A new global study from McKinsey reveals that 75% of organisations are struggling to build high-performance cultures. The State of Organizations 2026 report, published last week, shows that while many businesses are working to strengthen people performance, less than a quarter achieve lasting impact.
Nearly half (47%) of the 10,000 senior executives surveyed cited limited career progression as the biggest barrier to achieving a high-performance culture. This was closely followed by lack of targeted incentives (43%), disengaged employees (38%), and rigid performance-management systems (38%).
With HR leaders under increasing pressure to drive workers’ contributions to business growth, this research suggests results will be short-lived without meaningful investment in the employee experience.
High-pressured organisations block performance uplifts
The rapid rise of AI and geopolitical uncertainties are raising leaders’ expectations of their workforce – and placing significant strain on the people expected to deliver. McKinsey identifies these as two of three ‘tectonic forces’ reshaping organisations in 2026, with shifting workforce dynamics as the third.
The focus for HR is no longer simply on engaging and retaining employees; it’s about enabling people to perform at their best. 43% of executives surveyed cite productivity as their top priority in 2026, and 61% feel high pressure to deliver gains. And while many are looking to AI to help meet targets, 86% feel their organisation isn’t properly prepared to embed the technology into daily operations.
These rising demands could, ironically, be what’s holding employees back. McKinsey found that leaders in high-pressured organisations are less likely to report employee willingness to meet greater demands (43%) compared with leaders in lower-pressured organisations (50%). Employees in higher-pressured environments are also more likely to show reduced commitment (23%) versus those in lower-pressured organisations (14%).
When organisations push hard to ramp up outputs without meaningfully investing in employee wellbeing and development, workers are less likely to meet – and sustain – performance expectations. The inverse is also true: when organisations give equal weight to people and performance, they are more than four times more likely than the average company to maintain top-tier financial performance for nine out of ten years, according to a separate McKinsey report.
System-wide change to performance
Organisations looking to build a lasting high-performance culture must be open to system-wide transformation. “If you want to change the performance management of the business, you’ve got to change the whole system, not just one piece of it,” says Sarah Armstrong, Chief People Officer at Rolls-Royce, interviewed for McKinsey’s 2026 report.
For the past three years, the British aerospace and defence company has been shifting towards a more holistic approach – one that consistently measures not only financial performance, but also operational and people metrics.
Organisations placing greater demands on people must acknowledge the additional burden this places on workers, ensure a strong feedback culture is in place, and continuously track employee sentiment.
“You have to know that you are putting pressure into the system because you are raising expectations around high performance. So you have to balance that,” says Armstrong. “We have regular conversations as an executive team about employee sentiment and how the organisation is coping with the increased performance expectations from the transformation. We do quarterly reviews by business, with a deep dive into the feeling on the ground.”
Key takeaways for HR leaders
- Audit the pressure your organisation is placing on people. If productivity expectations are rising, ask whether this is being adequately balanced with investment in employee wellbeing. Unchecked pressure can erode the performance you’re trying to build – and accelerate burnout among your strongest contributors.
- Broaden your definition of performance. Sustainable high performance requires more than a focus on financial outcomes. Build operational and people metrics into your performance framework so that what gets measured reflects the full picture.
- Tackle career progression head-on. Limited career progression was the most commonly cited barrier to high performance in McKinsey’s research. Assess where internal mobility is stalling, identify development gaps, and create meaningful opportunities for people to grow – and stay.
- Invest in non-financial rewards. Only 20% of leaders believe non-financial rewards meaningfully boost performance, suggesting most organisations are significantly underinvesting in human motivation. Flexibility, autonomy, development, and a sense of purpose are powerful levers. Treating this as an untapped opportunity could set your culture apart.
