This is the season when people, in a quest for a healthy start to the year, join gyms, try out Drynuary, or give Whole30 a shot. For leaders and managers, this may be an excellent time to diagnose and plan on improving your company’s overall organizational health.
Organizational health, like physical health, involves some simple practices and philosophies that may take time to incorporate, particularly if it hasn’t been a priority in the past. But once you build it into your organization’s standard operating procedure, it will feel natural to maintain—and you’ll notice the payoffs fast.
What defines a healthy company?
Organizational health is much more than profit and loss. As McKinsey & Company summarizes it, the health of an organization is based on the 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 and remaining relevant through innovation
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A noticeable, immediate competitive edge
A healthy, well-rested employee surrounded by a supportive team is likely to outperform, over the long term, a counterpart who is underslept or unwell and who is incapable of sharing the spotlight. The same goes for companies.
According to McKinsey’s data, the total returns that healthy companies generated for shareholders were three times as high as those of unhealthy ones. On top of that, companies that instituted initiatives to improve their health showed gains in performance—earnings and returns to shareholders—in as little as six months.
So there is an incentive to get to work examining and improving your company’s health now, and not down the line.
What contributes to organizational health?
Business expert Patrick Lencioni, author of The Advantage: Why Organizational Health Trumps Everything Else in Business, believes that healthy organizations share a few common traits:
1. Cohesive leadership: Healthy organizations must have a strongly united team in charge, all individually committed to a common goal.
2. Dedication to clarity among leaders: The healthiest companies demonstrate alignment not only in the C-suite but among leaders of departments and teams throughout the business.
3. Dedicated, consistent clarification: In healthy companies, leaders emphasize to their teams what is true and important again and again to consistently incorporate it, even after deadlines are met and milestones achieved.
4. A clarity check at every pass: A healthy organization provides a system to ensure that clarity is achieved in any company process that involves people, from hiring to firing to evaluation, to administering awards and recognition.
Healthy role models: companies doing it right
Terms like culture and clarity may seem a little broad and vague, particularly for managers who wear many hats and need to handle a variety of priorities on any given day, week, or quarter. Let’s go beyond the data and take a look at some examples of companies recognized for their organizational health and how their leaders do it:
Salesforce: In 2016, the job search site Indeed.com recognized Salesforce’s “great organizational culture,” the result of its transparent prioritization of company alignment and the company’s philosophy on employee feedback. As Salesforce’s sales department puts it, “The best way to stay in sync is an ongoing, active dialogue where [employees] can share what kind of experience they hope to have at work.”
Acceleration Partners: Noted by Entrepreneur for its company culture as both a small and then a medium-size company in 2017 and 2018, the Massachusetts-based marketing firm Acceleration Partners has managed to keep corporate culture top of mind while scaling. One way is by using the right tools to cultivate engagement. Founder Robert Glazer praises the benefits of the Slack channel #WhatMadeYourWeek: “[It] was not a top-down mandate; it was an idea that came from one of our employees,” showing that the company’s organizational health is driven from all levels.
Zappos: The online shoe retailer has received plaudits in the business world for its commitment to clarity on workplace culture, with the belief that happy employees bring in happy customers. Critically, Zappos held fast to this tenet as it grew. “We knew as we were building the company that focusing on culture was paramount,” Jamie Naughton, Zappos’s chief of staff, told Forbes. “In order to provide amazing service to our customers, we knew we had to provide that same level of service to our employees and vendors.” An example is a requirement that all employees, regardless of position, must attend call center training, which both lends greater transparency, across all divisions, to customer needs and desires and cultivates empathy in employees for their customers and their peers working on the service side. A bonus, Naughton says, is that when developers take on this role, they spot ways to improve call center systems and tools that they might not have had they stayed in their own silo.
Keeping organizational health top of mind at a scaling company
When an organization grows quickly, it’s tempting to put health on the back burner and focus on metrics like profit and loss. But McKinsey’s data shows the competitive edge that organizational health brings: Would you rather grow healthfully and stay ahead of the pack now—or try to catch up later?
While considering how to invest in ways to keep employees happy, forward-thinking leaders of scaling companies shouldn’t look to gimmickry like foosball tables and an avocado toast bar, which may lose their novelty, but to ways to prioritize connection and clarity from the beginning. They can build organizational health into a company’s success metrics along with measures like profit, growth, and employee satisfaction and also integrate health into monthly and quarterly performance reviews.
Chris Gagnon and his colleagues at McKinsey also suggest financial incentives to improve team performance and creating and holding accountable a health team dedicated to embedding the right behaviors in the organization.
Ultimately, growing companies can build good health into their workplace culture by ensuring that it’s driven by employees at all levels. Similar to how our own Customer Success team here at Slack mobilizes a “champion network” of opinion leaders and influential peers, deputize these team members throughout the company to model and evangelize healthy company values and give feedback on what’s been working and what hasn’t. By providing clarity from the top down, but not limiting good ideas and leadership opportunities to only those in positions of power, growing companies of all sizes can start out healthy and stay that way.