The State of Organizations 2023 - Flipbook - Page 30
Exhibit 25
There is a direct link between organizational health and financial performance.
2017–22 TSR, by organizational health, %
43
3×
Bottom quartile in
organizational
health
–17
14
Middle quartile in
organizational
health
Top quartile in
organizational
health
Source: Corporate Performance Analytics by McKinsey; Organizational Health Index by McKinsey, 50 surveys, 2017–22
workers. The revised employee value propositions
should bring to life the things that targeted worker
cohorts care about: working in a great company (the
organization’s culture, values, societal impact), being
supported by great leadership (support from caring
managers), having a great job (access to coaching,
mentorship, and learning opportunities), and
achieving great rewards (recognition for a job well
done). Business leaders can use advanced analytics
and organizational data to identify the employees at
risk of leaving and develop interventions specific to
the things that the employees care about.
compensation, and benefits; and in advancement
discussions. Organizations will need to monitor and
measure representation at all levels and functions
and to develop inclusion and retention strategies for
those who are underrepresented.
develop a five-year workforce projection linked to
the company’s value-creation agenda. Which skills
are most critical for delivering on the company’s
strategy, and what would happen if people with these
skills weren’t available? With this information in hand,
the CEO can build a workforce plan that quantifies
skill needs and outlines potential pathways to find
the right people—for instance, traditional hiring and
capability building, as well as nontraditional options
(such as apprenticeships and role redesign). The
CEO can also use this workforce plan to prioritize
investments in the development or curation of
multimodal learning, ecosystem partnerships
focused on up- or reskilling, or other means to elevate
mission-critical roles and build foundational skills
across the organization.
an organization is 2.4 times more likely to achieve
performance targets if it has a focus on developing
leaders and that transformations are more than
five times more likely to succeed if leaders model
the desired behavioral changes.
Investing in leadership
Organizations tend to underinvest in leadership
development, often aren’t clear about which
mindsets and behaviors they should focus on building
in new leaders, and rarely (if ever) measure the impact
of leadership development programs. Consider that
only 33 percent of C-suite executives in a McKinsey
survey say their capability-building programs always
or often achieve business impact, and 45 percent say
they don’t have a clear plan for building high-priority
capabilities. That’s likely because most organizations
think of leadership development as a program rather
than a transformative, holistic, “leading self” journey.
If talent is the lifeblood of organizations, leaders
are the heartbeat. They are the ones who keep
ideas, people, and workstreams moving and who
enable an organization to achieve breakthrough
performance. Leaders are a heterogeneous bunch,
working at different levels and affecting different
areas of the organization. But their collective
influence matters. McKinsey research shows that
To refocus organizations on the importance of at
scale leadership development, CEOs can start by
identifying the leadership behaviors required to help
their organizations meet strategy objectives and
realize stated visions and aspirations. For instance, if
an organization is seeking to become more agile, the
leadership mindset will need to shift from controller
Build a deep bench
With retention and short-term attraction strategies
set, CEOs, chief HR officers, and other senior leaders
will want to create a deep bench of talent to meet
organizations’ longer-term talent needs. A CEO will
need to work with others across the organization to
Fill the gaps
To find the people with the skills that organizations
need, business leaders should think twice about
where they are looking for and the criteria that they
are using to screen candidates. As a result of the
COVID-19 crisis, many companies are shifting away
from standard hiring processes toward ones that
are faster and more candidate friendly—for instance,
reducing the time to an offer and giving candidates
the opportunity to interview with both potential
peers and potential managers. In all cases, a CEO
must ensure that equitable hiring practices are in
play. Organizational commitment to DEI should be
reflected in job descriptions; in employee training,
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The State of Organizations 2023
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