Organizational health is a topic that gets a lot of press these days. But almost no one seems to know what it actually is. More importantly, in the professional services world, there doesn’t seem to be a compelling business reason to care about organizational health or to try to adopt it. I believe that’s a huge missed opportunity. I think you should pay attention to organizational health because it pays dividends. Here’s what I mean.

I’ve completed an analysis of the outcomes of more than 70 mid-sized service firms, those with 25-100 staff, that my firm has served over the last 25 years. Some of these firms broke through to their next level while most did not. When I completed a close analysis of those who broke through, they all shared one common trait. You guessed it—organizational health. So how can you know if your firm is organizationally healthy? Here are ten traits to use as a measuring stick.

What Does It Mean To Break Through?

Before we look at the ten traits, let me explain what I mean by “break through.”  

• Leaders identified a BHAG (Big Hairy Audacious Goal) early in the life of their company.
• They stayed focused on the BHAG and worked hard over many years to achieve it.
• They faced adversity, losses and economic downturns—but did not quit.
• They were specific about the BHAG, defining both the economics of it and the options they might consider once they achieved it. For some, this meant selling the business to a third party. For others it meant transferring leadership internally to younger professionals. For still others it meant a new period of advanced expansion and outside investment.

Ten Traits Of Organizationally Healthy Service Firms

1. Low turn-over rates produce rock-solid operations. Healthy organizations have long-term employees who never want to work anywhere else. They have made their current employer the last stop on their career train. This eliminates worries about losing talent and allows everyone to focus on which seat on the bus is best for them. More than anything, it gives everyone a long-term view of their future, allowing them to relax and dream big dreams.
2. Decision-making is deliberate and timely. Healthy organizations have formalized their decision-making process. It’s not a mystery to anyone how decisions get made or who makes them. For complex issues, a thoughtful multi-phase decision process produces results no one regrets. For simple issues, decisions are made quickly and executed almost immediately.
3. Behavioral problems are vanquished quickly. Healthy organizations are intolerant of behaviors they don’t want to see because they have clearly defined their values. Leaders have effectively handled so many tough conversations that the staff have no doubt of their ability and willingness to do so. This means staff don’t have to worry about bad behavior hurting their morale or efforts. In healthy organizations, water cooler talk is almost non-existent. This means staff really focus on doing high quality work.
4. Leaders are deeply aligned and rarely clash. Leaders in healthy organizations don’t always see things eye-to-eye. But they have formalized the process by which they come to agreement on topics. They don’t air dirty laundry about other leaders. Spirited conversations happen behind closed doors. More than anything else, staff know that leaders are aligned about the long-term goals of the organization and trust each other to act in their best interest.
5. The best ideas win consistently. Healthy organizations have implemented a best-idea-wins decision-making process. They don’t care who an idea comes from. Every idea must stand up to the scrutiny of the “meat grinder.” Leaders are good at rooting out bad ideas while pounding on good ideas with certain weaknesses until they’re even better.
6. Leaders face the brutal facts head-on. Leaders of healthy organizations don’t downplay hard truths. When things go wrong, they are quick to take responsibility and not blame others or attribute outcomes to erroneous sources. Leaders are honest with themselves first and with everyone else around them. This creates trust with staff.
7. Staff trust leaders. In healthy organizations, staff believe what their leaders tell them. They don’t listen for hidden messages. Healthy organizations know that in the absence of factual information, people will supply their own narrative. Healthy organizations supply an honest narrative that staff believe in—even when things go wrong. This creates a lot of trust with staff.
8. Teamwork is fluid and dynamic with almost no hierarchy. Healthy organizations win and lose as a team. While there are certainly departments, there are almost no walls between them. In many healthy firms, staff have worked in more than one department with more than one boss. The entire company is seen as “the team,” not just a single department. When one team gets overloaded, other teams and their leaders step in to help. But more than anything, there is almost no hierarchy which means power is shared across the entire organization. While everyone knows who’s responsible for the firm, those with responsibility wear it lightly and only exercise power as a last resort.
9. Information flows freely and openly. Healthy organizations share openly. This is one of the reasons leaders are trusted. When something big happens—good or bad—staff know that it’s only a matter of hours or a couple of days at most before they will hear from their leaders. When leaders meet behind closed doors (which they do frequently), staff know that they’ll be briefed on what was discussed and it will be the straight dope, not a spin. Staff also know that they can ask clarifying questions and they’ll get straightforward answers.
10. Strategic plans consistently produce results. The net result of all of this is that healthy organizations take control of their future by consistently executing their strategic plans. While these plans don’t always produce the results leaders were hoping to see, this is rarely because of a lack of ardent execution. Even those who were dubious about the plan threw their weight behind it and did their best to see it come to fruition. When things don’t work out, this is seen as a win because the leaders now know for sure that it was a path they shouldn’t go down. But more than anything, strong execution moves the company forward, with noticeable and publicly celebrated wins. This leaves both leaders and staff with great confidence in the future of the firm.

A Resource To Help You Achieve Organizational Health

I’m wondering how your firm compares? How many of these ten traits would you say are abundantly evident at your firm? How many could you improve upon? If you’d like to become an even healthier organization, I have an option for you to consider. I’ve written an eBook that discusses organizational health and the practices that produce it. The eBook goes into much greater detail. If you liked the ideas in the article, I know you’ll love the eBook.

About The Author

Randy Shattuck is a seasoned entrepreneur who works hand-in-hand with senior leaders of mid-size professional service firms to grow revenues, acquire clients, open new markets, increase profits and effectively position their brands.