What do successful organizations do differently than the ones who barely scrape by? One of the differentiating factors is that they pay attention to their organization’s health. While it’s an important concept, not many entrepreneurs take it into consideration.

If you want to have a competitive edge over your contemporaries, you need to focus on organizational health.

According to research by McKinsey and Company, organizational health is based on the organization’s ability to do the following:

  • Align around a clear strategy, culture, and vision
  • Adapt to the changing market trends
  • Renew the organization’s focus when required
  • Execute planned strategies with efficiency and excellence
  • Deliver excellent operating and financial performance long-term

The key here is not to focus just on performance. You also need to keep in mind factors like sustainability, values, and adaptability.

Pillars of Good Organizational Health

So, which factors affect your overall organizational health?

According to Ryan Hanley, these two factors are extremely crucial for any organization to function in a healthy manner:

1. Well-Defined Hierarchy

According to Ryan, an organization needs to have a clear structure. Everyone from the CEO to the entry-level employee needs to understand their responsibilities and accountabilities.

With well-defined boundaries, everyone can clearly be aware of the scope of their work. Ryan believes that a well-defined hierarchy is essential.

2. Open Communication

Another key factor that contributes to the health of an organization is open communication. Doesn’t it seem contradictory for organizations that have a hierarchical structure AND open communication?

Healthy organizations manage to strike a fine balance between the two.

So, what exactly does open communication mean? It refers to a structure in which even the employee at the bottom of the hierarchy feels heard.

Their ideas and opinions are considered. In addition to this, different departments within the organization mingle freely. This ensures that everyone gets exposed to different facets of the business and gains more perspective.

In addition to this, factors like ability to delegate, flexibility, capacity for reinvention, and others also play a major role in evaluating an organization’s health.

Do you think your organization is healthy? Have you evaluated it? Please share your thoughts in the comments section below.

Shane Barker is a digital marketing consultant who specializes in influencer marketing, product launches, sales funnels, targeted traffic, and website conversions. He has consulted with Fortune 500 companies, influencers with digital products, and a number of A-List celebrities.