Your annual profit and loss statement alone cannot tell you whether your company is growing and thriving or standing on the brink of bankruptcy. Below, we explore the key indicators that help you recognize your successes and failures.
This is where value creation also plays a crucial role in business. Any organization that can create genuine value for its employees and customers is better positioned to achieve sustainable success.
Years ago, I asked a successful and pioneering investor how he managed to keep track of the profit and loss statements of all the companies he had invested in without ever running into trouble. His answer was simple: “I simply pay attention to the numbers.”
Unfortunately, however, numbers cannot explain the underlying causes of problems such as a lack of motivation within an organization, declining ethical standards, inadequate technology, and time-consuming, ineffective policies. By the time these organizational ailments become visible in the profit and loss statement, it may already be too late to address them effectively.
This leaves us with a fundamental question: How can we distinguish a healthy organization from an unhealthy one?
Organic Talent
In healthy organizations, employees demonstrate a strong sense of commitment to their work, and the number of mistakes tends to decrease over time. More importantly, these organizations experience continuous improvements in employee performance and achievements.
This indicates that people remain with these organizations because they have opportunities for ongoing growth and professional development—not because they are afraid to leave their jobs or lose their employment.
One particularly striking example I have witnessed involved a receptionist who, through the organization’s training, support, and commitment to providing growth opportunities, eventually became a member of the executive board. Someone who had once occupied a relatively peripheral role within the organization ultimately gained a comprehensive understanding of its internal affairs and strategic direction.
Constructive Contradiction
Great and healthy organizations know how to make effective use of contradictions and opposing viewpoints. Their leaders actively seek out differences of opinion and perspectives, valuing and respecting the discussions and debates that emerge from them.
When faced with challenges, these leaders do not lose their confidence or motivation. Instead, they welcome collaboration and encourage collective thinking to overcome the challenges at hand.
In fact, many successful leaders deliberately create opportunities for constructive disagreement (!) and establish predefined structures to facilitate it.
For example, they anticipate potential decision-making challenges that competitors might impose on them and ask their senior executives to examine a problem or challenge from multiple angles and perspectives.
In essence, leaders of healthy organizations have a different definition of contradiction: it is a mechanism through which business leaders develop the highest levels of critical and strategic thinking, refine their decision-making skills, and pave the way for greater achievements.
Organizations need to evaluate and measure the time their employees devote to their work, as well as their level of commitment to their responsibilities. If your organization has concluded that it is better for employees to rest at home than to waste their time at work, you can expect better outcomes in the future, including greater innovation and creativity.
Why? Because employees who lead rich and fulfilling lives are more likely to contribute to organizational success and generate fresh ideas and perspectives. By contrast, exhausted and unproductive employees may feel like passengers on a train traveling through an endless, dark tunnel. Eventually, they may prefer to get off at the nearest station and leave the organization altogether. Constructive disagreement, on the other hand, can help foster motivation and engagement among employees.
Reasonable Compensation and Rewards
Healthy organizations have their own distinctive compensation policies. One important characteristic is that they tend to avoid relying exclusively on cash bonuses directly tied to individual employee performance.
This does not mean that successful efforts go unrecognized. Rather, appreciation and recognition take different forms, such as ceremonies honoring outstanding employees, additional annual leave, learning and development opportunities, and access to greater resources.
These forms of recognition provide employees with the fuel they need to strengthen creativity in the workplace. By focusing on the factors that genuinely motivate people, healthy organizations create the conditions for long-term success.
Whenever these vital signs are absent or compromised within an organization, we should become concerned about its overall health. The consequences of organizational ill health may not be immediately apparent, but they gradually emerge as talented employees begin to leave.
In some organizations, senior managers fail to provide their teams with adequate training and choose to remain silent for fear of disrupting the existing harmony. Although employees may appear to be working hard under these circumstances, positive results are rarely achieved.
Over time, outstanding employees begin seeking opportunities elsewhere. Meanwhile, the annual profit and loss statement may still look healthy—but it reflects the past, not the organization’s future.
Therefore, we should begin today, with care and vigilance, to build a healthy and successful organization.
