Organizational Health and Culture

Many, including me, have written and lectured on the need for all businesses to conduct strategic planning and have concrete productivity, quality, and financial metrics in order to track performance to its goals, particularly net profit. Some say that discussion of “touchy-feely” HR issues like teamwork and organizational health are simply distractions. But my counter to that is to ask “Have you ever seen a sports team with a great game plan and highly talented players fail to win when it really mattered, like a championship game?” Of course the answer is “yes” and most often morale was low and the culture described as unhealthy or even toxic.

How can this be? The answer is both simple and difficult for many business owners and leaders to come to grips with. It is organizational health; the degree to which your organization functions in healthy ways and its ability to align, execute, and renew itself faster than your competitors can.

Focusing on organizational health is just as important as focusing on the traditional drivers of business performance. Organizational health is about adapting to the present and shaping the future faster and better than the competition. Healthy organizations don’t merely learn to adjust themselves to their current context or to challenges that lie just ahead; they create a capacity to learn and keep changing over time. This has never been more important for organizations and it is where the ultimate competitive advantage lies.

Most companies know how to keep a close eye on financial performance but organizational health often suffers from neglect.

The case for ensuring optimal organizational health starts with an understanding of how it relates to performance. Performance is what an enterprise delivers to stakeholders in financial and operational terms. It is evaluated through such measures as net operating profit, return on capital employed, total returns to shareholders, net operating costs, and stock turns. Health is the ability of an organization to align, execute, and renew itself faster than the competition to sustain exceptional performance over time.

The good news is that your company’s health is something you can control. Unlike factors that influence financial performance, such as changes in customer behavior, new disruptive technology, competitor behavior and government regulations, organizational health can be improved through sound leadership and team building that gets everyone on board.

The healthiest, best performing organizations have high functioning teams of interconnected passionate people doing the rights things, at the right time, for the right reasons without being pushed to do so.

If you’re like most business owners, you want your organization to be super healthy and long-lived. But if you’re honest with yourself, you may conclude that it’s not and that, in fact, you might not even be sure what excellent “health” means or how you’ll ever get there. Unfortunately, most management books won’t help. Despite the multitude of volumes written on organizational excellence, nothing appears to combine a view on the “steady state” of high, sustainable organizational performance with a dynamic perspective on how companies can transform themselves to achieve it.

Getting and staying healthy involves tending to the people-oriented aspects of leading an organization, so it may sound “fluffy” to hard-nosed business executives raised on “managing by the numbers”. Make no mistake: cultivating your organization’s health is hard work. And it shouldn’t be confused with other people-related management concepts, such as employee satisfaction or employee engagement.

Culture by Design

Your organization’s culture offers vital signs about its health. As the leader you must understand that culture will happen by default if not by design and changing an organization for the better starts with you. Culture is a combination of organizational beliefs and how your people act. Also know that how your people treat each other directly affects how they treat your customers. Some of the things you can do to design a culture that promotes organizational health include:

  • Develop a list of guidelines or norms that spell out how you and your people treat each other.
  • Build trust by trusting your people.
  • Hold yourself and each other accountable in healthy supportive ways to commitments made to the team.
  • Insist that everyone be loyal to the team and its members.
  • Criticizing a teammate behind her back should be unacceptable — no sideways griping or gossiping.
  • Bring differences of opinion and conflicts to the table for open discussion.
  • Don’t tolerate self-focused “superstars” and prima donnas, they will destroy your team.
  • Help each other do the best possible job. “We win together or lose together.” Don’t accept “that’s not my job”, customer satisfaction is everyone’s job, without them we’ll all be unemployed.

The list of guiding principles for your organization can be longer, or shorter, just be sure you live it and walk the talk before expecting your people to. Be a part of the team, not apart from it. That’s the type of transformational leader people want to follow.

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Frank Manfre

Frank Manfre

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Business consultant & coach w/ 35 years experience in leadership roles in for profit and nonprofit organizations focused on developing leaders & org health