Measuring Organizational Health: Top Metrics To Consider
The success of an organization depends on many factors. A leading consideration is the overall health of the company or institute. What exactly is organizational health? Below, we’ll go over what this term entails as well as two of the top metrics a company can use to measure it.
Organizational health is an umbrella term referring to the state of an organization as a whole. It incorporates elements of culture, employee happiness, leadership effectiveness, operations, and more. Because of the broadness, the meaning of organizational health may vary depending on the company’s industry and business model.
It’s important to note that organizational health does not simply measure profitability. A company could be generating plenty of revenue and growing, but still have high turnover rates and a toxic culture. On the flip side of this, a company reporting low profits could be measured as healthy due to extremely low turnover rates, an incredible culture, and other factors that generate high levels of employee satisfaction.
However, research from McKinsey reveals that organizational health and profitability tend to go hand-in-hand. In fact, companies that invest in the health of their organizations generate total returns to shareholders at a 3x higher rate than unhealthy organizations. What’s more, the research also has shown that when equal attention is paid to organizational performance and health, companies double their probability of outperforming their competitors.
Performing consistent checkups is crucial to measuring organizational health and discovering areas of improvement. Fortunately, there are many metrics which can help an organization understand how employees, leaders, and the company itself are performing. These can be used to look at the bigger picture and gauge how the organization is operating.
One metric that should be considered is employee engagement. Disengaged employees can lead to issues in productivity. Conversely, those who are actively engaged often stay with the company longer and are more productive. Put simply, employees who experience contentment in work relationships, growth opportunities, and so on generally care more about their work.
Although there is not a single equation for measuring engagement, leadership can use various evaluations to analyze how employees feel about their positions and workload. There’s feedback from one-on-ones, engagement surveys, and other forms of anonymous opinion gathering to help them measure and track employee engagement. These should be gathered routinely to reach an 80-100% engagement goal.
Speaking of surveys, another metric is the Employee Net Promoter Score or eNPS, which utilizes survey analysis. Smaller than a full employee engagement study, this metric helps to understand how personnel feel about recommending the organization or their job to a friend. The survey consists of simple questions such as, “Would you recommend your job to a friend?” and the employee answers on a scale of 1-10. These scores are then tallied up and the average eNPS score is divided by the total number of employees. The higher the end number, the better.
For further information on how to measure organizational health, please see the accompanying resource.
Infographic provided by Matt Mayberry, a world-renowned transformational leadership speaker
Author bio: Matt Mayberry is the 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.