Employee Experience

Understanding Organizational Health: A Guide for Success

The term organizational health means exactly what it sounds like, health of the organization. Like human health, understanding organizational health is all about comprehending an organization’s ability to function properly, change and adapt to ambiguity and grow along the way. Understanding organizational health is not simply a tool for the short term, rather it has long term consequences. It enables organizations to be relevant and compete effectively in the market, while organically reinventing itself to stay in demand. According to McKinsey’s Organizational Health Index, companies in the top quartile deliver three times value to shareholders than those towards the bottom. Invariably, understanding organizational health is an important component for success and a parameter that requires immediate attention. As more and more organizations are reimagining the way they work in the new normal, focus on organizational health is likely to be fruitful.   

The Key Factors to Understanding Organizational Health

If you look closely, there are several factors that determine organizational health. The performance on each of these factors comes together to define the holistic health and wellbeing of an organization. Clubbing a few indicators together, there are majorly four large focus areas which contribute to understanding organizational health:


  • Engagement: The first factor that promotes organizational health is engagement. Employee engagement has both tangible and intangible results that determine an organization’s health and wellbeing. Research shows that 71% executives believe that engagement is critical to their company’s success. Additionally, engaged employees are 17% more productive and businesses with greater engagement are upto 22% more profitable. All these data points show how the tangible benefits. At the same time, engagement leads to lower attrition, greater sense of belongingness and ownership, all contributing to a healthy organization.

  • Leader Satisfaction: Leader satisfaction is the second strand of understanding organizational health which mainly revolves around how well a leader is perceived by the employees. This generally includes a leader’s way of guiding and mentoring his/ her team, his/ her ability to command respect and drive the organization towards success. 

  • Job Satisfaction: Next in line for understanding organizational health is the level of job satisfaction. Generally defined as the feeling of being content with one’s job and having the motivation to work harder everyday because it gives you a sense of purpose is job satisfaction. It goes without saying that job satisfaction positively impacts organizational health. Firstly, employees who feel satisfied at work are happier, more engaged and more productive. Secondly, they become an organization’s advocated attracting greater talent as well as consumers by representing the organization as authentic and credible. 

  • Emotional Wellbeing: Finally, understanding organizational health requires due consideration to emotional wellbeing. Especially, in the new normal of ambiguity and uncertainty, focus on mental health and emotional wellbeing of employees defines organizational health and success. Organizations need to score high on EQ and must invest in empathy based capacity building and resilience building for their employees. 

The Starting Point

Invariably, focus on organizational health is the need of the hour. Organizations need to adopt an integrative approach and move along in a holistic manner. Each of the attributes and parameters mentioned above are connected to each other and working on them in silos will depreciate the impact. Therefore, organizations need to focus on a comprehensive approach to organizational health which takes into account all these aspects together.

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