Meeting the goals of any organization requires countless moving parts to work in sync. When key elements are out of whack, the whole system simply won’t perform as it should. The result could be a lack of growth or even deterioration. To avoid such detriments, much must be done to preserve and improve the health of the organization.
What all does organizational health entail? Below, we’ll go over the term as well as a few of the key metrics used to measure it.
What Is Organizational Health?
First, it’s important to understand what the term means. When referring to or measuring organizational health, this broad umbrella term covers many aspects. What’s more, these aspects can vary depending on the organization’s industry and business model. When put most simply, it refers to how well said organization operates as a whole in addition to its ability to effectively respond to changes as they arise.
Generally, the most central aspects of organizational health pertain to employee matters, not the bottom line. For instance, taking steps to gauge employee satisfaction and team effectiveness rather than meeting quarterly projections or performance quotas. Other typically measured qualities are employee turnover rate, engagement, pay equity and so on.
Ways to Measure Organizational Health
There are many benefits to being a healthy company. Research on the matter has revealed that when there is an equal amount of attention paid to organizational health as there is to performance, the companies being studied doubled their probability of outperforming competitors. Additionally, the returns to shareholders these healthy companies generated were three times higher than unhealthy companies.
Such potential advantages make prioritizing organizational health imperative. Going about this means gathering valuable data and using it to draw actionable insight. Business leaders and HR representatives can gather said data by using proven metrics such as the following:
Employee Net Promoter Score (eNPS)
Using a series of questions, this employee survey can lead to a better understanding of personnel opinions regarding their positions, the company, etc. eNPS questions could include, “How likely are you to recommend your job to a friend?” or, “Do you see yourself staying with the company past five years?”
These questions are answered on a scale of 1-10, with 10 being the highest or most desirable answer. Scores are tallied up and the average is divided by the total number of employees. The higher the end number, the better. Answers six or lower should be met with follow-up questions. Doing so helps identify problem areas so that they may be addressed sooner, rather than later.
New Hire Fail Rate
Next on our list of metrics is the new hire fail rate. Simpler than the eNPS, this assessment measures the rate of hires who were able to complete the first 90 days of their contract. To find the rate, take the number of failed new hires in the past 90 days and divide it by the total number of new hires in that timeframe.
While the nature of the business or the state of the job market may influence the rate, results above 30% should be cause for concern. Higher-than-average rates may be strongly indicating that the organization — despite putting the resources into hiring — is not seeing a positive return on the investment. More should be done to improve onboarding processes and retention efforts to keep new hires from failing.
Laying the foundation for a strong, supportive company culture is possibly the most important consideration in enhancing employee productivity and well-being. That being said, establishing core values to follow isn’t enough. A high degree of transformational leadership should be maintained. Leaders are encouraged to demonstrate these values and eliminate any elements contributing to a toxic environment.
To assess organizational culture strength, provide employees with a series of statements, such as, “I possess the skills and knowledge to act consistent with our core values” and, “Company leaders uphold our core values.” Then, ask them to rate how strongly they agree or disagree with the statement.
By measuring how employees feel about the strength of the culture, you gain a deeper understanding and insight into what could be improved. That way, the company may be placed in the best position possible to create a productive working environment and achieve its goals going forward.
Interested in other ways to measure organizational health? Check out the accompanying resource for further information.
Author bio: Matt Mayberry is President of Matt Mayberry Enterprises, Inc. He is also the Wall Street Journal bestselling author of “Culture Is the Way,” an internationally acclaimed keynote speaker, and one of the world’s foremost thought leaders on leadership development and culture change. Global Gurus ranked Mayberry one of the world’s top 30 leadership thought leaders for 2023. His insights on business performance have been featured on Harvard Business Review, Inc. Magazine, Fortune, Business Insider, NBC, ABC, Men’s Journal, Chief Executive and many more major media outlets.
Infographic provided by Matt Mayberry, a world-renowned transformational leadership speaker