Talent Development: Delivering Value through Organizational Identity

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1 Talent Development: Delivering Value through Organizational Identity Research by McKinsey & Company Presented by Michael Burchell, Ed.D. May 19, 2015

2 What is organiza-onal health? How do we measure it? How do I use my health score to drive change? (introducing recipes) What s my recipe for health? As a leader, what does this mean for talent development?

3 Why are we here today The pressure to stay compe--ve is going up the number of companies failing to maintain performance over -me is increasing drama-cally The common thread to those who con-nue to thrive? They run their organiza-ons bemer Unfortunately, most leaders fail in their amempts to change/improve how they run the place (about 70% fail) A big part of running your company bemer is understanding its organiza-onal health amributes (both results and behaviors) It s impossible to be best- in- class across all health amributes

4 The big idea: Performance and Health Performance Health What an enterprise does to improve how it buys raw materials, makes them into products, and sells them into the market to drive financial and operational results How an organization aligns itself, executes with excellence, and renews itself to sustainably achieve performance aspirations

5 We conducted an exhaus<ve academic review We interviewed key leaders across our client base We developed the Organiza<onal Health Index (OHI) Survey 800 books & ar-cles 100 client execu-ves 98 ques-ons 200 fact- based insights 30 func-onal leaders 20 minutes 2m+ users surveyed companies

6 Outcomes measure the soft and hard building blocks of the organizational ecosystem Accountability Direc<on Coordina<on & control Align Are people aligned around the organization s vision, strategy, culture and values? Execute External orienta<on Leadership Innova<on & learning Can employees deliver on their roles with the current capabilities, processes and motivation level? Capabili<es Culture &climate Mo<va<on Innovate / adapt to change How does the organization understand, interact, respond, and adapt to its situation and external environment? SOURCE: McKinsey Organiza-on Prac-ce; Organiza-onal Health Index (OHI)

7 37 Management Practices: Measure Behaviors, Actions and Processes Direc<on Accountability Mo<va<on 1. Shared Vision 2. Strategic Clarity 3. Employee Involvement 12. Role Clarity 13. Performance Contracts 14. Consequence Management 15. Personal Ownership 25. Meaningful Values 26. Inspira-onal Leaders 27. Career Opportuni-es 28. Financial Incen-ves 29. Rewards & Recogni-on Leadership Coordina<on and control Innova<on and learning 4. Authorita-ve Leadership 5. Consulta-ve Leadership 6. Suppor-ve Leadership 7. Challenging Leadership 16. People Performance Review 17. Opera-onal Management 18. Financial Management 19. Professional standards 20. Risk Management 30. Top- Down Innova-on 31. BoMom- Up Innova-on 32. Knowledge Sharing 33. Capturing External Ideas Culture and climate Capabili<es External orienta<on 8. Open and Trus-ng 9. Internally Compe--ve 10. Opera-onally Disciplined 11. Crea-ve & Entrepreneurial 21. Talent Acquisi-on 22. Talent Development 23. Process Based Capabili-es 24. Outsourced Exper-se 34. Customer Focus 35. Compe-tor Insights 36. Business Partnerships 37. Gov t & Community McKinsey & Company, Rela-ons 2015

8 Leadership Driven Market Shaper Con<nuous Improvement Engine Leaders are the performance catalyst; they set high expecta-ons and help the organiza-on achieve them Shaping market trends and building a poriolio of solid, innova-ve brands keeps us ahead of the compe--on Top 3 management practices per recipe Career opportunities Customer focus Inspirational Competitive Leaders Insights Open and Business Trusting Partners We leverage our people and know- how at all levels of the organiza-on to out- perform compe-tors via superior execu-on and con-nuous improvement Knowledge Sharing Employee Involvement Creative & Entrepreneurial Talent/Knowledge Core Our collec-ve talent and knowledge is our most important asset; our success depends on developing talent effec-vely Rewards & recognition Talent Acquisition Financial Incentives

9 Which Recipe fits your organization? What about your competitors? Leadership Factory Market Shaper Con<nuous Improvement Talent / Knowledge Engine Core Introduction to the OHI March 23, 2015

10 To understand which recipe is best for your organization, consider how you would prefer to spend an incremental hour Ensure future leaders are gekng the coaching/appren-ceship opportuni-es they need Structure projects/tasks to build specific leadership skills Priori-ze the next big projects for R&D Talk to their customers and find out what the trends are Set up a working team to iden-fy quick wins to drive efficiency improvements Ask those working the front- line, "what have you discovered and shared with your colleagues lately?" SOURCE: McKinsey Organization Practice Foster rela-onships with academic groups and experts Meet a colleague for coffee to discuss experiences and career opportuni-es

11 Common pitfalls and myths regarding recipes!!!! Interpre<ng recipes only based on connota<ons associated with their names We should follow the industry recipe We already have a top quar<le health score, so why should we bother with recipes? Priori<zing recipe prac<ces before fixing broken outcomes and prac<ces Once we determine our recipe, we have to s<ck with it Leadership is not only important for the Leadership Driven recipe Not necessarily. Example: Execution Edge is a dominant recipe in insurance; yet, GEICO was able to steal market share by differentiating itself with Market Focus Alignment bolsters your compe--ve advantage. Even within the top quar-le, top decile companies have 20% higher average TRS than their top quar-le peers If a company has more than 1 broken outcome or 3 broken prac-ces, they are unlikely to be healthy even if they align to a Recipe. Broken prac-ces must be addressed Depending on the stage of a company, it may mature into a different Recipe!

12 Aligning top recipe practices with your company s top 10 can dramatically improve organizational health Probability of Top Quar<le Health 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Having at least 8 of the top 10 recipe practices yields >70%+ likelihood of being top quartile in overall health ` 0% Number of top 10 recipe Prac-ces in company s McKinsey top & Company, 10 ranks 2015

13 Overall alignment to an archetype plays an important role in achieving organizational health Overall health score by archetype similarity score 1 Health score Archetype similarity score 2 1 r2= The archetype similarity score is a transformed correla-on between an organiza-on's standardized prac-ce scores and the average standardized prac-ce scores of organiza-ons within the archetype cluster

14 Q&A AND THANK YOU! Stay in touch: Michael Burchell, EdD on LinkedIn Twitter: OHISolution and burchellm

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