1、The State of Organizations 2023McKinsey&Company The State of Organizations 2023 ContentsIntroduction 4 Ten shifts that are transforming organizationsand what to do about them6 The ten most significant shifts facing organizations today Chapter 1 Ten deep dives 10 Increasing speed,strengthening resili

2、ence14 True hybrid:The new balance of in-person and remote work18 Making way for applied AI 22 New rules of attraction,retention,and attrition28 Closing the capability chasm32 Walking the talent tightrope 36 Leadership that is self-aware and inspiring42 Making meaningful progress on diversity,equity

3、,and inclusion48 Mental health:Investing in a portfolio of interventions52 Efficiency reloadedChapter 2 Lessons from leaders 58 Mars,Incorporated60 Decathlon62 Haier Smart Home64 DBS66 The LEGO Group68 AIA70 GitLab72 PsiQuantumChapter 3 74 Making change at scaleThe research 82 About the researchTen

4、shifts that are transforming organizationsand what to do about them I N T R O D U C T I O N4CEOs together with their leadership teams around the world have been operating in a highly volatile and uncertain environment,first having to cope with the COVID-19 pandemic and then with the ensuing economic

5、 slowdown,soaring inflation,and geopolitical disruption.In such an unsettled period,its no surprise that efforts to strengthen short-term resilience have dominated the agenda at many companies.Less obviouslybut no less importantlybusiness leaders are having to address a range of organizational shift

6、s that have significant implications for structures,processes,and people.These shifts are both challenging and harbingers of opportunity,depending on how organizations address them.Some shifts,most notably how to strike the right balance between in-person and remote work,took place at the height of

7、the pandemic and have lingered.Others,such as an ongoing mismatch in the labor market and a decline in employees mental health,1 have been accelerated by the COVID-19 crisis.Still others,such as effective leadership development and capability building,are perennial organizational issues that have pr

8、oved more vexingand more important to get rightin the current environment.All of these shifts have long-term consequences,and all require clearheaded thinking and decisive action that cant be postponed.Finding the appropriate organizational responses to these changes is far from simple.As part of re

9、search into this topic,we conducted a survey of more than 2,500 business leaders around the world.Only half say their organizations are well prepared to anticipate and react to external shocks,and two-thirds see their organizations as overly complex and inefficient.How can leaders and their teams re

10、orient their organizations?Where to look?Where to start?Management philosophies and approaches that succeeded in the past may no longer be fit for purpose in a world in which companies and industries are boundaryless,every organization is digital,hybrid work environments are taking hold,and the empl

11、oyeeemployer contract is up for renewal(and potential overhaul).With this in mind,we have launched McKinseys The State of Organizations 2023 report,an ongoing research initiative that both pinpoints the most important people,procedural,and structural shifts that organizations are grappling with and

12、seeks to provide some ideas and suggestions about how to approach them.2In this inaugural report,we go in depth on ten of the most important shifts.As a part of the exercise,we share inspiring stories and best practices from beaconsorganizations that have been able to adapt to recent economic and op

13、erational disruptions and forge a new path for the modern organization.We conclude by suggesting an integrated approach to achieving organizational change at scale.It comprises developing a clear perspective about the extent of the organizational changes that are truly needed,cultivating talent,inve

14、sting in leadership,and respondingat scaleto changing circumstances,new challenges,and new opportunities.The potential rewards of a job well done are significant:leaders who can unlock the most value from their organizations today can become the performance champions of tomorrow.Conversely,those tha

15、t fail to improve their organizations may fall behind peers who have succeeded in doing so,putting in jeopardy their competitive position and growth prospects.McKinsey research has shown a direct link between an organizations health and its financial performance.3In any discussion of organizations,i

16、ts important to recognize their fundamental importance to our lives.Of the approximately 8.0 billion humans on this planet,about 3.3 billion of them worked in organizations in 2022.4 They are being shaped,both directly and indirectly,every day by what goes on at workat a time when the very definitio

17、n of“being at work”is in a state of flux.Getting organizations right is thus not just about individual companies and institutions;its about the broader well-being of society.5The ten most significant shifts facing organizations today1 Increasing speed,strengthening resilienceVolatility is a feature,

18、not a bug,in todays organizations,yet half the respondents in the State of Organizations Survey say their organization is unprepared to react to future shocks.Those able to bounce forwardand quicklyout of serial crises may gain significant advantages over others.To be able to do so requires organizi

19、ng for speed of response,giving power to your people,and developing a culture of continuous learning.In the 202021 economic recovery,resilient companies generated TSR 50%higher than their less resilient peers 2 True hybrid:The new balance of in-person and remote workSince the pandemic,about 90 perce

20、nt 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.Whats important is that organizations provide structure and support around the activities best done in person or remotely.By remai

21、ning open to the entire universe of options for how,when,and where employees work,including with a reset of performance expectations,“true hybrid”organizations can distinguish themselves as destination workplaces.4 of 5 employees who have worked in hybrid models over the past 2 years want to retain

22、them3 Making way for applied AIAI doesnt just have the potential to supercharge a companys operations;it can also be used to build better organizations.Companies are already using AI to create sustainable,long-term talent pipelines;drastically improve ways of working;and make faster,data-driven stru

23、ctural changes to their organizations.As organizations embrace the opportunities offered by AI,they need to focus on embedding its use in corporate culture,hiring and developing AI-savvy leaders,and being thoughtful about AI-related risks and ethical concerns.Organizations used an average of 3.8 AI

24、capabilities(eg,natural-language generation,computer vision)in 2022,double the 1.9 used in 20184 New rules of attraction,retention,and attritionPeople are revising their attitudes both toward work and at work.Employees who quit(or who are“quiet quitting”)say it isnt just money,worklife balance,profe

25、ssional development,or purpose that will bring them back to work in 2023:its a combination of all those things.In Europe,for example,35 percent of people leaving jobs cite unsustainable performance expectations.Organizations can respond by tailoring employee value propositions to individualized pref

26、erences in ways that can help close the gap between what todays workers want and what companies need.39%of respondents in a recent survey conducted in 7 countries say they are planning to leave their jobs in the next 36 months5 Closing the capability chasm Companies across sectors often announce tec

27、hnological or digital elements in their strategies without necessarily having the right capabilities in place to integrate them.To achieve a competitive advantage,organizations need to build institutional capabilitiesthat is,an integrated set of people,processes,and technology that creates value by

28、enabling an organization to do something consistently better than its competitors do.That means plugging gaps in their core activities,which are often the result of insufficient resources or inconsistent commitment.Only 5%of respondents say their organizations already have the capabilities that they

29、 need-Web Exhibit of In the 202021 economic recovery,resilient companies generated TSR 50%higher than their less resilient peers McKinsey&Company+50%Web Exhibit of 4 of 5 employees who have worked in hybrid models over the past 2 years want to retain themMcKinsey&Company4 of 5Web Exhibit of Organiza

30、tions used an average of 3.8 AI capabilities(eg,natural-language generation,computer vision)in 2022,double the 1.9 used in 2018McKinsey&Company3.81.9Web Exhibit of 39%of respondents in a survey conducted in 7 countries say they are planning to leave their jobs in the next 36 monthsMcKinsey&Company39

31、%Web Exhibit of Only 5%of respondents say their organizations already have the capabilities that they needMcKinsey&Company5%67 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 cultivat

32、e fit-for-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 awarene

33、ss both of themselves and of the operating environment around them.Only 25%of respondents say their organizations leaders are engaged,are passionate,and inspire employees to the best-possible extent10 Efficiency reloadedIn todays uncertain business climate,companies are refocusing attention on effic

34、iency measuresmore than one-third of respondents in our survey list efficiency as a top three organizational priority.Boosting efficiency is about more than managing immediate crises or getting the same work done with fewer resources.Deploying resources more effectively to where they matter the most

35、 promises substantial benefits,including improved organizational health,higher shareholder returns,and better and faster decisions.Being efficient often means placing more trust in your organization and empowering employees.40%of respondents point to complex organizational structure as a cause of in

36、efficiency,and a similar proportion cites unclear roles and responsibilities6 Walking the talent tightropeBusiness leaders have long walked a talent tightropecarefully balancing budgets while retaining key people.In todays uncertain economic climate,organizations need to focus more on finding ways t

37、o match top talent to the highest-value roles.The idea isnt new,but its 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 arent filled by the most appropriate

38、people.The highest performers in a role are 800%more productive than average performers in the same role8 Making meaningful progress on diversity,equity,and inclusionMany organizations are focusing on diversity,equity,and inclusion(DEI),but in many cases,the initiatives arent translating into meanin

39、gful progress.Whats 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 opportun

40、ities for making progress within their organizations,as well as for improving their external communities and society.70%of respondents say their organizations express transformative DEI aspirations;only 47%say they have the infrastructure to realize their DEI aspirations 9 Mental health:Investing in

41、 a portfolio of interventionsNine of ten organizations around the world offer some form of well-being 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 well-being and organizational i

42、ssues,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;one-off and incremental fixes wont be enough.Employees facing mental-heal

43、th and well-being challenges are 4 more likely than others to want to leave their organizationsThrough the State of the Organizations Survey,conversations with CEOs and their teams,and the findings of recent McKinsey research,we have identified ten of the most important organizational shifts that bu

