Healthy Organization Definition and Impact on Outcomes
If we were to ask, “What is a healthy organization?” or “What do you understand by a healthy organization?” each of us would think of different attributes (flexible, approachable, caring for employees and the environment, socially responsible, etc.), all undoubtedly valid and necessary.
Rereading an article in McKinsey Quarterly, ‘The Hidden Value of Organizational Health,’ we have recovered this meaning of the term. As a summary, the article talks about how the ‘health’ of an organization is based on its ability to
- Align around a clear vision, strategy, and culture.
- Execute with excellence and efficiency.
- Renew the organization’s focus over time by responding to market trends.
McKinsey has researched in this field for decades, measuring the health of hundreds of organizations globally, with the aim of verifying and quantifying the impact of these three factors on organizational performance (financial results, shareholder returns, growth, etc.).
The goal of this note is not to delve into the details of the method and the results obtained, which are very impactful and we recommend reading ,The hidden value of organizational health—and how to capture it | McKinsey where it is clearly demonstrated the exponential relationship between the organizational health index, understood as the ability to achieve its own objectives, and the success of companies.
However, this article has led us to question: Do we dedicate time and effort to diagnose the “health” of our organization, or do we think this is something only for large corporations and strategic consulting firms?
Our experience working with companies of different sizes, sectors, and market maturity tells us that it is critical for all of them to work on these levers to effectively gain a competitive advantage and sustainability in the market.
State of My Organization: Diagnosis and Roadmap
Putting the organization in front of a 360-degree mirror objectively and reaching a diagnosis may seem like something for large companies and consulting firms, a complex exercise to tackle for a SME, for which we may not find the right moment or resources. Like everything in life, we can make it complicated or simple, which does not mean easy, with a very grounded and pragmatic approach, adapted to the size and circumstances of the organization. An exercise focused on action, on defining a realistic roadmap to move towards a “healthier” organization that drives the achievement of objectives more effectively.
We propose starting with something simple, dedicating no more than 10 minutes to ask yourself some questions about your organization:
- Starting from the mission and vision, do you have clear, well-defined, and understandable objectives and goals for all members of the organization?
- Is the organizational structure adequate to facilitate communication, coordination, decision-making, and achieve effective execution at all levels of the company?
- Do the habits and ways of doing things in your company foster collaboration, learning, critical thinking, and continuous improvement?
- Are internal processes agile and adaptable to changing environmental needs?
- Is people management aligned with objectives? Is talent recruitment, retention, and development consistent with the vision and goals you pursue? Does the organization have the necessary capabilities to be competitive?
The answers to these questions will be a first approximation to measure the “health of your organization,” the current capacity of your company to achieve its own objectives. Making an easy analogy with the healthcare world, if there are indications that your organization has some health issues, advancing in a deeper organizational diagnosis that allows designing a “treatment,” a roadmap, to achieve a healthier organization capable of achieving objectives effectively, is a decision for leaders that we believe deserves at least some reflection.