With the rise of disinformation, compounding risks, and macroeconomic volatility, it’s more important than ever for leaders to clearly and transparently communicate with stakeholders to drive their agenda forward. This requires leaders to be ambidextrous, simultaneously playing both offense and defense to articulate their position and drive sustainable and inclusive growth.
To navigate this new normal, we asked leaders from across McKinsey to share critical communications themes to get right in 2024. Here’s what they had to say.
Michael Birshan, senior partner, on strategy
When I talk to CEOs, there’s one thing they want from their communication colleagues that comes up over and over again. What they really want is to talk clearly and compellingly all the way to the front line about how their companies and business models create value, in a way that people can understand and that makes them want to take action. They want to treat frontline colleagues as the smart people they are and share the specifics of how the business creates value, what would help it create more, and their individual roles in that.
CEOs and managers are comfortable with the language of EBITDA, but how this translates into actual day-to-day, minute-to-minute behavior for workforces that are tens or even hundreds of thousands strong often gets lost in translation or reduced to a predictable and nebulous catalog of mindsets. Either it’s “We need to be more collaborative” or it’s “Turn out the lights at the end of the shift,” whereas what’s needed is something in the middle: a mental model that helps people do the right thing independently. Not everyone needs to understand the minutiae of a capital markets presentation, but there does need to be a clear thread through from strategy to value to what people need to do differently, and why and how. This is how we mobilize people to create value quickly, which we know is one of the six strategies central to driving outperformance.
The best corporate communicators are as fluent in the logic of business as they are in the language of communication, and that’s when they’re able to act as peer counselors to CEOs and business leaders.
Kenneth Bonheure, senior partner, on mergers and acquisitions
Mergers and acquisitions are inherently complex, as organizations manage various stakeholders while simultaneously unifying distinct organizational cultures. Our research shows that some 95 percent of executives describe cultural fit as critical to the success of integration. Yet 25 percent cite a lack of cultural cohesion and alignment as the primary reason integration efforts fail. The complexity is further amplified when mergers span international borders, introducing an additional layer of cross-cultural intricacies. While global M&A activity was down in 2023, individual companies deploy highly effective M&A strategies irrespective of market cycles. A crucial success factor for them and organizations looking to pick up the pace as the market rebounds is pursuing a programmatic approach to M&A, meaning a strategic and systematic strategy which includes carefully thought-through approaches to critical enablers such as communication and culture.
Communication is a core enabler to manage change and ignite a one-company culture. Through consistent, programmatic communication, leaders can help navigate common pain points such as change fatigue, cultural integration challenges, and competing stakeholder relationships. Throughout the integration process, starting prior to deal close, leaders should continuously engage employees, highlighting the positive aspects of the integration while addressing their questions and concerns. This approach enables leaders to not only get a pulse of the organization but also adapt their communications accordingly and co-create the journey with their teams.
Culture can be interpreted in a variety of ways, so it’s first important to properly define organizational culture, especially in the context of M&A. As my colleagues wrote, culture is the outcome of the vision or mission that drives a company, the values that guide the behavior of its people, and the management practices, working norms, and mindsets that characterize how work actually gets done.
To build and sustain the right culture, leaders should first diagnose shared traits as well as differences in key areas such as decision making, operating model, process, and ways of working, among other areas. This analysis facilitates an organization’s ability to shape the unified vision and develop concrete actions to underpin and reinforce it. For example, a Southeast Asian telecommunications company introduced hackathons to foster a culture of innovation and build customer-centric solutions. In another situation, the CEOs of two unifying organizations went through leadership journeys to understand their personal styles and address differences. By putting these initiatives in place and taking a structured, programmatic approach to communication and culture, leaders can rally the organization, role-model the desired behaviors, and maximize long-term value creation for their stakeholders.
Dana Maor, senior partner, on organizational resilience
If you want to unlock human potential and build organizational resilience, great communication is essential. Communication is how you build many of the core components of a healthy culture, from capturing and expressing a shared aspiration to engaging and inspiring employees. Communications can facilitate transparency, especially in times of uncertainty and change, while simultaneously enabling a culture of “contributory dissent” to foster an open, creative, problem-solving environment that sparks new ideas and mobilizes teams. Often, leaders think they can compel compliance through systems and processes, but the true work of leadership is to win hearts and minds by painting a picture of a future in which everyone will want to live and giving people a clear role to play in getting there.
For leaders to drive their agenda effectively, they must communicate openly and transparently if they are to align both their top team and the entire organization. This is worth serious investment. Our research shows that organizations with good managers can see 21 times larger returns and that many of the most powerful levers to pull are to do with communication, with the ability to hold constructive, honest, inspiring conversations around change that make people feel included. So I would encourage organizations to harness the full power of communication, investing even more in their people to help them become great storytellers to mobilize their teams. And in the complex times we are experiencing right now, this ability to rally behind a uniting story is more important than ever.
Julia McClatchy, partner, on board engagement
As we accelerate into 2024, we’re seeing CEOs and their top teams put a premium on board communications. I’d highlight three areas that CEOs are giving the most thought to: education, process, and engagement.
When it comes to education, our CEO Excellence research suggests that only 10 percent of board members feel they have a solid understanding of the dynamics of the industries in which their companies operate, and only 21 percent feel they understand how the firms’ business creates value. The best CEOs shape their boards’ learning agenda to facilitate a mutual value exchange and shift into a state in which the board helps them.
On process, just 30 percent of board members report that they serve on boards whose processes they would consider effective. When done right, however, CEOs can make process their product, deliberately and systematically communicating in a way that brings the board on an organization’s growth journey.
And lastly, as CEOs think about broader engagement, it’s important to start by recognizing the challenge. Unlike most teams, boards typically spend less than 10 percent of their time working together. Through clear, compelling, and frequent communication—preferably short!—CEOs can not only bring the board together as a team but also encourage meaningful dialogue and positive actions.
Said simply, CEOs should focus on building strong, dynamic partnerships with their boards, knowing that the payoff is real.
Andi Almond, global leader, strategic and change communications, on DEI
Our latest report, Diversity matters even more: The case for holistic impact, presents the most compelling business case yet for diverse leadership. It also underscores the critical role strategic communications and engagement can play in ensuring diversity commitments transform into bold actions.
Businesses with diverse executive teams and boards continue to show significantly higher likelihood of outperformance financially. Our research shows that companies in the top quartile for gender and ethnic diversity are 39 percent more likely to outperform their peers.
Digging into the specifics, the report shows that faster progress is being observed in gender diversity than in ethnic diversity. This is where targeted communication and change management can continue to play an outsize role. Clear narratives outlining the case for change and initiatives designed to foster a culture of inclusion and belonging may help to drive change and integrate diversity as a strategic imperative.
Here’s the kicker: diversity enables growth for all stakeholders. Our research delves into the holistic impact, showing that companies with diverse leadership excel not only financially but also in social and environmental responsibility.
We’ve outlined five practical steps companies can consider to help turn words into action. Integrate diversity and inclusion into your core mission. Embed your strategy into global, company-wide initiatives but give local teams license to tailor messaging and actions to local contexts. Foster a culture of inclusion and belonging. Identify and empower champions to encourage allyship. Lastly, engage all stakeholders, including dissenters, and act on the feedback you hear.
In today’s business landscape, diversity and inclusion aren’t buzzwords; they’re strategic imperatives.
As the saying goes, “the only constant is change.” In this environment, leaders should foster enduring connections with their stakeholders and strategically communicate on today’s most pivotal issues in order to drive sustainable and inclusive growth.