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How Do You Quantify Organizational Health?

Think organizational health is a touchy-feely metric useful only to consultants? Wrong. Healthy companies breed happy employees who remain loyal and productive. And that translates into real cost savings.
COLLABORATORS Patrick Lencioni
How to measure organizational health
photo by Jon Smith

“It is so fundamental to everything that we do that organizational health is almost impossible to quantify in a very precise way,” says Patrick Lencioni, author of The Advantage: Why Organizational Health Trumps Everything Else in Business. “This is not touchy-feely; this is hugely practical.”

That said, Lencioni insists that organizational health can be financially transformational for the CEOs who institute it at their companies. Here’s why:

1. Healthy organizations don’t lose their best people. The opportunity costs of what that employee might have accomplished, the replacement cost of hiring someone new, plus the costs of lost time and training add up fast.

2. Healthy teams make better decisions faster due to healthy conflict. Companies that cycle through a problem, consider alternatives and fixes, then implement changes without involving ego are just far more efficient.

3. When people get more done, then they want to be at work, and the recruiting and retention costs fall accordingly.

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THE PLUS

How does the new Yahoo CEO Marissa Mayer keep her employees happy and productive? She makes an effort to understand employees’ extracurricular passions and to accommodate them.

“I have a theory that burnout is about resentment, and you beat it by knowing what it is you’re giving up that makes you resentful.”

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