Organizational health stands as a cornerstone for sustained long-term performance, yet it remains an ever-shifting entity. For over two decades, McKinsey's Organizational Health Index (OHI) has delved deep into the practices and outcomes that pave the way to better health. Through extensive research, we have unearthed emerging and evolving trends in various critical health factors such as technology, worker motivation, talent strategies, and leadership styles. Now, it's time to test your knowledge and explore these fascinating aspects in detail.

Unlock the Secrets to Organizational Well-being

Authoritative Leadership

For a considerable period, the conventional wisdom suggested that there are specific times and situations where authoritative leadership comes into play. By leveraging authority, pressure, and influence, tasks get accomplished. This authoritative leadership practice has been an integral part of our OHI survey right from the start. During the survey update process, we hypothesized that it would continue to hold its ground as one of the key leadership practices. It has proven to be a powerful force in driving organizational health, guiding teams towards success.In many organizations, leaders who exhibit authoritative leadership qualities are able to inspire and motivate their teams to reach new heights. They set clear expectations and ensure that everyone is on the same page. This not only leads to increased productivity but also fosters a sense of discipline and focus within the organization.

Employee Experience

The OHI not only measures the outcomes such as how well an organization aligns, executes, and renews itself to achieve sustained high performance but also focuses on the daily practices that leaders employ to achieve these outcomes. While measuring individual employee experience can provide valuable insights, we initially believed that it might not be a core aspect of the diagnostic. We thought that it might not add significant predictive value beyond what is already captured by management practices.However, upon closer examination, we realized that employee experience plays a crucial role in organizational health. Happy employees are more likely to be loyal and committed to the organization. They bring a positive attitude to work and are more willing to go the extra mile. By focusing on improving employee experience, organizations can create a more engaging and fulfilling work environment.

Purpose

In the past, employee involvement mainly revolved around getting people involved in the "what" and the "how" of interpreting, evolving, and executing an organization's strategy. But we predicted that purpose, which represents the "why" that inspires people, should be added as a new practice. This new practice would drive whether organizations effectively set a clear direction, leading to four direction practices instead of three: purpose, shared vision, strategic clarity, and employee involvement.Purpose gives employees a sense of meaning and direction. When they understand the purpose behind their work, they are more likely to be motivated and engaged. It helps to align individual goals with the overall goals of the organization and creates a sense of unity among employees.

Decision-making Excellence

Effective decision-making is of utmost importance for organizational health. We have all experienced situations where decisions are made haphazardly, based on inaccurate information, or postponed for too long. These scenarios can lead to inefficiencies and missed opportunities. In updating the OHI survey, we predicted that decision-making effectiveness and efficiency would become a new practice driving the outcome of coordination and control.Organizations that excel in decision-making are able to make timely and informed decisions. They have clear decision-making processes in place and involve the right people in the decision-making process. This ensures that decisions are based on accurate data and are in the best interest of the organization.

Tech and Digital Capabilities

Many organizations recognize the importance of investing in technology to enhance the employee experience. They believe that happy employees are more likely to be loyal and productive. We predicted that technology and digital capabilities would be added as a new practice driving the capabilities outcome. This new practice would focus on the role of technology in making work easier for employees.With the rapid advancement of technology, organizations need to leverage digital tools and platforms to streamline processes and improve efficiency. From automation to data analytics, technology can provide valuable insights and enable organizations to make better decisions.

Environmental Sustainability

Employees today are increasingly concerned about the environmental impact of their organizations. They want to know that their companies are taking responsibility and making efforts to make the world a better place. We predicted that sustainability, including a focus on net-zero goals, would be added as a new practice driving external orientation.Organizations that embrace sustainability not only contribute to the well-being of the planet but also gain a competitive edge. By reducing their environmental footprint and engaging with external stakeholders on sustainability issues, they can build stronger relationships and enhance their reputation.

Inclusion

The true value of a diverse and equitable workforce is only realized when an organization is inclusive. We expected to add two practices related to inclusion. One practice focuses on creating an inclusive work environment where every employee's unique perspectives are valued and they feel a sense of belonging. This practice drives an effective work environment.Inclusive leadership is another crucial aspect. Leaders who foster an inclusive environment include a diverse set of employees in decision-making processes and address inappropriate behavior promptly. This practice drives the leadership outcome and helps to build a more cohesive and productive organization.

Talent Deployment

All companies strive to have the best talent. Attracting external talent and retaining great employees is a challenging task. We predicted that the talent acquisition practice, which focuses on hiring the best external talent, should be expanded to a broader practice that includes strategically and dynamically shifting talent within the organization.By effectively deploying talent, organizations can ensure that they have the right people in the right positions at the right time. This helps to optimize performance and drive innovation within the organization.