By  on November 3, 2010

How healthy is your company, organizationally?

It may be performing well financially, but if morale is low, vision is lacking and change isn’t embraced, it probably won’t be very long before the results start to decline.

That was the main message emerging during a workshop led by McKinsey & Co. executives Nora Aufreiter, director, and Josh Leibowitz, partner. In an unusual format, the McKinsey executives requested that the audience of 150 engage in some self-analysis and vote on their own company’s organizational health, as measured by three main factors:

• Alignment — the ability of a company to align and motivate its workers around a vision, goals and challenges, and establish an adaptable culture rooted in existing subcultures.

• Execution — the ability of a company to further talent, foster an owner mind-set at all levels, and give meaning to each task performed at any level.

• Renewal, meaning how a company embraces change and creates value for all stakeholders.

“Organizational health relates directly to organizational performance in the long and short term,” Aufreiter said.

“Given the rapid pace of changes in consumer behavior, technology and growth in emerging markets, retail and apparel companies more than ever need to have a high level of organizational health to react to these changes,” Leibowitz said.

After the voting, Leibowitz concluded: “They gave a broader distribution than we expected.” He said most people in the audience scored their organization’s health at one to three, rather than four or five, on a scale of one to five. “It suggests opportunities for companies to spend time working on both performance priorities and the underlying health of the organization.”

Based on a McKinsey survey of 800 companies across a wide range of sectors that elicited 500,000 responses, “Companies in the highest quartile of organizational health are two times more likely to have a higher financial performance,” Leibowitz said.

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