By True North Learning Director and Senior Facilitator: Errol Amerasekera

What is the current health status of your organisation?

Naturally, the answer to that question is dependent on how we define “health”. As I shall discuss later, there is a big difference between a healthy organisation and one that is simply performing well. That is not to say that performance is not somewhat based on the health of the organisation, but from an organisational health perspective, what’s more important is the efficiency of how organisations achieve that performance, and the cost or toll to the organisational system itself.

What we have observed with our own clients, which is confirmed by much of the literature, is that there are some trends which are of concern in terms of the long-term viability of organisations and the sustainability of the people that lead them. The three key things we are noticing are firstly, the survival rate of organisations themselves; secondly, the increasing demands and expectations of leadership; and finally, but by no means least, the rising incidence of burnout, stress disorders and mental health issues amongst executives.

Organisational Survival Rates

In 1996, Jim Collins and Jerry Porras wrote an iconic business book, Built to Last. In this book, they studied 18 of America’s most iconic and successful companies. They attempted to break down and decipher a code or the key elements which make those businesses highly successful and consistently outperform their competitors over a period of time.

In 2006, just 10 years after the book was written, and two years before the GFC of 2008, 20% of those beacons of the corporate landscape no longer existed, 46% were struggling and no longer outperforming their competitors, and only 34% were able to maintain their success and competitive advantage[1].

So, it appears that  having a robust recipe for performance, even in comparison to one’s competitors, gives an organisation no guarantee that it will continue to be in existence, let alone successful, into the future.

The Demands on Leadership

These days, when we ask managers and leaders how they are doing, the answer almost invariably comes back as some version of “we are ridiculously busy.” I am often curious if I asked a similar cross-section of managers that same question 10 years ago, would the answer they came back with be any different? It certainly does appear and feel like the pace of business is accelerating at a rapid rate and, as a result, managers feel there are more demands being placed on the limited time that they have to perform effectively in their role.

A survey conducted by McKinsey and Company on Leading in the 21st Century[2], had similar findings to what we are observing with our clients. They summarised their findings as follows:

When we meet with the men and women who run the world’s largest organizations, what we hear with increasing frequency is how different everything feels from just a decade ago. Leaders tell us they are operating in a bewildering new environment in which little is certain, the tempo is quicker, and the dynamics are more complex. They worry that it is impossible for chief executives to stay on top of all the things they need to know to do their job. Some admit they feel overwhelmed.

Executive Burnout and Well-being

The incidence of executive stress, burnout and mental health disorders such as depression and anxiety is at an all-time high. And what is even more frightening is that the incidence is actually rising at an alarming rate.

A 2006 study, conducted by The Australian Safety and Compensation Council[3] and sponsored by the Australian Government, found that, in 2002, mental stress claims comprised 5% of all workers’ compensation claims in Australia. This mechanism of injury/disease recorded the highest median claims cost ($9,700) and the second highest average cost ($16,400) as a result of the very high median and average time lost for this mechanism. Almost two-thirds (64%) of adults were classified to low levels of psychological distress, 23% to moderate levels, 9% to high levels and 3.6% to very high levels. In other words, 99% of people within the workplace experience some level of psychological distress, with 35% experiencing moderate to very high levels. This costs the Australian economy an estimated $20 billion a year[4].

What is Organisational Health?

I believe the solution to these challenges is a focus on organisational health.

An organisational health approach means that the need for short-term performance and long-term sustainability don’t need to be mutually exclusive. In fact, in our experience, including an organisational health approach to business in conjunction with traditional performance-based initiatives delivers both short-term performance as well as long-term viability.

Organisational health is the ability for organisations to outperform their competitors in short- to medium-term performance based metrics whilst not impacting on the long term viability of the organisation. In short, organisational health is all about performing at a high level, but also in a manner that is so adaptive[5], efficient and aligned that it enhances the longevity of an organisation rather than detracting from it.

The fundamental differentiator of healthy organisations in contrast to their less healthy counterparts is their philosophical approach to business. Healthy organisations have a systemic and holistic approach to organisational development, change and challenges. This means that healthy organisations have developed the thinking and behavioural capabilities to examine the challenges they encounter through a multi-focal and long-term approach. In other words, they appreciate that inefficiencies within the organisation rarely have one simple cause; they are usually multi-factorial. Hence, their thinking allows them to achieve operational excellence by addressing multiple causative factors within the various levels of the organisational system.

At True North Learning, we have found that when you distil organisational challenges down to the bare bones, and start to examine the underlying dynamics and behavioural processes which gave rise to the original problem, the vast majority are symptomatic of a lack of capacity and effectiveness in one or (usually) more of eight key elements within the organisational system. We have observed the substantial impact of the lack of aptitude in these eight key elements and how they adversely affect the performance and sustainability of organisations across various sectors of business, and also throughout different types of organisations, e.g. private and public sector, non-profit and social enterprise.

What we are effectively saying is that even though there is a range and complexity to the various types of challenges that organisations are confronted with, there are only a finite number of fundamental elements that give rise to those problems. This is simply because if you take those eight key capabilities and arrange them; there is an almost infinite amount of permutations and combinations of them, each of which contributes to manifesting as a particular set of symptoms within the organisational system.

The beauty and power of working to build capacity in these eight elements is that it addresses the underlying dynamics which give rise to organisational problems, rather than simply providing symptomatic relief. This means that building capacity in these “eight pillars” of organisational health actually supports short-term performance as well as the long-term viability of an organisation. This is organisational health.

Over the following months I shall discuss and explore, one at a time, each of the key elements that we consider to be “The Eight Pillars of Organisational Health”.

So please stay tuned and enjoy …

 

 

 

 

 

 

 

 



[1] Cranier, S. and Dearlove, D. Excellence Revisited Business Strategy Review, March 2002, updated to 2006

[2] Barton, D., Grant, A., Horn, M. Leading in the 21st Century, McKinsey Quarterly, June 2012

[3] Work-related Mental Disorders in Australia, The Australian Safety and Compensation Council, April 2006

[4] http://www.news.com.au/business/executive-lounge/meltdown-exec-burnout-costing-billions/story-fng3e17m-1226508470134

[5] Based on definition of “Adaptive” according to Heifetz, R. et al The Practice of Adaptive Leadership  Harvard Business Press 2009,BostonMA