When we discuss the culture of a company, we are referring to the values, assumptions, behaviours and unwritten rules accepted company-wide. Company culture is spear-headed from the Executive team right down to each and every employee. It plays an integral role in the key happiness of employees and whether a business will succeed. Both organisational health and organisational smarts are critical for a thriving culture. The problem is most businesses only concentrate on organisational smarts.
According to Patrick Lencioni, President of The Table Group and author of multiple best-selling management books, there are different behaviours displayed by “healthy” organisations compared to “smart” organisations. Patrick believes that whilst companies need a combination of both organisational smarts and health, it is organisational health that trumps everything else in business. Companies cannot thrive in the long-term without being “healthy”.
The Difference Between Organisational Health and Organisational Smarts
Companies that possess organisational smarts, as the name implies, make intelligent decisions in the fundamentals of marketing, finance, strategy, and technology. The leaders are often clinical and possess high IQ’s. Their focus is on outcomes that can be studied, measured, and quantified. These companies are task-oriented and focus on delivering outcomes. Most companies prioritise this approach. However, being smart will not guarantee success. Being a healthy organisation will increase your chance of success.
Unlike smart organisations, healthy organisations are void of politics and confusion.
Every employee know their roles and responsibilities and focus on achieving outcomes. Healthy organisations have the three c’s – cohesion, clarity, and communication. Employees work collectively together and have absolute clarity on how to move forward as a team. These businesses boast high productivity, morale and loyalty from their workforce. There is very little staff turnover.
Why Do We Need Both Organisational Health And Smarts?
It’s simply not enough to build a competitive advantage based on organisational smarts alone. We live in an age where information is readily available at our fingertips and change occurs in a nano-second. The competitive edge you think you have can become redundant in a moment. What if your rival develops a new technology that is smarter than your own? Or a more effective marketing strategy?
You could say it’s “smarter” to focus on maximising the human potential of your business, instead. A cohesive team that works together and shares a common goal, will give your business a competitive advantage. This advantage comes from three c’s – cohesion, clarity, and communication.
Often smart companies are known for politics and red tape. They can be plagued by lack of clarity, confusion and high staff turnover. Sometimes, there is no teamwork and the communication is secretive, lacking transparency. Leaders struggle to acknowledge their flaws, let alone learn from them or take feedback from their team on them.
An extreme example of a smart organisations would be the banks. They have poor reputations because instead of focusing on customers, they are self-interested. By the measures of a smart organisation they are a success. They deliver huge profits for shareholders who earn dividends, and employees are paid exceptionally well. They may have the technology and organisational capability and be “glossy” to outsides. But underneath the is an unhealthy organisation, that is rotten.
Many organisations are smart in their strategy, marketing, finance and technology. Healthy ones however succeed more because they have minimum politics. This enables better trust across the team, and provides greater clarity. This results in excellent employee engagement and a thriving culture all the cornerstones for a successful organisation.
The true difference between a mediocre and an exceptional company is the health of them. As a board member, CEO or any leadership position, your responsibility to create a culture where employees are engaged, informed and strive towards achieving a common goal. The only genuine way to do this is to prioritise organisational health. Try it and see, you will surprise yourself how your business grows.