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.

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✨ 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.

PEOPLE EXPERIENCE & ENGAGEMENT

Qualtrics | 2025 Employee Experience Trends Report | This comprehensive report examines vital trends shaping employee experience in 2025, including the importance of reducing workplace chaos, generational differences in engagement, critical moments in the employee lifecycle, building trust, and the impact of AI adoption on employee experiences.

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✨ OVERVIEW

The Qualtrics 2025 Employee Experience Trends Report highlights five major trends shaping people experience and engagement:

1️⃣ The importance of reducing workplace chaos to boost engagement
2️⃣ Surprising optimism among young employees
3️⃣ Critical impact of entry and exit experiences
4️⃣ The cost of prioritising short-term gains over long-term trust
5️⃣ Rapid employee adoption of AI tools

These trends underscore the need for organisations to focus on creating supportive work environments, nurturing young talent, improving critical touch-points in the employee lifecycle, building trust through leadership actions, and strategically integrating AI to enhance productivity and employee experiences.

🧩 CONTEXT

In 2025, organisations grapple with rapid change, economic pressures, and evolving employee expectations. There must be more than traditional work and employee management approaches to meet these challenges. Employees adapt to increasingly demanding and chaotic business environments, while organisations focus on issues like returning to the office, raising productivity, and implementing AI. This context has created a need for organisations to re-evaluate their priorities and strategies for managing employee experiences, particularly in areas such as trust-building, supporting employees through change, and leveraging new technologies like AI to improve engagement.

🔍 WHY IT MATTERS

➡️ Reducing workplace chaos is crucial for employee engagement and productivity—Employees are feeling pressure to increase productivity due to the pace of change (38%), strategic efforts (36%), and economic conditions (34%). Organisations that fail to support employees through change risk creating cultures that make it needlessly difficult for employees to do their jobs effectively, leading to disengagement.

➡️ Young employees represent a significant opportunity for engagement—Despite popular critiques, employees under 25 are the most engaged and optimistic of all employee groups. They have higher experience scores, with 82% believing in their organisation's values compared to 76% of other age groups.

➡️ Entry and exit experiences significantly impact employer brand and engagement—Poor candidate and exit experiences fail to meet employee expectations, with only 15% of employees reporting that their candidate journey exceeded expectations. These experiences shape an organisation's relationship with potential employees and customers, affecting overall engagement.

➡️ Trust in leadership is foundational to employee engagement—There's a clear correlation between trust and employee experience outcomes, with trust strongly linked to engagement (r=0.71), inclusion (r=0.69), and well-being (r=0.65). However, only 56% of employees feel their leaders will act benevolently, indicating a need for improvement.

➡️ AI adoption is outpacing organisational readiness—45% of employees use AI tools daily or weekly, often sourcing them themselves. This rapid adoption presents opportunities and challenges for organisations regarding productivity, security, and ethical considerations related to employee experiences.

💡 KEY INSIGHTS

➡️ Reducing workplace complexity drives engagement—The top drivers of employee engagement include the organisation's ability to adapt to changing customer needs and continually improve work processes. However, a culture of continuous improvement was one of the lower-rated items in the study, indicating room for improvement.

➡️ Young employees are surprisingly optimistic—Employees aged 18-24 are more actively engaged, future-focused, and have higher experience scores than other age groups. For example, 82% believe in their organisation's values compared to 76% of different age groups.

➡️ First and last impressions matter significantly. Many employees' candidate journeys and exit experiences are below expectations, with 43% reporting their exit experience below expectations. These experiences shape an organisation's relationship with potential employees and customers.

➡️ Trust in leadership is multifaceted—While employees are somewhat optimistic about their leaders' competence (68%) and integrity (67%), they're much less likely to believe leaders will act with benevolence (56%). Trust levels vary significantly across industries, roles, and age groups.

➡️ AI adoption is employee-driven—45% of employees already use AI tools at work, with 30% sourcing them themselves. The most common uses include analysing data (41%), online search (40%), and data entry (32%), all of which can potentially enhance employee experiences and engagement.

🚀 ACTIONS FOR LEADERS

➡️ Focus on reducing unnecessary complexity—Prioritise efforts to continually improve work processes and support employees through change. This includes enhancing processes, removing red tape, and empowering employees with the right tools to improve their overall experience.

➡️ Invest in young employees' growth and development—Create pathways for young employees to provide suggestions for continuous improvement. Consider new development opportunities or internal mobility programmes that allow early-career employees to cultivate essential skills and stay engaged.

➡️ Improve entry and exit experiences—Focus on creating positive first and last impressions throughout the employee lifecycle. Use tools to identify the moments that matter, understand the drivers of these experiences, and take action to improve them.

➡️ Build trust through observable behaviours and systems—Demonstrate that people are the priority by actively seeking and acting on feedback from diverse employees. Equip leaders with accessible, actionable intelligence to make smarter decisions that build trust and enhance employee experiences.

➡️ Develop a strategic plan for AI integration—Create a comprehensive strategy for AI adoption that addresses productivity, security, and ethical considerations. Provide guidance and support for employees using AI tools to ensure they are used effectively and responsibly to enhance their work experience.

