We've all worked somewhere where there is a buzz, something maybe very intangible that you can't quite put your finger on that makes it a great place to be; it's a feeling. And of course there's the other places too. Organisational health is simple, not always easy to establish, and takes sustained commitment to maintain. Here's some thoughts on what I think is a fascinating subject.
Organisational Health: Key Indicators and How to Improve Them
The heartbeat of any organisation is its health. It’s the lifeblood that keeps the organisation alive, pumping energy into every strategy, every initiative, and every employee. But what constitutes a healthy organisation, and how can we measure and improve it?
Understanding Organisational Health
McKinsey & Company has made extensive research on the topic of organizational health, defining it as an organisation’s ability to align around a clear vision, execute this vision effectively, and renew itself through innovation and creative thinking. A healthy organisation has a distinct culture that engenders a motivated and engaged workforce, leading to superior financial and operational performance.
Key Indicators of Organisational Health
Several key indicators can help gauge an organisation’s health. These include:
- Employee Engagement: Engaged employees are committed to the organisation’s vision and feel a sense of belonging. Gallup’s State of the Global Workplace report revealed that organisations with high levels of engagement outperform their competitors in profitability, productivity, and customer ratings.
- Leadership Effectiveness: Effective leaders communicate the organisation’s vision clearly, inspire their teams, and foster an environment of trust and collaboration.
- Operational Efficiency: Healthy organisations effectively manage their resources, meeting or exceeding their operational and financial targets.
- Adaptability: In an ever-evolving business landscape, organisations must be adaptable to change. This includes being agile, innovative, and resilient.
- Alignment with Core Values and Vision: An organisation’s health is also reflected in its alignment with its core values and vision. This means all team members, from top leadership to front-line employees, understand and resonate with these values.
Improving Organisational Health
With an understanding of the key indicators, the question becomes: how can we improve organisational health?
- Promote Employee Engagement: Employee engagement is a cornerstone of organisational health. Regularly solicit feedback, recognize employees’ efforts, and invest in their professional development. Encourage a work environment that fosters collaboration, empowerment, and inclusivity.
- Develop Effective Leaders: Invest in leadership development programs. Equip your leaders with the skills to inspire their teams, communicate effectively, and make sound decisions. As John C. Maxwell once said, “Everything rises and falls on leadership.”
- Streamline Operations: Regularly review your operational processes and eliminate inefficiencies. Use tools and techniques like lean management and Six Sigma to improve productivity and reduce waste.
- Cultivate Adaptability: Foster a culture that embraces change and encourages innovation. Provide resources and training to help employees adapt to new technologies or processes. As Eric Ries, author of “The Lean Startup,” points out, “The only way to win is to learn faster than anyone else.”
- Align with Core Values and Vision: Regularly communicate your organisation’s vision and core values. Make them an integral part of your strategic decisions, hiring practices, and day-to-day operations.
A useful example of a company prioritising organisational health is Patagonia, the outdoor clothing and gear company. Patagonia has built an impressive culture of trust, transparency, and shared purpose that has translated into high levels of employee engagement and strong financial performance.
One aspect of their approach is their dedication to environmental and social responsibility. Patagonia has embedded these values into its mission statement, business model, and everyday operations. They have a self-imposed “Earth tax,” whereby they donate 1% of their sales to environmental organisations, fostering a shared purpose among employees and generating goodwill among customers and the broader community.
In addition to their environmental efforts, Patagonia also invests heavily in employee well-being. They provide on-site childcare, enabling a better work-life balance, and there is a company-wide policy that allows employees to go surfing during work hours when the waves are good.
This strategy of integrating core values and employee well-being has reaped significant rewards. Patagonia has seen consistent financial growth, high levels of employee satisfaction, and strong customer loyalty. It’s a testament to the fact that prioritising organisational health can yield not just a happier and more engaged workforce, but also a healthier bottom line (B Corporation, 2020).
But it’s not all rosy; Patagonia’s approach has attracted criticism, notably around the challenge of maintaining their culture and mission as they continue to grow. There are questions about scalability and whether their model could work in other industries. This invites a discussion about the adaptability of such strategies and the need for each organisation to find its unique path to health.
And its not just the big FTSE and Fortune 500 companies that are testament to this. Missive, a communications agency in London invests serious time and effort in the way the organisation runs; who and how it hires; the value it places on employee contribution, and reflects those values not only inwards but with its clients too – very much enhancing its already envious reputation and brand.
Improving organisational health is a continuous journey, not a destination. It requires consistent effort, leadership commitment, and active employee participation. By focusing on the key indicators and implementing strategies to enhance them, organisations can foster a healthy work environment that fuels business success.
So, as you assess the health of your organisation, consider these key indicators. Are they where they need to be? If not, what changes can you make to improve them? And remember, a healthy organisation isn’t just about good business – it’s about creating a positive impact on every individual within the organisation.
Want more? I’d recommend …
Book: “The Advantage: Why Organisational Health Trumps Everything Else in Business” by Patrick Lencioni
Article: “The 10 Dimensions of Organisational Health” by McKinsey
Video: “The Advantage: Why Organisational Health Trumps Everything Else in Business” by Patrick Lencioni
Podcast: The OrgHealth Podcast: Demystify Organisational Health
