3X is the difference between organizations deemed to be healthy and those that aren’t, according to research from McKinsey. Healthy organizations have employees that are happy and productive, customers that are satisfied and loyal, and industry benchmarks that they regularly match or exceed. That’s why leaders all over the globe can help their organizations respond to challenges by focusing on their health and making the most of available opportunities.
What is Organizational Health?
The capacity of a business to adapt in a constantly evolving world can be termed as an indicator of its ‘health’. When an organization, or a team within an organization, successfully navigates the changes necessary for it to thrive and continues its high performance even under changed circumstances, it is deemed to be healthy.
The focus on organizational health initiatives is gaining importance because of the constant seismic shifts in the business world. Shifting customer demands, new regulations, new norms, and other ‘new’s affected organizations big and small across industries. A Gartner report from 2021 revealed that 47% of organizations experienced some kind of disruption, which organizations with questionable health can’t survive.
What Makes an Organization Healthy?
When there is alignment and clarity among team members, the organization is on its way to being healthy. Healthy organizations rely on open communication, encourage innovation, and focus on organizational development. They respond to customer behavior shifts by renewing themselves and their employee experience. Some elements of a healthy company are listed below.
Aligned The Same Way
When the leaders of the organization, along with middle managers and employees, work toward achieving a common goal – their goals can be said to be aligned. While this seems like a difficult task, getting it right helps achieve company goals. People whose goals are aligned can visualize what success looks like for them and their organization – and this enables them to set clear priorities.
A cohesive leadership team that’s aligned with the company’s purpose, vision, and priorities is necessary for the process of alignment, as they can provide clarity by developing a straightforward strategy. This can be shared throughout the organization through a well-thought communication plan.
Focused on Employee Well-Being
Healthy organizations care about their employees. The policies and behaviors of their leaders demonstrate the same. When HR teams introduce programs to prioritize employee well-being, the organization’s performance improves – according to The Journal of Management Studies. Focusing on mental and physical health in particular yields better results.
Organizations can start with expanding benefits to improve the overall wellness of their employees. The real-world impact of the employee-first approach is quite striking, too: An AARP study revealed that a healthy company that focuses on organizational health and adopts family-friendly policies like flexible working hours work from anywhere (WFX) or childcare sees its share price increase. There are different methods that can work better – it is up to the leaders and managers to understand the needs of their team members and follow a path that improves organizational health. They can even have an organizational health team dedicated to understanding and executing the issues of employees.
Committed To Equal Treatment
Healthy companies ensure that none of their employees receive preferential treatment – and they’re in line with the findings reported in BMC Psychology which states fairer workplaces have lower turnover rates.
Transparency over an entire organization is the best way to show this commitment to equal treatment. When employees can see how their work affects the organization and their team/superiors, their efforts become pointed. Decoupling performance with remuneration and using a methodology like OKR for goal setting can help in creating a transparent and communicable environment. Attrition rates will be low when employees understand that the promotion process was fair.
Simplified Processes And Workflows
Having a clear workflow is a good sign of organizational health, yet 59% of businesses suffer from dysfunctional and fragmented processes which hinder the successful execution of their projects. Having a clear org structure that anybody can access is a good first step, based on which clear processes and workflows can be designed.
Communicating this organizational structure that outlines employees’ roles and responsibilities along with relationships across the business helps employees to understand where they stand in the reporting structure, the teammates they’ll closely work with, and more. This process is extremely helpful in the onboarding of new hires, as the time for interaction and understanding of the structure is drastically reduced.
Professional Development Opportunities
Employees who learn new skills constantly grow in their careers and enhance their unique strengths. If the organization they work for encourages such behavior, they’re more likely to stay. A list collated by Comparably found that the Best Companies for Professional Development provided regular feedback to their employees, along with training opportunities for career growth. They had stronger employee engagement and employee contribution compared to their peers.
To promote a culture of learning, organizations can look at conducting internal workshops, and certification programs, in addition to regular one-on-one coaching by managers or other leaders.
Work With Purpose
Having a set of values that employees can relate to shows employees that the organization stands for something they can actively contribute to. A study measuring organizational health impacts by Frontiers in Psychology, offers that meaningful work experiences people create meaning in their lives – and act as key to the sustainability, growth, success, and health of individuals and organizations. A Harvard Business Review survey shows that employees who link their work to service find a sense of meaning in their work and build positive workplace relationships.
Why Is Organizational Health So Important?
Businesses are always on the lookout for a competitive advantage – they learn from their mistakes and continuously improve their ability to contest in unique ways that competition cannot copy. This requires a constant cycle of innovation, and that asks for good organizational health. When the organizational health is good, it positively impacts the financial sustainability of the business, increases its operational profits, and upskills its employees to be ready for the challenges of tomorrow. Strong organizational health helps its leaders create a path of continuous improvement, as it necessitates a good understanding of the external environment in which the business operates.
Why You Need an Organizational Health Strategy
Experts in organizational health agree that the best way to run a business is to balance its short-term performance with long-term health. This follows the strong, static correlation between health and financial performance and highlights the potential of companies to improve their business strategy.
No matter at what stage the organization is, it is bound to benefit from initiatives aimed at improving organizational health. While ones at the bottom might see the biggest change, the ones at the top achieve the biggest financial rewards. The changes observed provide a clear sign that working on health is an important reason in making companies shift from “good” to “great.”
5 Ways to Improve Organizational Health
In light of the benefits and positives brought about by improving organizational health, here are a few best practices that make employees understand how they can benefit from the process too.
1. Numbers matter less than people
If managers focus only on the end result and not the effort that went in, employees may end up disgruntled. Managers who acknowledge the accomplishments of their team members regularly see better results than those who don’t.
2. Being honest is important
When employees are honest about their strengths and weaknesses, they can start getting better at either. But in an unhealthy organization, employees may not be honest in their self-assessment due to the fear of low ratings (and compensation). Managers in healthy organizations will make their team members feel comfortable in assessing their strengths and weaknesses and work with them in creating plans for improvement.
3. Nobody stands for complexity
The idea of simplicity should stem from the vision, mission, and values of the company, as employees who identify with the cause work more passionately.
4. Repeat important messages
Messages that are simplified should also be properly and sufficiently communicated. Employees have multiple responsibilities – and establishing a healthy organization requires processes to be ingrained in their daily schedule. By ensuring employees see relevant messages in various forms, compliance can be achieved without any hitch.
5. Agree to disagree
Core issues are understood and solved only with a healthy amount of conflict. Employees who respect each other wouldn’t have any problem disagreeing, knowing fully well that their understanding is as valid as the other party’s. With a good manager who can handle such situations, the organization ends up winning.
Soft factors that are less tangible also play an important role in maintaining and improving organizational health. Observing behaviors during group and organizational communication is a good way to understand individual communication styles and enable managers and the rest of the team to adopt them – and gain a competitive edge. With proper focus on employee well-being, managers can develop interpersonal transparency that leads to increased accountability – and enthusiastic productivity.