44、sinesses are grappling with today.Web Exhibit of The highest performers in a role are 800%more productive than average performers in the same roleMcKinsey&Company800%Web Exhibit of Only 25%of respondents say their organizations leaders are engaged,are passionate,and inspire employees to the best pos

45、sible extentMcKinsey&Company25%47%Web Exhibit of 70%of respondents say their organizations express transformative DEI aspirations;only 47%say they have the infrastructure to realize their DEI aspirations McKinsey&Company70%Web Exhibit of Employees facing mental-health and well-being challenges are 4

46、 more likely than others to want to leave their organizationsMcKinsey&Company440%71 Ten deep dives10 Increasing speed,strengthening resilience14 True hybrid:The new balance of in-person and remote work18 Making way for applied AI 22 New rules of attraction,retention,and attrition 28 Closing the capa

47、bility chasm32 Walking the talent tightrope36 Leadership that is self-aware and inspiring42 Making meaningful progress on diversity,equity,and inclusion48 Mental health:Investing in a portfolio of interventions52 Efficiency reloaded9C H A P T E R 1:T E N D E E P D I V E S10Increasing speed,strengthe

48、ning resilienceWhats changing?Business shocks requiring quick responses have become the new norm for organizations.Companies need to focus on being prepared and ready to act at all timesand quickly.In the current volatile age,individual and organizational resilience combined with speed can be determ

49、inant factors for success and survival.Yet our research suggests that while some organizations do emphasize preparation,many focus only on some singular aspect of it(anticipating and then addressing an acute challenge,for instance).They forgo the holistic approach of routinely reviewing and transfor

50、ming structures,processes,and people so that they dont just bounce out of crises but bounce forwardlanding on their feet relatively unscathed and racing ahead with new energy.1As recent experience has once again demonstrated,crises will emerge.Global business today is fast moving,highly interdepende

51、nt,and complicated.People understand the importance of organizational resilience:more than 60 percent of respondents in our State of Organizations Survey report that it will only become more important in the future.Yet many say they dont feel that their organizations are well prepared for the extern

52、al shocks that may emerge over the next few yearsor the further disruption that those shocks might bring(Exhibit 1).Structure may be a factor here.Only 14 percent of respondents report that their organizations have adopted a fully agile operating model.Meanwhile,organizations with little to no exper

53、ience with agility or adaptability can end up in a double bind:unmotivated to prepare for crises during periods of calm and unable to change course and respond quickly when disruption occurs.2The benefits of getting it right In our experience,companies with capabilities in both adaptability and resi

54、lience are better able than others to absorb shocks and turn them into opportunities for capturing sustainable,inclusive growth.Leaders and teams in adaptable organizations are better prepared than others to assess the situation at hand,reorient themselves,double down on whats working,and walk away

55、from whats notand do it all quickly.With each bounce forward,they become more resilient.The competitive advantage that resilience provides was evident during the 200709 global financial crisis.Per McKinsey research,resilient companies in that time generated about 20 percent more total shareholder re

56、turn(TSR)than their peers didan advantage that accelerated to about 50 percent in the turnaround years of 200911 and 120 percent during the stable period of 201117.3 And that resilience premium was visible again during the height of the COVID-19 pandemic.McKinsey research shows that resilient compan

57、ies generated 10 percent more in TSR than less resilient peers did during the economic downturn between the fourth quarter of 2019 and the second quarter of 2020.In the ensuing economic recovery,from the second quarter of 2020 to the third quarter of 2021,the differential grew to as much as 50 perce

58、nt.Dealing with serial crises and being able to bounce forward out of themand quicklyare more important than ever.11Research by Jennifer Chatman and her colleagues at Haas School of Business at the University of California,Berkeley,points to a clear link between organizations fostering a culture of

59、adaptability and achieving superior economic performance.4 The research shows a 28 percent increase in revenue over the course of three years among high-tech companies that had established adaptable cultures.Meanwhile,McKinsey analyses indicate that the top quartile of businesses exhibiting healthy,

60、resilient behaviors are more than 40 percent less likely than those in the bottom quartile to go bankrupt(Exhibit 2).Given these findings,investing in resilience through adaptability would seem to be a no-regrets move.So what accounts for organizations lack of preparedness?Issues to address The Stat

61、e of Organizations Survey respondents we asked about resilience identify several barriers to strengthening it in their companies(Exhibit 3).Number one is having limited funds to develop surplus capacity and contingency solutions.One-third of respondents cite unclear priorities for targeting resilien

62、ce.Another one-third say initiatives are being launched in organizational silos,limiting their effectiveness.An additional one-third of our survey respondents identify limited willingness and a lack of excitementwhat Professor Chatman and her colleagues might refer to as a“low-adaptability culture”a

63、s impediments to building resilience in their organizations.Exhibit 1 Many business leaders say they feel that their organizations are unprepared to react to future shocks and disruptions.Exhibit 2 Organizations with healthy,resilient behaviors were better able than those with poor organizational he

64、alth to withstand major disruptions in 202021.Organizational preparedness to anticipate and react to external shocks and disruptions,%of respondents(n=442)11 All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of r

65、espondents:How well is your organization prepared to anticipate and react to external shocks and disruptions?Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 20223123

66、53416Very wellRather wellA littleTo some extentNot at allShare of organizations likely to go bankrupt over next 2 years,1 by level of organizational health,%1By 2020 Altman Z-score(formula that uses profitability,leverage,liquidity,solvency,and activity ratios to determine if a company is headed for

67、 bankruptcy).Source:Corporate Performance Analytics by McKinsey;Organizational Health Index by McKinsey,238,489 respondents,April 202021Topquartile10043 percentage pointsMiddlequartilesBottomquartile30487312The State of Organizations 2023Finding the right formula To address the challenges cited by o

68、ur survey respondents,leaders can start by thinking systematically about ways to build up their organizations resilience.They will need to take care to review and revise these elements on an ongoing basis rather than only when external forces or global crises force them to do so.Organize for speed o

69、f response The way that organizations are set up is a key determinant of their ability to act quickly and effectively when a crisis strikes or a market turns.McKinsey research shows that,compared with peers in slow-moving companies,leaders in fast-moving organizations report 2.1 times higher operati

70、onal resilience,2.5 times higher financial performance,3.0 times higher growth,and 4.8 times higher innovation.5A range of initiatives can help speed up the ways of working within an organization.Such initiatives include forming smaller,cross-functional teams that pursue their own ideas(and get a bu

71、dget for it);using inspiring role models to embody specific ideas in a meaningful and visible way;offering a well-tailored change narrative;and eliminating unnecessary meetings,events,and travel to allow people to focus on what really matters.6Give power to your people Successful companies increasin

72、gly ask employees to apply their own judgment and drive their organizations success actively.7 To move faster,companies might consider removing managerial layers(such as by redrawing organizational charts).Dynamically staffing certain individuals and teams for high-priority projects could also impro

73、ve speed,as could conducting more frequent performance reviews(for instance,quarterly instead of annually).Develop a culture of continuous learning An organization is only as resilient as its people.Thats why its so critical for business leaders to encourage adaptability among employees and equip th

74、em with tools that allow them to work as quickly as situations dictate.McKinsey research suggests that employees who are more adaptable tend to have an edge in managing change and adversity.8 Its important to find and promote adaptable leaders who dont just react when faced with,say,a natural disast

75、er,a competitors moves,or a change in team dynamics.They take the time to coach team members through the change.They catalyze new behaviors,and they develop capabilities that can help set the conditions for both a short-term response and long-term resilience.9 Exhibit 3 Obstacles to strengthening re

76、silience range from a lack of resources to dramatic differences between hierarchy levels and functions.Challenges to strengthening resilience in organizations,%of respondents(n=442)11All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question w

77、as posed to a subset of respondents:Which challenges do you see to strengthening resilience in your organization?Multiple responses were allowed.The response options displayed are the top options selected and represent a sufficient number of responses to be meaningful.Source:McKinsey State of Organi

78、zations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022Limited funds availableUnclear priorities and directionIsolated initiativesLimited organizational buy-inDramatic differences between hierarchy l

79、evels and functions433333332713April 2023C H A P T E R 1:T E N D E E P D I V E S14True hybrid:The new balance of in-person and remote workWhats changing?Before the onset of the COVID-19 pandemic,most organizations expected employees to spend more than 80 percent of their time in an office.1 Now only

80、 about 10 percent do,while the remaining 90 percent have embraced a range of hybrid work models that allow employees to work virtually from off-site locations(including home)for some or much of the time.Employees generally like this development:more than four of five who have worked in a hybrid mode

81、l over the past two years want to retain it,largely because of the flexibility and balance it affords them.2 Organizations are settling into an amorphous in-between state.The hybrid work model is a development that seems here to stay.Only 14 percent of respondents to the State of Organizations Surve

82、y believe that remote work will become less common in the future;more than half believe it will become more common(Exhibit 4).Leaders,managers,and employees are still grappling with the effects of this broad behavioral upheaval.Organizations have been forced to reexamine foundational norms:Where do

83、employees work?When do employees work?How do employees work?3 To succeed,each organization must determine how best to combine remote and in-person work in ways that suit the specific needs of its workforce.This is the world of“true hybrid”:organizations fully acknowledge the need to provide structur

