Organizational health a fast track to performance improvement

Working on health works. It’s good for your people and for your bottom line.

The central idea underlying our organizational work for the past decade has been that the best way to run a business is to balance short-term performance and long-term health.

Healthy companies, we know, dramatically outperform their peers. The proof is strong—the top quartile of publicly traded companies in McKinsey’s Organizational Health Index (OHI) delivers roughly three times the returns to shareholders as those in the bottom quartile—so strong, indeed, that we’ve almost come to take it for granted.

But now we see new, longitudinal evidence that redoubles our conviction. Companies that work on their health, we’ve found, not only achieve measurable improvements in their organizational well-being but demonstrate tangible performance gains in as little as 6 to 12 months. This holds true for companies across sectors and regions, as well as in contexts ranging from turnarounds to good-to-great initiatives.

Our recommendation is clear: start managing your organizational health as rigorously as you do your P&L, providing pathways for leaders at all levels to take part and embedding and measuring the new ways of working.

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