Dr Lynda Folan: Smart organisations are creating healthier environments

The Changing Focus for Smart Organisations

Over the past few years, businesses have been impacted by unprecedented levels of volatility and uncertainty. Some have quickly adapted and learned to navigate this new context, while others have found responding to the ongoing disruption challenging. Organisations that have not been able to adapt or stay ahead have been forced to take drastic measures such as large-scale redundancies, or they have been forced to close their doors.

In the next ten years, businesses will be impacted by technological advances, artificial intelligence, globalisation, recession, world politics and unstable market forces. We have seen the impact of AI with platforms like ChatGPT disrupting the information industry. This type of transformation will continue to challenge organisations and disrupt the world of work.

Smart organisations envision a new future and find innovative ways to stay ahead of the curve. Traditional organisations focusing only on increasing profits and delivering enhanced business outcomes will become a thing of the past. To thrive in a highly volatile and changing business environment requires focusing on organisational cultures and delivering employee engagement.

We have known for a long time that effective and sustainable businesses must focus on employee experience and create a positive work environment, emphasising a healthy organisational culture. Research has consistently shown that unhealthy cultures with disengaged workers have “37% higher absenteeism, 49% more accidents, and 60% more errors and defects. Organisations with low employee engagement scores experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.” (Seppala & Cameron, 2015).

Critical Challenges Facing Organisations in a VUCA World

There are some critical challenges that have impacted organisations over the past few years. Smart organisations are recognising these challenges and ensuring they have the capacity and capability to deal with them.

• EMPLOYEE WELL-BEING is a significant concern for many businesses, and it is imperative that organisations focus on managing work-life balance and employee well-being. Companies that prioritise employee well-being see a range of benefits, enhanced organisational performance, improved productivity, lower turnover rates, and higher employee satisfaction (Reilly, 2020)
• WORKPLACE STRESS AND MENTAL HEALTH have become a high-priority issue demanding businesses respond. Global research (Dimensions International’s Global Leadership, 2021) reveals that in the context of COVID-19, nearly 60% of leaders reported burnout. Research also shows that 44% of employees have experienced daily stress (Gallup 2022). The NHS (The Guardian, 2022) is projecting that 10 million people will need new or additional support for mental health over the next three to five years.
• EMPLOYEE ENGAGEMENT has become a significant driver of workplace change. Global research shows that only 23 % of employees are engaged (Gallup 2022). This impacts productivity, retention, attraction and all aspects of business effectiveness.
• We have seen the emergence of new EMPLOYMENT PHENOMENA like the ‘Great Resignation and Quiet Quitting.’ This has resulted in millions of workers worldwide deciding to reassess their careers and leave their jobs searching for greener pastures.

Strategies Employed by Smart Organisations

The pressure to hit financial numbers may tempt leaders of many traditional businesses to focus only on the balance sheet and ignore other critical organisational levers that directly affect the bottom line, such as employee well-being. Many assume that well-being, mental health, and engagement are “soft” issues; however, in today’s VUCA world, these are some of the toughest issues facing organisations.  Intelligent organisations embrace strategies that deliver enhanced well-being, mental health and engagement.

There are five critical strategies that smart organisations are focusing on to ensure that they remain competitive in the VUCA world.

1. POSITIVE AND ENGAGING ORGANISATIONAL CULTURES

In this volatile employment market, where engagement is a priority, smart organisations understand the importance of building a positive and engaging organisational culture. Research into the great resignation found that a toxic organisational culture was 10.4 times more potent than compensation in predicting a company’s attrition rate (MIT Sloan Management Review 2022).

We have known for a long time that effective and sustainable businesses require a greater focus on employee experience with an emphasis on building a healthy organisational culture. Research shows that unhealthy organisational cultures with disengaged workers have “37% higher absenteeism, 49% more accidents, and 60% more errors and defects. Organisations with low employee engagement scores experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.” (Seppala & Cameron, 2015).

