McKinsey Research Says Your Organization Needs Therapy

McKinsey just celebrated their 20th anniversary of the Organizational Health Index (OHI), a "diagnostic that measures critical elements of a high-performing culture in an organization. The index draws from a proprietary database of more than eight million respondents across more than 2,500 organizations in a range of geographies and industries." Their research "reiterates the degree to which organizational health is not just nice to have; it’s required for sustained performance and organizational success."

I encourage you to read the full article. Today's blog focuses on the main findings and insights from this impressive research study.

Key Finding:

Organizational health is the strongest predictor of value creation and sustained competitive advantage. Companies with higher health outperform their peers in terms of:

• Total shareholder returns (TSR): 3x higher over the long term

• Resilience: 59% less likely to show signs of financial distress during crises

• Safety: 6x fewer safety incidents

• Talent retention: 47% less likely for employees to report intentions to leave

• Performance: 35% higher TSR in large transformations

Key Trends:

Leadership: Decisive and empowering leaders are crucial, with decisive leaders 4.2x more likely to have healthy organizations. Empowering employees leads to 85% better quality decisions.

Data-Driven Innovation: Organizations succeed with both "big bang" ideas and smaller, frequent improvements informed by data and feedback from frontline employees.

Dynamic Talent Deployment: Internal mobility boosts employee engagement, reduces burnout, and helps organizations adapt to changing environments.

How to get and stay healthy as an Organization:

1. Measure and understand your current strengths and weaknesses.

2. Set clear behavioral priorities.

3. Implement specific interventions based on your business needs.

Focus on four "power practices":

1. strategic clarity

2. role clarity

3. personal ownership, and

4. competitive insights.

Leadership Imperative:

• Make organizational health a central priority and manage it rigorously.

• Avoid common pitfalls: inconsistency, lack of involvement, short-termism, and fear of confronting unhealthy behaviors.

• Reframe performance management around maintaining and improving health.

• Identify and cultivate the behaviors that are your "secret sauce" for competitive advantage.

• Commit to continuous monitoring and improvement, even for seemingly healthy organizations.

Organizational health is not a one-time fix. It's a continuous journey that requires commitment and effort, but the rewards are significant and long-lasting.

Personal Reflection:

• Do you believe your organization prioritizes organizational health?

• How would you rate your own organization's performance on the four "power practices"?

• Where could you improver your own leadership behaviors to be more decisive, empowering, and data-driven?

Organizational Reflection:

• What are the biggest challenges your organization faces in achieving or maintaining good health?

• How can you communicate the importance of organizational health to all levels of the organization?

• How does our organization foster innovation and adapt to changes in the market or industry? Are there processes in place that could be hindering our ability to innovate?

• In what ways has our organization demonstrated resilience in the face of challenges? What can be learned from these experiences to further enhance our resilience?

• Consider how data and technology are utilized in decision-making processes. Are we leveraging these tools effectively to support innovation and operational efficiency?

Actionable Reflection:

• What is one thing you can do personally to contribute to a healthier organizational culture?

• What is one question you can ask your manager or leader about your organization's health?

• What is one action you can take to start collecting data on your organization's health metrics?

Note- McKinsey's research is clear: a truly healthy organization outperforms in every metric that matters. Understanding and improving organizational health is a formidable journey, one that necessitates nuanced expertise and a strategic approach. At Glass Half Full Consulting, we specialize in guiding organizations like yours through the process of enhancing workplace cultures, driving engagement, and fostering environments where innovation and excellence thrive. We empower leaders to not only meet but exceed their strategic objectives, ensuring sustainable success and resilience against any challenge. Reach out to us and let’s craft a tailored strategy designed to help you assess your current health, identify areas for improvement, and implement data-driven strategies for building a thriving workplace culture.