If you're a hospital or health system senior executive, stop whatever you're doing and make time to read the latest findings from McKinsey on "organizational health". Yes, as a former hospital CEO myself, I know you're too damn busy. Yes, I know you have a day crammed with meetings, a raft of scheduled and unscheduled calls, multiple reports due, hundreds of emails to read, and the inevitable unforeseen "must address now" issues that arise almost daily. Yes, I know you can't stand the prospect of yet another consultant's "how to" advice. Trust me. Having spent 40 years in healthcare administration, I know you'll find the February 12 article, "Organizational health is (still) the key to long-term performance", written by Alex Camp, Arne Gast, Drew Goldstein, and Brooke Weddle, to be a revelation.
If you're a clinician with a patient panel/schedule/assignment ahead of you, well, of course see them. But when you have a minute -- perhaps at the end of the day or over the weekend -- find a way to get this article in front of any executive you can reach in your organization.
Here are some snippets from the article:
"McKinsey’s latest findings on organizational health demonstrate that it remains the best predictor of value creation...
Twenty-plus years of proprietary McKinsey research tells us that one of the main reasons is organizational health.
Organizational health refers to how effectively leaders “run the place”—that is, how they make decisions, allocate resources, operate day to day, and lead their teams with the goal of delivering high performance, both near term and over time. Organizational health comprises three elements: how well the entire organization rallies around a common vision and strategy, how well the organization executes its strategy, and how well the organization innovates and renews itself over time.
Our latest research on the topic reiterates the degree to which organizational health is not just nice to have; it’s required for sustained performance and organizational success. McKinsey’s Organizational Health Index (OHI) continues to show, for instance, that, over the long term, healthy organizations deliver three times the total shareholder returns (TSR) of unhealthy organizations, regardless of industry. Other findings point to greater resilience and higher financial performance in healthy organizations, even as the world around them has become that much more complicated."
McKinsey's Organizational Health Index
So, what is McKinsey's "Organizational Health Index"? It comprises 9 attributes which have emerged from McKInsey's study of some 2500 organizations and 8,000,000 respondents across a range of industries and geographies. Here are the 9 organizational attributes that comprise "organizational health":
Accountability
Ensure that individuals understand what is expected of them, have sufficient authority, and feel accountable for delivering results.
Direction
Communicate a clear and compelling vision of where the organization is headed, how it will get there, and what it means for everyone.
Coordination and Control
Consistently measure and manage the business and its risks, and address problems when they arise.
External Orientation
Engage with customers, suppliers, partners, and other important external stakeholders to create and deliver value-now and in the future.
Leadership
Use different leadership styles to shape employees' actions and generate high performance.
Innovation and Learning
Encourage and harness new ideas-from incremental improvements to radical innovation-so the organization can evolve and grow.
Capabilities
Ensure that institutional skills and talent are in place to execute strategy and create competitive advantage.
Work Environment
Cultivate a clear, consistent set of values and working norms that foster effective workplace behaviors.
Motivation
Develop employee loyalty and enthusiasm and inspire people to exert extraordinary effort to perform at their very best.
According to McKinsey, "there is no one right path to sustained success, but the fact is, healthier organizations do tend to perform better than unhealthy ones, especially in times of uncertainty. And that performance advantage increases over time. According to our research, organizational health is the strongest predictor of value creation and a critical factor in sustained competitive advantage. In one evaluation of 1,500 companies in 100 countries, for instance, we saw that companies that had improved their organizational health realized 18 percent increases in their EBITDA after one year.
An organizational-health diagnostic revealed the problem [with underperforming, less healthy organizations]: misaligned behaviors had dulled the company’s performance edge. Employees were producing day to day—but not in the areas that mattered most for meeting the organization’s long-term strategic goals. They were engaged but comfortable—“like being in a warm bath.” To change the energy, the CEO and executive team embarked on a multiyear transformation in which they reengineered business processes, instituted different working norms for leadership teams, changed their protocols for meetings and communications, activated change agents across the organization, and pushed more decisions down to those on the front lines. Over time, employees’ enthusiasm increased, and descriptions of “what it felt like to work there” became livelier and more focused on achieving great things together. Performance was on the upswing.
Decisive [but not top down, authoritarian-type] leadership is not just for times of crisis, however; it’s a requirement for any business that just wants to keep up. To that end, a number of organizations have taken steps to empower frontline workers. Senior leaders at TJ Maxx, for instance, have empowered more than 1,200 buyers across all stores, each of whom controls millions of dollars, to cut deals on the spot with manufacturers. By committing to a system of delegated decision making, leaders have ensured that items get into stores quicker—within a week, in most cases—than they would have under a more traditional, hierarchical review process. Leaders at Southwest Airlines have made a concerted effort to put critical customer information in frontline employees’ hands: “Not only are [employees] able to work more quickly, but they are also providing a more tailored experience to customers,” James Ashworth, vice president for customer support and services, told Forbes magazine. The end result has been “a lift in our customer satisfaction scores, as well as a decrease in our call handle times,” he says.