84、e and support around which activities are best done in person or remotely.True-hybrid organizations create policies,workflows,and documentation that help employees understand which activities are best done in person and whether those activities are best carried out in real time or asynchronously(tha

85、t is,with all team members being online when its most convenient for them rather than simultaneously).True-hybrid organizations also consistently address the shortcomings that occur with conducting activities in the less optimal format.4 By looking beyond the static definition of hybrid work modelsb

86、eyond working at home versus an officeand remaining open to the entire universe of options for how,when,and where employees work,true-hybrid organizations can distinguish themselves as destination workplaces.The benefits of getting it rightFinding an appropriate balance between in-person and remote

87、work can bring important potential organizational benefits,including in talent and productivity.-Attracting and retaining talent Organizations that optimize their hiring processes and employee journeys for a distributed workforce can attract talented workers who may be interested in certain jobs but

88、 feel reluctant to relocate to perform them.They may also be able to access new pools of talent in previously unavailable parts of the country or in other countries,as well as workers with disabilities,parents of young children,and others whose needs arent suited to traditional working models.Starti

89、ng in February 2022,remote jobs posted on LinkedIn received more than half the applicationseven though they accounted for less than 20 percent of the job postings.5 McKinsey research on the workforce shows that three of four employees Hybrid work models are here to staybut not at the expense of team

90、work.15 McKinsey&Companyreport that having control over when they work was a key factor in their decision to accept their current job.6 And McKinsey research on workplace flexibility shows that among people who prefer hybrid work models,71 percent say they are likely to look for other opportunities

91、if their current employers discontinue those models.Improving productivity During the height of the COVID-19 pandemic,some 58 percent of executives reported that the productivity of individual employees had improved.7 Most organizations also saw rises in the productivity of teams,employee engagement

92、,and customer satisfaction.By allowing organizations to construct globally dispersed teams working in different time zones,a remote work model can enable around-the-clock coverage and enhanced productivity,although some of the data on the issue are less than clear cut.8To make the most of a hybrid w

93、ork model,companies must balance remote-work benefits with the advantages brought by in-person work.Increased productivity can also be achieved and sustained when organizations balance the flexibility of work with a structured environment.More specifically,in-person work in a psychologically safe en

94、vironment can bring about easier access to apprenticeship,mentorship,and sponsorship opportunities,as well as a clearer delineation between work and life boundaries that may help workers manage their well-being.9Issues to addressIf a true-hybrid work model is to thrive,people from every part of an o

95、rganization will need to adjust physically,mentally,and emotionally.Along the way,its important to address some basic obstacles.Many managers feel uncomfortable leading hybrid teamsMore than half of respondents in our State of Organizations Survey report that their team leaders are either uncomforta

96、ble or barely comfortable leading remote and hybrid teams.Only 15 percent say they are very comfortable(Exhibit 5).Managers of hybrid teams miss the day-to-day oversight that naturally occurs in an office setting.They have less contact with employees who work remotely,and that can lead to cycles of

97、miscommunication.Remote employees sometimes dont feel seen in hybrid settings Managers can unintentionally create a two-tier system within hybrid teams.People working in an office might be valued simply because their managers can observe them working,while remote employees might be judged solely on

98、the quality of their deliverables and the dynamics of their Exhibit 4 Survey respondents expect to see more,not less,remote work.Expected evolution of remote work,%of respondents(n=566)11 All respondents were asked to select the top 3 trends for their organizations.For these data,an additional quest

99、ion was posed to a subset of respondents:How do you expect remote work to evolve?Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022533314IncreaseNo changeDecrease1

100、6The State of Organizations 2023presence on infrequent video calls.The result can be managerial bias.For workplaces already challenged by diversity-and retention-related issues,adopting an ill-conceived hybrid work model could speed departures,decrease levels of inclusion,and harm performance.10Boun

101、daries between work and life can blur in a hybrid contextIts no accident that hybrid work models have changed schedules and processes:almost 60 percent of respondents in a McKinsey survey ranked worklife support,such as switching to hybrid working,as a key priority for companies.11 But work norms ar

102、e catching up.For instance,emails,phone calls,and instant messages may arrive far outside traditional working hours,and that can create disquieting uncertainty for the receiver.Finding the right formulaWhile the hurdles of hybrid work models are evident,so are the opportunities.But its no longer eno

103、ugh just to tweak old policies and practices.While no one size fits all,organizations can behave as though all workers are off site all the time,even if that isnt always true.They need to develop a new set of norms suited to a new kind of workplace.Our research and experience in the field suggest a

104、few areas where they can start their focus:Reset performance expectations.Discussions of performance need to take asynchronous work into account.That would mean managers emphasizing work outputs rather than time spent working,for example.Its important to create an environment in which on-site and of

105、f-site colleagues all feel that they are on an equal footing.Exhibit 5 Survey respondents report that team leaders are uncomfortable leading remote teams.Perceived comfort of team leaders with leading remote teams,%of respondents(n=566)1Note:Figures do not sum to 100%,because of rounding.1 All respo

106、ndents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:How comfortable do you believe team leaders in your organization are today with leading remote teams compared with leading in-person teams?Source:McKinsey S

107、tate of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 20221943526VerycomfortableRathercomfortableA littlecomfortableNot comfortableat allComfortable tosome extent15 Be transparent.Its impo

108、rtant to have a single source of truth for managers and employees at all levels.Perhaps the source is the combination of a handbook and other documents that lay out the rules and norms and is continually updated.Such documents can outline,for instance,who can work remotely and why,the levels of supp

109、ort for in-person and off-site work,and who has decision rights in certain matters.Be purposeful about where people work.Many employees dont want to come into the office to do work they can just as easily do at home.Many companies are therefore starting to refocus in-person work on activities that t

110、ake advantage of the presence of colleagues in the same place.Companies need to balance the increased potential of a globally dispersed workforce with the relational fabric and sense of community that employees crave.Remove ambiguity about working practices.True-hybrid organizations emphasize clear,

111、consistent communication protocols.For instance,if colleagues agree that their team will share materials through certain channels only at certain times of the day or week and have agreed-upon response times,expectations are set.Thus the boundaries between work and life become sharper.Test and learn.

112、Pulse checks can determine whats working and what needs to be improved.Companies can adjust codes and boundaries,if necessary,based on employee feedback.Leaders shouldnt be afraid to share lessons learned through experienceeven if that means admitting to failures or experiments that werent well rece

113、ived.17April 2023C H A P T E R 1:T E N D E E P D I V E S18Whats changing?More than half of the respondents in a McKinsey Global Survey on AI said they had adopted AI in at least one of their business units,and nearly two-thirds expected that their companies investments in AI would increase over the

114、next few years.1 While some of this investment is about improving the speed and scale of operations,applied AI is also a powerful tool to build better organizations.While organizational decisions previously were made mostly based on management judgment,AI-driven organizations are reimagining how the

115、y manage talent,processes,and organizational structures.These organizations are using AI to create sustainable,long-term talent pipelines;drastically improve the ways of working;and make faster,data-driven structural changes.For talent,more and more companies are using AI-enabled software to match j

116、ob candidates behavioral attributes to open positions,helping these organizations shift to a skill-based approach to hiring.AI also helps in tailoring job offerings and advertising them to the right candidates,screening those candidates,and accounting for human biases.Other talent management applica

117、tions include AI-based learning management systems and employee experience platforms.2 One global tech company introduced a tool that predicts the likelihood of employee exits based on more than 20 data sources and informs leaders accordingly.This gives leaders the opportunity to approach these empl

118、oyees proactively,understand the underlying reasons for their potential interest in leaving,and react to the information.AI can also drastically improve the ways of working.One digital health company began using an AI-enabled integrated system to foster a collaborative,data-driven,and fun work envir

119、onment and,in turn,has boosted productivity,employee engagement,and performance.No more emails at this company;everything is managed through the system.In addition to budgeting,invoicing,time tracking,and meeting scheduling,the system can even automatically order lunch for employees when they scan i

120、nto the building.It also provides personalized data-driven experiences for employees.Other companies have used AI tools to improve communication across their organizations or help leaders assess the overall quality of team dynamics by identifying group-level attributes.3Companies are using AI to mak

121、e data-driven structural changes.These include using HR data to identify opportunity areas for leaders to ensure that the right work is being done in the right structure and to rebalance suboptimal spans of control across managerial roles,removing duplicative and transactional work and redistributin

122、g the allocation of activities across roles.The right people across the organization(business and HR leaders)can then collaborate and use these insights to design various scenarios of structural changes seamlessly in an integrated system,with real-time implications of design choices on target outcom

123、es.The endless drawing and redrawing of organization charts is finally over.Making way for applied AIApplied AI has more potential than just to supercharge your companys operations:its also a powerful tool to build better organizations.19The benefits of getting it right The application of AI for bui

124、lding better organizations holds promise,particularly when companies manage AI with practical,ethical,and risk-related concerns in mind.First,McKinsey surveys show a strong impact of AI on efficiency.4 Companies that have seen the biggest bottom-line returns from applied AIthose that attribute at le

125、ast 20 percent of EBIT to their use of AIare more likely to have set themselves up for success by aligning AI and business strategies.Moreover,the share of respondents in those surveys reporting at least 5 percent of EBIT attributable to AI have remained comparable year over year(27 percent in the m

