A Research Paper By Melissa Chapman, Organizational Health/Leadership Coach, UNITED STATES
Growth Mindset Benefits in Coaching
Over the last few years, I have had the honor of facilitating and coaching organizational leadership teams in workshops focused on improving internal alignment, communication, and culture. The ultimate goal of those workshops was to move the organization towards operating in a healthier way. Since the organization is made up of people, the goals of these workshops are centered around how to create an environment that fosters the ability to trust one another, effectively communicate regardless of the topic, recognize each individual’s value, continue to evolve individually and as a team, and to improve upon the overall fulfillment of everyone on the team.
What Is Organization Health?
Organizational health as defined by McKinsey & Company, a renowned global business consulting firm, is the organization’s ability to align around a common vision, execute against that vision effectively, and renew itself through innovation and creative thinking. Put another way, health is how the ship is run, no matter who is at the helm and what waves rock the vessel.
McKinsey’s research of over 1,500 companies in over 100 countries over 10 years determined that the healthier the organization, the happier the employees, the more innovative the work product, and the more profitable and financially sustainable the company. The research aggregated the views of employees and managers (more than four million to date) on management practices that drive nine key organizational dimensions—or “outcomes,” as they call them. They then assign scores to each practice and outcome, allowing a company to see how it compares to others in the database. Their proprietary Organizational Health Index (OHI) measures an organization’s health by how they score in nine areas: direction; innovation and learning; leadership; coordination and control; capabilities; motivation; work environment; accountability; and external orientation.
The results provide organizational leaders insight into what they are doing well and areas that are in need of attention. There are other methods to glean this information other than McKinsey, but their OHI is the first measurable process published and serves as a beacon to other methodologies.
Why Is Organizational Health Important?
Healthy companies dramatically outperform their peers. The proof is strong—the top quartile of publicly traded companies in McKinsey’s OHI delivers roughly three times the returns to shareholders as those in the bottom quartile. In addition, companies that work on their health not only achieve measurable improvements in their organizational well-being but demonstrate tangible performance gains in as little as 6 to 12 months. This holds true for companies across sectors and regions, as well as in contexts ranging from turnarounds to good-to-great initiatives.
McKinsey has long seen a strong, static correlation between health and financial performance. But the following research they conducted is more dynamic: In a sample study of 64 companies with over 250,000 individual respondents participating, the results highlighted the potential for the vast majority of companies to improve their health and how that can correspond with enhanced performance. Their findings included the following:
- Almost all companies perform better if they improve their health. Around 80% of companies that took concrete actions on health saw an improvement, with a median six-point OHI increase in their overall health. The majority of these companies moved up an entire quartile against all other companies in their database. Over the same period that the companies in their sample were making changes to their health, their earnings, and total returns to shareholders (TRS) were also increasing disproportionately—by 18% and 10%, respectively (against an average 7% increase in earnings and an average 9% increase in TRS for those companies in the S&P 500).
- The unfit are the most likely to make the biggest health advances. After working on their health, companies in the bottom quartile saw a 9-point health improvement, with notably strong improvements in the company direction (+17 points) and innovation and learning (+14 points) outcomes. This group of “health workers” made progress across every outcome.
- Those at the top achieve the biggest financial rewards. Companies whose health-improvement efforts took them from the second quartile of the OHI to the top quartile recorded the biggest financial-performance boost, a clear sign that working on health is an important factor in going from “good” to “great.”
What this research and my workshop experiences have taught me is that the common denominator to achieving organizational health is when leadership is focused on cultivating a growth mindset culture.
What Is a Growth Mindset?
A growth mindset, proposed by Stanford professor Carol Dweck in her book Mindset, describes people with the belief that their success depends on time and effort. People with a growth mindset subscribe to the idea that their skills and intelligence can be further developed with effort and persistence. They readily embrace challenges, persevere through obstacles, learn from criticism, and search for inspiration in others’ success.
Those who hold a growth mindset believe that they can get better at something through the dedication of time, effort, and energy. Working on one’s flaws, and the process—not the outcome—are the most important components. With time and practice, people with a growth mindset believe they can achieve what they want. The opposite of a growth mindset is a fixed mindset.
A fixed mindset describes people who see their qualities as fixed traits that cannot change. With a fixed mindset, talent is enough to lead to success, and effort to improve these talents isn’t required: one is born with a certain amount of skill and intelligence that can’t be improved upon. Those with fixed mindsets may avoid challenges, give up easily and ignore useful negative feedback.
Dweck’s research of Fortune 1000 companies was different than previous studies that focused on how people’s personal beliefs about themselves affected their own outcomes. Instead, her research explored how the company-wide beliefs influenced workers’ satisfaction, as well as their perception of the organization’s culture: the level of collaboration, innovation, and ethical behavior that was embraced in each company.
In an organization, a growth mindset can mean the following:
- Development: Incremental and continuous improvement, self-development, learning, helping others grow, and growing beyond one’s current role.
- Empowerment: Mutual accountability, taking responsibility, taking charge, and being fearless in times of change.
- Openness: Embracing the new, being open to new challenges and industries, being curious, “dreaming big”, and challenging the status quo.
Why Growth Mindset Culture Matters
According to Dweck’s research, the benefits of growth mindset cultures can be significant:
- Trust: Employees in a growth mindset culture of development companies expressed a 47% higher agreement with statements about having more trust in their company
- Engagement: Employees in the growth mindset culture of development companies are 34% likelier to feel a sense of ownership and commitment to the future of the company.
- Innovation: Those in growth mindset companies showed 65% stronger agreement that their companies support risk-taking and 49% stronger agreement that their organizations foster innovation.
