Taking cue from a previous post we shared, organizational health is increasingly becoming a top priority for organizations, and rightly so. Organizational health is primarily an organization’s ability to function properly, change and adapt to ambiguity and grow along the way. Invariably, the value of organizational health lies in ensuring a competitive edge and ensuring its sustainability and scalability. While most organizations read the value of organizational success, it is equally important to measure and track it to ensure there is constant progress for the same. The objective of this piece is to guide organizations on what parameters should be used to measure organizational health. Additionally, how this tracking and monitoring aids strategy alignment for organizational health to make business sense.
Measuring organizational health: The parameters
According to McKinsey, there are nine major parameters which form the basis of organizational health. Measuring organizational performance on these parameters can be a credible source for business leaders to gauge organizational health and align the best practices to improve the same.
- Direction: Organizational health largely depends on the direction of effort. Without a direction, efforts will be all over the place and not yield any concrete output. An organization’s direction is largely dependent on three components. Firstly, there should be a shared vision which refers to a common destination that everyone is progressing towards. Secondly, there needs to be strategic clarity, i.e. a clear route to the destination. Finally, there needs to be employee involvement in every step of the process. Invariably, for organizational health, leaders must constantly track and measure the level of clarity of goals and the route across the organization.
- Accountability: The next parameter which can be a measuring point for organizational health is accountability which refers to taking responsibility for one's actions. To measure the same, leaders need to start by tracking role clarity as to how well each team member understands what is expected of them. Next in line is having performance contracts and consequence management. Finally, a spirit of personal ownership and the extent to which employees come to the forefront without being asked to is a fair metric to track and measure organizational health.
- Coordination and control: The third parameter to measure organizational health revolves around how well those in leadership are able to navigate the route, coordinate and control the journey. This involves measuring and tracking the efficacy of your leadership on parameters like people performance reviews, operational, financial, risk management as well as maintenance of professional standards. The better the leadership is able to coordinate and control the team and other resources, the better is the organizational health.
- External orientation: Next in line to measure the health of your organization is to track and monitor its external orientation which has five components. Start with being open to external ideas and tracking your customer focus, whether or not your organization is receptive towards customer demands. Follow it up with competitor insights. Next, it is important to judge your organization’s performance in building partnerships and collaborations, both in business as well as the community and government.
- Leadership: Undoubtedly, leadership plays a key role in improving organizational health. To gauge the effectiveness of your leadership, an organization must judge its performance along the different leadership styles that exist. Only a perfect balance between them can spell success. Check the pulse of your leadership on authority i.e. if they are able to command respect, but at the same time if they are consultative and promote team participation and voice. At the same time, track your leadership on their support to their times and how they challenge themselves to reach higher goals.
- Innovation and learning: A healthy organization is always on the path to innovation and learning. To ensure that you are innovating and disrupting what you do, focus on top-down innovation that starts with the leadership and trickles to those who execute. As well as, there is a need to explore bottom-up innovation which starts with empowering your team members to innovate processes and practices. Additionally, track if your innovation is siloed and measure the extent of knowledge sharing.
- Capabilities: Invariably, the right capabilities have the potential to accelerate the journey to business success and organizational health. Measure your performance on talent acquisition in terms of how robust your hiring practices and results are. Additionally, judge your talent development practices to navigate employee development in the organizations. It is also important to measure the efficacy of your business process. Finally, to boost organizational health, leaders need to take a call on which capabilities to develop in house and which ones to outsource. A right decision is the key to a healthy organization.
- Motivation: Capturing and measuring your team motivation is important to organizational health. Your performance on a few motivation boosters can help you track where you stand. Start with inculcating a strong value system. Follow it up with inspirational leaders, career opportunities, incentives, rewards and recognition. If you measure and track these components diligently, your score on motivation will hit the top mark.
- Work environment: Finally, track your organizational health by monitoring and maintaining a healthy work environment free of toxic culture. Measure how open and trusting the environment is while being internally competitive. At the same time, how well do your fare on discipline and at the same time promote creative and entrepreneurship.
Taking a stock of your organization’s performance on these nine parameters will give you a comprehensive picture of where you stand with respect to organizational health. As your performance starts soaring high on them, your organization is destined for success.
Aligning organizational health with strategy
The secret to organizational health starts with acknowledging its importance and value. Next in line comes measuring and tracking major parameters which define where an organization stands. Once you have a fair idea of how well you are on the organizational health chart, there are four major approaches for organizations to choose from leverage to boost organizational health.
- Leader driven: A leader driven strategy to organizational health focuses on building an inspirational leadership to promote a positive work environment. By investing in high quality leaders, organizations yield credible results. Career opportunities become a ladder to coming out as better leaders which consequently lead to greater organizational success.
- Market focused: Market focused organizations pivot on customer centricity and competitor benchmarking. Their objective is to stand out in the market through constant innovation to deliver the best. Such organizations have clarity on the shared vision and a clear sense of direction and consistency for each step along the way with great responsiveness to market dynamics. Being able to keep up with market trends, these organizations remain in good stead and health.
- Execution edge: The strategy of execution edge largely depends on augmenting efficiency by delivering better and faster at lower costs and reducing resource intensity. They constantly delve in innovation and knowledge sharing to ensure that creativity travels across the organization. The efficiency and efficacy of this approach yields strong organizational health.
- Talent and knowledge core: Organizational leveraging the fourth strategy mainly play their talent and knowledge card. They fall back on different motivation boosters including financial incentives and other rewards to onboard and retain the best talent which consequently generates business and value for the organization. Their secret mantra to success lies in their investment in human resources and building their capabilities and knowledge.
Organizational health: What’s next?
To cut a long story short, organizational health is an imperative for organizations all across the globe. It is vital for organizations to tactfully measure their progress across the different parameters mentioned above. This can lead to determining their strengths and weaknesses. An understanding of the strengths can help organizations strategically choose the approach to success that best fits their combined capabilities. At the same time, organizations can leverage different platforms like SuperBeings to improve their performance on the parameters and proceed a step closer to better organizational health.