How Executive Coaches Help Create Organizational Health
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What is organizational health?
Organizational health is the ability of an organization to align, execute, and renew itself faster than its competitors can, ensuring sustained and comprehensive performance over time. It encompasses several elements such as the quality of leadership, the ability to strategically redirect resources, and the capacity for continuous improvement and innovation. This definition positions organizational health not just as a measure of operational efficiency, but as a dynamic capability that enables organizations to thrive and adapt in an ever-changing business landscape.
As the rate of change continues to accelerate (think artificial intelligence) organizational health is emerging as a critical determinant of long-term success. Unlike traditional metrics that focus mainly on operational efficiency, organizational health is a dynamic capability that enables organizations to adapt, thrive, and sustain performance over time. This holistic perspective is vital for building resilience and agility amidst constant change.
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McKinsey and Company developed an Organizational Health Index (OHI) by identifying nine outcomes that measure an organization's ability to align, execute, and renew itself more effectively than competitors. Executive coaches are wise to be familiar with the factors that make up organizational health because they represent fruitful areas for in-depth exploration.
The nine outcomes that make up organizational health can be grouped into three categories:
Align
Consisting of direction, leadership, culture, and climate
Execute
Consisting of accountability, coordination and control, capabilities
Renew
Consisting of innovation and learning, external orientation, leadership, and governance
Organizations that measure organizational health conduct a comprehensive survey that assesses employee perceptions across these dimensions, providing a picture of an organization's health and identifying potential areas for improvement.
Executive coaching plays a pivotal role in navigating these dimensions. By understanding the nine dimensions of organizational health, coaches can work with leaders to pinpoint areas for improvement and tailor interventions that foster a more aligned, effective, and adaptable organization. A key focus is on leadership development and cultural transformation, as these elements significantly influence all nine outcomes of organizational health.
To refine the organization’s functioning across the nine dimensions of organizational health, coaches might encourage leaders to consider the following questions, one for each dimension:
Direction
This dimension measures the clarity and coherence of an organization's strategic goals. Question: "How can we clarify and communicate our strategic direction more effectively?"
Leadership
Assesses the effectiveness of leadership in inspiring and guiding the organization. Question: "What actions can I take to demonstrate leadership that inspires trust?"
Culture and Climate
Evaluates the organizational environment, including values, norms, and standards of behavior. Question: "How can we cultivate a positive culture that aligns with our core values?"
Accountability
Focuses on the extent to which individuals and teams are held responsible for their performance. Question: "What systems can we implement to enhance accountability across the organization?"
Coordination and Control
Looks at how well the organization manages and synchronizes its activities and resources. Question: "How can we improve our processes for better coordination without stifling innovation?"
Capabilities
Concerns the skills and competencies the organization needs to execute its strategy. Question: "What key capabilities do we need to develop to achieve our strategic objectives?"
Innovation and Learning
Measures the organization's ability to innovate and grow knowledge. Question: "What can we do to foster an environment that encourages innovation and continuous learning?"
External Orientation
Examines how the organization perceives and responds to its external environment. Question: "How can we better understand and respond to external trends and customer needs?"
Motivation
Assesses the level of commitment and engagement among employees. Question: "What strategies can we employ to ensure our employees feel motivated and engaged?"
How might you apply these concepts in your coaching? Consider this case example:
Dr. Elena Martinez, at the helm of a mid-size pharmaceutical company, was determined to reverse the company's stagnation and low morale. She enlisted the expertise of an executive coach, who was knowledgeable about organizational health. Together, they embarked on a strategic journey. The coach explained the concept of organizational health, and Dr. Martinez decided to focus her coaching especially on refining how she could better foster accountability, provide direction and motivation, and adapt her leadership style. The coach guided Elena through a deep dive into the dimensions that Elena determined were most important to refine, exploring critical questions that led to insights and action steps.
Through her conversations with the coach, Elena decided to implement a clear performance management system to enhance accountability, ensuring that individual goals were aligned with the company's strategic mission. For direction, she chose to hold workshops at various levels of the company to clarify the organization’s vision and goals, emphasizing clear communication across all levels. To improve motivation, she introduced a recognition program and development opportunities. Elena found that the coach’s approach helped her create a culture that celebrated success and fostered professional growth.
As Elena learned more about different leadership approaches from readings the coach suggested, she had conversations with her coach that led her to adopt a more inclusive and transformational leadership style. This approach empowered employees, encouraged innovation, and facilitated a shift towards a collaborative culture.
By embracing this holistic approach to organizational health, leaders are more likely to achieve sustainable success and a competitive edge in an ever-changing world. Coaches are especially valuable when they facilitate leaders to evaluate and refine their strategies, fostering an environment where every member of the organization is empowered to contribute to its health and performance.
