Here is a brief excerpt from an article written by Chris Gagnon, Elizabeth John, and Rob Theunissen for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.
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The central idea underlying our organizational work for the past decade has been that the best way to run a business is to balance short-term performance and long-term health.
Healthy companies, we know, dramatically outperform their peers. The proof is strong—the top quartile of publicly traded companies in McKinsey’s Organizational Health Index (OHI) delivers roughly three times the returns to shareholders as those in the bottom quartile—so strong, indeed, that we’ve almost come to take it for granted.
Execute against that vision effectively, and renew itself through innovation and creative thinking. Put another way, health is how the ship is run,
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Working on health works. It’s good for your people and for your bottom line.
The central idea underlying our organizational work for the past decade has been that the best way to run a business is to balance short-term performance and long-term health.
Healthy companies, we know, dramatically outperform their peers. The proof is strong—the top quartile of publicly traded companies in McKinsey’s Organizational Health Index (OHI) delivers roughly three times the returns to shareholders as those in the bottom quartile—so strong, indeed, that we’ve almost come to take it for granted.
But now we see new, longitudinal evidence that redoubles our conviction. Companies that work on their health, we’ve found, not only achieve measurable improvements in their organizational well-being but demonstrate tangible performance gains in as little as 6 to 12 months. This holds true for companies across sectors and regions, as well as in contexts ranging from turnarounds to good-to-great initiatives.
Our recommendation is clear: start managing your organizational health as rigorously as you do your P&L, providing pathways for leaders at all levels to take part and embedding and measuring the new ways of working.
Health and the bottom line
We think of organizational health as more than just culture or employee engagement. It’s the organization’s ability to align around a common visiono matter who is at the helm and what waves rock the vessel.
Over the past ten years, we’ve monitored the health of more than 1,500 companies across 100 countries. We do this by aggregating the views of their employees and managers (more than four million to date) on management practices that drive nine key organizational dimensions—or “outcomes,” as we call them. We assign scores to each practice and outcome, allowing a company to see how it compares to others in the database.
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Here is a direct link to the complete article.
http://www.mckinsey.com/business-functions/organization/our-insights/organizational-health-a-fast-track-to-performance-improvement
Chris Gagnon is a senior partner in McKinsey’s New Jersey office; Elizabeth John is an associate principal in the Washington, DC, office; and Rob Theunissen is a partner in the Amsterdam office.
The authors wish to acknowledge the contributions of Lili Duan to this article.