What defines a healthy business

In March 2019 management consultants McKinsey produced a podcast called ‘What Makes an Organisation Healthy?’ written by McKinsey partners Rajesh Krishnan and Brooke Weddle.

We found it interesting, not only because they had certainly done their research on it – based over 15 years and 2,000 companies – but because most of the data came from employees rather than from top-down management. They chose this method because they found that company leaders often:

‘…have a biased view of their organisation’s health. They have an overly positive view of it. We've been in many eye-opening conversations with leadership teams where we show them the difference in perception between the front line and the leadership team.’

They define organisational health as being ‘about the way in which you run your organization to effectively deliver against your performance goals, much as you would with physical health.’

Information changes behaviours

They say that what is needed is not abstract theory but actions that change behaviours.

Business that get better every day

‘The organization is underperforming right now. Something needs to materially change so that it can do better—better margins, better revenues, whatever the metric might be. They're unlikely to do that unless they fundamentally look at what's not working today and changing the way that's done.’

‘We would recommend that you prioritize a manageable set of behaviours that will help you go after the performance improvement that you want to unlock. That number is typically around eight to 12 things. On the other hand, there are some organizations that are quite well run. Maybe it's just a handful, three to five things, that they want to focus on.’

Information changes behaviours

They say that what is needed is not abstract theory but actions that change behaviours.

Business that get better every day

‘The organization is underperforming right now. Something needs to materially change so that it can do better—better margins, better revenues, whatever the metric might be. They're unlikely to do that unless they fundamentally look at what's not working today and changing the way that's done.’

‘We would recommend that you prioritize a manageable set of behaviours that will help you go after the performance improvement that you want to unlock. That number is typically around eight to 12 things. On the other hand, there are some organizations that are quite well run. Maybe it's just a handful, three to five things, that they want to focus on.’

One type of company McKinsey talk about is those ‘deriving competitive advantage from getting better every day.’  Incidentally that is something that a lot of agencies using Synergist frequently tell us. McKinsey says: ‘The practice that is probably the most important to that recipe is performance transparency, which is, very simply put, how to make results in an individual, in a unit, easily accessible and widely available for people to look at, with the belief that if that information is made available, good things happen.’

They illustrate the point by the analogy of the manufacturing plant. ‘Providing performance transparency (is) taking the time to say, ‘Let's have a dashboard’ that makes the information available to the teams.

‘The performance transparency you're providing here is not a culture exercise that's happening on the side. It is a management behaviour that allows us to get better by learning what the other person is doing, and just knowing where to aspire to. That's why we don't think these things are separate or that health often is at the detriment of near-term performance. If anything, it is used to accelerate and provide performance gains when used in the right way.’

Four themes for business health

They noticed four themes emerging from the research:

1. Making sure there's a clear direction for the transformation. What are we trying to achieve? Does everyone know what the goals are?
2. This cascades down to providing clarity and meaning for employees. Does every individual employee know their role? Do people feel engaged?
3. Capturing external ideas and encouraging bottom-up innovation.
4. Making sure the transformations have a strong infrastructure to ensure that you're operationally disciplined and that you deliver on time and in value. But also making sure it’s supplemented by supportive leadership and caring about the employees' welfare.

You also need a top team that is committed to making the change happen. ‘Because, as with everything, role modelling is the single most important thing to do.’

Synergist on business health

A healthy agency has continuous real-time visibility of what’s going on and where emerging problems are so that something can be done about them before it’s too late.

In addition to its range of reporting, Synergist provides dashboards as standard elements of the Synergist offering, personalised and password-protected to the individual.

At one end of the scale are personal dashboards showing, for example, your upcoming work allocations for the following day or week, the status of your current expense claims, and the time you have entered over the past month in chargeable and non-chargeable hours.

At the other end of the scale are Management Dashboards giving you an immediate summary of the health of your business. This includes the monthly financial summary of Work In Progress, turnover and gross margin, staff utilisation by team showing chargeable and non-chargeable time, the turnover and gross margin of top clients, and planned vs actual project billing.

What Synergist users say

A great deal of this McKinsey research resonates with comments from our users. Here are some examples.

Sara Blannin, Finance Director, ECUS told us:

“Prior to this, we could be focusing on the wrong areas. We had 54 people working hard, but profits were still elusive." “Patterns emerge that we couldn’t see before. We couldn’t have made such a shift without having the infrastructure in place."

“There are two ways that companies handle information. One is to keep it locked up tight, so only a privileged few see it. The other is to share it so that everyone is empowered to make smart decisions, can learn from the facts, and can communicate constructively with colleagues and clients to everyone’s advantage. Clearly the latter is the way forward if profitability is a focus.”

“Solving the profitability problem was key. Now, our Exec team can go to the Board meetings every month and say ‘We’re getting it right!’ The list of things to sort out gets smaller every month. We’re down to finessing things now. There are no more instances of us not understanding profitability issues. That’s all behind us."

“In forward planning we can finesse each area better now. Targeting, utilisation planning and recruitment decisions are easier now for the team managers to handle – it’s all transparent."

 “The transparency of data has helped us develop a company culture of responsibility and progression. Because people are more aware of the wider implications of their work, it helps them understand their Line Manager’s position better. It even increases the chance of them rising to that position themselves.”

Andy Yates, Director of Webb Yates Engineers:

“Everything’s in one place now. All the consulting information and all the financial data is combined together. It’s great to have everything organised now. It helps us to stay on top of things. Projects, clients, time, financials.”

And finally,

Gary Winder, Managing Director, REC: 

“Synergist changes everything. It shows exactly what the capacity is in each of our teams. It lets us analyse, improve and challenge efficiencies, rather than simply leaping into hiring every time. We track utilisation, sales and GP weekly so that we can see our direction of travel. Everything now links together. Synergist helps us to make huge decisions that we couldn’t do before. For example, we made a structural change as a direct result of the data provided by Synergist.”

Source: Mckinsey