The State of Organizations 2023 - Flipbook - Page 6
The ten most significant shifts
facing organizations today
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Strengthening
resilience
A renewed
efficiency drive
Volatility is a feature,
not a bug, in today’s
organizations, yet
half the respondents
in the State of
Organizations Survey
say their organization
is unprepared to react
to future shocks and
disruptions. Those able
to bounce forward—
and quickly—out of
serial crises may gain
significant advantages
over others. Those that
don’t may get caught
in a double bind: not
sufficiently motivated
to prepare for crises
in times of calm and
unable to move quickly
enough when a crisis
does strike.
More than 30 percent
of executives in our
survey say efficiency
is one of their top
three organizational
priorities, and about 10
percent acknowledge
that efficiency will be
critical for survival. Yet
only about one-third say
their organizations are
set up in ways that are
simple and supportive of
key business activities.
Improving efficiency
requires putting a
renewed focus on
people in decision
making—listening
to employees about
obstacles to efficiency
they are experiencing
and coming up with
solutions together.
In the 2020–21
economic recovery,
resilient companies
generated TSR
50 percent higher
than those of less
resilient peers
~40% of respondents
point to their organization’s complex
structure as a cause
of inefficiency, and
a similar proportion
blame unclear roles
and responsibilities
50%
40%
3
‘True hybrid’:
The new balance
of in-person and
remote work
Since the pandemic,
about 90 percent of
organizations have
embraced a range of
hybrid work models
that allow employees
to work remotely from
off-site locations
(including home) for
some or much of the
time. What’s important
is that organizations
provide structure and
support around the
activities best done in
person or remotely. By
remaining open to the
entire universe of options
for how, when, and where
employees work, “true
hybrid” organizations can
distinguish themselves
as destination
workplaces.
>4 of 5 employees
who have worked in
hybrid models over
past 2 years want to
retain them
>4 of 5
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Making way for
applied AI
Successful deployment
of applied AI poses
many of the same
organizational
challenges seen with
workplace digitization—
that is to say, it requires
changes to create a
culture that enables the
responsible use of AI,
as well as to cultivate
AI-savvy leadership
and talent. Companies
need to think about
how to build on the
digital backbones
they have already
been developing and,
as they embrace the
opportunities offered
by the technologies,
redefine themselves as
organizations driven by
AI, not just power users
of it.
50–60% of
respondents have
adopted AI in ≥1
business unit, and
nearly 67% expect
their organizations to
increase AI investment
50–60%
5
New rules of
attraction, retention,
and attrition
People are revising their
attitudes both to work
and at work. Employees
who quit (or who are
“quiet quitting”) say it
isn’t just money, work–
life balance, professional
development, or purpose
that will bring them back
to work in 2023, it’s a
combination of all those
things. Organizations
can acknowledge the
new rules of talent
attraction and retention
by tailoring employee
value propositions
to individualized
preferences in ways that
can help close the gap
between what today’s
workers want and what
companies need.
39% of respondents
in a recent survey in
7 countries tell us that
they are planning to
leave their jobs in next
3–6 months
39%
Through the State of the Organization Survey, conversations with CEOs and their
teams, and the findings of recent McKinsey research, we have identified ten
organizational developments as having the most impact on the ability of businesses
to prosper in the future.
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7
Closing the
capability chasm
Walking the talent
tightrope
With the growing
deployment of
automation and AI in
the workplace, the
skills needed to drive
growth and value
over the next decade
are changing, and
companies everywhere
are looking to fill
capability gaps. This
is not just a question
of individual skills: to
achieve a competitive
advantage, they need
to build institutional
capabilities that go
beyond traditional
learning programs,
plugging the gaps in
their core activities that
are often the result of
insufficient resources
or inconsistent
commitment.
Business leaders have
long walked a talent
tightrope—carefully
balancing budgets while
retaining key people.
In today’s uncertain
economic climate,
organizations need to
focus more on finding
ways to match top talent
to the highest-value
roles. The idea isn’t
new, but it’s the right
one in this era of hybrid
work models, increased
employee mobility,
and skill shortages.
McKinsey research
shows that, in many
organizations, between
20 and 30 percent of
critical roles aren’t
filled by the most
appropriate people.
Only 5% of
respondents say
their organizations’
capabilities are set for
the next several years
Highest performers
in a role are 800%
more productive than
average performers in
same role
5%
800%
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9
Leadership that
is self-aware and
inspiring
Leaders these days are
necessarily focused on
short-term responses
to crises, but they also
need to think longer
term and cultivate fitfor-purpose behaviors.
They need to be able to
lead themselves, they
need to be able to lead
a team of peers in the
C-suite, and they need
to have the leadership
skills and mindset
required to lead at
scale, coordinating and
inspiring networks of
teams. That requires
leaders to build a keen
awareness both of
themselves and of the
operating environment
around them.
Only 25% of
respondents say
their organizations’
leaders are engaged,
passionate, and
inspire employees to
best possible extent
25%
10
Making meaningful
progress on
diversity, equity,
and inclusion
Mental health:
Investing in
a portfolio of
interventions
Many organizations are
focusing on diversity,
equity, and inclusion
(DEI), but in many
cases, the initiatives
aren’t translating into
meaningful progress.
What’s often missing is
a clear link between DEI
strategy and the business
strategy. One path
forward is for leaders to be
more systematic early on,
considering the objectives
and desired level of impact
from their programs. To
realize DEI aspirations,
leaders will need to
identify opportunities for
making progress within
their organizations, as
well as for improving their
external communities
and society.
Nine of ten organizations
around the world offer
some form of wellness
program. But global
health and well-being
scores remain poor,
despite well-intended
interventions. Research
highlights the link
between reports of poor
mental health and wellbeing and organizational
issues, including
attrition, absenteeism,
lower engagement, and
decreased productivity. In
2023, organizations need
to refocus their efforts
on addressing the root
causes of mental-health
and well-being challenges
in a systematic way; oneoff and incremental fixes
won’t be enough.
>70% of respondents
say their organizations
express transformative
DEI aspirations; only
47% say they have
infrastructure to realize
their DEI aspirations
Employees facing
mental-health and wellbeing challenges are 4×
more likely than others
to want to leave their
organizations
>70%
4×
47%
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