126、ost recent survey results;27 percent and 22 percent in the two prior years results,respectively).Second,AI amplifies talent.It helps business leaders improve the speed and efficiency of candidate hiring,make their resource deployment more effective,increase the personalization of capability developm

127、ent,and improve employee experience and engagement.In line with that,McKinsey research shows that organizations with strong use of people analytics see an 80 percent increase in recruiting efficiency,a 25 percent rise in business productivity,and a 50 percent decrease in attrition rates.5Third,appli

128、ed AI(machine learning,in particular)can help organizations perform with speed and precision,thereby improving resilience.Individual and team decision making can be pushed to the edges of the organization,removing obstacles to action,responding to market needs faster,and accounting for factors such

129、as human bias and politics.This translates into quantifiable,organizational impact.Issues to address AI deployment brings a number of challenges,many of which build on the issues that companies may already be facing with digital deployment.One common challenge is resistance to change.Some employees

130、may be wary of a class of technology that can be abused or exploited if proper guardrails and privacy protections arent setor which could result in losing their jobs.Another common challenge to implementing AI is the lack of talent and capabilities needed to drive technological change(Exhibit 6).The

131、 required digital and analytical skills include software development,customer insights,and data science.A third common challenge is AI-related risks and ethical concerns.In the 2022 McKinsey Global Survey on Digital Trust,55 percent of respondents report incidents in which active AI had produced Exh

132、ibit 6 Survey respondents report existing or impending capability gaps in technology-oriented roles.Technology capability gaps,by role,%of respondents(n=489)11All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to respondents:

133、For which roles are you about to face or already facing capability gaps?The response options displayed are the top options selected,have the largest gaps compared with other roles,and represent a sufficient number of responses to be meaningful.Source:McKinsey State of Organizations Survey,2,500 lead

134、ers in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022McKinsey&CompanyWeb Exhibit of Software developmentDigital and analytics,overallCustomer insightsData scienceDigital marketingProduct management26324025242120The State o

135、f Organizations 2023biased,incorrect,or otherwise problematic results that reduced employees confidence in AI or created financial losses.6Finding the right formula If organizations redefine themselves as AI-first organizationsentities driven by AI,not just power users of itthe characterization can

136、help them address key issues.AI-first organizations focus not just on the technologies behind AI but also on the operating models,culture,talent,leadership,and capabilities required to get the most from their AI investments.Embedding AI in corporate culture AI-first organizations are focused on buil

137、ding a perpetual-learning culture and teaching AI to the whole workforce.Thats the only surefire way to drive widespread acceptance of AI.The organizations that report the highest returns from AI are nearly three times more likely than others to report using a variety of capability-building programs

138、(such as experiential learning,self-directed online courses,and certification programs)to develop technical employees.7 They are also nearly twice as likely as others to offer programs for nontechnical employees.Hiring or developing AI-savvy leaders At a system level,leaders in AI-first organization

139、s will likely need to establish new technology rolesfor instance,chief analytics officer,chief data officer,and chief privacy officer.These leaders will have the requisite technological skills and background but will also need to demonstrate business acumen and understand how the organizations and t

140、he ecosystems they operate in create value and drive growth.They will also understand that corporate conduct counts,so they will show a keen interest in understanding and adhering to data ethics and hygiene.For example,they could make it clear that some suggestions about data-oriented projects and p

141、ractices simply arent up for negotiation.In this way,they can help ensure that organizations steer clear of potential privacy issues.Leaders in AI-first organizations also must be change agents who can advocate for the inclusion of technology in strategy and process discussions.They can help bridge

142、the divide between technology and business teams.Above all,they can actively embrace their role as talent scoutsattracting,retaining,and cultivating high-end machine-learning experts,software engineers,data engineers,data scientists,and other top talent for AI-related roles.McKinsey research shows t

143、hat the companies seeing the biggest bottom-line returns from applied AI are more likely than others to have well-defined capability-building programs to cultivate AI talent.8Being thoughtful about AI-related risks and ethical concerns AI-first organizations contribute to and adopt the requirements

144、for responsible,trustworthy AI use.They consider possible unintended effects on societal and environmental well-being,technical safety,data privacy and governance,diversity,and fairness,among other factors.These are many of the same concerns that already affect people analytics.McKinsey research sho

145、ws that the companies seeing the biggest bottom-line returns from applied AIthose that attribute at least 20 percent of EBIT to their use of AIare more likely than others to follow the best practices that enable explainable AI.9 That is,they can always express why an AI system reached a particular d

146、ecision,which is especially important in organizations in which AI models may be used to automate hiring searches,loan approvals,or other sensitive processes.We have seen steady increases in the focus on mitigating AI risks related to equity and fairness.21April 2023C H A P T E R 1:T E N D E E P D I

147、 V E S22Whats changing?“Is there anybody out there?”Its a question that senior leaders around the world are asking as they try to fill open positions while keeping existing employees on board and engaged.In the wake of the COVID-19 pandemic and the accompanying“Great Attrition,”human capital is scar

148、cer than its ever been.Despite recently announced layoffs in some sectors,in the United States,for example,there are 1.8 job openings for every hire,according to the US Bureau of Labor Statistics.1According to McKinsey research conducted between 2021 and 2022,33 percent of employees across nine coun

149、tries in Europe,40 percent of employees in the United States,45 percent of employees in the Middle East,and 60 percent of employees in India were planning to leave their jobs.2 But our State of Organizations Survey showed that most surveyed employers in those countries erroneously believed that less

150、 than 20 percent of their workforce were planning to leave.And relatively few employers have acknowledged or found ways to reengage the“quiet quitters”a spectrum of employees who are doing less than they had done previously,ranging from those who fulfill their defined job descriptions but dont do an

151、ything more to those actively destroying value by doing nothing.Many employees are redrawing the boundaries between their work and personal lives.Some have left jobs to take on very different roles.Others are leaving the workforce entirely.We have found that what employees want from workfor instance

152、,flexible hours,remote work,opportunities to advance,tasks that have purpose and meaning,and adequate compensationcan vary significantly,depending on age group,life stage,work experience,and other factors.In this changed environment,the question for senior leaders to ask is,“What do we need to do di

153、fferently to attract and retain top talent?”3The benefits of getting it right Recent research from the McKinsey Global Institute underscores the critical importance of attracting and retaining talent:companies that successfully develop people and manage them well(organizations we refer to as“people

154、and performance winners”)gain a long-term performance edge(Exhibit 7).4 The following are among the key findings:Organizational capital.Companies that successfully build human capitalabout one in ten in the data set for the studyhave more consistent earnings than sector peers do and greater resilien

155、ce during crisis.They are also better at retaining talent,with attrition rates that are about five percentage points lower than those of peers.Dual success.Some organizations prioritize talent development and manage to deliver top-tier profitability at the same time.These New rules of attraction,ret

156、ention,and attritionPeople are revising their attitudes both to work and at work.-23companies are more likely to become large-scale superstars.They exist in all sectors and average more than$1 billion in economic profit.Competitive advantage.Companies that combine people and performance success have

157、 a distinctive organizational signature that challenges and empowers employees while fostering bottom-up innovation.This management style seems to activate human capital and create a tangible competitive advantage:the people and performance winners in our study were 4.2 times more likely than the av

158、erage company to remain in the top quintile of Exhibit 7 Companies can gain a competitive edge with a dual focus on people and performance.Source:McKinsey Global Institute analysisPeople and performance winners excel across a range of business outcomesROIC,%Economic profit,$billionPerformance vs pee

159、rs,multiplesRevenue growth during COVID-19 crisis,%0.10.10.400691.53.013.513.47.928Rate of attrition,%1.1Goal orientedTop downCaringEncouragingCollaborativePerformance-driven companies:top-tier financial resultsPeople-focused companies:top-tier human-capital developmentPeople and performance winners

160、:top-tier financial results and human-capital developmentOrganizational signature,by company typeShare of companies in each type,%ChallengingNurturingTypical performers:no clear patterns observed21551594.22888.51.1364Web Exhibit of BETTERWORSEBETTERWORSEBETTERWORSEBETTERWORSEBETTERWORSE24The State o

161、f Organizations 2023their sectors in ROIC for at least nine out of the ten years between 2010 and 2019.Capability building.Talent benefits from an organizations people focus too.Skills learned on the job contribute 46 percent of the average persons lifetime earnings,and companies that build human ca

162、pital are more likely to propel their employees into higher earnings brackets over the course of a career.Issues to address The Great Attrition is affecting workers of all levels.All types of employees across all income levels,from managers on the front line to leaders in the C-suite,are leaving the

163、ir jobs.No role,level,or industry is impervious to the trend.Moreover,expectations are high that it will continue.When asked about expected voluntary attrition over the first half of 2023,almost 40 percent of our survey respondents say they expect the rate at their organization to be higher than tha

164、t seen in first half of 2022(Exhibit 8).The traditional labor market is losing its inevitability People no longer look at a traditional job as the only possibility for income,as many other opportunitiesfor instance,to become Uber drivers,Airbnb hosts,and social-media influencershave emerged.Organiza

165、tions hiring for traditional jobs now find themselves in competition for talent not only with one another but also with nontraditional types of employment.There is a disconnect between employers and employees When we surveyed employers and employees in August 2021,employers said the top reasons that

