The simplicity of Organizational Health
To succeed in business, it’s not enough to be good at what you do.
You have to be healthy.
It’s true for individuals. It’s true for organizations. It doesn’t matter whether you have all the answers. If you or your organization aren’t organizationally healthy and can’t function properly, you won’t succeed long-term.
That’s the finding of five years of workplace research and interviews with millions of employees at companies across the United States. WorkplaceDynamics, the country’s largest surveyor of employees’ opinions about their working lives, found that what employees really want isn’t more money or better benefits. They want to work at a place that is organizationally healthy. This means an organization that:
- Sets a clear direction for its future and how it conducts itself
- Executes well and has a culture of high performance
- Creates a strong connection between employees and the company by showing appreciation and by bringing meaning to work
“Ultimately, organizational health is about people being inspired,” says Al Taylor, a research partner at WorkplaceDynamics. “You have to be inspired by the bigger-picture stuff.”
Doug Claffey, CEO of WorkplaceDynamics, adds: “It’s not enough to be good at what you do. You also have to be healthy as an organization.”
When companies are organizationally healthy, they get results. To test its findings, WorkplaceDynamics created a fund of publicly traded companies whose employees ranked them as exceptionally healthy organizations. The performance of the companies in that fund has outperformed the Standard & Poor’s 500 Index by 48 percent, or an average of 12.5 percent annually, since WorkplaceDynamics began tracking the data in October 2008.
“Our belief is that having a healthy organization should deliver much better long-term profits, and the fund results reinforce that,” Taylor says. “Business models can be copied relatively easily. It is the people within the business that become the long-term differentiators of success and failure. I would much rather back a company that has inspired and loyal employees who think their company is high functioning and who are optimistic about their futures.”
Several other research organizations are recognizing the importance of organizational health for the long-term future of companies. The additional insight WorkplaceDynamics has identified is that the organizational health qualities that result in business success are the same qualities on which employees thrive.
For all its stunning simplicity, the idea of organizational health is one that has taken companies a while to understand and believe. And even still, some companies don’t buy it.
“That’s because it’s really difficult to be a healthy organization,” Claffey says.
And that’s why companies need to focus on organizational health. Getting healthy as an organization is like exercise. It’s work. It requires listening to what employees say. It requires addressing sometimes difficult cultural issues that, in the end, make all the difference.
WorkplaceDynamics has made it easier by summarizing findings from its massive store of employee survey data and offering these findings to companies that want to improve their organizational health. The research finds that what employees want most fits into three buckets: Direction, execution and connection.
- “Direction” means that employees clearly understand and are excited about the direction the company is headed. Nearly 70 percent of the time when employees in WorkplaceDynamics surveys responded positively to this single question, “I believe this company is going in the right direction,” they also rated their company as a top workplace.
- “Execution” is about the company having a culture that expects—even demands—high performance. Employees want to work at a company with high standards and where outcomes matter.
- “Connection” is about employees feeling they are appreciated, feeling they do meaningful work, and feeling confident about their futures in the company.
As with the question about whether the company is headed in the right direction, WorkplaceDynamics found similarly high correlations between positive answers to questions about execution and connection and overall employee satisfaction.
Employers have long recognized that happy employees are harder-working employees who can become a company’s competitive advantage. But how to instill happiness? That is the mystery about which thousands of management books have been written. In the end, it turns out to be not so mysterious after all. And it holds up whether you’re a senior manager or an entry-level employee.
For all the talk in management circles about enhancing pay and benefits, or even improving the manager-employee relationship, Taylor says this: “Our belief is that when it comes to managers, pay, benefits and work/life balance there is a certain threshold you have to get over. But once you get over it, you get diminishing returns from becoming better and better. Once you pay someone enough that they feel valued, you’re not going to get any extra benefit from doubling and tripling the pay.”
Instead, WorkplaceDynamics says, the extra effort should be redirected to improving a company’s organizational health.
“If you want to be positioned for long-term success,” Taylor says, “you have to be organizationally healthy.”