Is your organisation healthy?

In today's business landscape, organisations are constantly seeking ways to achieve sustainable success.? McKinsey's latest research reveals that organisational health is not just a desired attribute, but a crucial driver of long-term performance. Their findings demonstrate a clear link between organisational health and financial success.? Healthy organisations, as measured by McKinsey's Organisational Health Index, achieve three times the total shareholder return compared to their unhealthy counterparts.? This data underscores the importance of fostering a healthy organisational environment, making it a critical factor in sustained competitive advantage and value creation.

What is organisational health?

Essentially, it's about how effectively leaders run their organizations. But there's much more to it, so let's dig deeper.

How do great leaders run organizations?? It’s not just about getting things done—it's about building lasting strength.? Healthy organizations perform better, especially in tough times. They achieve high performance and stay there. It's about having the right people and behaviours to take them there.

Organizational health is linked to employee and leadership behaviour. The key focus areas are accountability, direction, coordination and control, external orientation, leadership, innovation, learning, capabilities, work environment, and motivation.

Most organisations default to focusing on employee engagement, but that isn't enough. Leaders often separate health and performance, but they actually go hand-in-hand. The question to ask yourself is: “How can I run this organisation every day, in every meeting, in a way that fosters both health and high performance?”

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Where to start – Think Differently

It's not about piling on more tasks, but about rewiring the way you do business.? Factor both well-being and performance into every action, every day. Companies that think outside the box are better at finding the right talent and the specific behaviours that drive success toward their goals.

First, gather data to establish your baseline of strengths and weaknesses. Determine what data you need and verify its quality. Next, define your organisational performance goal and break it down. Then, set clear behavioural priorities by asking: What skills, strengths, and talent does your organisation need to achieve these performance goals? What health improvements should your organisation prioritise? Finally, implement actions tailored to your specific context. Health interventions should align with your business, performance goals, and customer value proposition. Your business system is dynamic and complex. Avoid simply copying others' strategies; instead, develop the right solution for your unique situation.

McKinsey’s recommended ‘power practices’ to drive performance include translating vision and strategy into actionable and measurable outcomes, role clarity supporting agility, personal ownership and having competitive insights into the markets and value proposition.

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Where do leaders get stuck?

Leaders frequently talk about organizational health, but they often fail to see the importance of getting involved in the interventions and implementation of strategies needed to improve it. This takes time, and many leaders are too busy putting out fires to fix the system. Executives must make organizational health a central part of their leadership approach. Otherwise, unhealthy actions may go unnoticed.

Next steps

Focus on reframing quarterly discussions, incentives, and other performance management elements around maintaining organizational health.

Meaningful feedback and aligned performance metrics are crucial. Remember, a shared purpose remains vital for a performance-driven, healthy organization.

Lead decisively, following through on decisions promptly with available data. The better your data, the stronger your insights, and the easier it becomes to lead with clear direction.

Think differently. For instance, address burnout by examining role demands and their connection to the organisation's broader purpose.

Capability building is essential. Empower managers to implement these health interventions and lead with a strong understanding of organizational health goals. Better managers become better leaders, ultimately improving overall organizational health.

Use a common language to articulate your vision and where you want to go.? Share your commitment and lead by example. Embed this approach into your communication plan.

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REFLECT ON:

You're on a mission to build a high-performing organisation and have identified your baseline and goals.? But how do you make sure your managers are leading the way??

• What are the fundamental management practices that lay the groundwork for successful organisational health outcomes?
• How can I empower my managers to excel at these practices, day in and day out?
• How can you equip your managers to clearly define roles and responsibilities for their team members??
• How can you help your managers articulate this link of what we do, inspiring their teams to work towards a shared vision?

Written by Martina Rios Master You Mind Coaching.

References: McKinsey & Company, People & Organizational Performance Practice