Organizational Health

Organizational health refers to the overall, holistic well-being of an organization. It is concerned with the factors that contribute to an organization functioning effectively and at its most optimal level. A healthy organization is one in which all parts, all functions work together seamlessly; there is no confusion regarding each individual role, nor are there internal factors (political, structural) that might inhibit that role from being performed. Rather than focusing squarely on the market-driven factors that influence an organization’s business decisions, organizational health is determined largely by internal factors such as leadership, workplace culture, employee policies, training, and support networks—all of which are reflected through its communication practices, overall organizational motivation, and degree of coordination among the various functions.

External stakeholders and third parties often look to various indicators of the organization’s health when making attributions about organizational performance. Moreover, the evidence they accumulate from different measures of organizational health help forecast changes in the organization’s reputation. Most discussions about organizational health are metaphorical. Nevertheless, various efforts are under way that link various aspects of organizational members’ personal health and physiology back to the organization’s overall performance, health, and well-being. This entry discusses some of the core concepts of and contributing factors to organizational health, physiological and psychological metaphors for describing organizational health, and how employee resources contribute to organizational health and affect reputation. The entry ends with a discussion of the characteristics of healthy and unhealthy organizations that offer risks and opportunities for corporate reputation development.

Core Concepts and Contributing Factors

Although many models of organizational health can be found, four core concepts can be seen across most definitions of organizational health: (1) the importance of effective leadership, (2) clarity of purpose, (3) ongoing communication, and (4) provisions that demonstrate that an organization values its people. An organization’s leaders set the tone. They are charged with conveying an organization’s mission and vision, building internal and external stakeholder buy-in for an organization’s objectives, and ethically championing an organization. This process begins with employee buy-in, which is crucial for organizational health. Employees look to leadership—the leader’s message, tone, and convictions. If a leader proves ineffective in achieving employee buy-in for organizational objectives, it soon will become impossible to pursue those objectives. To support this process, an organization—starting with its leaders—must remain focused on clarity—first by ensuring that every person is completely clear about his or her role and how that role ties to—and benefits—the rest of the organization. Empowered employees are those who clearly see the positive impact that their daily responsibilities have on the life of the organization.

More broadly, clarity requires organizations to eliminate uncertainty when possible, especially when an organization faces difficult times. For example, when an organization suffers from a crisis, it must be clear regarding what happened, who is or could be affected, what steps are being taken to resolve the issue, and the implications for the organization and its internal and external stakeholders. Simply put, providing clarity is important in certain and uncertain times. Constant and consistent communication is central to effective leadership and providing clarity for organizational stakeholders. Communication must be proactive and transparent, and provide enough actionable information for the affected stakeholders to take the right action and make reasonable decisions. Moreover, communication must establish and maintain legitimacy for an organization’s actions.

Physiological and Psychological Metaphors

Corporations often use physiological and/or psychological terms as metaphors when discussing organizational health, such as lifeblood, new life, nimble workforce, clear thinking, new thinking, exercise, heartbeat, and family network. The underscoring, implicit goal is to position the corporation as a single body, working together seamlessly. As with the human body, if one part suffers, the whole suffers. Accordingly, health requires good practices, maintaining healthy routines, and pursuing optimal efficiency. In fact, many visual models showing the contributing factors to organizational health integrate the image of a cross, similar to that of the Red Cross symbol or Bayer brand. The use of physiological and psychological metaphors also emphasizes the importance of not only ensuring that employees know how their role contributes to the whole but also providing the support mechanisms that will allow them to do so effectively. In this regard, organizations are focused on more than employees’ contribution to the bottom line—they are squarely focused on employees’ actual health and the personal factors that could lead to a lack of productivity. Health affects job performance and workplace morale. For good organizational health, companies therefore must provide resources that reduce stress and allow employees to take care of their individual health.

Employee Resources and Organizational Health

Organizations have implemented a variety of employee resources to help support individual health and in turn contribute to organizational culture and health. These include on-site gyms and workout facilities, child care facilities, post offices, laundromats, collaboration spaces, upscale dining and healthy eating options, and game rooms. Some corporations, realizing the number of hours employees spend at work, offer flexible hours, where employees can work from home or alter the number of hours spent in the office, to spend more time with their families. For example, some companies offer summer hours that allow employees to work nine hours a day Monday through Thursday and then take a half day on Friday in order to be home early. In addition, many companies offer training and ongoing education programs that help build on-the-job skill sets while contributing to personal professional development.

An organization’s otherwise stellar reputation can be damaged if it is seen as not protecting individual employee health or if it is believed that employees’ health is being harmed due to long working hours, heightened and often unrealistic demands, or lack of clarity in job function. Public perception or actual knowledge of poor treatment indicates poor organizational health, which in turn could lead to challenges in the marketplace. For example, in recent years, supporters of an increased minimum wage have centered their arguments on employee health and the lack of resources for employees to support themselves and their families. Part of this debate has included media images during the holidays of food collection bins in the break rooms of major corporations. Likewise, employees’ personal health has implications for how they treat their coworkers and customers and also provides insights into how valued they are by their employers. Manifestations of poor health can include workplace bullying and incivility, which have long-term implications for organizations striving to be the “best company to work for” and cast doubt on companies’ reputations for social responsibility.

Characteristics of Healthy and Unhealthy Organizations

Gerry Randell and John Toplis provide a number of clues and signals of healthy and unhealthy organizations. For example, healthy organizations are said to have organizational objectives that are widely shared throughout the organization, and ownership and movement toward accomplishing those objectives by organizational members are visible. Healthy organizations are said to have more teamwork and less concern about encroachment. Employees at lower levels of the organization are respected. When crises do occur, then employees band together. In healthy organizations, there is a great deal of on-the-job learning and a willingness to give and receive feedback and advice. In healthy organizations, poor performance is confronted with an eye toward joint resolution. Nonconforming behaviors are also tolerated in healthy organizations.

On the other hand, in an unhealthy organization, there is little investment in organizational objectives outside the top management team. When people see things go wrong, there is little done about it if it does not fall in one’s job description. Employees’ personal needs and feelings are often considered side issues. When crises occur, people withdraw and blame one another. Relationships and accountability are contaminated by impression management efforts. Additionally, little feedback or upward reporting of bad news occurs. All these various behaviors serve as indicators of what are considered healthy and unhealthy behaviors, which are then attributed to the informal culture and formal policies of the organizations. To a great degree, they provide signs and signals of organizations’ long-term potential and the various reputation risks and opportunities that organizations may encounter in the future.