McKinsey considers organisational health and effective leadership behaviours

The most effective leadership behaviours reflect the state of a company’s organisational health, McKinsey research finds.

Leadership in Context

McKinsey Quarterly, January 2016

Recent McKinsey research suggests that the most effective leadership behaviours reflect the state of a company’s organisational health.

To explore the effectiveness of different kinds of leadership behaviours at companies in different states of organisational health, McKinsey surveyed more than 375,000 people from 165 organisations across multiple industries and geographies.

It was found that certain leadership behaviours are always appropriate: specifically, effectiveness at facilitating group collaboration, demonstrating concern for people, championing desired change, and offering critical perspectives.

Yet other leadership behaviours may be more or less important depending on the state of a company’s health. For example, the research found that the most effective forms of leadership behaviour in distressed organisations are making fact-based decisions, solving problems effectively, and focusing positively on recovery. Conversely, for companies in the top quartile of organisational health, behaviours like motivating others and modelling organisational values are important.

The researchers argue that some behaviours appear to be differentiators: emphasising them in different situations can lift the organisational health of companies.

This is a large study and its findings may have important implications for leaders, including directors, executives and managers. To be useful, organisational leaders need to have a good sense of how healthy their organisations are. (There are tools and professionals who can assist with this since a rigorous self-diagnosis is not always possible.) Where this is the case, the research findings can help guide leaders as to what are the most effective behaviours in different situations.

The research also has important implications for, arguably, what is the most important responsibility of the board: choosing a CEO. The article states:

"However much an executive may seem to have a leadership “it” factor, the organization’s health, not the claims of individuals, should come first when companies determine which kinds of behaviour will be most effective for them".

Speaking to the Governance Leadership Centre, McKinsey Australia Partner, Naveen Unni, further emphasised the importance of organisational health:

“McKinsey's research points to organisational health as being the best indicator of a company's future sustained performance. It's really at the core for any major business. As Australian companies face more challenging times with growing disruption and new rivals potentially emerging, addressing organisational health will hold valuable lessons.”