Healthy Organizations Have a True Competitive Edge

By Jun 26, 2012
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Patrick Lencioni speaks at a Masters Series session held during the SHRM 2012 Annual Conference. Photo by Steven E. Purcell

ATLANTA--Just how healthy is your organization?

While this might sound like a strange question to many people, Patrick Lencioni said that it may be the most important question anyone can ask about their company.

During hisMasters Series session, “Healthy Organizations Win: How to Harness Your Organization’s Full Potential,” held here during the SHRM 2012 Annual Conference, Lencioni argued about, stated and then repeated the importance of organizational health.

“I don’t think it can be overstated. Organizational health is the single greatest competitive advantage for organizations today,” said Lencioni, a management consultant and author of the book The Advantage: Why Organizational Health Trumps Everything Else in Business (Jossey-Bass, 2012). “Organizational health is virtually free and accessible to any leader who wants it, and yet it remains largely untapped in organizations.”

He told the audience that there are two parts to the equation of organizational success, being smart and being healthy. According to Lencioni, on the smart side of the equation are the elements of strategy, marketing, finance and technology. On the healthy side of the equation are minimal politics, minimal confusion, high productivity and low turnover.

“Business leaders focus about 98 percent of their attention on the smart side of the equation, and just don’t pay much attention to the healthy side,” Lencioni said. “I’ve talked to executives about the healthy side and many have told me, ‘I would love to have all those things in our business.’ But when I talk about what it takes to get there, they inevitably will turn to the smart side and try to readjust the dials.”

The reality is that businesses are all aware of the smart side of the equation, and everyone has an idea on how to make things better. In fact, whatever you attempt on this side of the equation has already been tried somewhere else, Lencioni argued.

“The smart side has been completely tapped. So that leaves the healthy side. If your organization focuses on the healthy side, then they are doing things that many executives don’t want to do or think is below them. They consider these things inconsequential or soft,” he said.

Lencioni pointed to companies like Southwest Airlines, Chick-fil-A and Nordstrom that he said are exceptionally healthy organizations, and all of these organizations are highly successful, very competitive and considered leaders in their industries.

“And you know the reason why? Because for their leaders it’s not about them and stroking egos,” he said. “It’s all about doing the things that make the organization healthy.”

The steps to making organizations healthy begin with making the leadership cohesive, which means overcoming five dysfunctions of an organization: absence of trust, fear of conflict, lack of commitment, avoidance of accountability and inattention to results.

“When I mention conflict, many people don’t believe me and say lack of conflict is a good thing,” Lencioni said. “I am here to tell you conflict can be a good thing, maybe the best of things.”

He explained by saying people who come to agreement after debating, arguing and discussing issues tend to be stronger and healthier teams.

“Nothing is worse than to be dismissed out of hand, but if your points are seriously considered and discussed, then you most likely will support and commit to a decision,” he said.

The next key step to creating a healthy organization is creating clarity about the company for everyone in the company.

“I have been in meetings where people have disagreed pretty strongly about what the company does,” Lencioni said. “If you can’t agree on that, then some deeper issues are there, I believe.”

The next two steps to building a healthy organization are to over-communicate to stakeholders and then to reinforce clarity.

He concluded by telling the audience that they were in a unique position to make a difference in their organization, and to become the most important advisor to their organization’s leaders.

“I truly believe that HR’s time is coming, and that the next group of top business leaders and CEOs will come from HR,” he said. “You have the opportunity to have a powerful impact on the world. What you do shapes how people live and survive with their friends and families. Never forget that you are in the position of changing people’s lives.”

Bill Leonard is a senior writer for SHRM.

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