Improving organisational health: A five-point checklist

Just because 2022 feels like an extension of 2021 doesn’t mean we need to stick with old habits — such as neglecting organisational health. A new year gives an opportunity to look critically at better ways of working, decision making and, most importantly, setting up to deliver strategic value.

The events of the past two years have brought health to the attention of boards and executives, albeit often in discrete and narrow ways. Real organisational health takes an integrated view bringing strategy, organisational design and culture together, using a skillful balance of art and science.

The health or wellbeing of each individual can’t be ignored, but it is this skillful integration into the bigger organisational context that brings unique impact and lasting results.

Four warning signs of low organisational health

1. Executive teams operating as individuals

   The first warning sign is when an executive team feels more like a set of individuals. A lack of integration at this level sets the tone for siloes elsewhere. Most pronounced is when strategy build starts with each executive defining their own strategy, then the ‘Head of Strategy’ linking these into one document, with a set of individual KPIs that aren’t shared.

   Organisational health will only be achieved when there is one vision and the strategy is a coherent pathway to achieve the vision. Start with a clear definition of the vision and plan a joint pathway to get there — one where each individual has their own responsibilities to meet the core, shared objectives.

2. Operating model design that starts with structure

   One of the critical links between strategy and execution is the operating model that ultimately houses the work performed; what is done, where, how and by who. It provides solid foundation, structure and a clear way forward.

   There is often not enough thought put into this exercise and as a result, while financial targets are normally met in the short term, what is left is a set of issues that won’t rear their heads until later down the line… issues such as performance or cultural issues that could have been avoided.

3. Decision making based on limited insight

   Despite enterprise resource planning (ERP) systems having been around in various forms since the ‘90s, there are still a large number of companies that — despite huge system investments — don’t have an integrated view of their business.

   Instead, disconnected HR and Finance data is viewed separately without a clear view of where or how work gets prioritised, delivered and results assessed.

   Bringing together product/service performance and activity assessment alongside people and finance information will provide a clearer understanding of what is really happening in the business and what is being delivered. It is this intersection that is key and will determine how successful business decisions are made.

4. The wellbeing of the organisation is seen as the preserve of HR

   The events of the past two years have moved employee wellbeing from an individual issue to a strategic business imperative. Yet few businesses were viewing people as integral to financial outcomes until this point. There was talk, but little real strategic action. Foresight needs integrated data and the right questions being asked to gain valuable insight.

   Clearly wellbeing and psychological safety will continue to be key business issue in 2022 and the number one priority on the business continuity agenda. They are fundamental precursors to performance and staff retention. Check this is coming out of the HR silo and is an integral part of the leadership conversation.

Top five ways to drive organisational health

1. Articulate a clear vision for the end of 2022 which brings all of the organisation together. Test this by asking: is the vision one which unleashes ambition?

2. Take an objective look at how your organisation is functioning to deliver this strategy. Observing and asking: where are the tension points in terms of resource allocation and decision making? How is this getting in the way of honouring our customer proposition?

3. Optimise how teams work and intersect. Initiate this by asking: are there key teams where more seamless connections would significantly shift customer experience?

4. Consider ways of working and individual wellbeing as being mutually reciprocal. Observing and asking: are leaders demonstrating the behaviours that balance both performance and wellbeing? Are our people thriving or just getting by?

5. Build an executive dashboard using a balanced scorecard where strategic outcomes along with organisation design, people and technology are all reflected.

   Set up an executive working session to begin to answer: what are our top ten indicators that we are realising a balance in tangible outcomes? What are lead and lag indicators that we are on track for delivering our internal and external promises?

Art vs science

Reflecting and deciding on changes requires both sensing (art) and thinking (science). Management and leadership tools, data, analytics, and spreadsheets provide the logic for decisions — but organisations are made up of people. Every change can bring unexpected ripples in unintended ways, so sensing and checking on a human level is needed.

In fact, experience shows that the greater the complexity and the unknowns, the more that ‘art’ is required. Yet leaders, feeling the burden of responsibility, can slip into the trap of seeking linear and predictable answers to complex situations. The trap of setting up simplistic siloed projects, rather than integrated response to drive organisational health.

This year, honour both logic and intuition as you set up for success.