a balance between sustainable results and efficiency for the benefit of the company [12]. Moving away from traditional leadership models, this paper has highlighted the significant role that agile leadership can play in enhancing the effectiveness and performance of a company. The current Industry 4.0 era is considered not only as a process that dominates technological developments, but one that also influences leadership styles [80]. Management 4.0 is essential for businesses to find and apply the appropriate technologies in the age of Industry 4.0. The leadership styles that leaders will need to adopt to be successful in this process and to survive in an intensely competitive environment could play an important role. According to Petermann and Zacher [1], the agile leadership style is currently a novelty in the business world, so human resource departments are not yet agile or are in the process of adopting this idea, and agile approaches are not yet used regularly. Human resource managers and leaders are not professionally trained or informed about their agile leadership style, so the vast majority of organizations do not yet have agile leaders [19,20].
Every company has to determine its level of agility itself. Consequently, the ways that companies respond to changes are different, so they need different levels of agility. It is about the people with whom the company is related. This study focused solely on agility at the organizational level. In addition, we limited our measurements to the five constructs that effect the agile work environment in medium and large Slovenian companies. Furthermore, there are other potential factors that lead to a company’s performance, for example individual performance and the company’s improvement. Employees and their skills, capabilities, knowledge, experience, and, on the other hand, the working environment and working conditions are also of great importance for the performance of a company. However, an agile mindset can help enterprises build and sustain a competitive advantage, even in the case of smaller organizations. As a possibility for future research, we recommend extending the measurement instrument with some additional constructs and applying the model to small businesses. Further qualitative research could also uncover valuable in-depth insights and interesting correlations. Of particular interest, in addition to the focus on the corporate size, could be the long-lasting establishment/tradition and the type of industry. Moreover, in our article we did not focus on SAFe or LeSS methods. Thus, as a possibility for future research, we recommend analyzing how scaled agile frameworks, such as SAFe or LeSS, impact on the agile work environment and the companies’ performance.

Author Contributions

Conceptualization, K.C., P.T. and M.R.; methodology, P.T. and M.R.; results: K.C., P.T. and M.R.; writing—original draft preparation, K.C., P.T. and M.R.; writing—review and editing, K.C., P.T. and M.R. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

Not applicable.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A

Table
Table A1. Factor analysis results.
Table A1. Factor analysis results.
ConstructItemCommunalitiesLoadingsCronbach’s Alpha
Building agile leadership skillsThe leader is actively involved in removing organizational barriers at all levels. 0.868 0.932 0.965
The leader communicates a compelling story, which helps inspire individuals and the team. 0.678 0.823
The leader is a role model for continuous improvement within the company. 0.875 0.935
The leader’s actions demonstrate that they care about personal and group wellbeing. 0.846 0.920
The leader transcends hierarchy to foster collaboration. 0.658 0.811
The leader creates conditions that encourage team engagement. 0.858 0.926
The leader encourages and supports the celebration of progress and offers proper recognition. 0.821 0.906
The leader motivates and supports individuals to bring their whole selves to work. 0.860 0.927
KMO = 0.939; Bartlett’s Test of Sphericity: approx. chi-square = 4545.172, df = 28, p < 0.001.
Cumulative percentage of explained variance: 80.753%.
Leadership support in the companyThe top management has significantly changed their way of working and interaction to fully embrace agile in the company. 0.881 0.939 0.937
The company has an agile management style that includes the involvement of subordinates in an effective decision-making process and the use of new management tools. 0.872 0.937
Top management has partly tailored their way of working and interaction. 0.792 0.890
Top management is the original driver for the transformation. 0.869 0.936
KMO = 0.782; Bartlett’s Test of Sphericity: approx. chi-square = 1952.375, df = 6, p < 0.001.
Cumulative percentage of explained variance: 84.638%
Drivers for shifting towards agilityAgility in our company is necessary for the digital agenda. 0.876 0.936 0.948
Agility in our company is necessary for the fast and continuous improvement of customer satisfaction. 0.885 0.941
Agility in our company is necessary for faster product delivery, adjusted to changing customer needs. 0.904 0.951
Agility in our company is necessary for swiftly adapting to market changes. 0.908 0.953
Agility in our company is necessary for improving transparency and managing priorities in the company. 0.878 0.937
Agility in our company is necessary for increased flexibility. 0.799 0.894
Agility in our company is necessary for improving team productivity. 0.846 0.920
KMO = 0.928; Bartlett’s Test of Sphericity: approx. chi-square = 4908.596, df = 21, p < 0.001.
Cumulative percentage of explained variance: 87.068%.
Organizational culture in the companyThe company consistently implements changes to better adapt to changing market conditions. 0.821 0.909 0.951
The company has an appropriate organizational culture, which helps to establish common values, opinions, and beliefs about the need for rapid and effective adaptation. 0.849 0.921
The company creates a culture that values agile employees’ work. 0.834 0.916
The company creates a culture where agile employees passionately believe in what they are doing. 0.826 0.913
Organizational culture is based on agile team spirit, trust, openness, dedication, and experimentation. 0.847 0.920
The company creates a culture in which agile employees want to stay with the company. 0.814 0.903
KMO = 0.873; Bartlett’s Test of Sphericity: approx. chi-square = 3179.222, df = 15, p < 0.001.
Cumulative percentage of explained variance: 81.903%
Forming agile teams in the companyA great agile team spirit prevails in the company. 0.853 0.924 0.938
All team members have knowledge of the organization’s operations, business environment, and future priorities. 0.862 0.928
Team members strive for common company goals. 0.851 0.923
Team members are ready to make quick decisions. 0.828 0.916
Team members can resolve issues related to change quickly. 0.795 0.908
Team members have a positive attitude towards changes, new ideas, and technology. 0.832 0.918
Team members support each other (extensive mutual support, mutual trust, and mutual respect between team members). 0.779 0.896
KMO = 0.913; Bartlett’s Test of Sphericity: approx. chi-square = 3148.801, df = 21, p < 0.001.
Cumulative percentage of explained variance: 74.206%.
Agile work environmentThe company strives to adapt to change in the shortest possible time. 0.811 0.900 0.953
The company recognizes good work and acknowledges success using periodic employee evaluation. 0.781 0.893
Working in a company is based on fast learning, decision making, and action cycles. 0.832 0.912
The company provides its agile employees with adequate training to carry out their work well. 0.840 0.917
The company constantly monitors changes in its business environment and seeks feedback from business partners in various ways. 0.827 0.910
The company lets agile employees feel empowered to make decisions that impact their work. 0.845 0.919
The company strives to ensure that existing products or services are based on new digital technologies that will meet the changing requirements of business partners. 0.850 0.922
The company is governed by an organization, based on a network of small, high-performing teams, with a high degree of autonomy. 0.838 0.916
KMO = 0.916; Bartlett’s Test of Sphericity: approx. chi-square = 4132.196, df = 28, p < 0.001.
Cumulative percentage of explained variance: 76.409%.
Company’s performanceWe strengthen business processes with new projects. 0.806 0.898 0.968
We successfully achieve business goals in the company. 0.877 0.937
We are better than our competitors at anticipating future customer needs when it comes to product development. 0.881 0.939
Business growth is increasing. 0.889 0.943
Our business units and/or functional units (e.g., marketing, R&D, and sales) are closely intertwined and support each other, thereby improving our competitiveness. 0.871 0.933
Profitability growth is increasing. 0.886 0.942
Compared to our main competitors, our company is more innovative. 0.809 0.899
KMO = 0.912; Bartlett’s Test of Sphericity: approx. chi-square = 4792.655, df = 21, p < 0.001.
Cumulative percentage of explained variance: 85.718%.

