Organizational Health: What It Is and How to Assess Yours

You’re supposed to go to the doctor for a yearly checkup (and if you haven’t already, this is your sign to make an appointment). These regularly-scheduled appointments are necessary to maintain good health, and hopefully, lead to a long and prosperous life.

Doesn’t it make sense that organizations should do the same?

In most cases, healthy organizations see that employees are happy and productive, customers are satisfied and loyal, and the company regularly matches or exceeds industry benchmarks for financial performance. In fact, research from McKinsey finds that healthy organizations generate total returns to shareholders 3x higher than unhealthy organizations.

Alternatively, a company with suffering organizational health experiences low employee engagement, retention issues, and lagging morale, which creates a negative snowball effect for teams and the company as a whole.

Therefore, when you understand and prioritize your organizational health, you help your organization respond to challenges and capitalize on opportunities in a changing business environment.

What is Organizational Health?

Organizational health is your organization’s ability to unite around a shared vision and respond to change to meet company goals. In other words, it’s your company’s capacity to adapt to a world that is constantly evolving. 

And these days (and this comes as no surprise), the business environment is always shifting. In fact, Gartner reports that 47% of organizations recently experienced some kind of disruption. Economic volatility therefore makes it essential for organizations to quickly adapt and respond to issues that arise. 

Organizations with good organizational health are able to move quickly, assess risks, and make decisions that lead to growth, innovation, and increased profits. Furthermore, these companies can anticipate changes and be proactive in addressing them before they become a problem. With that in mind, let’s take a look at three ways you can assess the organizational health of your own company.

Your Organizational Health Checklist: 3 Key Items to Measure

When it comes to assessing your organizational health, there are three key items to measure: agility, accountability, and alignment. It’s important to note that every organization is different, and you first need to establish a baseline of what it means for your company to be high-performing and successful. 

Thus, including these aspects as part of your organizational health checklist helps you gain a comprehensive understanding of how well your organization is doing to ensure it’s on the right track.

Want a longer list of things to check for when measuring your organizational health?

Read our complete list 

1. Is Your Organization Agile?

Agility focuses on how quickly and how often you can gather insights about the organization. (It can also focus on how quickly a border collie can make it through an obstacle course, but that’s a conversation for another day).

For instance, can you pull up information at a moment’s notice during conversations with managers and get regular updates to those data points? Or do you need to plan ahead to gather information?

Ideally, you need access to regularly updated information at your disposal. That’s because increased agility means more regular feedback, which allows you to identify trends and take action quickly before those issues stem into larger problems that are harder to fix.

Companies with strong organizational health not only have this information at their fingertips, but can also visualize their people data to quickly determine trends and make informed decisions about their workforce. 

Common examples of data points that can provide the necessary level of agility to understand organizational health in real-time include:

• Employee engagement. Employee engagement is a powerful indicator, and luckily, you can measure it in a variety of ways. Consider deploying engagement surveys and using a continuous performance management strategy to keep a pulse on engagement levels. Another strong indicator is to have employees rate their week (e.g. on a scale of 1-5) so you can track how that rating trends for each individual over time.
• DEIB. Gather information about your people through a voluntary self-ID survey to see how your efforts are tracking among different workforce demographics. Building these surveys in a people operations platform also allows your People team to adjust the survey as needed (no IT support needed). Survey results are incredibly valuable, as Noah Warder, Head of People at Guusto, discovered. He says since deploying their first DEIB survey, they now run one a quarter, with a focus “on looking at our inclusion and diversity scores to see how they change QoQ and YoY, making sure they’re always going up and people always feel supported.”
• Pay equity. Reviewing compensation across any factor like team, seniority, gender, and ethnicity helps you make the best decisions regarding pay equity. Using that data for headcount scenarios and compensation planning helps streamline communication and allows teams to make off-cycle adjustments as needed.

Use a people operations platform to slice and dice your people data so you can accurately assess your organizational health.

2. Do You Hold People Accountable?

Accountability is essential to every organizational health assessment, as it’s about being open and transparent with the entire organization when it comes to what’s being measured and how that data is used. Furthermore, creating a sense of accountability helps employees take ownership in driving more “healthy” behavior, such as taking initiative or meeting goals. Raise your hand if you’d like to spend more time strategizing and less time figuring out who’s owning what.

Transparency and collaboration are key when it comes to unlocking this sense of accountability. In other words, teams should have open discussions about the data gathered and what actions to take to improve organizational health. It’s important to note that sensitive team and company data should be secure and accessible only to those who need to know.

Some of the best ways to create a sense of accountability for organizational health include:

• Sharing full survey results. When it comes to surveys, the more results you can share with the entire team (as appropriate), the better. For example, seeing complete information in real-time can help people understand where the organization stands and make them feel like they are a part of the solution. This strategy stands in contrast to picking and choosing the “best” data points and only sharing those well after the survey has been completed, which doesn’t make people feel involved and can give a sense that the data is skewed.
• Providing learning opportunities. Training benefits your organization on many fronts, as it professionally invests in your people (hello, higher retention rates) and makes everyone better understand their responsibilities. Over at Whip Media, Sr. VP of People Joanna Wise developed a mentorship program to help employees adapt, grow, and be successful within the organization. She explains that L&D opportunities “help employees identify and achieve career development and personal growth goals that support business objectives, while also building a bench of leaders who have people development skills.” She is also proud that her program “fosters higher levels of learning and engagement, equips employees with the tools necessary to perform to their highest capability, and provides opportunities for creating a more inclusive, open, and connected workplace.”
• Allowing for collaboration on key initiatives. Centralizing activities for key initiatives, like headcount planning, into a single platform allows for collaboration. Collaboration gives leaders a sense of ownership across planning and implementation and provides more visibility into plans for growth, both of which promote a high level of accountability.

The right platform will help you cross out tasks on your organizational health checklist efficiently and effectively.

3. Are Your Teams Aligned?

Healthy organizations are aligned, meaning everyone has a shared understanding of both qualitative and quantitative measures and is working towards the same goals. 

While alignment can often just be a buzzword, it should instead be something you actively work towards. Consider improving on the following to create alignment across departments and teams:

• Giving the right people access to the right data. There’s such a thing as healthy transparency, meaning you should make intentional decisions about which stakeholders can access what data. Having access to the right data with the right permissions allows departments to share information more easily – which can improve alignment, encourage collaboration, measure progress, and enable action as needed. 
• Increasing visibility and collaboration. Achieving visibility and collaboration is easier said than done, especially if you don’t have a platform that houses all of your people data. Dan Beksha, Head of Strategic Planning, explains what life was like before they had readily available data for headcount planning: “There was no source of truth for what was open, what was approved, and what level and compensation those roles were. Furthermore, our executive team manually reviewed every single open role and hired candidates. It was absolute chaos.” Luckily, their switch to a centralized platform proved fruitful, and now all teams are entering and tracking data the same way across the organization.
• Equipping managers with tools for informed decision making. Give your managers resources to be the best leader they can be (and have them playing the Rocky theme song on repeat). Consider providing standardized 1:1 templates, access to team data, and insight into company KPIs so they can align their team’s goals to company ones. With these tools at their fingertips, managers can focus their time more on strategizing and driving their team forward.

Build a Healthier Organization and Improve Performance

Organizational health is an important aspect of any company’s success, since it has a significant impact on the day-to-day operations, performance, and morale of the organization. By understanding what organizational health is, assessing it regularly, and striving to maintain it, you can be sure you’re set up for success and are positioned to achieve your goals.

It’s important to focus on the health of your organization as a whole, but equally important to look at it by team. Read our five tips real leaders use to support their high-performing teams.