From defining a new hybrid workplace, to navigating supply chain disruption, to retaining exceptional talent amid the great attrition, leaders and organizations today are facing unparalleled challenges. Core to performing in this environment is having a tightened focus on an organization’s health—its ability to align around and achieve strategic goals.
Research shows that healthy organizations excel in three areas: attracting and developing their people, investing in the right capabilities for their goals, and designing their organizations for speed and innovation. We spoke with two leaders of McKinsey’s People & Organizational Performance Practice, Michael Park and Dana Maor, on what they’re hearing from clients and how we’re helping them navigate the topic.
You’re both laser-focused on the people part of an organization. How did you get interested in the topic?
Michael: McKinsey was my first job after college. I honestly never thought I’d join this practice but found that in my performance transformation and strategy work, the biggest constraints I saw in organizations over and over again typically stemmed from people and culture issues. In my earlier days, I thought this area was “soft stuff,” but I learned that when we really energized people and brought the organization along together towards unified goals was when we saw the greatest success in our client work.
Dana: I started my professional life as a computer scientist and joined McKinsey to crack the toughest problems. I quickly learned that solving the problem is only half the battle and doesn’t truly move the needle or make a difference. Whether at McKinsey or with clients, truly making a difference involves changing how companies and teams operate. It’s about helping individuals understand the capabilities, mindsets, and behaviors they need to be successful and then helping them get there. This shifted my focus from the what to the how, from a focus on solving problems to a focus on empowering individuals. If individuals are empowered, they can solve the problems.
With CEOs prioritizing people-related issues now more than ever, what’s top-of-mind for them?
Dana: Change at the accelerated scale, scope, and pace we’re seeing today is the new normal. The pandemic has changed people, business, and society forever—which has created a mix of challenges and opportunities. Talent attrition is on the rise, well-being is on the decline, and the demand for highly-skilled talent is only intensifying. In our research, 40 percent of employees are likely to leave their current job in the next three to six months, and 85 percent of workers report that their well-being has declined with the pandemic.
Michael: Over the last 24 months, every employer has been scrambling to meet the needs of a fast-changing workforce. Too often this means playing defense, reacting to the next obstacle. Now is the time for leaders to go on offense, to build environments that attract talent, and create a people and organizational competitive advantage.
This is an opportunity to do away with bureaucracy and non-value-added processes and meetings, and really re-think how an organization works. As the adrenaline from that initial crisis-response period wears off, organizations must figure out how to move faster and be more customer-centric and modern.
How are these changes impacting the way McKinsey serves clients?
Michael: For starters, there is no longer a case that needs to be made to convince leaders to focus on people and the way an organization operates. Our research shows that most transformations fail—usually for reasons related to people and culture. Our clients know they have to get this right. And so, we’ve focused our offerings around outcomes that create the space and capacity for speed and innovation.
One example of how we’re doing this is by helping clients build faster, leaner, more resilient and modern organizations. We’re tapping into a wide range of our capabilities, from McKinsey Academy—our entity for skill-building and leadership development—to assets like our Organizational Health Index that puts quantification and real interventions against previously-considered “soft” organizational issues.
Dana: We recognize that today business transformation is the new reality of business as usual. Our clients need to crack the code for sustaining change to achieve the outcomes they desire. We help our clients deliver that lasting change, drawing on our organization experts, implementation coaches, Aberkyn change facilitators, and a wide range of diagnostics and assets. This starts with getting them to articulate a clear purpose from the top that is understood at all levels of the organization, inspiring purposeful leadership, shifting mindsets and behaviors, and equipping people with the required skills and behaviors to grow and sustain performance.
Ultimately, people make change happen. Organizations that put people at the heart of all they do are the ones that will come out ahead.
You mention speed. How do we think about enabling fast-moving companies to do more?
Michael: First you start with the critical priorities that flow through an organization—both to create value and to preserve value. Then you get to quantifiable objectives and metrics at each level that support these priorities. Most leaders get these steps right.
The real differentiator from there is to allocate resources and people to the areas that matter most and create a performance culture that sustains. One of my clients regularly asks his teams at the end of a meeting what is the most important thing they’re working on. After they answer, he then asks if they have the best person to do it. And so often the answer is no.
From an organizational structure standpoint, we’re moving away from functional hierarchy to having greater fluidity in place. Organize people around things that matter and are relevant to their roles. This means creating small cross-functional teams oriented towards specific goals for set periods of times.
Dana: Talent is at the crux of all this. A company’s talent agenda has to start with those junctions and roles in the organization that will unleash the most value. Companies need to map out their existing talent gaps and determine who they need to engage in the workforce to fill them.
We’re working with clients to build attractive value propositions to get the right people to join, to develop people and to retain them. This means building a culture of accountability where people take ownership of their work, rather than rely on upper management for direction.
And all throughout, technology needs to be a driving force that everyone can make use of. Particularly post-pandemic, when many face the talent attrition challenge, there is a window of opportunity to attract and retain some of the best people that will make a difference to an organization.
Lastly, what excites you most about building organizations fit for the future?
Dana: So much of this is about building purpose, mission, and experience into the value proposition. People want to be part of an organization that makes a difference—for the world, their own community, and for themselves—and organizations that are well set up to attract the best people will be best positioned to successfully deliver.
I’m energized by the opportunity to create organizations that place emphasis on people’s potential by empowering them with the skills, mindsets, and behaviors to achieve their goals. This includes putting health and well-being at the center to enable them to achieve sustainable performance. An organization that takes care of its people’s needs, invests in expanding their capacity, focuses their time on what matters the most to them, and allows them to thrive, will win.
Michael: There is tremendous potential in creating individuals and teams that achieve high performance, which in turn will lead to sustainable performance in organizations. The role of the company in people’s lives has changed. It’s now about thinking how to be the place people want to work versus have to work, and a big part of that is creating a culture of learning and adaptability so people have the skills required to perform their jobs within the company—and for when they leave.
When people are cared for, can focus on what matters most, enjoy their day-to-day experience, and deliver on their purpose, individual performance will peak, organizational health will be at an all-time high, and the organization itself will achieve high performance sustainably.