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- Hybrid Can Be Healthy for Your Organisation—When Done Right | McKinsey & Company (2024)
Hybrid Can Be Healthy for Your Organisation—When Done Right | McKinsey & Company (2024)
McKinsey's research reveals that fully remote organisations can achieve top-tier organisational health, rivalling traditional companies. This article explores critical insights and priorities for companies aiming to maintain high organisational health in flexible or distributed work environments.
Tanguy Dulac
November 10, 2024
FLEXIBLE WORKING
McKinsey & Company | Hybrid can be healthy for your organisation—when done right | McKinsey's research reveals that fully remote organisations can achieve top-tier organisational health, rivalling traditional companies. This article explores critical insights and priorities for companies aiming to maintain high organisational health in flexible or distributed work environments.
📊 DID YOU KNOW?
Did you know that fully remote organisations can achieve top-decile organisational health?
👀 DID YOU SEE?
Figure: The Impact of Flexible Work Practices on Organisational Health
✨ OVERVIEW
McKinsey's research, leveraging their Organisational Health Index (OHI), reveals that flexible and remote work models can lead to exceptional organisational health. The study, which included technology companies that were fully remote before the COVID-19 pandemic, found that these organisations achieved top-quartile scores on the OHI, with the largest and most mature reaching top-decile health. This challenges the notion that traditional office-based work is necessary for optimal organisational performance. Six key priorities are outlined for companies aiming to maintain high organisational health in flexible or distributed work environments, emphasising clear communication, performance expectations, transparency, purposeful work locations, trust-building, and continuous improvement.
🧩 CONTEXT
As organisations navigate the post-pandemic landscape, hybrid and remote work debate continues. Many companies operate in a "hybrid middle," where employee experiences vary significantly. To address this, McKinsey has refreshed its Organisational Health Index to understand better the impact of flexible work practices on organisational health. This research is particularly relevant as businesses seek to balance employee preferences for flexibility with the need for collaboration and productivity. The findings from fully remote companies provide valuable insights for organisations considering or already implementing hybrid or remote work models.
🔍 WHY IT MATTERS
➡️ Flexible work can lead to top-tier performance—Fully remote organisations studied by McKinsey achieved top-quartile scores on the Organisational Health Index, with the largest and most mature reaching top-decile health. This demonstrates that flexible work models can effectively support exceptional organisational performance.
➡️ Remote work can enhance work environment and motivation—The studied organisations showed top-decile scores on OHI outcomes for Work Environment and Motivation, indicating that remote work can positively impact employee satisfaction and engagement.
➡️ Leadership styles adapt in remote settings—Remote organisations exhibited top-decile performance in Consultative Leadership and Supportive Leadership practices, suggesting that effective leadership in flexible work environments requires specific approaches and skills.
💡 KEY INSIGHTS
➡️ Clear communication is crucial—Remote and hybrid organisations must remove ambiguity about working practices by setting clear expectations, establishing consistent meeting protocols, and incorporating asynchronous work practices.
➡️ Performance expectations must be reset—Creating an environment where on-site and off-site colleagues feel equal is essential, which requires reevaluating performance goals and review processes.
➡️ Transparency drives success—Having a single source of truth for all employees, such as a regularly updated handbook outlining rules and norms, is vital for effective knowledge-sharing and process-based capabilities.
➡️ Purposeful work location decisions matter—Organisations should encourage informed, intentional choices about when and where to work, focusing on the moments that matter for in-person collaboration.
🚀 ACTIONS FOR LEADERS
➡️ Remove ambiguity about working practices—Set explicit expectations for remote and hybrid work, establish consistent meeting protocols, and develop asynchronous work practices to enable collaboration across time zones.
➡️ Reset performance expectations—Create performance goals and review processes that ensure fairness between on-site and remote employees, focusing on outcomes rather than presence.
➡️ Be transparent—Develop and maintain a single source of truth (e.g., a regularly updated handbook) that outlines all hybrid and remote work rules, norms, and processes.
➡️ Be purposeful about where people work—Help employees understand when and why in-person work is necessary, focusing on high-value interactions that benefit from face-to-face engagement.
➡️ Foster trust and a sense of support—Demonstrate a welcoming work environment through inclusion, belonging, supportive leadership, and openness.
➡️ Test and learn—Make decisions quickly, regularly assess what works, and share lessons learned through empowering leadership, tech enablement, and data-driven decision-making.
🔗 CONCLUSION
McKinsey's research demonstrates that when implemented thoughtfully, flexible and remote work models can lead to exceptional organisational health. Organisations can overcome the challenges of distributed work environments by focusing on clear communication, equitable performance management, transparency, purposeful work location decisions, trust-building, and continuous improvement. These findings provide valuable guidance for companies navigating the complexities of hybrid and remote work, suggesting that such models can maintain and potentially enhance organisational performance and employee satisfaction. The success of fully remote companies in achieving top-quartile and even top-decile organisational health scores challenges traditional notions about the necessity of office-based work.
🎯 KEY TAKEAWAY
Effective implementation of flexible work practices, guided by clear priorities and intentional strategies, can lead to top-tier organisational health and performance. Fully remote organisations demonstrate the potential to achieve top-decile health scores rivalling or exceeding traditional companies.