According to the OHI research, companies with leaders who take decisive actions—and who commit to those decisions once they are made—are 4.2 times more likely to be healthy, as compared with their peers.
But it’s not enough just to be fast with those decisions; our OHI research shows that decisive leaders who empower their employees (giving those closest to the work the autonomy to make their own decisions) are 85 percent more likely to improve the quality of organizational decisions, as compared with their peers. This supports previous McKinsey research pointing to a paradigm shift in leadership and, among other new requirements, the need for executives to shift from being controllers to becoming coaches who engage employees and help foster in them a bold mindset of testing, learning, and fast adaptation.”
The Leadership Imperative
Our research makes a clear and compelling case that organizational health is the foundation for companies’ ability to successfully create value, attain profitability, build resilience, and thrive in so many other areas.
So why don’t more senior executives make it a priority?
In our experience, there are several common obstacles. The first is inconsistency in how leaders think and talk about organizational health: conversations about organizational health often anchor on employee engagement as the default, and executives often consider organizational health as being separate from performance. In fact, they are actually one and the same. Leaders should be asking themselves, “How do I run the place each and every day—in each and every meeting—in ways that are both healthy and conducive to creating high performance?”
Related, senior leaders may not see the trees for the forest; many will discuss organizational health as a top-level theme but are much less often involved in the interventions and implementation required to achieve and sustain organizational health. Third, realizing improvements in organizational health takes time—and executives often need to move fast. The default here is to focus on putting out fires rather than fixing the system.
And finally, there’s a sense that bad health implies bad leadership. C-suite leaders must make organizational health a central component of their leadership styles and manage it as rigorously as they do their P&L. Otherwise, they may not actually recognize unhealthy actions when they see them. For this reason, leaders may need to spend extra time, attention, and resources on health interventions. They may need to reframe quarterly discussions and incentives and other elements of performance management around the idea of maintaining organizational health.”
Organizational Wellness
My colleague, Paul DeChant, MD, MBA, and I use the term "organizational wellness" to describe the goal of our work rather than McKinsey’s preferred "organizational health" but there is a great deal of complementarity between the two. Notice that neither McKinsey nor our firm are conflating "wellness" or "health" with the unfortunate tendency of employers, especially hospitals, with offering "personal resilience" or "wellness courses" to their employees as an imagined countermeasure to burnout. We're talking about changing the culture of an organization -- in our case, hospitals, health systems, and medical group practices -- to become truly people-centered, clinician-friendly, operationally high performing, highly responsive, and highly adaptive in which executives and front-line clinical staff are aligned. These are not qualities one typically ascribes to hospitals and other healthcare organizations today. But it is possible -- no, it's essential -- that healthcare leadership teams commit themselves to creating a healthy organization, not just a place that dispenses care, if their organization is going to survive, let alone thrive in today's VUCA (volatile, uncertain, complex, and ambiguous) environment.
Here are examples of leadership-driven changes we often recommend to achieve organizational wellbeing:
expect all leaders, but especially senior executives, to do periodic job shadowing of front-line staff (where observing and deep listening are emphasized)
create and require leader standard work (LSW).
develop and deploy a sophisticated, deeply ingrained, and rigorous daily management system (DMS) supported by visual display boards or monitors
consistently apply one or more of the improvement sciences (Lean, six sigma, operations research, agile, design thinking) in consultation with front-line staff to improve workflow and reduce delays, waste, inefficiency, and job skill mismatches
invest in AI/ML solutions -- selected, tested, and endorsed by front-line staff -- that eliminate or at least markedly reduce data entry, administrative requirements, and/or repetitive tasks that are non-value add
invest in EHR remediation and optimization
regard clinicians as knowledge workers who are given significant latitude to make clinical decisions without unnecessary administrative encumbrances or delays
get rid of superfluous or outdated policies, procedures, redundant approvals and other stupid stuff (GROSS)
Ready to transform your hospital or workplace?
Are you frustrated by adversarial relationships between front-line clinicians and senior leadership? Organizational Wellbeing Solutions was formed to enable senior leaders to identify the specific drivers of clinician burnout in their organization; and to support leaders in designing and executing a comprehensive plan to stop clinician burnout, increase retention, and improve operating results. A hallmark of our consultancy is correcting the all-too-frequent distrust and alienation clinicians feel toward the c-suite generally and the CEO in particular. Let us help you help your organization and its clinicians develop a more trusting, aligned, and productive working relationship.
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