166、 their employees were quitting were that they were looking for better jobs,compensation,and worklife balance.But employees responses painted a different picture:among the top reasons they gave for quitting were not feeling valued by the organization or by their individual managers and not feeling a

167、sense of belonging at work.The employers were focusing on transactional elements of the work experience while employees were asking for more emphasis on relational factors.Exhibit 8 Survey respondents say their organizations expect continued workforce turnover in the first half of 2023.t of Voluntar

168、y employee turnover expected in H1 2023,%of respondents(n=697)1All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:How much voluntary turnover do you expect over the next year?Source:McKinsey State o

169、f Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 20222384614Lower than in H1 2022About the same as in H1 2022Higher than in H1 2022Dont know25April 2023Exhibit 9 To attract and retain emplo

170、yees,companies can consider individualized needs.Web Exhibit of Measures implemented to create a better employee experience,%of respondents(n=697)All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:W

171、hat measures have you taken to create a better employee experience?Multiple responses were allowed.The response options displayed are the top options selected and represent a sufficient number of responses to be meaningful.For example,matched new colleagues with coaches and matched identified top ta

172、lent with sponsors.Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022Created initiatives to help meet individualized needs(eg,flexible working time)Provided leader

173、ship training on giving and receiving feedbackIncreased compensationProvided mentorship and sponsor programs40363331Surveyed workers to identify what would improve employee experience27At least some of this disconnect lingers today,our State of Organizations Survey suggests.While worklife balance an

174、d compensation are among the top factors affecting the employee experience,employees themselves cite other characteristics that tend to be lower on employers lists.These include caring leaders,meaningful work,and safe workplace environments.The lesson here?Even if a company is offering,say,more flex

175、ible working time or is reconsidering its pay packages,its inaction in other important relational areas may be creating a lopsided employee experience.Finding the right formula Regardless of whether the rate of worker attrition speeds up,slows down,or finds its equilibrium,organizations need to heed

176、 the lessons from this unprecedented shift in the labor market and remain focused on creating tailored employee experiences.Organizations can only unlock talent as a competitive advantage if they can better understand what different cohorts of employees want and need.One size doesnt fit all Gone are

177、 the days when simply focusing on compensation,job title,and financial security was enough to keep most of a workforce satisfied.Leaders need to identify the discrete workforce segments(traditional workers,nontraditional employees,working parents,early-stage employees,late-stage employees,and so on)

178、in their organizations and tailor employee value propositions that are specific to those groups.It isnt about giving people money or worklife balance or purpose;its about providing any or all of those things in the proportion thats best suited to a particular segment.Indeed,40 percent of respondents

179、 in the State of Organizations Survey we asked about the topic say their companies are attempting to improve employees experiences by meeting their individualized needs(Exhibit 9).The answer may come from the bottom up To improve workforce retention,some employers are cocreating employee value propo

180、sitions with their workers.Some of the most striking innovations in this regard have come from business leaders who understand that employees mood and morale directly affect customers experiences and,hence,the top and bottom lines.One example is a trucking company whose drivers were leaving in large

181、 numbers because they were unhappy about working at inconvenient hours.The company had customers pay more for overnight delivery,with the result that turnover among drivers decreased significantly.526The State of Organizations 2023There is power in purpose When business leaders dont measure up ethic

182、ally,morally,or socially,employees are more likely to quit jobs and tell the people in their networks to do the same.And the opposite is also truean organizations core values and beliefs,as well as the ability of its managers and leaders to inspire and help employees find purpose and meaning in the

183、workplace,are critical factors for attraction and retention.For example,employees who feel more connected with people in their networks are one and a half times more likely than their peers to report being engaged at work,McKinsey research has found.6Employees experience purpose differentlyand leade

184、rship teams can do more to acknowledge these differences.7 More than two in five State of Organizations Survey respondents(43 percent)refer to a lack of communication about purpose,and almost one-third(32 percent)say theres insufficient support for living out individual purpose in their organization

185、s.Some 28 percent say purpose and its consequences are inadequately wired into performance management processes.Gone are the days when simply focusing on compensation,job title,and financial security was enough to keep most of a workforce satisfied.27April 2023C H A P T E R 1:T E N D E E P D I V E S

186、28C H A P T E R 1:T E N D E E P D I V E S28Whats changing?With the growing deployment of new technologies in the workplace,from automation to AI,the skills that are needed to drive growth and value over the next decade are changing,and companies everywhere are looking to fill capability gaps.In our

187、experience,companies across sectors often announce technological or digital elements in their strategies without having the right capabilities already in place.To plug those gaps and achieve a competitive advantage,they need to build institutional capabilities.Institutional capabilities are,put simp

188、ly,the key elements that make up a companys superpowerthat is,an integrated set of people,processes,and technology that creates value by enabling an organization to do something consistently better than competitors do.Institutional capabilities stem from a companys strategy and need to involve work

189、that is integral to the company and its industry.When well produced,such capabilities become a lasting edge,leading to consistent outperformance and growth in competitive advantage over time.1But organizations today find themselves lagging behind in their core activities,often as a result of insuffi

190、cient resources or consistent commitment to institutional capability building.Filling these gaps is a big agenda,but one that is increasingly recognized as significant.In our State of Organizations Survey,90 percent of respondents asked about capability building deem it to be something that their or

191、ganizations need to act on now or soon.Yet only 5 percent feel that their organizations capabilities are already set(Exhibit 10).The benefits of getting it right In a 2020 McKinsey survey of more than 860 executives,78 percent said capability building was very or extremely important to their organiz

192、ations long-term growth(versus 59 percent of leaders who said so before the global COVID-19 pandemic).2 And more than half of surveyed leaders(53 percent)ranked capability building as the most useful way to close skill gapslarger than the combined share of those who cited external hiring,redeploying

193、 people,and hiring contract workers.Other McKinsey analysis of 38 publicly listed companies has shown that when companies included more than 30 percent of their workforces in capability-building programs,they enjoyed TSR 43 percent above benchmarks after 18 months.Just as important,the benefits flow

194、 both ways:employees are excited to develop valuable new skills and knowledge.Issues to address Organizations are having a hard time acquiring employees to fill capability gaps because they often lack the ecosystem-style approach thats needed to make the necessary,and lasting,changes to their capabi

195、lity programs.We arent talking about just the acclimation of new hires or development of skills in the current workforce but also about the building of new functional and enterprise-wide capabilities.Functional capabilities are core activities that a company does today but may need to change or impr

196、ove dramaticallyfor example,sales force effectiveness,procurement,and performance marketing.Enterprise-wide capabilities are strengths that truly span the entire company,such as speed of decision making and the ability to Closing the capability chasmTo achieve a competitive advantage,companies need

197、to build the institutional capabilities that can help them develop a value-creating superpower.29innovate,and they are often“net new”capabilities that a company requires.In our survey,respondents we asked about capability building cite several obstacles,including not enough time(46 percent),insuffic

198、ient support from senior leadership(20 percent),and a lack of resources for training and development(20 percent),for their organizations(Exhibit 11).Among the issues are the following:Programs arent necessarily tailored to specific institutional or individual skill gaps.In many organizations,capabil

199、ity-building programs arent integrated into employees on-the-job experiences.Organizations dont necessarily review their ROI on learning programs regularly,adequately measure desired outcomes,or link training outcomes directly to business outcomes.Hiring externally and building internally are both o

200、ptions to fill the gap,although both come with challenges and costs.When it comes to acquiring capabilities through hiring,State of Organizations Survey respondents point to insufficient support Exhibit 10 Survey respondents believe that their organizations should make capability building a priority

201、.Exhibit 11 Organizations lack the time,leadership support,and resources to build new capabilities internally.Exhibit of Urgency required to address capability gaps,%of respondents(n=489)1Note:Figures do not sum to 100%,because of rounding.1All respondents were asked to select the top 3 trends for t

202、heir organizations.For these data,an additional question was posed to a subset of respondents:How urgent is the need to address any capability gaps?Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India

203、,Japan,Spain,UK,and US,MayJune 2022476435We are all setWe need to act soonWe need to act nowWe are already too lateExhibit of Challenges to in-house capability development,%of respondents(n=489)1Note:Figures do not sum to 100%,because of rounding.1All respondents were asked to select the top 3 trend

204、s for their organizations.For these data,an additional question was posed to a subset of respondents:Which challenge is most pressing for your organization regarding the development of capabilities within the existing workforce?Source:McKinsey State of Organizations Survey,2,500 leaders in organizat

205、ions with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022OtherUnclear about whichcapabilities are neededLack of resources fortraining and developmentInsufficient supportfrom senior leadership462202011Lack of time todevelop capabilities30The S

206、tate of Organizations 2023from senior leadership and a lack of resources as key obstacles.The top three most frequently cited concerns are a lack of available talent in the industry,an inability to meet compensation requests,and the lack of attractiveness for certain types of talent(Exhibit 12).Find

207、ing the right formula In trying to fill both individual-and institutional-level capability gaps,companies can use a model that we call“VECTOR”(based on the first letter of each of the six elementsvision and leadership,employees,culture and mindset,technology,organization,and routinesthat inform the

