The State of Organizations 2023 - Flipbook - Page 17
scale superstars. They exist in all sectors and
average more than $1 billion in economic profit.
management style seems to activate human
capital and create a tangible competitive
advantage: the people and performance
winners in our study were 4.2 times more
likely than the average company to remain in
the top quintile of their sectors in ROIC for at
least nine out of the ten years between 2010
and 2019.
— Competitive advantage. Companies that
combine people and performance success
have a distinctive organizational signature
that challenges and empowers employees
while fostering bottom-up innovation. This
Exhibit
Exhibit
10
of
Survey respondents say their organizations expect continued workforce
turnover in the first half of 2023.
Voluntary employee turnover expected in H1 2023, % of respondents (n = 697)¹
Don’t know
Higher than in H1 2022
2
Exhibit
Exhibit
9of
1
Companies can gain a competitive edge with a dual focus on people
and performance.
Organizational
signature, by
company type
People and performance winners:
top-tier financial results and human-capital development
Challenging
Nurturing
Caring
Encouraging
Top down
38
Issues to address
People-focused companies:
top-tier human-capital development
Performance-driven companies:
top-tier financial results
Share of companies in each type, %
21
9
15
55
Typical performers: no clear patterns observed
People and performance winners excel across a range of business outcomes
ROIC, %
Performance
vs peers, multiples
Revenue growth
during COVID-19 crisis, %
Rate of
attrition, %
Economic
profit, $ billion
BETTER
BETTER
BETTER
BETTER
BETTER
7.9
28
4.2×
28
8
1.1
8.5
3.0×
6
0.4
4
9
6
–1.1×
–1.5×
WORSE
WORSE
Source: McKinsey Global Institute analysis
22
The State of Organizations 2023
0
13.5
3
WORSE
13.4
WORSE
0
–0.1
–0.1
WORSE
46
Lower than in H1 2022
14
All respondents were asked to select the top 3 trends for their organizations. For these data, an additional question was posed to a subset of respondents:
How much voluntary turnover do you expect over the next year?
Source: McKinsey State of Organizations Survey, >2,500 leaders in organizations with ≥1,000 employees across industries in Canada, China, France, Germany,
India, Spain, UK, and US, May–June 2022
— Capability building. Talent benefits from an
organization’s people focus too. Skills learned
on the job contribute 46 percent of the average
person’s lifetime earnings, and companies that
build human capital are more likely to propel their
employees into higher earnings brackets over the
course of a career.
Collaborative
Goal oriented
About the same as in H1 2022
The Great Attrition is affecting workers of all levels.
All types of employees across all income levels, from
managers on the front line to leaders in the C-suite,
are leaving their jobs. No role, level, or industry is
impervious to the trend. Moreover, expectations
are high that it will continue. When asked about
expected voluntary attrition over the first half of
2023, almost 40 percent of our survey respondents
say they expect the rate at their organization to be
higher than that seen in first half of 2022 (Exhibit 10).
looking for better jobs, compensation, and work–
life balance. But employees’ responses painted a
different picture: among the top reasons they gave for
quitting were not feeling valued by the organization or
by their individual managers and not feeling a sense
of belonging at work. The employers were focusing
on transactional elements of the work experience
while employees were asking for more emphasis on
relational factors.
At least some of this disconnect lingers today, our
State of the Organization Survey suggests. While
work–life balance and compensation are among
the top factors affecting the employee experience,
employees themselves cite other characteristics that
tend to be lower on employers’ lists. These include
caring leaders, meaningful work, and safe workplace
environments (Exhibit 11).
The traditional labor market is losing its inevitability
People no longer look at a traditional job as the only
possibility for income, as many other opportunities—
for instance, to become Uber drivers, Airbnb hosts,
and social-media influencers—have emerged.
Organizations hiring for traditional jobs now find
themselves in competition for talent not only with
one another but also with nontraditional types
of employment.
There is a disconnect between employers
and employees
When we surveyed employers and employees in
August 2021, employers said the top reasons that
their employees were quitting were that they were
March 2023
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