Benchmarking

How to Understand Your Organizational Health

What does a healthy organization look like? According to McKinsey, true organizational health comes from having a long-term focus. But more specifically, health comes from using short-term transformations to bolster long-term corporate objectives. In an article for McKinsey & Company, Lili Duan, Rajesh Krishnan, and Brooke Weddle share four “power practices” to use during transformation that can improve organizational health:

  • Set a clear direction.
  • Make it meaningful to employees.
  • Spark ideas and innovation.
  • Build strong operational discipline, in a supportive way.

Fitness for Years

To have a clear direction for transformation, strategy must be converted into concrete goals and milestones. Such mechanisms will be used to raise fences as to what will or will not be done on a project. Without this formal guidance from the beginning, it is a crapshoot whether everything else will fall into place.

To make strategy most meaningful to employees, try to involve them in setting the objectives that pertain to them. In the best case scenario, employee talents will not only align with what strategy needs, but also align with employees’ individual aspirations. Setting strategy should not always be a one-way street.

On the subject of sparking innovation, the McKinsey authors concede that there is no one best method for generating fresh ideas, and to think otherwise could be dangerous. However, it is seldom a bad idea to let employees work closer with customers in order to dream up product or service improvements. It also does not hurt to take a look at what the competition is doing.

Lastly, about building operational discipline, the authors write this:

It’s important to start at the top, with explicit targets for operating performance that are then replicated at other levels. Operational discipline requires the communication of clear standards of work so that employees understand how to achieve goals and metrics consistently. This also helps leaders ensure that the day-to-day work complies with those standards, and it allows leaders to emphasize the core values of efficiency and productivity. Maintaining operational discipline puts a premium on another management practice: supportive leadership, which includes creating a sense of teamwork and mutual support throughout the organization and demonstrating concern for the welfare of employees.

Maybe you have noticed that McKinsey’s recommendations often fall under the category of “easier said than done,” but hey—somebody has to be the one to say these things, and they have the abundance of data to support their ideas. For a breakdown on that data, you can view the original article here: https://www.mckinsey.com/global-themes/performance-transformation/the-yin-and-yang-of-organizational-health

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