208、approach).3 Vision and leadership The most ambitious and successful CEOs outline a vision for what they want to be known for.How will their company shape and innovate the industry?The leadership team must commit to the journey and drive it resolutely,even as the institutional capability evolves and

209、grows.Employees Companies should build a full talent system to support the institutional capability.A well-functioning talent system first maps the pivotal roles and skills required for the capability,honestly assessing the existing strengths and gaps.It then efficiently balances new hiring with exi

210、sting employee reskilling and delivers training throughout the talent life cycle to enhance existing skills and build new ones.Finally,it builds and manages career paths to retain high performers and maintains strong incentive and performance management systems.Exhibit 12 Organizations are having a

211、hard time acquiring employees to build new capabilities.22211151824OtherInsufficientLack of resourcesNot attractive Inability to matchInsufficient poolsupport fromfor finding andfor certain types compensationof talent leadershiphiring new staffof talent expectationsin industryChallenges to acquiring

212、 new employees for capability development,%of respondents(n=489)1Note:Figures do not sum to 100%,because of rounding.1All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:Which challenge is most press

213、ing for your organization regarding the acquisition of new employees for capability development?Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022Culture and minds

214、et A mindset shift is often required when building or enhancing a capability.The techniques of change management,from change stories to top-team role modeling,still work.But to make the change stick,in our experience,companies need to commit to the ongoing measurement of culture and inclusion of cul

215、ture change metrics in top-management incentives.Technology In todays world,its hard to imagine a true institutional capability that doesnt have technology,data,and AI at its core.But these elements are hard to get right:companies often build one-off digital customer journeys or AI models that dont

216、scale,or they rely too heavily on an overhaul of core systems to solve all problems.Organization A companys organizational structure and ways of operating must be designed and constructed to provide clear roles,responsibilities,and account-abilities that enable the capability to grow and thrive.Rout

217、ines In filling an institutional capability gap,as in any part of a business,high-quality,well-designed routines are essential.Critically,organizations must practice any new processes with coaching to lock them truly into the organization.31April 2023C H A P T E R 1:T E N D E E P D I V E S32Whats ch

218、anging?Business leaders have long had to walk a talent tightropecarefully balancing budgets while retaining key people.That tightrope walk is more complicated than ever in a tight labor market affected by industry churn and postpandemic corrections.1As organizations look to protect the business in t

219、he near term at the same time as setting it up for success in the long term,one important focus is on ways to match top talent to the highest-value roles.This idea isnt new,but its the right one at a time when the value contribution of certain roles is increasingly shifting to tech specialists.In ou

220、r survey,for example,40 percent of respondents cite a lack of digital analytics capabilities,32 percent cite lacking software development capabilities,and 26 percent cite a lack of capability in generating customer insights.-The benefits of getting it right McKinsey research shows that 5 percent of

221、employees deliver 95 percent of an organizations valueand that companies that reallocate high performers to the most critical roles on a quarterly basis are 2.2 times more likely to outperform direct competitors than are those that revisited roles less frequently.2 Research also shows that the highe

222、st performers in a role are 800 percent more productive than average performers in the same role.3 These high performers can influence the overall productivity of projects and business units,which can affect financial outcomes in turn.Issues to address According to McKinsey research,most large organ

223、izations derive disproportionate value from just 25 to 50 roles that are scattered across different levels and functions.4 But many organizations are uncertain about exactly which roles are the most critical,where the high performers are in their organizations,and how to bring these two sides of the

224、 equation together.Indeed,46 percent of State of Organizations Survey respondents who we asked about the roles that are the most critical in creating value in their organizations say they have no,little,or only some clarity on the topic(Exhibit 13).Respondents cite this lack of clarity and transpare

225、ncy about roles as the most pressing challenge in their quest to understand which skills and roles are the most critical in creating organizational value(Exhibit 14).Its followed by the lack of a talent-development agenda and the lack of awareness about the importance of fostering one.Aggravating th

226、e matter is that about 20 percent of the critical roles that organizations need either dont exist at all or have greatly evolved in scope,according to McKinsey analysis.5 Whats more,our internal analysis suggests that even when organizations put people in the right roles,40 percent of those people n

227、eed development or other interventions to be successful.Finding the right formula To match people with positions effectively,business leaders need a systematic approach that can consist of setting a value agenda,being a matchmaker,Walking the talent tightropeWith the economic outlook uncertain and t

228、he talent pool highly competitive,organizations need to balance protecting the business in the near term with setting it up for long-term success.33reallocating talent early and often,and making talent mapping a leadership priority.Set a value agenda Business leaders need to define their organizatio

229、ns value agenda explicitly.Which business units generate the most value,and which the least?Which roles,both existing and projected,are required to make those outcomes possible?With answers to those and other value-related questions in hand,it should be possible to identify the most critical organiz

230、ational roles,which can be further broken down into value creators(directly generate revenue and increase capital efficiencies)and value enablers(lead support functions).6Be a matchmaker Once the value agenda has been set and the critical roles identified,leaders need to match top talent to those ro

231、les.Yet McKinsey research shows that,in many organizations,between 20 and 30 percent of critical roles arent filled by the most appropriate people and that current incumbents may not be the people best suited to meet the future demands Exhibit 13 Survey respondents are unclear about which roles are

232、the most critical in value creation.Exhibit 14 Survey respondents cite several challenges to identifying the most critical talent and roles in their organizations.Clarity about roles most critical in organizational value creation,%of respondents(n=403)11Figures do not sum to 100%,because of rounding

233、.All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:How transparent are the critical roles in your organization?Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,00

234、0 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022343421019CompletelyclearSomewhatclearMostlyclearA littleclearNotclearWeb Exhibit of Challenges to identifying talent and roles most critical in organization,%of respondents(n=403)11All respondents we

235、re asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:What is the most pressing challenge to identifying critical talent and roles in your organization?Source:McKinsey State of Organizations Survey,2,500 leaders in orga

236、nizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022 Other323252119No role clarityNo talent-development agendaNo value agenda(limited clarity on aspiration and required talent/capabilities)Little focus on talent(low awareness of imp

237、ortance of fostering a talent-first organization)34The State of Organizations 2023of their roles.7 It can be helpful for matchmaking business leaders to think differently about role structures,talent profiles,and performance metrics:Reconsider role structure.With more employees considering whether t

238、raditional working models fit their needs and pursuing increased flexibility,business leaders should think about how their most critical roles are structured.Create success profiles.Organizations should define what“great”looks like for their highest-value roles.With a checklist of the knowledge,skil

239、ls,attributes,and experiences required for success in those positions in hand,business leaders can look beyond the usual suspects and customize their searches accordingly.8 Use available metrics.To create the best matches,business leaders should use any and all performance data available to them,tak

240、ing care to keep the specifics of the high-value position in mind while gathering and assessing those metrics.Reallocate talent early and often The changing nature of work and the constant introduction of new skills and capabilities required for a range of future scenarios mean that organizations mu

241、st regularly review talent distribution.At quarterly or semiannual check-ins,senior leaders can evaluate the needs for potential reassignments and for investment in upskilling and capability-building opportunities.Make talent mapping a leadership priority McKinsey research shows that when HR process

242、es are aligned with a businesss talent-to-value efforts,employee engagement can go up by 50 percent,training costs can go down by 50 percent,and productivity can increase by 40 percent.9 For example,HR and product development teams at one technology company codesigned and deployed training to suppor

243、t the companys new cloud-based strategy.Within two years,the teams had reskilled more than 6,000 employees to new roles and upskilled 20,000 employees in their current roles.35April 2023C H A P T E R 1:T E N D E E P D I V E S36Whats changing?In todays turbulent environment,leaders may be tempted to

244、stick with the approaches that have worked for them in the pastregardless of whether they are still fit for purposerather than rethinking and changing the way they lead.1 But the costs of leaders remaining in the familiar zone can be high.Those who do so run the risk of alienating key stakeholders w

245、ho now expect organizations to be accountable for both profit and sustainability objectives,as well as employees who may feel demotivated,overwhelmed,or otherwise unable to bring their best to the workplace.2 Only 25 percent of respondents in the State of Organizations Survey who we asked about this

246、 trend say they consider their leadership culture to be one that inspires employees to the best extent possible(Exhibit 15).For todays leaders,the essential task comes in three layers: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

247、 be able to exhibit the leadership skills and mindset required to lead at scale,coordinating and inspiring networks of teams and ensuring that their organization functions as a cohesive whole.Thats a big ask of any single human.For any leader,it requires building a keen awareness both of themselves

248、and of the operating environments around them.3The benefits of getting it right A body of McKinsey research highlights the critical importance to stakeholders and employees of inspiring leadership.Many of the metrics about top leadership inevitably focus on the CEO,but the entire C-suite team is cri

249、tical to success.From a pure value creation standpoint,McKinsey estimates that$5 trillion in excess value is created by the 200 highest-performing CEOs.4 Those in the top quintile of performance generate about 90 percent of their industrys value and 30 times more value than the middle three quintile

250、s combined do.Moreover,CEOs who rank in that top 20 percent of financial performance generate,on average,2.8 times more TSR during each year of their tenure than do average performers.The CEO role is decisive:what a CEO controls accounts for 45 percent of a companys performance.5 And a CEOs ability

