Back in the dark ages, organizational health was measured in black and red terms: Are we making money or not? What’s our cash flow? How does our market look and what are our financial prospects?
That’s changed, as organizations have realized that people could be an asset to both the operating success today and the company’s future prospects tomorrow. Although a solid balance sheet and growth are key factors, they are not the only thing dictating whether a company can fulfill its mission.
Human resource and workforce leaders have been tasked with figuring out how to measure organizational health in a way that other executives can both connect to the key initiatives in their parts of the organization and understand at a glance. For those looking for a place to begin, here are a few areas of focus to get you started.
1. Shared vision and direction
Do people know where the organization is going? This one is about knowing the direction and buying into the vision. Rather than focusing on quizzing people on mission, vision, and values, ask people to simply describe in their own words what you do, who your customers are, and what makes you unique. If you don’t have a vision or you haven’t communicated it with employees effectively, you’ll know when the thematic elements don’t align.
2. Role clarity and accountability
Knowing the shared vision doesn’t help much if people don’t know how they contribute to the end vision. They may know what they do, and they may be very good at it, but if it doesn’t ladder up to the broader vision for the organization, there needs to be a solution. For people who are critical but don’t know it, it may be focusing on emphasizing and clarifying that. For those who don’t have a clear role, it may be about finding and reimagining what that looks like.
3. Willingness and capability
With a purpose and role defined, do your people have the willingness and ability to actually execute? Competency is easier to measure and solve than willingness, with skills or broad training available for nearly anything. But a combination of meaningful purpose, solid leadership, and attainable incentives can help unlock willingness.
4. Culture and climate
Do people feel like they belong? Does your culture and climate help support people as they find purpose, clarity, and capability to work toward success? Though culture is hard to measure, asking people if they feel like they’re part of what you’re doing can go a long way to determine whether your climate is set up right.
5. Aligning all the pieces
Knowing how well you’re doing here is part measurement (i.e., how well are we doing in these areas) and part performance (i.e., are these things moving our organization forward). The key is to bring what can feel like disparate data together to find alignment across vision, accountability, capability, and culture to know if they are working together to make a difference.
When you take steps to improve organizational health, you not only improve work for employees but you'll also improve the bottom line. Research from McKinsey shows that a majority of organizations that take concrete action on organizational health improve their total earnings by 18% compared with the median.