Defining Organizational Health
When people try to define their personal health, they often think of their overall well-being where all systems — physical, mental, and social — are positive and in balance. But it’s more than that. It also assumes an ability to recover from the inevitable onslaught from disease and other problems.
Organizational health is similar. It implies that all company systems are working well together and that the business has the resilience to bounce back from competitive and other challenges. At its foundation, we define organizational health in terms of leadership, trust, capability, and climate.
What Good Organizational Health Means
Just as your own good health allows you to perform at your best, organizational health is the foundation for high performance. Without the right levels of leadership, trust, capability, and climate, it is problematic to ask people to lift their performance. The good news is that healthy organizations can dramatically outperform others in their industry.
In fact, McKinsey reports that the top quartile of the healthy publicly traded companies that they analyzed deliver almost three times as much value to their shareholders as those in the bottom quartile. Reason enough to do all you can to promote good health in your organization. But besides that, the good news is that promoting good health is easier than you think, and it can produce positive results surprisingly fast.
A Leading Indicator
Consider all the time and energy you put into managing profit and loss. What if you applied the same rigor to corporate health? Instead of working on financial results which are a lagging indicator of success, try measuring and improving a major leading indicator of success — organizational health.
We know the goal — a healthy culture that will promote and sustain high performance that leads directly to people and business success.
To reach the goal, you need to define what organizational health would look like for your specific business. To start, assess your current level of organizational health and identify the key areas to monitor, maintain, leverage, and prioritize. Then, think in terms of factors that can impact leadership, trust, capability, and climate at work to build a strong culture
At the team level, how do you ensure that the team is highly effective at getting things done with high levels of talent alignment, process management, and resource allocation?
At the organizational level, how do you ensure organizational efficiency, goal orientation, and performance excellence?
Focus on What Matters Most in Your Unique Situation
If you want to see results fast, we recommend that, based upon a cultural health assessment, you choose one of the four above so that you can focus, rather than diffuse, your efforts. Choose the one that will have greatest impact on your organization after you factor in the current level of health and relative importance.
Research shows that organizations that focus on one key area are six times more likely to reap the benefits of top quarter health than organizations that do not concentrate their efforts.
The Bottom Line
Organizational health impacts both people and business performance. Are you doing all you can to monitor and improve the health of your organization? You want your organization to be in the best possible health to maximize employee engagement, discretionary effort, and retention.
To learn more about turning your workplace culture into a competitive advantage, download The 3 C’s of Culture that You Must Get Right
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