Organisations in Southeast Asia have a unique opportunity to elevate their performance, according to a recently released McKinsey study: with a strong corporate culture and internal health as the foundation, the next step is to hone in on a set of high-impact management practices.

The study, which surveyed over 200,000 individuals from nearly 40 companies over a five-year span, examines the organisational health of companies in Southeast Asia. It confirms that healthier companies consistently outperform their peers: they are 3x more productive and 2x more resilient, and their employees are 1.5x more likely to stay and 3.9x more likely to recommend their employer.

Organisational health, as defined by McKinsey, refers to the overall effectiveness of how a company is run—how decisions are made, resources allocated, and teams led to achieve short- and long-term goals. McKinsey measures it according to an Organisational Health Index (OHI) that evaluates performance across nine dimensions, including how well an organisation aligns behind a shared vision, delivers against strategy, and adapts through innovation. 

What makes Southeast Asian organisations stand out?

In Southeast Asia, the overall health of organisations is encouraging. Many companies in the region are powered by dynamic cultures where employees exhibit a strong sense of ownership and accountability—factors closely linked to business success. According to McKinsey’s authors, this cultural trait is one of Southeast Asia’s most distinctive strengths. Employees often feel directly responsible for outcomes, supported by leadership styles that are inclusive, transparent, and outcome-oriented. Reward systems and recognition structures are also prominent, reinforcing this ownership mindset.

This internal discipline extends outward. Southeast Asian companies tend to score highly on customer orientation and stakeholder engagement. Many demonstrate a clear commitment to listening to customers, adapting offerings based on feedback, and nurturing long-term partnerships. There’s also a growing emphasis on social responsibility and community impact, which further strengthens their external relationships.

The above cultural strengths are shared by many, but only a select group—the region’s healthiest organisations—have cracked the code on reinvention and talent development. Leadership plays an active role in achieving this task.

Equally critical is how these companies invest in their workforce. Learning and development are integral to their strategies. Employees are given continuous opportunities to build skills and grow, while leadership demonstrates empathy and commitment to employee wellbeing. The objective? Promoting both performance and retention.

Three ways organisations can improve

When compared to the world’s most resilient organisations, Southeast Asia trails in three key areas. The first is the formal empowerment of employees. While a sense of personal responsibility exists, it is often unsupported by structured systems that promote genuine empowerment. More comprehensive performance management frameworks and consistent feedback mechanisms are needed, alongside more empathetic leadership styles that foster learning and growth.

Second, strategic alignment could be sharper. In many leading global organisations, employees have a clear line of sight between their daily responsibilities and the company’s overarching goals. In contrast, Southeast Asian companies often lack this strategic transparency. A compelling narrative and a clearly communicated vision could help bridge this gap, giving employees greater purpose and engagement in their work.

Third, there’s untapped potential in the realm of data and technology. While global frontrunners use data and digital tools to inform decisions and streamline operations, many companies in Southeast Asia are still developing these capabilities. The opportunity lies not just in acquiring new technologies but in building a workforce that knows how to interpret data and act on insights.

To help organisations in the region address these gaps, McKinsey proposes five practical strategies. The first is to treat culture as a core strategic priority. Creating the right culture involves more than aspirational statements—it requires deliberate actions and leadership commitment to align the current organisational reality with future ambitions.

Secondly, companies need an operating model that genuinely supports their strategy. That means aligning people, technology, and processes in a way that enables consistency and clarity of execution. C-suite leaders, particularly those in the “G-3” roles (CEO, CFO, CHRO), must co-own this alignment.

The third strategy is to focus talent where it creates the most value. Identifying mission-critical roles and placing top performers in these positions can yield productivity boosts of up to 800%, according to McKinsey’s research. This kind of precision in talent deployment is essential for strategic execution.

The fourth priority is to reposition managers at the heart of performance management. Rather than treating it as an HR formality, performance management should be a continuous, personalised process led by line managers. This means providing regular, constructive feedback and making clear distinctions in performance.

Finally, building a workforce that can extract and act on insights from data is critical. Investment in technology is only part of the equation; organisations must also cultivate analytical and problem-solving capabilities among staff. Encouraging curiosity, data literacy, and decision-making confidence can significantly improve operational agility and innovation.

In sum, Southeast Asia is home to many high-performing organisations, but the potential for even greater impact is clear. The key lies in aligning strategy, talent, data, and leadership to cultivate a healthy organisation.