Unfortunately, traditional businesses focusing on operational and financial outcomes do not emphasise building a healthy culture and enhancing employee engagement. Organisations must invest in and build a culture that engages people and delivers positive results if they want to thrive in the present volatile and unpredictable context. When organisations don’t manage their culture, they damage their reputation and ability to deliver effective outcomes. We have recently seen some very public examples like CBI and Amnesty International, which were found to have toxic cultures. This will have implications for all aspects of the business functioning, and it will take years for the damage to be fixed.

In today’s business context, smart organisations are investing in building healthy and sustainable organisational cultures that deliver good outcomes for the organisation and the people who work in the business.

2. DEVELOPING LEADERS’ CAPACITY TO DELIVER A TRANSFORMATIONAL LEADERSHIP STYLE

In a volatile and unpredictable environment, Leadership styles are a critical topic of conversation in workplaces. The dominant leadership style in a business impacts the organisation’s culture and the outcomes it achieves. Research has consistently shown that a leader’s ability to leverage a transformational leadership style is essential for navigating challenging times and maintaining employee engagement. With the impact of trends like “the great resignation” and “quiet quitting”, it is imperative that we support leaders to develop a style that supports business outcomes and builds healthy organisational cultures.

We know that command control styles have a damaging effect on the organisation’s culture and that they create a high level of stress for individuals. In today’s world, where mental health and well-being have become incredibly important, a command control style will damage organisations and their culture. The key attributes of a transformational style are the ability to inspire, develop, and support their people. In a highly unpredictable work environment, these capabilities are essential.

The leader’s role and the competencies required to deliver organisational results have shifted dramatically in the past decade. In the present business context, with its volatile economic and social environments, the command control leadership of the past is no longer sufficient. It is not enough to simply manage the outcomes and technical aspects of the organisation through command-and-control strategies. Today’s world needs leaders to connect with their people, lead them through challenging times and support them in building their capacity to flourish.

The most recent research shows that the requirements for leadership have dramatically changed and that we require a new set of competencies to lead in this new world. Some key competencies that leaders need are the ability to coach and mentor, flexibility and agility and the capacity to deal with and manage mental health and well-being (Johnson, Dey, Nguyen, Groth, Joyce, Tan, Glozier & Harvey, 2020). Leaders who choose not to develop these competencies will be unable to lead effectively and will have a detrimental impact on the people they lead, hindering the organisation’s outcomes. These people are not leaders; they are individuals in positions of power, driving their agenda and choosing to continue using an old-school leadership style.

Smart organisations understand that if they don’t invest in their leadership capacity, they will severely hamper the organisation’s outcomes.

3. ALLOW EMPLOYEES MORE FLEXIBILITY ABOUT WHEN AND WHERE THEY WORK.

Several studies have found that giving workers more choice or control over their work schedules improves their mental health. This can involve simply permitting varied starting and stopping times and easier trading of shifts in jobs that must be done on-site. A more extensive work redesign at a Fortune 500 company — where IT employees were given control over when and where they did their work but still collaborated with their teammates to ensure needed coordination — resulted in physical and mental health improvements for employees as well as reduced turnover for the business (Kelly & Moen, 2020).

4. DEVELOPMENT STRATEGIES

Another effective strategy is providing resources and support systems for employees. This could involve offering coaching, mentoring, resilience workshops and stress management workshops. It is also essential to provide confidential access to counselling services. By giving employees the tools they need to manage their stress effectively, organisations can help prevent burnout and improve overall well-being. 

5. ONGOING TRAINING AND PROFESSIONAL DEVELOPMENT

Smart organisations understand the significance of investing in ongoing training and professional development opportunities. By providing employees with the necessary skills and resources to excel in their roles, organisations can help reduce stress associated with feeling overwhelmed or lacking support. Professional development is a crucial differentiator in attracting talent. 68% of workers say professional development is vital when considering a new job. Additionally, 48% say they would switch to a new job if it offered skills training opportunities (Gallup Survey).

Smart organisations are embracing strategies that deliver enhanced well-being, mental health, and engagement amongst their staff. These strategies will ensure that they remain agile and adaptable in the VUCA world and can rise to the challenges of a modern workplace.