Catelouge

1. Organizational Health Index:
The Missing Management Metric
Using organizational health to build
and sustain financial performance

2. What makes the OHI unique?
The OHI goes beyond a typical employee survey. It prescribes interventions
to improve those elements of health directly linked to financial performance.
For the first time, managers are saying they know where to focus organizational
efforts to impact the bottom line.
“McKinsey provides Three factors contribute to OHI’s distinctiveness:
a unique combination Proven link between health and performance
of operational and
• McKinsey has identified the nine elements of organizational health that impact
organizational expertise.” financial performance
Chief Executive Officer,
Energy Corporation • The healthiest companies are more than twice as likely to earn above their industry’s
median profit margin
Competitive insights
• The OHI benchmarks a company’s results against a continuously growing, proprietary
database of more than 600 companies in industries across all geographies.
• Results are benchmarked against industry top performers as will as companies within
an organization’s archetype
Archetypes
• McKinsey has identified four patterns of organizational behavior or “archetypes”, that
help describe most companies’ organizational health profile; market focus, execution
edge, talent/knowledge core, and leadership driven.
• The archetypes are critical to defining a company’s “winning recipe” of management
practices

3. About the OHI
The Organizational Health Index measures and tracks the organizational elements
that drive financial performance.
It provides a simple but powerful roadmap for leaders and managers to improve
organizational health.
“McKinsey’s behavioral Linking organizational health and performance
work is the most profound Our research has proven that the healthiest companies are more than twice
I’ve been involved in – the as likely to have EBITDA margins above their industry median
impact is extraordinary”
Chief Executive Officer, Nine elements of organizational health Proven link to financial performance
Global Telecom Company
Probability of earning earning above-median
Probability of above-median
EBITDA margin margin
EBITDA
Percent Percent
68 68
48 48
2.2x 2.2x
31 31
Weak Weak
Good Good
Great Great
Levels of health health
Levels of
Improving performance
The OHI:
• Employs an employee survey to provide hard measures for the soft issues that impact
financial performance
• Benchmarks a company’s results against industry performance and high
performing organizations
• Helps set aspirations and identifies which management practices to emphasize for
improved performance using organizational archetypes
• Helps prioritize needed interventions to drive lasting change
• Tracks progress and catches potential issues early through regular survey deployment
Connecting with experts
The OHI process draws upon:
• A group of highly trained analysts, with experience across many companies in
different industries and geographies, who often yield from a company’s OHI,
unexpected and important practical insights for that company
• McKinsey’s deep organizational expertise and broad experience serving the world’s
leading global institutions – critical for helping a company define its unique path forward
http://ohi.bymckinsey.com

4. What the OHI delivers
The Organizational Health Index provides detailed findings for how your company is
performing on the nine elements of health related to financial performance.
McKinsey’s basic beliefs about organizational health
Health matters Focus on the right practices
Financial performance is driven by organizational health. Although companies must achieve a minimum threshold level
We have identified nine elements and 34 underlying for all management practices, they need distinctiveness in only
management practices directly related to performance. six to seven practices.
Know your organization’s archetype Drive execution
McKinsey has identified four patterns of organizational behavior Management must design and execute against a set of priorities
or “archetypes”. Management needs to understand their that strengthen the critical organizational health practices and
archetype to know which practices to emphasize. drive bottom line performance.
The OHI’s value proposition
The OHI…
1 2 3 4
Provides hard measures Assesses organizational Identifies an Tracks progress and
for the soft issues strengths and organization’s catches potential issues
that impact financial weaknesses archetype to illuminate early
performance the optimal path forward

5. Working with the OHI team
From designing the approach to tracking progress, the Organizational Health Index
relies on McKinsey’s close collaboration with you and your management team
Comprehensive OHI assessment survey
• An online employee survey of an organization’s entire population or specific segments
(paper-based survey available for employees without computer access)
• In-depth interviews and focus groups to gain a deeper understanding of the key issues
• Additional survey modules, if needed, to assess specific areas ; for example,
social networks, top management effectiveness, change readiness
Rigorous analysis and benchmarking
• OHI analyses are provided for the enterprise, business units, functional groups,
management layers and other subgroups as needed
• Results are benchmarked against a proprietary database of more than
600 companies
Identification of organizational archetype
• Each archetype has a specific mix, or “winning recipe”, of management practices that
delivers optimal performance
• An archetype’s “winning recipe” guides in designing an organization’s optimal
improvement plan
Development of change programs along
“themes for action”
• Themes for action are developed based on the company’s optimal improvement plan
• Change interventions and initiatives can be short- or long-term and revolve around
McKinsey’s influence model
Tracking progress
• Regular survey deployment tracks progress and identifies potential issues early
• Tracker survey results include McKinsey-facilitated discussion with management regarding
progress made and additional interventions needed

6. For more information on the OHI,
visit http://ohi.bymckinsey.com
or email ohi@McKinsey.com