Editor's Note: Take a look at our featured best practice, Complete Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]
Also, if you are interested in becoming an expert on Organizational Design (OD), take a look at Flevy's Organizational Design (OD) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.
* * * *
The typical approach to improving productivity focuses on assessing variance in quality, time, rate, service, or cost, around which management systems develop incrementally or revolutionarily.
Organizational Health Index, on the contrary, focuses on improving performance through improved alignment of organizational systems. For example, by improving competence of key components such as mindset, work design, technical expertise, or relationships; or through improving the interface between work processes, or the interaction between work practices.
Simply put, the capability of an organization to achieve its strategic goals and their alignment defines an organization’s health. The Organizational Health Index (OHI) leverages logical consistency to manage the organizational health. OHI entails quantifiable evaluations, diagnostics and recipes for success that allow the leaders to calculate and accomplish the organizational health goals, required to sustain long-term performance.
Organizational health refers to the need to address soft (leadership, direction or culture) and hard factors (accountability, reporting lines, or controls) affecting performance. The organizational health index is an ongoing continuous improvement system applicable across an organization. The OHI measures not only the current health level, but also determines the next steps for an organization. There are numerous advantages to the organizations implementing it, including:
Benchmarking organizational health against the rivals.
Aligning the organizational systems, units, and people by communicating shared goals and priorities; and highlighting and plugging the disconnects.
Improving organizational performance by pinpointing variances and opportunities to improve health and drive business success.
The OHI Diagnostic Framework provides a roadmap for leaders and managers to improve organizational health. It measures the organization against the 9 most critical health outcomes; these outcomes comprise both hard and soft organizational elements. Careful measurement of these 9 elements has a proven link with improved financial performance and earning above-average EBITDA margins:
Direction
Accountability
Coordination and control
External orientation
Leadership
Innovation and Learning
Capabilities
Motivation
Work Environment
There are 37 management practices under these 9 health outcomes, developed to help companies identify the behaviors most critical to their health journey:
Direction
Shared Vision
Strategic Clarity
Employee Involvement
Accountability
Role clarity
Performance contracts
Consequence Management
Personal Ownership
Coordination and Control
People Performance Review
Operational Management
Financial Management
Professional Standards
Risk Management
External Orientation
Customer Focus
Competitor Insights
Business Partnerships
Government and Community Relations
Leadership
Authoritative Leadership
Consultative Leadership
Supportive Leadership
Challenging Leadership
Innovation and Learning
Top-down Innovation
Bottom-up Innovation
Knowledge Sharing
Capturing External Ideas
Capabilities
Talent Acquisition
Talent Development
Process based Capabilities
Outsourced Expertise
Motivation
Meaningful Values
Inspirational Leaders
Career Opportunities
Financial Incentives
Rewards and Recognition
Work Environment
Open and Trusting
Internally Competitive
Operationally Disciplined
Creative and Entrepreneurial
Years of research have shown the healthiest companies to align with 1 of the 4 recipes for organizational health. These recipes constitute concrete management practices and activities for the organization to implement. Leaders need to acknowledge and align to the recipe that is appropriate for them. They can use these success recipes to plan and implement a change program that results in sustainable outcomes. The 4 recipes for organizational health are:
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”
– Michael Duff, Managing Director at Change Strategy (UK)
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
“Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”
Organizational Design (OD) is a structured approach to aligning the structure, processes, and systems of an organization to achieve its strategic objectives and enhance performance. It encompasses various components, including defining the purpose of reorganization, determining supportive [read more]
Want to Achieve Excellence in Organizational Design (OD)?
Gain the knowledge and develop the expertise to become an expert in Organizational Design (OD). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.
Organizational Design (AKA Organizational Re-design) involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. It includes:
1. The overall organizational "architecture" (e.g. decentralized vs. centralized model).
2. The design of business areas and business units within a larger organization.
3. The design of departments and other sub-units within a business unit.
4. The design of individual roles.
In the current Digital Age, there is an accelerating pace of strategic change driven by the disruption of industries. As a result, to remain competitive, Organizational Design efforts are becoming more frequent and pervasive—with the majority of organizations having experienced redesign within the past 3 years. This has only been exacerbated by COVID-19.
Frustratingly, only less than a quarter of these Organizational Design efforts are successful. Most organizations lack the best practice know-how to guide them through these Transformations effectively.
Organizational Design involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. This framework focuses on the following 3 initial steps of the full 10-step Organizational [read more]
The McKinsey 7-S Strategy Model is a business framework used to evaluate organizational effectiveness and alignment. It identifies 7 internal, interrelated organizational elements: Shared Vision, Strategy, Structure, Systems, Style, Staff, and Skills. These elements need to be aligned for the [read more]
Business environment has transformed drastically and has become immensely challenging due to competition, disruptive technologies, laws, and globalization. These challenges warrant better performance to address customer needs and to survive--and outpace--intense competition.
Consequently, [read more]
The objectives of this document are:
- Explain organisation design in relation to the other attributes of an organisation, such as its people and strategy
- Outline the key success factors in designing an organisation structure
- Explain the high level process and supporting [read more]
The typical approach to improving productivity focuses on assessing variance in quality, time, rate, service, or cost, around which management systems develop incrementally or revolutionarily.
