4 Models to Quantify Organizational Health at Your Company

Bryan Smith

Published in

LEONVC

9 min readDec 29, 2023

How much is your investment in organizational health worth for the company?

Organizational health refers to the overall well-being and effectiveness of an organization.

To understand organizational health, leaders today can use a variety of methods, including:

Surveys: People Leaders use surveys to gather feedback from employees about various aspects of the organization, such as communication, leadership, and work culture.
Key performance indicators (KPIs): Leaders use specific metrics, such as financial performance, employee retention, and customer satisfaction, to measure the overall health of the organization.
Benchmarking: Companies compare their organization’s performance to that of other similar organizations in their industry.
Organizational assessments: Organizations use tools such as LEON Insight to measure the health of their organization. These assessments typically involve gathering feedback from employees and evaluating various aspects of the organization’s culture, structure, and processes.
Focus groups: You can conduct focus groups with employees to gather more in-depth feedback about the organization’s health. This can be particularly useful for exploring specific areas of concern or for identifying trends or patterns.

That said, how do you put a number to the subjective health of an organization and its people? What is it worth? Most people would answer that it cannot be measured — that health is both infinitely valuable and cannot be bought for money.

The question, however, changes when you ask it from a leader or a CFO.

How much is your investment in organizational health worth for the company?

This may seem like a cold-hearted question, especially when we all want to believe that companies today “really” care about their employees.

However, it’s a critical question for today’s leaders to ask.

Mental health issues are lingering after Covid-19. War and economic unrest have led to massive uncertainty and layoffs. And for the people staying in their seats, there’s high pressure and a battle for top-level talent.

So, leaders are forced to face this question:

How much should I invest in organizational health? And how do I know if the investment is worth it?

That’s the question we set out to answer in this article. And like anything involving people analytics, it is a challenging answer. So we’re not going to dive deep into some scientifically validated, absolutely foolproof methodology around quantifying organizational health and company performance. But we can give you this: Four different models for evaluating the effectiveness of committing to improving organizational health at your company. Four models which can be relevant to leaders, specifically, and one straightforward diagnostic tool to help you get started quantifying organizational health at your company.

Four models built to help leaders understand and quantify organizational health.

What follows are four ways to measure organizational health: what it is, some pros and cons, and what to consider if you decide to use this measure. But also, how relevant is the benchmark for your company? And should each approach can be used alone? Or should they be combined, compared, and contrasted? So, think: Where could I start measuring organizational health for my company?

Model 1: Measure changes in organizational health outcomes.

Concrete measures related to organizational health — before and after an intervention can include:

Survey results (e.g., a mental health score).
Changes in survey questions (e.g., happiness, stress levels).
Physical measures (e.g., fitness tests).
Personal goals.

For example, LEON uses a 26-point organizational health diagnostic called Insight, which looks at individual and organizational health elements. In addition, we use follow-up diagnostics, using a machine-learning-based algorithm called “wellness intelligence,” to quantify the impact of any interventions used at both the individual and organizational levels.

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Pros:

Measure what you’re trying to change is an easy and manageable rule. For example, if you’re improving individual mental health, you should measure changes in improving that specific measure.
Seeing changes in health is rewarding for participants — it may even be a primary driver for people.
Some organizational health measures have strong links to work performance, e.g., better coping under stress improves engagement.
A validated organizational health measurement tool that gives one consistent, easy-to-understand model to benchmark health across your entire company.

Cons:

Most of these measures tend to be individual-focused rather than organization-focused metrics — although the LEONVC diagnostic tool does improve this issue.
Measure changes in health outcomes are “a point in time’ and impacted by various factors — some participants will inevitably be worse off after, perhaps due to work or external circumstances.

Model 2: Measure the return on investment of health programs

For organizations, investments must pay off over time (ask your CFO). Therefore, the most widely used financial indicator is Return on Investment (ROI). In short, ROI is calculated as the ratio of benefits (cost savings and/or increased output) to the cost of the intervention.

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Pros

Excellent for easily measured (often cost-driven) organizational health, e.g., sick days, insurance costs, or on-the-job accidents.
ROI quantification forces the organization to think about how success looks.
A solid ROI calculation can convince even the most critical leaders to invest in a long-term organizational health strategy.

Cons

It’s tricky for organizational health programs targeted at better output or productivity — how do you measure team performance or isolate the effect of organizational health from other factors?
A goal built on understanding financial returns can blind the organization from considering qualitative measures.
Potentially time-consuming and limited by data availability.

Model 3: Quantifying success against a targeted metric with a focused strategy.

Focus on a specific organizational health issue — e.g., mental health, psychological safety, or sleep — and do a targeted intervention — measure participants before and after the intervention.

