The State of Organizations 2023 - Flipbook - Page 20
Exhibit 13
Exhibit 15
Survey respondents believe that their organizations should make capability
building a priority.
Organizations are having a hard time acquiring employees to build new
capabilities.
Exhibit
of
Urgency required to address capability gaps, % of respondents (n = 489)1
We are already too late
We need to act soon
6
Challenges to acquiring new employees for capability development, % of respondents (n = 489)1
We need to act now
43
We are all set
47
5
Lack of resources
for finding and
hiring new staff
Not attractive
for certain types
of talent
Note: Figures do not sum to 100%, because of rounding.
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 urgent is the need to address any capability gaps?
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
1
capability programs. We aren’t talking about just the
acclimation for new hires or development of skills in the
current workforce but also about the building of new
functional and enterprise-wide capabilities. Functional
capabilities are core activities that a company
does today but may need to change or improve
dramatically—for example, sales force effectiveness,
procurement, and performance marketing. Enterprisewide capabilities are strengths that truly span the
entire company, such as speed of decision making
and the ability to innovate, and they are often “net new”
capabilities that a company requires.
Hiring externally and building internally are both options
to fill the gap, although both come with challenges and
costs. When it comes to acquiring capabilities through
hiring, State of Organizations Survey respondents
point to insufficient support from senior leadership
and a lack of resources as key obstacles. The top three
most frequently cited concerns are a lack of available
talent in the industry, an inability to meet compensation
requests, and the lack of attractiveness for certain
types of talent (Exhibit 15).
1
In our survey, respondents we asked about capability
building cite several obstacles, including not enough
time (46 percent), insufficient support from senior
leadership (20 percent), and a lack of resources
for training and development (20 percent), for their
organizations (Exhibit 14).
Among the issues are the following:
— Programs aren’t necessarily tailored to specific
institutional or individual skill gaps.
— In many organizations, capability-building
programs aren’t integrated into employees’
on-the-job experiences.
— Organizations don’t necessarily review
their ROI on learning programs regularly,
adequately measure desired outcomes,
or link training outcomes directly to
business outcomes.
Exhibit 14
Organizations lack the time and resources to build new capabilities internally.
Challenges to in-house capability development, % of respondents (n = 489)1
Other
Unclear about which
capabilities are needed
Lack of resources for
training and development
2
11
20
Insufficient support
from senior leadership
1
46
Lack of time to
develop capabilities
20
Note: Figures do not sum to 100%, because of rounding.
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:
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
28
Insufficient
support from
leadership
The State of Organizations 2023
Inability to match
compensation
expectations
Insufficient pool
of talent
in industry
Note: Figures do not sum to 100%, because of rounding.
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:
Which challenge is most pressing for your organization regarding the acquisition of new employees for capability development?
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
Finding the right formula
In trying to fill both individual- and institutional-level
capability gaps, companies can use a model that we
call “VECTOR” (based on the first letter of each of
the six elements—vision and leadership, employees,
culture and mindset, technology, organization, and
routines—that inform the approach).
Vision and leadership
The most ambitious and successful CEOs outline a
vision for what they want to be known for. How will
their company shape and innovate the industry? The
leadership team must commit to the journey and
drive it resolutely, even as the institutional capability
evolves and grows.
Employees
Companies should build a full talent system to
support the institutional capability. A well-functioning
talent system first maps the pivotal roles and skills
required for the capability, honestly assessing
the existing strengths and gaps. It then efficiently
balances new hiring with existing employee reskilling
and delivers training throughout the talent life cycle
March 2023
to enhance existing skills and build new ones. Finally,
it builds and manages career paths to retain high
performers and maintains strong incentive and
performance management systems.
Culture and mindset
A mindset shift is often required when building or
enhancing a capability. The techniques of change
management, from change stories to top-team role
modeling, still work. But to make the change stick, in
our experience, companies need to commit to the
ongoing measurement of culture and inclusion of
culture change metrics in top-management incentives.
Technology
In today’s world, it’s hard to imagine a true
institutional capability that doesn’t have technology,
data, and AI at its core. But these elements are hard
to get right: companies often build one-off digital
customer journeys or AI models that don’t scale, or
they rely too heavily on an overhaul of core systems to
solve all problems.
Organization
A company’s organizational structure and ways of
operating must be designed and constructed to
provide clear roles, responsibilities, and accountabilities that enable the capability to grow and thrive.
Routines
In filling an institutional capability gap, as in any part
of a business, high-quality, well-designed routines
are essential. Critically, organizations must practice
any new processes with coaching to lock them truly
into the organization.
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