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Sustainability 14 14807 g001 550
Figure 1. A conceptual model of developing an agile work environment.
Figure 1. A conceptual model of developing an agile work environment.
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Figure 2. The conceptual model with the values of path coefficients. * p < 0.01; ** p < 0.001. Source: own research.
Figure 2. The conceptual model with the values of path coefficients. * p < 0.01; ** p < 0.001. Source: own research.
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Table
Table 1. Model fit and quality indicators.
Table 1. Model fit and quality indicators.
Quality IndicatorsThe Criterion of Quality IndicatorsCalculated Values of Indicators of Model
Average path coefficient (APC)p < 0.050.187, p < 0.001
Average R-squared (ARS)p < 0.050.472, p < 0.001
Average adjusted R-squared (AARS)p < 0.050.470, p < 0.001
Average block variance inflation factor (AVIF)AVIF < 5.03.439
Average full collinearity VIF (AFVIF)AFVIF < 5.03.032
Goodness-of-fit (GoF)GoF ≥ 0.1 (low)
GoF ≥ 0.25 (medium)
GoF ≥ 0.36 (high)		0.626
Simpson’s paradox ratio (SPR)SPR ≥ 0.71.000
R-squared contribution ratio (RSCR)RSCR ≥ 0.91.000
Statistical suppression ratio (SSR)SSR ≥ 0.71.000
Nonlinear causality direction ratio (NLBCD)NLBCD ≥ 0.70.875
Source: own research.
Table
Table 2. Indicators of quality of the structural model.
Table 2. Indicators of quality of the structural model.
ConstructsCRAVER2Adj. R2Q2VIF
Building agile leadership skills0.9710.808(-)(-)(-)2.816
Leadership support in the company0.9550.841(-)(-)(-)1.537
Organizational culture in the company0.9620.807(-)(-)(-)2.740
Drivers for shifting towards agility0.9780.865(-)(-)(-)2.182
Forming agile teams in the company0.9490.814(-)(-)(-)1.975
Agile work environment0.9530.8260.5280.5270.3763.061
Company’s performance0.9840.8720.5630.5600.3892.548
Note: (-) values could not be calculated because the construct was a baseline. Source: own research.
Table
Table 3. Standardized path coefficients for the proposed model.
Table 3. Standardized path coefficients for the proposed model.
Hypothesised PathPath Coefficient (γ)Sig.Effect Size
(ƒ2)		Standard ErrorRelationship DirectionShape of Relationship
AL→AE0.543p < 0.0010.4730.034PositiveNonlinear
LS→AE0.612p < 0.0010.3680.036
DA→AE0.579p < 0.0010.5020.035
OC→ AE0.481p < 0.010.3750.035
AT→AE0.523p < 0.010.4260.036
AE→CP0.647p < 0.0010.5240.033
Note: AL—building agile leadership skills; LS—leadership support in the company; DA—drivers for shifting towards agility; OC—organizational culture in the company; AT– forming agile teams in the company; AE—agile work environment; and CP—company’s performance. Source: own research.
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Crnogaj, K.; Tominc, P.; Rožman, M. A Conceptual Model of Developing an Agile Work Environment. Sustainability 2022, 14, 14807. https://doi.org/10.3390/su142214807

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Crnogaj K, Tominc P, Rožman M. A Conceptual Model of Developing an Agile Work Environment. Sustainability. 2022; 14(22):14807. https://doi.org/10.3390/su142214807

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Crnogaj, Katja, Polona Tominc, and Maja Rožman. 2022. "A Conceptual Model of Developing an Agile Work Environment" Sustainability 14, no. 22: 14807. https://doi.org/10.3390/su142214807

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