Introduction

Recent research by McKinsey & Company has shed light on the significance of organisational health for long-term success. In one study of 1,500 companies in 100 countries, it was found that "companies which had improved their organisational health realised 18 percent increases in their EBITDA after just one year". This compelling evidence underscores the direct impact of organisational well-being on financial performance.

The Three Key Research Findings

In addition to the main headline of the impact of organisational health, three trends emerged in the lastest study:

1. Decisive Leadership Transforms: Leadership is undergoing a seismic shift, with decisiveness now one of the strongest predictors of organisational health. The ability to make quick decisions and commit to them sets the foundation for a robust organisational structure, fostering an environment where innovation and efficiency thrive.

2. Innovation Fuelled by Data: Organisations that harness the insights of frontline employees and apply data-driven strategies to innovation are significantly more capable of effective change, enhancing their adaptability and resilience.

3. Dynamic Talent Deployment: The fluidity of the modern workforce demands a strategic talent management approach, where internal mobility and upskilling not only enhance employee engagement but also maintain a competitive edge.

The Four Power Practices

Clearly there are a number of factors that impact organsiational health. However, McKinsey's research has identified four specific behaviours, knonwn as Power Practices, that have a disproportionate impact on organisational performance.

1. Strategic Clarity: Communicating a clear vision and strategy is key. This clarity transforms into actionable objectives that resonate at every level of the organisation.

2. Role Clarity: Successful organisations eliminate bureaucracy, enabling employees to navigate new or ambiguous situations effortlessly.

3. Personal Ownership: Fostering a sense of ownership among teams encourages initiative and results-driven action.

4. Competitive Insights: Understanding the competitive landscape allows for strategic positioning and informed decision-making.

Focusing on these four things will yield significant gains in performance, while neglecting them will hold an organisation back from reaching its potential.

Conclusion

The direct correlation between organisational health and long-term performance is undeniable. The insights provided by McKinsey's research, including the significant EBITDA growth observed in companies that focus on improving their organisational health, serve as a powerful reminder of the value of these practices. By embracing the four power practices, organisations can navigate today's challenges and secure a prosperous future.

Next Steps

Want to learn more about organisational health? Check out these links:

Organizational health is (still) the key to long-term performance

10 Proven Strategies for Boosting Team Performance

High Performing Teams Characteristics - 15 Things All High Performing Teams do

To find out how PerformanceNinja could help you with increasing organisational health, book a free strategy call or take a look at our GrowthLab.