Examining the importance of organizational health

Organizational health goes beyond the physical and mental state of people in the workplace. It refers to how the management aligns and executes its objectives to get ahead of the competition in the long run. Here is why it is important to check the organizational health of any companies, on a short-term or long-term basis.

According to McKinsey&Company, organizational health has long-term and short-term benefits. A study involving 51 companies tried to find the link between organizational health and long-term transformation. The report revealed that companies which have long-term plans are considered the healthiest. To assess objectively, the report included factors such as investment patterns, earnings, and value-creation efforts.

Companies which focus on long-term value creation are ahead in the competition. Also, it was revealed that organizations which are undergoing transformations need not go through the painful and tedious process of getting a quick financial turnaround.

The Organizational Health Index was scrutinized to see why such companies have been successful. This is why it is crucial for companies which are undergoing transformation to include certain practices that will help strengthen the organization in the long run. The five themes which must be considered are: setting direction, providing meaning and clarity, sparking ideas and innovation and fostering strong operations. These involve vision, strategies, employee role and involvement, ideas, innovation, leadership, and discipline.

Companies get lost on their way to achieving the goals they set out in the beginning or sometimes, they just do not have any idea what they are doing. Companies such as McKinsey&Company offer services that provide solutions to the present and hidden problems a company may have. They are doing a checkup against their Organizational Health Index to see the DNA of companies, to see what is working and to continue doing it and to see what is not working and to stop doing it.

Some companies are offering services which can diagnose an organization’s DNA to see what is working and what is not. (Source)

In terms of tracking the performance of a company, the Organizational Health Index includes the following criteria: direction, accountability, coordination and control, external orientation, leadership, innovation and learning, capabilities, motivation, and culture and climate. One thing is for sure, organizational health and financial performance go hand in hand. At a glance, a company which is doing well financially almost always has a good organizational health.

Per the 15five, there are practices which can be put up to prevent small setback become systemic problems. If a problem pops up from time to time, it means the management is not doing a good job solving it before and putting up practices to prevent it from happening again.

Additionally, the report revealed four clusters that companies can implement specific practices to improve their organizational health. These are leader driven, market focused, execution edge and talent and knowledge core. This just goes on to show how thorough conducting checkups for companies could be. It is like stripping it to the bone and analyzing each part, its functions and if it carries out the tasks it is supposed to be doing.

It must be noted that there are different paths and recipes to success. Each company or organization is unique in their own way. What works for others might not be applicable to some. What matters is how these companies remain competitive and are able to sustain it, in the long run, using the best management practices.

(Featured image via DepositPhotos)