Corporate Health and Top Performance

A recent posting on the McKinsey & Co web site provides a detailed analysis of how corporate health affects performance and financial strength.

The McKinsey definition of health related to business:

“We think of organisational health as more than just culture or employee engagement. It’s the organisation’s ability to align around a common vision, execute against that vision effectively, and renew itself through innovation and creative thinking. Put another way, health is how the ship is run, no matter who is at the helm and what waves rock the vessel.”

Using a monitoring system which they call the Organisational Health Index, Mc Kinsey & Co has compared results over a 10-year period to confirm “a strong, static correlation between health and financial performance.”

Measuring performance across 9 outcomes

• Direction
• Innovation and learning
• Leadership
• Co-ordination and control
• Capabilities
• Motivation
• Work environment
• Accountability
• External orientation

Promoting health

Throughout the comprehensive McKinsey & Co report are examples of why communication is a vital element of success. The challenge for leaders is “to balance short-term performance and long-term health.” Their recommendation is “start managing your organizational health as rigorously as you do your P&L, providing pathways for leaders at all levels to take part and embedding and measuring the new ways of working.”

A clear vision

Aligning around a common vision is the critical first step in promoting health across the organisation. This is a sophisticated management concept. Organisational health can be “sensed” by the attitude and demeanour of the managers and employees in the front line. There is an atmosphere in many companies that tells you whether it is ‘healthy’ and succeeding or stagnant and failing. It is as much about motivation and ambition as it is about policies and systems.

McKinsey’s report contains a lot of management wisdom, but is also emphasises that people perform best when they are regularly informed, involved and engaged with the corporate mission and plan. There is a heavy dependence on employees and channel partners to deliver. The need for a two-way channel for sharing ideas and concerns is imperative. Sustaining health requires regular checks and occasional remedial treatment, to avoid the development of more serious complications.

Reward and recognition

Health and fitness also improve with exercise. In a corporate context, the stimulation and reinvigoration that maintains performance can be achieved with reward and recognition programmes and events. They can be selective, based on various criteria. A focus on the top performers with prestigious incentive awards may be appropriate. In another business, the most valuable contribution will come from innovators and creative thinkers. Outstanding customer service and star ratings for the company can often be a winning factor.

Promoting health by celebrating and rewarding excellence is an integral part of achieving and sustaining corporate success.

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