251、to scale leadership throughout an organizationthat is,affecting peoples immediate bosses and how they lead othersis an important facilitator or blocker for employee experience.Leadership that is self-aware and inspiring Organizations can only be as resilient as their leaders,who need to lead themsel

252、ves as well as their teams.37Issues to address Our research and experience in the field show that very few companies take a holistic approach to leadership.When we asked a subset of State of Organizations Survey respondents which elements of leadership would be most important for their organizations

253、,role modeling(focusing on building respect and considering the ethical consequences of decisions)came out on top with 46 percent,followed by inspiring others(presenting a compelling vision of the future and inspiring optimism about its implementation)with 37 percent and developing people(spending t

254、ime teaching,mentoring,and listening to individual needs and concerns)with 35 percent(Exhibit 16).Survey respondents point to several obstacles that have prevented their organizations from switching up their leadership styles.Chief among them is a lack of incentive(both financial and nonfinancial)to

255、 change,followed by short-term thinking and strategy and a lack of training(Exhibit 17).Some organizations are taking measures to break through these barriers and improve their leadership.For instance,almost 40 percent of respondents asked about the topic say their Exhibit 15 Only one-quarter of sur

256、vey respondents see their leaders as inspirational and fit for purpose.Web Exhibit of Impressions of overall leadership culture,%of respondents(n=385)1All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of responde

257、nts:How do you evaluate the overall leadership culture in your organization?Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022Below par;not fit for purpose Organiz

258、ation requires significant evolution of leadership approachInspirational;fit for purposeOrganizations leaders are engaged,are passionate,and inspire employees to best possible extent136225Somewhat effective;potential for improvement Only some leaders are engaged and inspirational to the degree requi

259、red Leaders faced with volatility and uncertainty will benefit from building a keen awareness of themselves and of the operating environment around them.38The State of Organizations 2023organizations have made development a core part of leaders daily work,and almost 30 percent say their organization

260、s have made leadership training more accessible to more employees.Most encouraging is that more than half(55 percent)say their organizations have invested in leadership development to foster greater adaptability and resiliencefor instance,by implementing new forms of leadership training and changing

261、 requirements for leadership selection(Exhibit 18).Finding the right formula Leaders faced with volatility and uncertainty will benefit from building a keen awareness of themselves and of the operating environment around them.Leading yourself,leading others,and leading at scale are the new watchword

262、s for inspiring leadership.Exhibit 16 Respondents value human-centered aspects of leadership.Web Exhibit of Most important elements of leadership culture,%of respondents(n=385)1All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was pos

263、ed to a subset of respondents:Which shifts in leadership culture would be most important for your organization?Multiple responses were allowed.The response options displayed are the top options selected and represent a sufficient number of responses to be meaningful.Source:McKinsey State of Organiza

264、tions Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 20222.Inspiring others:presenting a compelling vision of the future and inspiring optimism about its implementation3.Developing people:spending time t

265、eaching,mentoring,and listening to individual needs and concerns4.Setting expectations:defining responsibilities clearly and rewarding achievement of targets5.Fostering team discussions:building a team atmosphere in which everyone is encouraged to participate in decision making6.Communicating effici

266、ently:communicating in a convincing and charismatic way4637353228271.Role modeling:being a role model,focusing on building respect,and considering ethical consequences of decisionsLeading yourself Its becoming increasingly important for organizations to encourage well-being,connection,and authentici

267、ty in the workplace,and leaders need to set the tone in this regard.Individual leaders will need the courage and humility to embark on what we call a“leader self-journey.”It starts with leaders building self-awareness of their own strengths and default tendencies,especially under stress,and identify

268、ing strategies to manage through their fears and limitations.With this self-awareness,leaders will be better equipped to tap into their passions,renew their energy,and help others achieve their full potentialand that of their organizations.6Leading a team As organizations trade hierarchical command

269、models for more collaboration,there is a 39April 2023Exhibit 17 Respondents say a range of challenges can prevent a change in leadership styles in organizations.Web Exhibit of Factors preventing leadership style changes in organizations,%of respondents(n=335)1All respondents were asked to select the

270、 top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:Which challenges do you see preventing a change in leadership style for your organization?Multiple responses were allowed.Source:McKinsey State of Organizations Survey,2,500 leaders in or

271、ganizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022Lack of incentive(financial and nonfinancial)Lack of mid-and long-term strategies(short-term focus only)Insufficient leadership trainingLack of leadership capabilities and skills

272、Lack of role models within organizationCultural barriers403534333128role for the leader as an orchestrator who defines organizational structures,roles,and responsibilities.The leader will need to serve as a catalyst for empowering networks of teams and encouraging transparency,collaboration,and incl

273、usiveness across the organization and its ecosystems.In practice,leaders and organizations will need to break down rigid organizational silos and introduce open,transparent,collaborative networks.They will need to put greater emphasis on teams than on individualsby creating and empowering small,entr

274、epreneurial squads,for instanceand establish psychologically safe conditions in which all team members can contribute to their full potential.Leading at scale Among the key elements of leading at scale are the need to execute work differently and redesign how value is created.Among the key elements

275、of leading at scale are the need to execute work differently and redesign how value is created.40The State of Organizations 2023Exhibit 18 Respondents say their organizations are taking steps to improve their leadership cultures.Exhibit of Measures implemented to improve leadership culture,%of respo

276、ndents(n=335)1All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:Which challenges do you see preventing a change in leadership style for your organization?Multiple responses were allowed.For example

277、,through training and specific selection processes.Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 2022Invested in leadership development to foster adaptability and

278、resilience Made development part of leaders daily workWent beyond one-off trainings and made leadership development easily accessible to more employeesNo measures have been taken55392712For execution,organizations need to foster an environment in which teams are working on multiple initiatives in pa

279、rallelall with a mindset of discovery.The leaders perspective here changes from that of a controller who operates through detailed analysis and planning to that of a coach who operates through short cycles of quick decision making,experimentation,and learning.Under this form of leadership,an organiz

280、ation can better respond to challenges and uncover opportunities.It can stop experiments that underperform and scale up those that are thriving.To redesign how value is created,the leaders perspective needs to move beyond being a manager who ensures that profits are predictably delivered to sharehol

281、ders to one who is a visionary and can engage people to deliver impact and value to all stakeholders through a compelling purpose.McKinsey research shows that employees at purpose-driven companies are four times more engaged at worka powerful source of competitive advantage.741April 2023C H A P T E

282、R 1:T E N D E E P D I V E S42C H A P T E R 1:T E N D E E P D I V E S42Whats changing?Over the past several years,more and more organizations have prioritized DEI in their organizations,including in their product,process,and investment decisions and in the ways that they hire,retain,and develop talen

283、t.1 And despite recent economic challenges and resource constraints,most remain committed to these efforts.Almost half of survey respondents we asked about the topic say their organizations have focused on strengthening their leadership DEI efforts and holding leaders accountable for delivering on D

284、EI goals(Exhibit 19).Forty-three percent say their organizations have focused on creating more transparency in promotions and pay processes.And 43 percent say their organizations have taken measures to tackle bias and discrimination in the workplace.In many cases,however,these initiatives arent tran

285、slating into meaningful progress.The survey results reveal a gap between what organizations say they want to do with DEI and what they are actually doing.While there has been some progress on diversity initiatives,equity and inclusion ones continue to lag behind.2 Even relatively diverse companies f

286、ace significant challenges in creating inclusive and equitable work environments.McKinsey research shows that more than 70 percent of companies surveyed express transformative DEI aspirations,but less than half(47 percent)have the infrastructure in place to realize these aspirations.3 And more than

287、20 percent of State of Organizations Survey respondents we asked about the topic cant confirm that there is a sense of community and inclusion in their organizations.This percentage may be even higher:a lack of community in organizations is typically experienced most by employees in underrepresented

288、 groups,who also tend to be underrepresented in survey responses.The benefits of getting it right When measured and applied comprehensively,healthy organizational DEI becomes a competitive advantage.For example,McKinsey research shows that companies with executive teams in the top quartile for ethni

289、c diversity are more profitable than companies with teams in the bottom quartile by 36 percent.4 Companies that boast executive teams in the top quartile for gender diversity are 25 percent more likely to outperform the industry profitability average than are those with teams in the bottom quartile.

