How Healthy is Your Organization?
Reed Deshler | September 6, 2017
A healthy organization is efficient, resilient, and supports positive relationships both internally and with its external stakeholders, with all parts operating effectively toward a common goal. Organizational health is a measure of how well a company functions, as well as its long-term viability and potential for growth.
Just as symptoms such as dull hair or labored breathing signal poor health in people, an unhealthy organization will show signs of ill health too. Leaders are advised to keep a sharp lookout for signs that their organization is not as healthy as it should be.
Five Symptoms of an Ailing Organization
Shadow organizations. When one part of an organization isn’t delivering as it should, it can prompt individuals or entire functions to create workarounds. For instance, a sluggish HR department may lead to another department hiring their own recruiters in an attempt to expedite the hiring process. Such shadow organizations create redundancy in the organization. They also erode the standardization and efficiency that can be achieved when processes, practices and resources are shared and harmonized properly.
Segregation of information and resources. I am at times amazed how much knowledge certain parts of an organization can have that is not shared with other functions or individuals, who would be empowered to make different or better decisions if they knew. One example of this is in product development. If a product development team doesn’t fully understand the customer’s needs, it can set their development efforts up to fail. There are other functions, such as marketing, sales, and customer service, that typically have access to customer information, but it isn’t always shared. On the flip side, it’s also common for the product development team to create great products but neglect to take the time to effectively educate the rest of the organization on them. This can result in less than optimal sales and customer service delivery, simply because the customer service and sales teams don’t have the knowledge they need to help the customer understand and use the product.
Misaligned functional objectives. I once worked with an organization where the IT function was busy trying to install a predictive dialer in a call center to improve productivity, at the same time that the customer service function was trying to improve customer service. The predictive dialer ended up forcing new calls to agents when they hadn’t finished writing up the previous call, resulting in sub-optimal customer service performance. Both functions had admirable goals, but unfortunately their failure to coordinate with each other led to less desirable results.
Unnatural resourcing practices. Sometimes cost management attempts can backfire. For example, some organizations institute hiring freezes and demand high-level signoff on any position to be filled. A solution like this can be viable in the short term, but over time it can cause organization alignment problems because it disempowers functions and leaders from taking appropriate action. In this instance, a new hire request may not get approved or it may sit in limbo for a long time. Eventually people stop asking and start creating workarounds or simply put up with being understaffed.
Another way that unnatural resourcing practices show up is when people automatically jump to the conclusion that every resource need is a head count add—“do we have enough manpower for this?”–rather than first asking questions like “are we looking at technology options?” or “how can we streamline work?”
Inappropriate spans of control and/or layers of management. As an organization changes over time structural imbalances can occur. Too many, not enough, or poorly proportioned layers of management can lead to inefficiencies as well as distorted decision making. For example, too many unnecessary or ineffective management layers create an intimidating and obstructive pyramid for approvals. Or, too wide a span of control can leave managers too bogged down with direct reports to manage effectively.
How to Monitor the Health of Your Organization
Just as it’s an individual’s responsibility to stay proactive about monitoring their own health, it is the responsibility of leaders to routinely keep an eye on the health of their organization. Ask yourself:
- Are you monitoring and looking for organizational health symptoms? Examining your organization for shadow organizations, inefficient spans of control, and other organizational health red flags on a regular basis is like a routine physical for your company that can help you identify and address potential problems before they pile up.
- Do you have regular practices in your organization that allow you to periodically assess whether your organization is optimally aligned to do what you want to do? If not, how can you best implement such practices? One way to do this is to build an organizational health assessment into your annual planning cycle. Annual strategic planning happens predictably every year, but in some companies it becomes little more than a budget planning exercise. Why not take an extra day or two in that process to examine how well your organization is functioning, whether you have the resources you need and are using them appropriately, what workarounds or inefficiencies may exist, and what organizational restructuring may be in order to correct them. Using the Cube model is a great framework for assessing the alignment of your organization to strategy.