Assessing Your Company’s Organizational Health: The 6 Essential Elements

Is your organization healthy? Your first inclination may be to look at the company’s bank account, budget, or pipeline. But what we’re talking about is organizational health – when your company sets itself up for success to be high-functioning and high-performing in the long term.

In fact, most healthy organizations see successes in three main areas: Employees are happy and productive, customers are satisfied and loyal, and the company regularly matches or exceeds industry benchmarks for financial performance.

But before you can start clocking in these wins, you need to know where you stand on the spectrum of organizational health. Below are six key elements of organizational health, as well as some research-backed tips on how to improve each aspect to create a stronger future for your company and employees.

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1. Organizational Alignment

Organizational alignment should be at the top of your organizational health checklist. If your organization is aligned, everyone in the company — from leadership to middle managers to employees — is working toward achieving a common goal. Additionally, alignment gives people a model to understand what success looks like and clear daily priorities to meet objectives.

Patrick Lencioni, often known as the pioneer of organizational health, encourages the following framework to improve organizational alignment:

• Build a cohesive leadership team that’s aligned with the company’s purpose, vision, and priorities.
• Create clarity by developing a straightforward strategy.
• Introduce a communication plan to share that strategy throughout the organization.

2. A Focus on Employee Well-Being

What’s a sure-fire way to show you care about your employees? Creating a well-being strategy with a range of people-first policies to support your employees.

In fact, the Journal of Management Studies finds that when People teams introduce programs that prioritize employee well-being – and mental health in particular – the organization’s performance improves.

To better prioritize employee well-being, consider:

• Expanding benefits that contribute to employees’ overall wellness and mental health.
• Looking into additional support for employees returning from parental leave.
• Creating ERGs for specific resources and conversations to better support your people.
• Surveying your people. Exactly what route you take will depend on your employees, and whether you use 1:1 check-ins, focus groups, or surveys to better understand their needs.

When you equip employees with templates for 1:1 check-ins with their manager, you empower them to guide the conversation, celebrate wins, and discuss potential roadblocks.

Creating a healthy workplace not only supports your people, but can help your bottom line. An AARP study showed that when companies promoted family-friendly policies, like flexible working hours or dependent care, their share price increased. Companies with a higher number of female employees that prioritized such policies also saw a jump in sales.

3. Commitment to Organizational Justice

Healthy companies use fair and equitable practices, helping ensure that all employees receive the same treatment and opportunities.

In fact, findings reported in BMC Psychology suggest organizational justice is “an essential predictor of organizational success.” Additionally, workplaces deemed fairer have lower turnover rates.

To reflect your company’s commitment to fairness, prioritize making equitable decisions when it comes to compensation, benefits, and promotions. It’s best practice to:

• Analyze your people data. While you should always use people data to make informed decisions, it’s incredibly important to do so when it comes to salary and band decisions.
• Establish a pay transparency strategy. Discussing and publishing your compensation plan (which can look a variety of ways) helps create a more equitable workplace. Consider both location-based and value-based salaries and how it might affect your workforce, company culture, and bottom line.
• Ensure a fair promotion process. You’ll also want to ensure your promotion process is fair by using a universal process for evaluating employees. A Great Place to Work report showed that employees who believed the promotion process was fair were more likely to stay with a company.

To improve your organizational justice practices, slice and dice your people data within a people operations platform to make the best decisions for employees and your organization.

4. Clear Processes and Workflows

In a healthy company, workflows are clear and communicated across the organization. As a result of these processes, employees understand how the company achieves goals and makes decisions. Unfortunately, 59% of businesses said dysfunctional and fragmented processes blocked them from moving successful projects forward.

Luckily, you can establish clear processes and workflows by:

• Sharing their org structure. Communicating your company’s organizational structure lays a solid foundation for clear workflows. For example, you can use your org chart to show new employees where they fall in the reporting structure and the teammates with whom they’ll work closely. These efforts improve employees’ understanding of different roles (including their own) and create a more efficient onboarding process.
• Using a people operations platform with approval workflow functionality. When you use approval workflows for headcount planning, you’ll streamline your process, align stakeholders, and save time, since all the data, notes, and plans are housed in a single spot.
• Offering employee self-service for basic HR tasks. Healthy companies reduce manual, inefficient processes. For example, InVision’s HR team used to respond to internal requests for information about employees (like team structure or benefits), but was witnessing a bottleneck as their business (and requests) scaled. In response, InVision revamped its intranet to give employees greater access to company information, allowing them to complete self-service tasks, such as accessing tax forms, managing paid time off, and updating personal information on their own.

Empower your people to access their own information – no back-and-forth emails with HR required.

5. Opportunities for Professional Development

A healthy workplace provides opportunities for employees to learn new skills and grow their careers based on their unique strengths and goals. A survey of 60,000 companies found organizations that prioritize development by providing regular manager feedback and training opportunities for career growth experienced higher levels of employee engagement.

To promote a culture of learning in your organization, consider offering:

• Professional development stipends for online courses, books, and conference tickets.
• Quarterly development check-ins with employees and development plans
• Learning initiatives based on individual employees’ career growth plans. For example, Fuel Cycle provides internal workshops, certification programs, and professional coaching for their employees.

6. Purposeful Work

Want engaged and motivated employees? Of course you do. To help employees achieve work satisfaction – and for your organization to reach its goals – you want your people to understand and believe their work is purposeful.

A McKinsey study found that 80% of employees who strongly believe their work is meaningful are more productive than those who don't. Not only does having purposeful work benefit employees, but it can also help organizations as a whole. Having a shared understanding of purpose increases employee engagement and can lead to improved job satisfaction, higher morale, and better communication between colleagues.

To help employees find meaning in their work, you should:

• Clearly articulate your organization’s purpose and contribution to society. According to Harvard Business Review, employees who link their work to service and build positive workplace relationships find a sense of meaning in their professional lives.
• Tie individual OKRs to company goals. When individual goals are tied to your organization’s, employees will see how their work directly contributes to company success.
• Encourage passion projects. When you allow employees to carve out time for their own projects, you may see benefits beyond people creating new features or processes. Brooke Weddle, a partner in McKinsey’s Washington, DC office, notes that healthy organizations encourage innovation and respond to shifts in employee behavior to “renew” themselves. When your people are happy, studies show increased employee productivity by 12%.

Next Steps to Determine Your Organizational Health

If you’re ready to start improving your organizational health, it’s time to complete an organizational health assessment, which helps identify areas of strength and areas that need improvement.

Rajesh Krishnan, a McKinsey partner, suggests reevaluating your organizational health every two to five years to see where you are and what’s likely to lead you to success. And the most important aspect, he says, is determining what set of behaviors work. He explains: “Once you move the expectations from ‘let’s follow a recipe for success’ to the behavior being the unit at which change occurs, it just makes it tangible. I can get specific actions. If I act, I will improve the health of my team. As the statistics say, when that happens, the performance improves as well.”

Ultimately, you’ll gain valuable insight into the overall health of your company and make necessary changes to reach your desired objectives so you – and your people – can thrive.

Ready to create an organizational health assessment? Here’s 24 questions to get you started.