If I had a quarter for every time I saw an Instagram post, TikTok, or tweet about how much the corporate workforce loves working from home, well… I’d be at least a little bit richer! Quippy anecdotes aside, many workers are loving the remote-work environment—it allows schedule flexibility, saves employees money on traveling, and supports a stronger work-life balance, among other perks.
While the benefits to virtual work are many, maintaining company culture and improving the organization’s overall health in the virtual environment are paramount to a business’s success. We’re covering how virtual culture impacts organizational health by defining each of those things, investigating how they are interconnected, and outlining ways that businesses can continue improving both
What is Organizational Health?
While it may seem that organizational health is a somewhat self-explanatory name, it’s fundamentally a multi-faceted approach to defining, improving, and maintaining an organization’s ability to adapt to change.
McKinsey & Company, one of the world’s largest management consulting firms, says that an organization’s health is “based on the ability to align around a clear vision, strategy, and culture; to execute with excellence; and to renew the organization’s focus over time by responding to market trends. Health also has a hard edge: indeed, we’ve come to define it as the capacity to deliver—over the long term—superior financial and operating performance.”
After extensive research, McKinsey created the Organizational Health Index, which helps businesses track their health based on nine different dimensions of health and their associated management practices. Further analysis revealed that the healthiest of the organizations that McKinsey tracked, four combinations of practices led to improved organizational health, which positively impacted performance and financial sustainability. These four approaches are:
- A leader-driven approach. The key indicator of this approach is having talented and dynamic leaders, full of potential, at all levels of the organization. These individuals are then given the autonomy to discover best practices and deliver results.
- A market-focused method. Businesses with a strong external focus are product and process innovators. Their external orientation toward anyone and everyone involved in their industry—from customers and competitors to industry regulatory bodies—is their largest asset. These companies have a shared vision that drives the strategic plan and financial accountability that allows the company to adapt profitably from market changes.
- An execution edge. Companies that stress constant growth on the front lines of business are some of the most efficient entities. They stress driving quality and productivity by sharing knowledge across the entire company. This fosters healthy internal competition and allows employees at all levels to innovate and spread ideas across all organizational units.
- A talent and knowledge core. This approach is often found in professional-services firms, professional sports teams, and entertainment businesses. These organizations succeed by attracting high-performing individuals and retaining them with a balance of financial and non-financial motivators. The key in this approach is the highly-skilled individual employee.
Each of these approaches can support a balance of short-term performance and long-term health.
Virtual Culture as a Component of Organizational Health
While organizational health has a more complex definition, virtual culture is a bit more self-explanatory. Pre-Covid, a standard workplace involved employees working in the office from 9am-5pm. Face-to-face interactions supported organic company cultures, which was supplemented by (hopefully) intentional efforts on the part of management to create healthy and supportive environments where employees could thrive.
As noted in McKinsey & Company’s definition, culture is one component of organizational health that needs to be clearly defined and executed to be successful. Positive culture keeps workers motivated by and satisfied with their work. They need to feel like more than just a number or a cog in the machine because they are more than that.
Not to mention, the current labor crisis means that businesses must work overtime to hire and retain talent. Understanding human capital also plays a role in virtual culture and organizational health. Check out our recent blog for more info on that.
Now, businesses must learn how to maintain a positive work culture even when employees don’t have those daily, face-to-face touchpoints. And the challenge is not only to learn how to maintain it but how to make virtual culture a driving factor in positive organizational health.
Synergy Between Culture & Health
There are several steps businesses can take to support their virtual culture and, thus, their overall health.
- Find where virtual culture and organizational health connect in your organization. Each organization is different. Business leaders should consider components like size, geographic location, employee demographics, work environment (i.e., fully remote vs. hybrid), and other factors. These will help determine where the virtual culture amongst employees and leadership most impacts an organization’s ability to carry out a strategic plan, maintain financial sustainability, and boost performance.
- Create strong policy, checks, and balances. To be clear, strong policy does not necessarily mean that policies need to dive into the granular aspects of the business. The detail and depth of policies should reflect the needs of the organization based on its size and the needs of employees in the virtual environment. For example, if the organization falls within the leader-driven or execution edge approach, as outlined by McKinsey, then having broader policies that allow both leaders and lower-level employees to innovate could be the right move. But what really makes a policy strong is how the business holds itself accountable to the policies, from C-suiters all the way to entry-level employees. Clearly defined policy and the ability to follow through on it are keys to ensuring the virtual culture supports the organization’s overall health.
- Emphasize a few key management practices. Unfortunately, just like people, no business can do it all. Instead of trying to be industry leaders in every aspect of business, pick a few key practices that best support the business’s culture, strategy, and mission in the virtual world. McKinsey’s research found that most successful businesses are exceptional at a handful of the thirty-seven total management practices and do decently—not the best, but certainly not the worst—in the other management practices. Conversely, emphasizing the wrong practices can be highly detrimental to an organization’s success.
- Maintain the business’s “secret sauce.” Most businesses would say they have a “secret sauce” or some key practice that makes them stand out from the competition. It’s critical that businesses not only maintain but emphasize this differentiating factor. Or, in some cases, adapt it to fit the virtual environment. But the human-focused approach that got many employers through the pandemic, where leaders emphasized the mental health and schedule flexibility of all employees, must not fade. In the words of Dr. Seuss, “a person’s a person, no matter how small.”
Using virtual culture to drive organizational health is critical to achieving both a business’s short-term and long-term goals. Increased health means that organizations can adapt more quickly to the accelerated rate of change most industries are facing. Thoughtful planning and strategy, with a focus on the virtual culture that surrounds businesses’ most important assets—employees—is the key to sustained success.