McKinsey offers organizational health index to non-profits

20 March 2023 2 min. read
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A proprietary tool designed by McKinsey to measure organizational health is being offered free of charge to non-profits worldwide, with the firm expressing its critical importance to long-term performance.

Global strategy and management consulting firm McKinsey & Company has made its in-house organizational health index (OHI) tool available free of charge to non-profits around the world, with enrollment applications open until the end of the month.

The launch of McKinsey’s ‘OHI for Nonprofits’ program follows a successful pilot which reached over 4,000 employees in 45-plus countries through 70 participating not-for-profit organizations.

Developed 20 years ago, McKinsey’s OHI tool has been used by more than 2,500 clients in 100-plus countries, generating in excess of 7 million survey responses which when measured against sustained financial performance serve as organizational health benchmarks to provide targeted areas of improvement. According to McKinsey, healthy organizations outperform their unhealthy peers by a factor of three on shareholder returns.

“We’ve seen OHI deliver major returns for our for-profit clients,” said McKinsey partner and OHI lead Alex Camp. “We wanted to bring that to organizations where returns are measured in social good; to small- and medium-sized nonprofits at scale. A vibrant nonprofit sector, with healthy organizations equipped to realize their ambitious missions, is critical to achieving sustainable and inclusive growth around the world.”

McKinsey has adapted the tool specifically for non-profits, with program participants receiving an organization-wide survey that diagnoses current ways of working and identifies strengths and weaknesses in how teams work together toward their goals. A custom organizational health report will then be issued, with a comparison to McKinsey’s non-profit benchmarks and best practice resources to improve organizational health.

The consulting firm says the program has already revealed some sector-specific insights, such as that 90% of staff at non-profits in the top health bracket think their organizations are extremely effective at achieving their mission, compared to only 60% at the least healthy organizations. Further to that, those who don’t consider their organizations extremely effective are 10x more likely to be planning to depart in the coming year.

One of the participants, Indian social change policy nonprofit Indus Action, stated that the tool would serve as a key guide in shaping its future retention strategy. “We will be using OHI scores and data to address our retention challenges and strengthen employee engagement,” said Indus Action senior manager Achalika Ahuja. “The experience revealed so much about how these improvements can help us achieve our targets and goals.”

In addition to overall effectiveness in achieving goals, McKinsey’s OHI tool assesses other relevant factors such as an organization’s direction, leadership, accountability measures, and employee motivation – day-to-day organizational elements the firm says are critical for long-term performance.

The ‘OHI for Nonprofits’ program is a core initiative of the consultancy’s philanthropic not-profit support division