Predictions 2022: Organisations to be more inclusive, flexible, and less hierarchical

As we begin 2022 and businesses return to normalcy, it isn’t business as usual. The way we work has undergone a paradigm shift that is here to stay. The pandemic forced companies around the world to adapt, though out of necessity. But as the worst of the pandemic recedes, a recent McKinsey research titled “Great Attrition or Great Attraction? The choice is yours” shows that a record 40% of workers across the world have quit or are planning to quit. Moreover, of those who had already quit in the six months prior to the research, 36% did so without a job in hand. That’s unprecedented.

2021 has been the year of ‘great attrition’ in India too. Amidst remote working that made interactions more transactional and less interpersonally enriching, employees felt tired, uncared for, and gravitated towards becoming ‘actively disengaged’. The situation was further accelerated due to the ongoing ‘digital dislocation’ that is bringing about a reallocation of scarce technologically-savvy and entrepreneurially-inclined talent towards digital businesses.

In the face of talent loss, organisational response so far has been rather lacklustre. Most companies are trying, and failing, to address the attrition by offering well-intentioned but transactional quick fixes, such as bringing checklist improvements in employee experience or offering one-off financial perks, without understanding the why. A transactional response is proving insufficient to reactivate the talent that needs appreciation, inclusiveness, learning and growth, and above all, wants to operate with a sense of purpose.

2022 brings an opportunity for CEOs to embrace talent and agility as two new but potent competitive advantages. They can make their companies magnets for tomorrow’s talent and raise the speed and agility of their organisations by activating four important pillars.

Cultivating servant leaders and bringing them center-stage: Organisations of the future will have to be more inclusive, more flexible, and less hierarchical. There will be less room for domineering leaders with large egos who alienate people rather than integrate them.

The new-age organisations will need servant leaders, who build teams that are truly inclusive and together demonstrate a learning and growth mindset. These leaders focus squarely on improving the culture of the organisation, one behavior at a time, and by role-modelling new behaviors. Such inclusive leadership sits at the centre of the nine elements that make up the McKinsey Organizational Health Index – a long-standing measure of the strength of corporate culture – where the top quartile companies on culture outperform the median companies by over 50%, on the measure of total returns to shareholders.

Operating with purpose and connecting with values that Gen-next espouses: The growing number of millennials and Gen-Z employees in the talent pool is bringing about an important shift – this talent is embracing those firms that help them fulfil their sense of purpose. Companies that clearly articulate how they positively impact the world and their local communities, and embody that purpose throughout their business, are finding that the best talent is thronging to them. Our research shows that employees who feel a sense of purpose in their work are more productive, more resilient, and more likely to stay engaged. The new-age talent also finds it liberating to pursue excellence and innovation at their workplace with a learning mindset, rather than get tied to narrowly defined performance goals.

Tightly linking talent to value: Organisations that deploy their best talent in roles that align with the strategic value-creation initiatives of the company are more than twice as likely to outperform their peers, our research shows.

CEOs who do this well look at the most value - creating 20-30 roles in the company and move their best talent into these roles, not due to seniority or tenure, but due to the ‘fit’ they have and the opportunity to grow future leaders. Making these talent decisions in a more inclusive manner is also an important opportunity to grow the representation of women leaders in senior roles in the organisations.

Infusing speed and agility by ‘breaking the mould’: As the pandemic recedes, many companies are finding that speed must be woven into the design of an organisation. Companies must anticipate future shifts in demand and get ready to reimagine their entire commercial and operating models with agility. There are three aspects to consider when building for speed: Rethink ways of working (e.g., by configuring agile squads to speed up decision-making), Redesign non-hierarchical structures (e.g., empowered teams that leverage a hybrid work model), and Reshape the talent pool (e.g., field tomorrow’s leaders today, create culture of learning and development).

These pillar interventions get to the heart of what’s causing the talent woes faced by the organisations and sets them on a more sustainable journey to make talent their new competitive advantage – talent that operates with purpose, inclusiveness, with greater speed and agility, thereby creating tremendous value.