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Leadership Issue: Healthy Firms and Performance Essay

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The 2008 Great Recession spurred unprecedented deviations from conventional business practices and performance standards worldwide. Leaders were forced to operate in a new reality where traditional means of attaining competitive advantage failed beneath encumbrances of unfamiliar change catalysts, reshaping global economies, and an ambiguous future. By 2010, hard management methods of driving performance were no longer effective, business cultures were crumbling, and leaders needed new mental models toward which to direct revolutionary change if their companies were to endure. Consequently, today’s most pressing leadership issue is how to transformatively drive organizational health as an innovative strategy to improve performance and…show more content…
Ehtesham, Muhammad, and Muhammad (2011) found an empirical correlation between performance and business culture leadership at a .99 confidence level. Surveying over 600,000 employees in over 500 firms worldwide, Keller and Price (2011b) found healthy firms had (a) a 2.2 times greater probability of an above-median EBITDA2 margin, (b) a 2.0 times better prospect of above-median growth in enterprise-to-book value, and (c) a 1.5 times greater chance of having above-median growth in net income to sales than unhealthy companies. Yet at the same time, thousands of executives surveyed indicated that change program failures stemmed from poor organizational health more than 70% of the time.
The correlations among leadership practices, organizational health, and performance are positive and strong. Transformative leaders who invest in organizational well-being reap large performance dividends. Traditional leaders who try to generate change within the context of poor organizational health sustain failures in their change initiatives. Conclusively, as today’s business leaders focus inward toward building healthy organizations, effects on performance will be positive and sustained over time. Advancing a transformative leadership
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