290、The extent to which diversity is driving this outperformance isnt clearly measurable,however.Furthermore,there is evidence that organizational DEI can help companies win talent and unlock the full potential of a diverse workforce.For example,Making meaningful progress on diversity,equity,and inclusi

291、onDriving change in DEI goes far beyond launching DEI initiatives.43 39 percent of respondents to a McKinsey Global Survey have turned down a job opportunity because of a perceived lack of inclusion,and employees who work in an inclusive organization are 90 percent more likely than those who dont to

292、 go out of their way to help a colleague.5Issues to address Organizations tell us that they still face significant challenges,including the following,in implementing and sustaining their DEI initiatives:-Not being strategic about DEI.Rather than developing a DEI strategy and tying it to the entire o

293、rganization,they apply the programs in piecemeal fashion or through singular initiatives.6 Unclear criteria for DEI impact.What does success with DEI look like?How can companies measure their DEI initiatives to allow them to track progress and make improvements,both internally and in the community m

294、ore broadly?Not walking the talk.Almost one-third of State of Organizations Survey respondents we asked about the topic note that their organizations hiring processes impede their ability to achieve DEI goals.Another 30 percent report insufficient resources to implement DEI initiatives,and 25 percen

295、t report a lack of a clear,compelling case for change.Inadequate organizational support and recognition for DEI efforts.Some 40 percent of surveyed women leaders,for instance,say their DEI work isnt acknowledged in their performance reviews.7 This is despite almost 70 percent of organizations saying

296、 DEI work is very or extremely critical.Finding the right formula To move the needle with DEI programs and practices and sustain their impact,organizations must look at the whole of these initiativesnot just at their efforts to build diversity but also at their Exhibit 19 Respondents say their organ

297、izations are taking steps to boost diversity,equity,and inclusion.Web Exhibit of Measures taken to improve diversity,equity,and inclusion(DEI),%of respondents(n=369)1Strengthened leadership efforts and accountability for delivering on DEI goalsEnabled equality of opportunity through fairness and tra

298、nsparencyPromoted openness;tackled bias and discriminationIncreased diverse representation,particularly in leadership and critical rolesNo measures have been takenFostered belonging through support for various dimensions of diversity49434339328Placed core business leaders at heart of diversity effor

299、ts and held them accountableUsed analytics to ensure transparency in promotion and pay processesAdopted a zero-tolerance policy on discrimination;established norms for inclusive,welcoming behaviorPromoted diverse talent into executive,management,technical,and board rolesBuilt a culture in which all

300、employees feel they can bring their whole selves to work1All respondents were asked to select the top 3 trends for their organizations.For these data,an additional question was posed to a subset of respondents:What measures have you taken to improve diversity,equity,and inclusion in your organizatio

301、n?Source:McKinsey State of Organizations Survey,2,500 leaders in organizations with 1,000 employees across industries in Canada,China,France,Germany,India,Japan,Spain,UK,and US,MayJune 202244The State of Organizations 2023commitments to create equitable workplaces in which employees feel like they b

302、elong.Leaders must ensure that their organizations embrace all employees and empower them to make meaningful contributions.-One path forward is for leaders to be more systematic early in strategy development,considering the objectives and desired level of impact from their programs.To realize DEI as

303、pirations,leaders will need to identify opportunities to make progress both in their organizations and in their communities and broader society(Exhibit 20).8 Achieving internal impact Measuring and acting on an organizations inclusion goals are critical elements for achieving internal impact.Based o

304、n our research,inclusion can be reliably measured along two dimensions:personal experience and enterprise perception.Exhibit 20 Whether internally or externally focused,diversity,equity,and inclusion initiatives can be placed on a spectrum of impact.Opportunities for diversity,equity,and inclusion(D

305、EI)impactDiverse organizationEnsures that diverse identities are represented at each level of organizationInternalFocused on improving organizationExternalFocused on improving community or societyInclusive environmentEnsures that employees of all identities feel a sense of belonging and ability to c

306、ontribute to their fullest Equitable access to opportunities and benefits Ensures that all employees have opportunities to grow,contribute,and develop Corporate and social responsibilityDeploys philanthropy to address institutional and structural disparities;takes public stances on issues of equityB

307、usiness operationsExplicitly designs operations and investment processes to improve DEI outcomes and minimize negative downstream effectsCore business and strategyEmbeds equity considerations in all levels of strategy development;makes explicit,DEI-informed changes to core market and product decisio

308、nsIHigherLowerMeasuring and acting on an organizations inclusion goals are critical elements for achieving internal impact.45April 2023mpactThe first dimension captures individuals personal experience.Are they encouraged to be authentic and speak up at work?Are they connected at work,and do they fee

309、l like they belong?Do they feel that their work is meaningful and contributes to the success of the organization?The second dimension captures employees perceptions of how accepting,connected,and fair the full enterprise is.A look at performance along both dimensions can highlight gaps or potential

310、discrepancies in employees experiences and help organizations think more equitably about how,when,and where work gets done.Achieving external impact To achieve the highest external impact from DEI initiatives,leaders will need to assess DEI opportunities systematically in three key areas:philanthrop

311、y,operations,and core business strategy.Based on this review,they can invest in DEI programs and practices in one,some,or all these areas,depending on how closely linked each one is to their business strategies.In this way,leaders can also gain senior managers commitment to DEI as a multiyear endeav

312、or and ensure that it remains a focus for the organization,regardless of the business cycle.The three key areas are:Philanthropy.Organizations external DEI efforts have traditionally focused on philanthropy.Often led by corporate-giving and communications teams,organizations make donations and grant

313、s to help address structural and institutional obstacles to change,coordinate employee volunteering,and speak out on issues of equity.Operations.Organizations can redesign internal processes and reconfigure relationships with suppliers and other downstream partners to improve DEI.US companies have c

314、ommitted more than$50 billion to collaborating with minority-and women-owned businesses in the next ten years to secure more diversity among their suppliers.9 Core business strategy.Business unit and senior leaders across an organization can work together to embed DEI into everything a business does

315、:brand and customer management,product development,talent management,M&A,and so on.Forging an overarching strategy To bring external and internal DEI initiatives together into one overarching strategy,organizations must set a vision,create an action plan,and hold leaders accountable for DEI objectiv

316、es and outcomes.Setting a DEI vision will require making an honest assessment of how diverse,equitable,and inclusive an organization is currently and how much further it needs to travel.A mix of DEI,HR,and business leaders should own this process.C-suite leaders,business unit managers,functional man

317、agers,and others across the organization will need to define the vision for DEI in the workplace and set clear aspirations and goals for achieving that vision.Leaders wont be able to act on all DEI initiatives at once,so they should develop an action plan One path forward is for leaders to be more s

318、ystematic early in strategy development,considering the objectives and desired level of impact from their programs.46The State of Organizations 2023that prioritizes the programs based on ease of implementation and level of impact.Setting up some pilot projects in specific business units or teams can

319、 help executives decide what works and what needs adjustment before the DEI initiative can be introduced in other parts of the organization.Respondents in our State of Organizations Survey note the importance of placing core business leaders and managers at the heart of DEI efforts and sharing accou

320、ntability beyond just the HR function or employee-resource-group leaders.Its up to everyonethe CEO and other C-suite leaders includedto ensure that managers understand whats expected of them,that managers have what they need to achieve DEI goals,and that managers take responsibility for delivering r

321、esults.47April 2023C H A P T E R 1:T E N D E E P D I V E S48 Whats changing?In a McKinsey Health Institute Global Survey on Mental Health and Well-being,almost 60 percent of respondents say they have experienced at least one mental-health challenge at some point in their livesa figure consistent wit

322、h other global research.1 This trend holds true regardless of country,industry,age group,role,or gender.The message is clear:most employees are directly or indirectly affected by mental-health-related challenges,and they cant be treated in isolation from the workforce or excluded altogether;they are

323、 the workforce.2Four of five HR leaders around the world report that mental health and well-being are now top priorities for their organizations.3 And despite concerns by some about a potential rise in“well-being washing,”estimates show that nine of ten organizations are offering some form of struct

324、ured wellness programs to employees,incorporating benefits such as yoga classes,mindfulness and time management workshops,paid subscriptions to meditation apps,and extra days off work for mental healthcare.4However,many workers continue to feel overwhelmed.Our research and experience in the field su

325、ggest that this may be because their organizations,with the best of intentions,have focused on launching interventions that remediate symptoms of mental distress rather than on addressing root causes of poor mental health and well-being among employees.5 Since the problem is systemwide,we encourage

326、employers to invest in systemic interventions that are developed and managed with the same rigor and strategic thinking as for other corporate initiatives.The benefits of getting it right Apart from the obvious moral imperative for organizations to provide both preventive and acute support for emplo

327、yees mental health and well-being,there is a compelling business case.The benefits of getting it right can be a source of sustainable competitive advantage over time.The World Health Organization estimates that 12 billion working days are lost annually around the world to depression and anxiety,at a

328、 cost of$1 trillion per year in lost productivity.6 Other research has found that employees who have endured at least one mental-health challenge report worse employee experiencesin some cases,experiencing promotion discriminationthan peers with no mental-health challenge do and were four times more

329、 likely to want to leave their organizations.7Benefits to employers of investing in mental health and well-being are seen in improved retention,attraction,and productivity.For example,Mental health:Investing in a portfolio of interventionsEmployee mental health is becoming a C-suite issue.49employee

330、s surveyed as part of McKinseys Great Attrition research say the level of support that organizations offer for mental health and well-being is a top factor in their decision to leave or stay.8In addition,a growing body of evidence supports a causal link between overall health and well-being and prod

331、uctivity.In 2019,a UK study of 1,793 BT telesales workers showed a causal link between happiness and productivity,with three additional sales per week(a 12 percent increase)per unit increase in employee happiness.9Issues to address Many workers continue to feel overwhelmed.Our research and experienc

332、e in the field suggest that this may be because their organizations,with the best of intentions,have focused on launching interventions that remediate symptoms of mental distress rather than on addressing the root causes of poor mental health and well-being among employees.10Based on the McKinsey He

333、alth Institute scan of employers public declarations regarding mental health and well-being,it appears that many are focusing their investments on addressing the effects of poor mental health on individuals.There is no doubt that this is important.Because most employees are likely to experience at least some symptoms of poor mental health and well-being at some point during their working years,the