Healthy Organizations: What, Why and How

Healthy Organizations

What are healthy organizations?
Why are healthy organizations important?
How do organizations become healthy and stay healthy?

At WellSpirit Consulting, we help organizations be healthy. Organizational health is not employee wellness programs. Organizational health is about treating people well (customers and employees) and about executing business disciplines well.  According to the World Health Organization, adults spend one-third of their lives at work. Because people make a huge investment of our time, energy, knowledge and abilities in our work, WellSpirit believes that business should be worth living! By that, we mean that work should bring out the best in us. Even more than bring out our best, our work should be a place where our knowledge, skills, ability, and character become better over time. On top of that, our work should contribute to making the world a better place. Wow! Is this possible? Yes, it is possible in healthy organizations.

In this post, we want to connect our readers to one of the best sources available to learn what a healthy organization is and how to create one. The resource is Patrick Lencioni’s book, The Advantage: Why Organizational Health Trumps Everything Else in Business. Let’s take a look at how Lencioni, along with some of our insights, answers the three questions at the beginning of this post.

What Are Healthy Organizations?

An organization is healthy when its management, operations, strategy, and culture fit together in a way that makes sense. The most successful companies excel at the typical “hard disciplines” of business: strategy, marketing, finance, and technology. However, the most successful companies are also healthy; they create an organizational environment that minimizes politics, has little confusion, while fostering high morale, high productivity, and enjoying low turnover.

Why Are Healthy Organizations Important?

Let’s start with the price of poor organizational health. Perhaps you’ve worked in an unhealthy organization. You can recognize unhealthy organizations by the politics, confusion, and bureaucracy manifesting in dysfunctional behaviors that lead to wasted resources, wasted time, decreased productivity, increased turnover, and losing customers. The human and financial cost of poor organizational health is staggering. Some scholars assert that these toxic work environments cost the U.S. economy $300 billion annually. Lencioni notes that smart companies will not necessarily become healthy companies.

On the other hand, healthy companies will inevitably get smarter over time. “That’s because people in healthy organizations, beginning with the leaders, learn from one another, identify critical issues, and recover quickly from mistakes.” Because these organizations minimize politics and confusion, they can identify problems and implement solutions much faster than their dysfunctional competitors implement. This in turn, leads to financial success. The Boston Consulting group asserts that companies that invest in creating these kinds of healthy work environments may enjoy over 3x the revenue and over 2x the profit margin when compared to other companies.

How Do Organizations Get Healthy and Stay Healthy?

Lencioni asserts that healthy organizations work at maintaining four disciplines.

Building a Cohesive Leadership Team

Cohesive teams embrace five behavioral principles: building trust, mastering conflict, achieving commitment, embracing accountability, and focusing on results.

Creating Clarity

Organizations create clarity by answering six critical questions:

(1) Why do we exist? (purpose)

(2) How do we behave? (values)

(3) What do we do? (mission)

(4) How will we succeed? (strategy)

(5) What is most important right now? (execution)

(6) Who must do what (accountability)

Over Communicate Clarity

When the leadership has defined the company’s reason for existence, its core values, its strategy and its top priority, they must communicate that message repeatedly. People generally will not believe the message until they hear it consistently over time. As the leadership repeats its clear message and aligns behaviors to the message, the message becomes believable.

Reinforce Clarity

Organizations reinforce clarity when they create simple, practical processes for recruiting, hiring, and orienting the right people based on their core values. These organizations have similar practical processes for training people based on the company’s culture, strategy, and operations. Finally, these healthy organizations manage and reward their employees around the company’s most important priorities.

Healthy organizations are smart and they get smarter all the time by creating trust, constructive conflict, commitment, accountability and by achieving results. Because healthy organizations have great clarity about why they exist, how they will behave, what they do, how they succeed, and what is most important right now, they correct problems and seize opportunities quickly. Healthy organizations stay healthy by over communicating their clarity and by reinforcing clarity throughout their organizational processes.

In your experience, what characteristics of a healthy organization have you found to be most important? What would you add to the description of healthy organizations presented in this post?

Join the Leaders Alive! conversation about Healthy Organizations Thursday, April 3 on WJOB at 5:00 CT.