Organizational Health
What is Organizational Health?
Organizational health is a concept introduced in the book "The Advantage: Why Organizational Health Trumps Everything Else in Business" by Patrick Lencioni. Organizational health is a measure of how effectively a company operates. Two central tenets are building a cohesive leadership team and clarity. The clarity tenet incorporates clarity among the leadership team, communication of that clarity from a top-down approach across the organization, and establishing a structure to reinforce that clarity in the future. The Four Discipline model describes organizational health in detail.
What are the three biases that Leaders must overcome that prevent them from embracing organizational health?
While organizational health makes sense anecdotally, many leadership teams do not embrace this concept due to one or a combination of "the three biases." The biases are listed below and are the reasons why organizational health is not prioritized:
Sophistication Bias – Not complex enough. Therefore, it likely isn't believable that it could help and will not be addressed.
Adrenaline Bias – Leaders who enjoy moving fast find it hard to slow down and do the work to gain organizational health. If the issue is not urgent, it gets put on the back burner, and rarely is organizational health seen as an urgent issue. "You have to slow down in order to go fast," is a race car driver saying that was shared in the book, The Advantage.
Quantification Bias – It is impossible to measure impact because you cannot isolate variables. Even though the impact exists and is valuable, you need intuition to see it. This can be difficult for some leaders to see and believe in.
What is the Four Disciplines Model of Organizational Health? - Explain
The Four Discipline Model is a detailed outline of creating organizational health within your organization. You can liken each discipline to a step you need to take on your journey toward organizational health. These steps are provided in chronological order. Below you will more details on each find each discipline.
Discipline 1: Build a Cohesive Leadership Team – To build a cohesive leadership team, you will ensure that this group, preferably of eight or fewer people, trust and understand each other. You will achieve this by having an offsite retreat and conducting Myers Brigs Testing.
Discipline 2: Create Clarity – After establishing your cohesive leadership team, you will work to create a playbook for the organization. The playbook is a resource for guidance, decision-making, and planning. In it, you will answer the Six Critical Questions- Why do we exist? How do we behave? What do we do? How will we succeed? What is most important right now? Who must do what?
Discipline 3: Overcommunicate Clarity – After you have an established playbook and know precisely where you want to take your organization and how you will do it, you must communicate and overcommunicate this across the organization. This should be communicated from a top-down approach and through upward and lateral communication.
Discipline 4: Reinforce Clarity – After employees across the organization have been made aware of where the organization is going and how they will get there, you will demonstrate to everyone that this is not a fleeting strategy and that it is what the organization is becoming. You will incorporate clarity into recruiting and hiring practices, orientation, performance management, recognition, and compensation and rewards.
What role can the HR function play in helping Leadership achieve Organizational Health?
The level at which leaders buy into organizational health will ultimately determine how successful its adoption will be. These leaders are active drivers, not only cheerleaders. The human resource department, and specifically Human Resource Business Partners, should play an integral role in ensuring that functional leaders believe in and instill the concepts of organizational health into their teams. Additionally, when reinforcing clarity, human resources can play a significant role in assisting leadership to achieve organizational health. While it is not the sole duty of human resources to execute these activities, they can assist leadership in ensuring that clarity is reinforced throughout the employee experience, specifically when recruiting, hiring, during orientation, recognition, compensation and rewards, and with performance management.
Why should the Leadership of a business spend time and resources on achieving organizational health?
There are many reasons why leadership should spend time and resources on achieving organizational health. Bottom-line is that it will improve employee morale and profitability for your organization. It will also provide an efficiency boost because having clarity into where you want to go will eliminate the missteps of spending time going to the wrong places. Many scenarios could occur in an organization's pursuit to reach a specific goal. Please find the image in Appendix I, which depicts the origin of a company and the route they took, highlighted in green, as well as the paths they could have taken. Next, focus on the point that reads "right now." Understand that your organization can move in various directions over time. Imagine that your clarity, i.e., goal, is the red star. Strong organizational health will allow organizations to streamline processes to achieve their goals.
Ok, Organizational Health sounds like a great concept, but what really is the bottom line impact on a business? Does Organizational Health realize profitability? What impact does it have on the people assets of a business?
The bottom-line impact that organizational health provides is a competitive advantage. Attention to organizational health is largely untapped in most companies, and those who are early adopters will stand to benefit the most. To run an organization today, you must be both smart and healthy. Focusing on only being smart is the bare minimum to operate a business in 2023. With the evolution of AI and mass adoption of telecommunication tools post-pandemic, the ability to outsource some technical, i.e., smart, jobs is looming. When this comes to a head, maintaining organizational health will be needed to support your organization's business objectives and morale. It will allow a company to stay in business and remain profitable. Early adopters of this competitive advantage will realize the most profitability as they are not reacting to a market that has already moved.
There is another aspect to consider. Poor organizational health can provide real anguish for real human beings. It can lead to talent beginning to resent the organization and believe they cannot be successful in their current environment. Not only do these problems exist within the confines of the organizational setting, but they are taken into your employees' personal lives. Worst-case scenarios leave employees depressed, anxious, or even suicidal due to poor organizational health. An inattention to organizational health is not only a business problem that could result in turnover, insufficient output, and subsequent related expenses, but it can also disrupt the talent's mental health.
When investors consider investing in a business, is Organizational Health something they pay attention to?
Investors should consider organizational health when deciding where to invest their capital. While the SEC protects investors' ability to gain transparency into an organization's financials, it is more difficult for them to provide clarity in organizational health. As shared in a previous response, you cannot isolate an individual variable, measure organizational health, and put it into a report. It is more of an intuition or a feeling the investor must have to make a judgment call. However, some insights are provided through media that would allow potential investors to get a feel for the organizational health within a company. Public figures making obtuse statements will aid investors in understanding the organizational health of a particular organization. An organization that currently comes to mind as having poor organizational health, using my intuition, is Twitter. Lastly, resources like Glassdoor can provide insights into organizational health.
Appendix I
Works Cited
Lencioni, Patrick. The Advantage. vol. 1, Jossey-Bass, 2012. pp. 1-205.
Urban, Tim. "We Think a Lot about Those Black Lines, Forgetting That It’s All Still in Our
Hands." Twitter, 5 Mar. 2021, twitter.com/waitbutwhy/status/1367871165319049221. Accessed 25 Jun. 2023.