🔗 CONCLUSION

The 2025 Employee Experience Trends Report highlights the complex and evolving nature of the modern workplace. Successful organisations will be those that can effectively reduce workplace chaos, nurture young talent, create positive experiences throughout the employee lifecycle, build trust through leadership actions, and strategically integrate AI. By focusing on these critical areas, organisations can create more engaging, productive, and resilient work environments that meet the needs of employees and the business in an increasingly dynamic landscape.

🎯 KEY TAKEAWAY

To thrive in 2025, organisations must prioritise creating supportive, trust-based work environments that empower employees to adapt to change, leverage new technologies, and contribute their best work throughout their entire journey with the company. This will ultimately lead to higher engagement and better experiences for people.

RESPONSIBLE AI

MIT Sloan Management Review | Avoiding Harm in Technology Innovation | This comprehensive article examines how organisations can responsibly develop and deploy emerging technologies like AI while mitigating potential harms, providing a framework for ethical innovation and commercialisation.

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✨ OVERVIEW

The article "Avoiding Harm in Technology Innovation" by Tania Bucic and Gina Colarelli O'Connor explores the critical challenge of responsibly developing and deploying emerging technologies like AI. Based on interviews with executives and managers involved in technology scouting, adoption, and commercialisation, the authors identify common problems in companies' cultures and processes that limit consideration of potential harms. They propose a Responsible Innovation and Commercialisation (RIC) framework adapted from the Responsible Research and Innovation principles to help organisations capitalise on emerging technologies while mitigating unanticipated consequences.

🧩 CONTEXT

Advances in AI and other technologies promise to solve global problems and fuel economic growth. However, they also raise ethical questions and potential adverse consequences that many companies are ill-equipped to address. Innovators are often ahead of regulations that might provide guardrails around commercialisation decisions. This requires organisations to establish systematic processes for considering new technologies' ethical implications and potential harms before releasing them. The article addresses this crucial issue by providing a framework for responsible innovation that can be applied to AI and other emerging technologies.

🔍 WHY IT MATTERS

➡️ Failure to consider potential outcomes can lead to negative consequences—The Air Canada case demonstrates how enthusiasm for AI-powered customer service can override understanding of its limitations, resulting in legal and reputational damage. This highlights the need to consider AI's potential impacts before deployment carefully.

➡️ Few systematic processes exist for ethical consideration—The research revealed that companies often lack formal guidance or processes for questioning the moral implications of the technologies they develop. This gap increases the risk of unintended harm when deploying AI systems.

➡️ Business imperatives often overshadow ethical concerns—Companies focus primarily on using new technologies like AI, their market objectives, and their business model constraints, giving little forethought to potential adverse effects on society or nefarious uses.

➡️ External stakeholder perspectives are often overlooked—Many organisations avoid engaging with external stakeholders during AI development, potentially missing essential insights about societal impacts and public acceptance.

➡️ Risk mitigation often focuses on liability rather than harm prevention—Some companies prioritise offloading liability for AI systems onto other parties rather than avoiding causing harm altogether, which can lead to ethical blind spots.

💡 KEY INSIGHTS

➡️ Anticipation is crucial for proactive risk management—Before deployment, Organisations must systematically consider all potential uses and consequences of AI technologies, including positive and negative outcomes for various stakeholder groups.

➡️ Reflexivity helps surface biases and assumptions—Questioning organisational norms and industry standards regarding AI development can reveal ethical shortcomings and lead to more responsible innovation practices.

➡️ Inclusion of diverse stakeholders improves decision-making—Engaging with relevant external groups, including scientists, advocacy organisations, and end users, helps ensure a more comprehensive understanding of AI's potential impacts.

➡️ Responsiveness is critical to addressing unforeseen consequences—Organisations need mechanisms to monitor for unintended effects of AI systems after deployment and swiftly resolve issues that arise.

➡️ A systematic framework can guide ethical innovation—The Responsible Innovation and Commercialisation (RIC) framework provides a structured approach for organisations to consider ethical implications throughout the AI development and deployment process.

🚀 ACTIONS FOR LEADERS

➡️ Implement a systematic review process—Establish a formal procedure for evaluating the ethical imp’ ethical implications and potential harms before and during development, using the RIC framework as a guide.

➡️ Cultivate diverse expertise—Build teams that include technical experts, ethicists, social scientists, and other professionals who can offer diverse perspectives on AI's potential impacts.

➡️ Engage external stakeholders—To comprehensively understand AI's societal implications, proactively seek input from relevant external groups, including potential users, advocacy organisations, and domain experts.

➡️ Develop clear ethical guidelines—Create and communicate ethical principles and decision-making criteria for AI development and deployment that align with the organisation's values and mission.

➡️ Establish monitoring and response mechanisms—Implement systems to continuously monitor deployed AI technologies for unintended consequences and have clear protocols for addressing issues.

🔗 CONCLUSION

As AI and other emerging technologies advance rapidly, organisations face increasing responsibility to understand and mitigate their potential negative impacts on society. The Responsible Innovation and Commercialisation framework provides a structured approach for companies to navigate these challenges, enabling them to capitalise on technological innovations while minimising harm. By embracing anticipation, reflexivity, inclusion, and responsiveness, organisations can foster a culture of ethical innovation that mitigates risks, builds trust with stakeholders, and contributes positively to society.

🎯 KEY TAKEAWAY

To harness the full potential of AI while minimising risks, organisations must implement systematic processes for ethical consideration throughout the innovation lifecycle, engaging diverse perspectives and remaining responsive to unforeseen consequences.

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