- Ethics: Those in growth mindset company cultures disagreed 41% more strongly than those in fixed mindset companies that unethical behaviors were prevalent within their organization.
Considering self-beliefs affect social interaction, job performance, and personal well-being, the appeal of cultivating a growth mindset culture within an organization may seem obvious. Yet finding the many areas where an individual may hold growth or fixed mindsets about one’s abilities is a life journey on its own — much less possibly shifting the collective mindset across an organization of thousands. Assisting the process of transformation towards intentionally operating with a growth mindset by incorporating individual and team coaching creates a partnership between coaches and the leadership team that produces multiple benefits. From providing support in modeling behavior to assisting in navigating implementation and adoption, individual and group/team coaching improves the capacity for systems and strategic thinking, in addition to building proficiency in reflection, reframing, questioning, problem-solving planning, and time management.
Whether or not organizations are conscious of it, their culture is shaped by priorities, habits, and systems. As such, research conducted across multiple industries continues to collate data to identify elements across these three related paths that seek to promote a growth mindset. While the research is somewhat limited due to the relative newness of the concept of connecting a growth mindset culture to organizational health, the research currently published points in the same direction – that they are intimately related.
Challenges Related to Fostering a Growth Mindset Culture
Implementing a growth mindset within an organization is no easy task. It requires a commitment by leadership to embody humility, to believe in the process, and to trust others. Humility comes in the form of recognizing the need that ALL employees can improve, including the top of the organization hierarchy. No one is exempt from being challenged to continue to learn and evolve.
Belief in the process is critical because leadership has to ‘walk the walk’ in order for adoption to be embraced. Developing habits take time, so understanding that the process is not an overnight endeavor will influence successful implementation. It also involves giving space for people to take risks and possibly make mistakes, and then look at those mistakes as learning opportunities, rather than a means for termination.
Trusting others in their ability to adopt a growth mindset (if they don’t already have one) is the last frontier in making it stick. In fact, demonstrating that trust is also demonstrating a growth mindset. Giving your team the freedom and empowerment to embrace new habits will enable faster adoption. The bottom line, it starts at the top. If that top-down approach to implementing a growth mindset culture is in place, it can have significant benefits to an organization – from improved employee engagement and satisfaction to an increase in innovative solutions and enhanced customer experiences, and ultimately an increase in revenue and profitability.
Coaching is a powerful resource in helping facilitate organizational change and for implementation to stick and be long-lasting. Coaching, accompanied by resources that reinforce behavior, can help activate engagement and adoption. Providing tools to assist employees when they find themselves getting ‘caught’ in their limiting self-beliefs can make a positive impact.
Microsoft – A Case for the Impact of Implementing a Growth Mindset Culture
A case study on the positive impact of a growth mindset culture initiative implemented within Microsoft published by the NeuroLeadership Institute, an organization focused on leadership development and coaching, and cultural transformations, demonstrated just that. Influenced by Dweck’s work, the senior leadership team with the help of the NeuroLeadership Institute determined that a growth mindset would become the foundation of Microsoft’s culture. Multiple approaches were taken to initiate and drive efforts for long-term change. This started with coaching and engaging senior leaders to talk about and role model growth mindset. Employee-awareness campaigns to drive growth mindset adoption and ongoing measurement of how employees experience growth mindset within the company were also put into place.
One of the most essential efforts was developing the Microsoft leadership principles: clarity; energy; and success with the intent of engaging everyone in the company – from senior executives to new hires – in building growth mindset habits, processes, and environments into everyday experiences. The talent team also operationalized a growth mindset in processes and practices.
Microsoft’s continuous measurement of its culture change provides insightful data. Daily pulse surveys collect metrics of employee experiences of growth mindset as a whole, as well as more detailed items such as levels of risk aversion, visibly recognizing and learning from failure, or support in unlocking one’s ability. The growth mindset experience measurement has trended around 80%, and it has been proven as the primary driver of the rest of the Microsoft culture that is customer obsessed, diverse, and inclusive, one unified Microsoft, and making a difference.
Since its inception in 2016, revenue at Microsoft has performed at an astonishing rate of over 130% through 2022, or over $110 Billion, vs the prior eight-year growth of 41%, or slightly under $25 Billion. Employee retention at Microsoft is in the top 20% of similar-sized companies in its ability to retain quality employees. 58% of employees would not leave Microsoft if they were offered a job for more money while 78% are excited to go to work each day.
A Growth Mindset Within an Organization
The proof is in the data. A growth mindset within an organization can improve its overall health when measuring employee satisfaction and retention, individual and company performance, and sustainability. The saying “happy employees make happy customers” really does ring true. When organizations invest in creating a culture that encourages growth and evolution and utilizes resources such as coaching to assist in the adoption of that philosophy, great things happen – for both employees and the overall organization. It’s a win-win proposition.
I continue to be excited by my work with organizations in helping them reinvent themselves with a growth mindset as their foundation. Similar to the efforts realized at Microsoft, utilizing workshops to develop trust, leadership coaching to engage management in modeling behavior, and supporting process implementation efforts to reinforce growth mindset behaviors positions my clients to be a bigger version of themselves, thus delivering bigger results. And that’s what motivates me every day.
References
Dweck, C., Murphy, M., Chatman, J., & Kray, L. (2014). Why Fostering a Growth Mindset in Organizations Matters.
Dweck, C. (2015). Carol Dweck Revisits the 'Growth Mindset'. Education Week.
McKinsey & Company (2017)
Rock, D. (2018)
Kaluza, A., Schuh, S., Kern M., Xin, K., van Dick, R. (2019)
Vailshery, L. (2022)
https://www.comparably.com/companies/microsoft/retention