To truly understand how a business is performing, organisational health should be considered in its entirety – from strategy to the processes and everything in between, writes Lyndal Hughes, Managing Director of Q5 Australia.

Health is now a ubiquitous word in the world of business. It is the key characteristic that separates good organisations from the ones that are great.

More importantly, it is the engine which drives staff experience, and bottom-line outcomes.  To understand how a business is performing, the health of an organisation should be considered in its entirety – from strategy to the processes and everything in between. This ensures the right interventions can be made to produce desired business outcomes.

Whether you’re at the top of your game (and want to remain there) or are in ‘turnaround’ mode, it’s crucial for all business leaders to focus on organisational health. This can only be truly understood through a holistic view. That means, considering all parts of the business and how they interact with one another. What’s working and what isn’t (similar to how we assess the health of our own bodies)?

Five key foundations for organisational health

There are five key foundations for organisational health:

1. A clear and coherent strategy tied to a common purpose
2. A clear understanding of the value chain and underpinning ways of operating
3. Talented people motivated by the right culture and empowered by their leaders
4. A proven ability to implement change and transformation
5. All underpinned by technology, data and insights that align to strategic objectives

If all of this is in place, you have an efficient and effective organisation and the experience working there is positively enhanced. Staff wellbeing and experience are concerns facing many organisations. Research shows that issues with resources, process blocks and poor leaders are the niggles that grow to undermine individual, team and ultimately organisational health. This can be more detrimental, over time, than a significant negative event.

As a leader you can gain a sense of which areas need attention through one of two ways.

1. Intuition

When you harness years of experience and learning, that ‘gut feeling’ plays a powerful role in a leader’s toolkit, particularly when assessing an organisation’s current state.  A potential issue with this approach is the blind spots. Experience is great when teaching us patterns of what ‘good looks like’, but it can also blind us to new contexts.

Challenge yourself to view things differently.

2. Methodical Approach

The second is through a methodical approach that can provide the trigger needed to put meaningful actions in place. In fact, sometimes a structured approach is needed to challenge the status-quo.  The degree of rigour will be very dependent on your concerns, or perhaps at a key milestone for the business – regardless, it aims to determine whether your organisation is:

• On target – Are we clear on our targets and how we perform against them? (Financial, environmental, people metrics)
• Capable – Are we capable of delivering our strategic objectives? (Technology assessment, talent maps, asset review, leadership analysis)
• Resilient and adaptable – How well have we performed against shocks? (Share price analysis, employee wellbeing data)
• Delivering for stakeholders and customers – Do we know who our stakeholders are and are we answering their needs? (NPS, customer engagement, regulatory reviews)
• Trusted and reputable – Are we making decisions that reflect our organisational values and we would be proud to champion? (customer, employee, and shareholder perspectives).

Leaders must then ask whether there is a coherent focus on value throughout the organisation. That is, human, art and creative thinking working with modern, scientific, analytical ability to drive business success.

This is often where the real challenge lies. Having a clear sense what, where and how value is created in your organisation is the cornerstone of effective decision-making around resource allocation, cost reduction and workforce management.

Focus on ‘bright spots’

As part of striving for organisational health, don’t just look for the gaps. Instead, have a balanced view that identifies where your business has real strengths.  Aim to harness these strengths and take them to other parts of the business.  Working across sectors for three decades has shown repeatedly that the ‘bright spots’ in an organisation often hold more valuable information than looking at external benchmarks.

For example, Q5 recently re-designed the operating model for a large ASX listed organisation. One of the key shifts was to reset the remit of a core function, and as a result significantly reduce costs (half of which were re-invested into customer-focused teams).

The new leader coming in was part of the shift required. They were previously managing one of the state operations. Hence, what they brought to the table was an understanding of the organisation, but also a fresh look at the team. Chiefly, they challenged assumptions around what was possible and why things were done in a certain way. The benefit of looking internally for the ‘magic’ is that it is credible. There’s no need to worry about snake oil or benchmark numbers with no context.

Staff experience and results

When striving for organisational health, keep in mind that ultimately this is about staff experience and achieving bottom-line results.

Of course, both of these things go hand-in-hand; there is not part of a business that doesn’t start or end with a person. Even AI needs to be designed by a person at some point.

Regardless, the most valuable parts of your business will likely have people at the core to success. Consider how to align purpose, structure, technology and process in their service, so that they may go on to ‘wow’ your customers.

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