ali khan
Ali Khan
Co-founder
Published On
December 14, 2023
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Why Organizational Health Is Important

The first thing you might wonder is “well, what is organizational health?” and that’s a great question, let’s dive into it!

What is organizational health?

It should be obvious that a thriving and healthy organization is not only focused on short-term goals and wins but also on long-term growth and a healthy culture. Organizational health determines how well your team can cope with organizational change, an ever-important part of the business world. 

The benefits to successfully building a healthy company are incredibly valuable, you create happy, proactive, and engaged employees that are ready for anything! Let’s look at McKinsey to formalize that with the data they gather - “We’ve long seen a strong, static correlation between health and financial performance. Almost all companies perform better if they improve their health.” It all starts with a good leadership team in place.

Why is organizational health so important?

A business, at its core, is built by people. And people operate best when they are healthy, exactly like an organization. If you focus too much on short-term goals and improvements you may strain your team members (like overworking your body by working out with no rest days). Employee surveys will get you closer to important insights within your team.

Startups and high-growth companies rely heavily on innovation. When you don’t have a healthy organization your teams will collaborate less, take fewer risks, fall behind on the training, and be less innovative.

Organizational health focuses on creating a healthy environment that underpins everything important in your business. If you want your team to have cross-departmental collaboration, shared goals and objectives, high engagement, and low retention then your focus should be on improving your company’s organizational health. Managers should shift their focus from financial incentives to employee well-being to maintain a healthy organization. Mental well-being, workplace safety, physical health, social connections, and work attitude all play a role in workplace well-being.

Organizational health metrics

So now you know what it is conceptually and why it’s so important, but how do you measure it? Remember that you can only truly improve something that you can measure, otherwise, you may spin around in circles helplessly. Organizational health relates closely to company culture which is difficult to measure. Culture is hard to measure because there are a lot of factors and most of them are subjective. You can’t simply count how many product updates you push out each quarter or how long your average employee stays with the company, you need to take a broad look across many points of your company.  

Here are some key questions to ask yourself:

  • Direction - Are your products and processes moving forward with a shared vision?
  • Innovation and Learning - Do you have top-down and bottom-up innovation as well as necessary upskilling?
  • Leadership - Are your leaders engaged but not micro-managing?
  • Coordination and control - Does your team get good performance reviews?
  • Capabilities - Do you have strong talent acquisition and development?
  • Motivation - Is your team able to motivate one another?
  • Work environment - Is the environment trusting and cooperative yet competitive?
  • Accountability - Is there role clarity, clear KPIs, and OKRs?
  • External Orientation - Are you tracking market insights, customer needs, and partnerships? 

Something you need to keep in mind is that there are thousands of things that can affect this list of factors and improve your health. No one action is going to make a large enough improvement to change things. This is why iterative improvement across the board is key.

To iteratively improve you’ll need to track metrics to build comprehensive organizational health literacy. Some key metrics include:

  • Performance review metrics
  • The time it takes to fill a new position
  • How many positions are filled internally
  • Sprint/Project success metrics
  • How often you’re improving/changing policies
  • Completed training/certifications
  • The average length of employment
  • Glassdoor/Blind reviews

What do all of these factors and metrics have in common? You need to iteratively check up on them and try new things to improve! And to do that you’ll need honest, contextual, valuable feedback from your team which you can get by sending out short and frequent pulse surveys. We recommend doing this anonymously so you can get your team member's most authentic thoughts instead of people playing for brownie points. If you're building a digital workplace in Slack then check out Wrenly.

Building your organizational health dashboard

We’ve gone over the metrics and factors you should be looking out for, but this is not a one-time thing. You need to track these metrics over time to assess the impact your improvements and updates are having. Set a business strategy in place!

The simplest way to do this is a simple Google Sheet that you update weekly for each metric you track. This makes it easy to share with your leadership team so everyone is on the same page. You can color-code your metrics so that improvements and negative trends are automatically highlighted.

How often you brief your employees and leaders depends on your company culture. A classic method is to set aside 5 minutes during each all-hands call to overview the successes and areas for improvement so that everyone is on the same page.

If you’re pulling in tons of data you should look to automation. When you’re trending employee feedback you can use tools like Wrenly that automatically send out pulses you put as recurring to easily gather data over time. If you’re pulling in data elsewhere you can try to integrate it cleanly with Zapier or another data automation tool. 

Reducing the manual steps makes it easier to stay up to date without taking too much precious time.

Healthy organizations in this post-COVID hybrid world

The world is different. We’ve gone through COVID, the great resignation, the great re-shuffle, and now we may be looking at an economic recession.

Organizational health is more important than ever as companies are navigating this more complex world of hybrid or even remote-first work. Culture is easier to track in person when you can chat over lunch and casually at the water (or seltzer) cooler. Zoom and Slack are great for communication but can lead to cultural difficulties.

This doesn’t mean you should leave organizational health on the side, it means you need to try harder focus on employee engagement to create the work environment your employees deserve. You can take this organizational risk and turn it into a competitive advantage.

More Articles From Ali Khan

Ali is a remarkable Business Development professional known for his innovative thinking and exceptional ability to win over even the toughest prospects. His dedication, mentorship, and leadership skills have not only shaped various careers but have also made him an invaluable asset to the Wrenly team.

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