Menu Close

Keep your firm in peak condition

Terry Frost ying yang

Long-term performance and sustainability may seem destined to clash with the short-term aggression of transformation, but the two can sit comfortably together, according to Lili Duan, Rajesh Krishnan and Brooke Weddle, writing for McKinsey Quarterly.

If your underlying organisational health is in good shape, your long- and short-term goals can balance each other perfectly, like the yin and yang of Chinese philosophy.

To uncover the secrets of this symmetry, the authors studied and analysed detailed data on 51 companies, collected from McKinsey’s Organisational Health Index and the Corporate Horizon Index.

They found there was a strong connection between good health and ongoing performance: those organisations focused on long-term orientation were the healthiest. With this in mind, the authors set out to discover the best ways for a business to simultaneously boost its core strengths while going through an inevitably tricky period of rapid change.

Looking at data from companies that have been advised by McKinsey’s Recovery & Transformation Services unit, gave Duan, Krishnan and Weddle the tools to devise the tactics below for maintaining and renewing your organisational health during the transformation process.


“Companies prioritising them during the first year of the transformation effort improve their health by twice as much as companies that don’t,” they say.

1) Establish strategic clarity. When a transformation is under way, everyone in the business needs to be clear about what the collective goals are, or your organisational health will suffer. Decide the things you definitely will and will not do.

Make sure your aims are well communicated to all your executives and employees. You don’t want people wasting time and energy working on projects that conflict with the overall strategy.

To get the message across, one company leader created a visual presentation which explained the targets of the transformation by depicting how they would play out across the value chain. This was shown to employees in all departments, who were then encouraged to contribute to discussions on how best to achieve them.

2) Match personal goals with company vision. Take extra steps to engage all employees in your desired transformation to give the process meaning and safeguard the fundamental health of the company.

This means “going beyond ‘cascading’ the strategy into key performance indicators and targets to involving employees up front in setting the company’s strategic objectives, ensuring that the right talent is in place to achieve those objectives, and making sure that each individual’s ‘stake’ in the strategy reflects his or her aspirations”.

3) Encourage fresh ideas. Tapping into innovative thinking from inside and outside your business is a useful way of boosting your organisational fitness. Investigate the practices used by others in your industry, draw on the knowledge of staff recently transferred from other companies, and give employees a deeper sense of ownership by seeking their opinions and ideas.

In one industrial organisation where there was a reluctance to use anything except in-house initiatives, employees were asked to work more intimately with both customers and vendors in order to spark some bottom-up innovative thinking.

4) Create a benevolent “right every time” culture. Robust operational discipline is an essential foundation for good organisation health. You can make it clear you want everyone to commit to the highest standards by demonstrating core values at top executive level, then clearly communicating what exactly is expected from all employees on a day-to-day basis.

This should be done in a supportive way that shows your commitment to employee well being. Teamwork and a climate of mutual support need to be encouraged, and people who go the extra mile to embrace the culture should be recognised. Help and reassurance should be offered to individuals having difficulty adapting.

The authors cite an Asian production company in transformation that created a fund to give a monetary reward to employees who went “above and beyond their routine jobs” to help the company achieve its new objectives.

“Managers also formally recognised this extra effort, thanking fellow colleagues publicly on a near-daily basis and following up constructively with employees who were struggling. This approach helped to sustain momentum long after the initial impetus had begun to wane.”

Putting these four balancing strategies in place can not only sustain your organisational health through the short-term “yang” of transformation, it can also give your business a boost of “yin-like” strength and sustainability at the same time.

Source Article: The Yin And Yang Of Organisational Health
Author(s): Lili Duan, Rajesh Krishnan and Brooke Weddle
Publisher: McKinsey Quarterly