On The Business: Feature
verb | (thrīv)
1. to make steady progress: prosper
2. to grow vigorously:flourish
Whether we’re examining nature, individuals or organizations, nothing can thrive, prosper or flourish without being healthy.
And when it comes to health and organizations, Patrick Lencioni’s latest book says it all – The Advantage: Why Organizational Health Trumps Everything Else In Business.
When an organization is healthy you can tell right away – politics are minimal, morale and productivity are high and good people don’t leave.
Healthy companies also perform:
- Healthy organizations are 2.2x more likely to have above-median EBITDA margins (McKinsey)
- From 2003 (when McKinsey began collecting data on health) to 2011, healthy companies generated total returns to shareholders 3x higher than those of unhealthy companies (McKinsey)
- A mock fund of publicly traded companies whose employees ranked them as exceptionally healthy organizations, outperformed the S&P 500 by 48%, or an average of 12.5% annually, from 2008 to 2013. (WorkplaceDynamics)
Simply put, healthy companies win.
Sadly, Lencioni estimates that only 15% of organizations are healthy. But this means lots of opportunity for those willing to put in the work.
The Advantage outlines four key components of the Organizational Health Model:
1. Build a Cohesive Leadership Team
A cohesive leadership team is built on a deep foundation of trust. But not just any kind of trust – the vulnerability-based trust where people are willing to say “I need help,” “I don’t know,” and “I was wrong.” With real trust, groups can openly engage in conflict and hold each other accountable without defensiveness.
2. Create Clarity
Creating clarity is about eliminating the potential for confusion. Organizations can achieve clarity by answering six simple questions that have to do with purpose, values, culture, focus, priorities, responsibility and defining success. The questions are simple, but most companies can’t answer them.
3. Overcommunicate Clarity
Once the leadership team is aligned, the rest of the employees need to be aligned as well. They need to understand the answers to those six questions just as well as the leadership team understands them. Clarity throughout an organization is achieved through repetition, simplicity, multiple mediums and by cascading the message through the layers of the organization
4. Reinforce Clarity
In order to sustain health, organizations must reinforce this clarity in everything they do, including hiring, performance management, compensation, etc. If people sense inconsistency in any of these areas, health can quickly deteriorate.
I would argue that organizational health is even more critical for service organizations. There are no machines to maintain a minimum base level of productivity and predictability. Advisors and capital providers only have their people. Conflicts, confusion and division show up quickly, and have a huge impact on performance.
More on healthy organizations:
- PDF: The Advantage: Organizational Health Model
- PDF: Organizational Health – Comprehensive Checklist
- Article: Organizational Health: Beyond Performance
- Article: John Mackey: Why Companies Should Embrace Conscious Capitalism
The Advantage: Why Organizational Health Trumps Everything Else In Business
On The Business: Leadership
Speaking of organizational health and trust – a culture of trust means that your open door policy is actually effective. People aren’t afraid to speak up and suggest ways to improve the business.
Leading a team of people to greatness requires the willingness to give regular, candid feedback. The candid part is the most difficult part for many people: The Lost Art of Candor in The Workplace.
On The Business: Talent
Flexibility is a sometimes forgotten fringe benefit that is becoming more and more valued these days: The 2015 Workplace Flexibility Study from WorkplaceTrends.com.
On The Business: Sales & Marketing
Accountants, attorneys, bankers, consultants – we all want to be the trusted advisor. Here is an excellent article on how to achieve it: Want to Be a CEO’s Trusted Advisor? Do These 8 Things
Getting meetings with decision-makers is tough. If you want to increase your chances, spend 12 minutes listening to this short podcast, The Key to Getting Meetings with Decision Makers, and learn about building a process, working with gatekeepers and balancing the use of email in your approach.
That is all for this week. If you are finding this useful, would you mind sharing it with a friend or colleague? And if you missed the first few issues of On The Business, you can find them here and here.
Invest in the important stuff,
On The Business