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‍An example of this would be:

Choose a specific organizational health issue e.g., sleep
Select a focused metric, e.g., LEONVC Insight Diagnostic
Do a targeted intervention, e.g., purchasing sleep-tracking applications like our partners, Whoop or Rise Science.
Re-measure after intervention

Pros

Great for a pilot study to test a new intervention or benefit offering.
Helpful when employees (or specific employee groups) have a few everyday health issues where cause and effect are clear — e.g., lower back pain among warehouse employees or burnout among top-performing sales reps.
A very narrow and specific focus allows targeted and often high-quality results.

Cons

Only applicable for a specific challenge and intervention.
Not as helpful when organizational health challenges among employees are varied or when cause and effect are unclear — e.g., a targeted sleep intervention may do little if the root cause is stress.
Highly targeted interventions might not scale as population and challenges become more varied.

Model 4: Measure changes in your people analytics

Every organization has some employee metrics in place. These metrics may include recruiting and retention data, culture assessments, or productivity. Most organizations also run an Employee Engagement Survey or pulse survey. Instead of simply measuring health, these expanded People Analytics metrics can be used to assess the impact of a complete organizational health strategy.‍

Pros:

You likely have all these numbers in-house and will repeat them in the foreseeable future.
Employee engagement surveys are standardized, translated into different languages, and benchmarkable across cultures.
Metrics like employee engagement and eNPS are directly linked to business outcomes and are often respected and followed at management and Board levels.

Cons:

Depending on your measure, you may need help linking your people metrics directly to an organizational health strategy.
Due to privacy and legal reasons, employers often cannot know who has participated in a health program. This can make linking employee engagement and intervention data challenging.

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A systematic approach to quantifying the value of your organizational health investment.

With the rise in awareness of organizational health and its potential impact on profitability, companies have begun to take more business-focused approaches to operationalize their organizational health strategy. In response, LEON has developed a framework to address this new complexity. One that arose fifteen years ago when we challenged ourselves to go beyond traditional components, like culture and engagement, and to measure organizational and people well-being more holistically. 1,500+ clients and 3+ million data points later, we’re doing just that.

The LEON 4P Matrix offers a systematic approach for a corporation to determine where best to invest in organizational health and, more importantly, the impact of that investment. Rather than rely on guesswork and implementing underutilized wellness benefits, the company can use a proven technology-enabled process built for improving organizational health in a modern company.

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The LEONVC 4P Matrix

Prepare: As the initial step of the 4PMatrix, organizations use tools such as LEONVC Insight to measure the health and resilience of their company. These assessments typically involve gathering feedback from employees and evaluating various aspects of the organization’s culture, structure, and processes. This process will help to establish a holistic baseline of the health of your company.

Plan: Once we have a clear understanding of the health of your organization using LEONVC Insight, you will use a process called “abstraction,” and “grouping” where you will take deeper dives into problem areas using follow-up diagnostics and/focus groups to work towards a valid diagnosis. In your typical consulting engagements, this process would be similar to a focus group, although instead of using a team of high-price and often billed-by-the-hour consultants, we let our machine learning-based algorithm tell us what type of follow-up data we need to work towards a plan of action.

Program: During the program phase, you will partner with key stakeholders to bring transformation experiences to your people and measurable growth to their organization. ‍

Perform: During the Perform phase, you will review and quantify the impact of any interventions taken using follow-up diagnostic data to further expand on the recommendation model and to quantify the impact of your investment using similar models discussed above. Furthermore, you can use external data sources to enrich the data set and move closer to measuring the impact and success of your organizational health strategy. This process allows us to use the four models discussed in this article to provide you with both valid recommendations and, most importantly, a measurable and quantifiable approach to improving the health of your organization.

Organizational health at scale

Rapid changes in the marketplace have now led organizations to try to understand issues such as employee burnout, mental health, and overall resiliency at a scale that would have been unimaginable just a few years ago. With LEONVC, it’s now possible to maximize organizational health by using real-time intelligent data, and a predictive analytics framework to help you quantify organizational health.

This is what has been missing until now: previous iterations of company wellness solutions still relied on wellness perks and company culture and lacked a contextual understanding of the long-term adaptability of an organization. All of this meant they were still tied to a faulty sense of company wellness (because it was hard to quantify) and more importantly, how to improve it.

But when we discuss organizational health we don’t imply businesses will necessarily be purchasing more gym memberships and hiking the Himalayas as a team.

Instead, we see businesses improving organizational health by using intelligent data, better recommendations, and a quantifiable ROI. This is what LEONVC can offer. It gives you a deep understanding of team health, resiliency, and organizational culture. But more importantly, as the data set becomes more robust, we work towards investing in the health of your people and organization in a process that has real, validated measures on ROI and an understandable impact on company profitability.

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