Does Employee Morale Boost Revenue?
employee-morale-roi

Does Employee Morale Boost Revenue?

According to Gallup’s 2017 State of the American Workplace, engaged employees are more present and productive; they are more attuned to the needs of customers; and they are more observant of processes, standards and systems. When taken together, the behaviors of highly engaged business units result in 21% greater profitability.

Gallup’s research also shows that companies with engaged workforces have higher earnings per share (EPS). In a recent study, they examined publicly traded companies with EPS data available from 2011-2015 and found that organizations that follow employee engagement best practices — the winners of the Gallup Great Workplace Award — outperformed their competitors over recent years. This finding is consistent with previous analyses of the relationship between engagement and EPS.

Specifically, when comparing EPS from 2011-2013 and 2014-2015, Gallup found that:

  • Publicly traded organizations that received the Gallup Great Workplace Award experienced 115% growth in EPS, while their competitors experienced 27% growth over the same time period.
  • The actual EPS of the best-practice organizations grew at a rate that was 4.3 times greater than that of their competitors.
  • The best-practice organizations in the study had 11 engaged employees for every one actively disengaged employee. At the start of their engagement journey, these organizations had an average of two engaged employees for every one actively disengaged employee.

The numbers speak for themselves, don’t they?

How does employee morale affect the bottom line?

Let’s dig into the “whys and hows” of engagement and its effects on company revenue. Companies that report high engagement among their employees typically experience:

Higher Workforce Production

When employees feel positive and enjoy their work environments, their production is normally higher. This engagement helps managers achieve departmental and organizational objectives. When employees are producing more, their potential of earning more and getting promoted increases. A motivated sales rep, for instance, might generate a higher volume of sales, leading to greater commissions and bonuses and opportunities in new territories, as well having a positive impact on company revenue.

Fewer Absences

Absent employees cost organizations thousands of dollars in missed production or lower revenue. A Workforce Institute white paper published by workforce solutions company, Circadian, shows that annual absenteeism costs run $3,600 for hourly and $2,650 for salaried workers.

Lower Employee Turnover

The negative impact of employee turnover is troubling due to its effect on financial and on productivity outcomes. When employees leave, they take with them the institutional knowledge and skills that helped contribute to the goals and performance of the organization.

The Saratoga Institute suggests that the average internal cost of turnover ranges from a minimum of one year’s pay and benefits to a maximum of two years’ salary. Other research indicates that the direct expenses of turnover can vary from 46 percent of annual pay for frontline employees to 176 percent for IT professionals and 241 percent for middle managers, according to Washington-based Corporate Leadership Council. High turnover also means that significant recruitment, replacement and training costs will be incurred.

roi-employee-morale

So, what are you going to do about workforce morale?

If your company is having a low-morale crisis, you have several options to right the ship. One success formula is to make sure you’ve got the right employees in the right jobs, and that you’ve gone above and beyond to keep them there. Although a great salary, benefits, and bonuses and perks are one way to help ensure your people stay happy, the quality of work/life issues is a vital element that has a definite and measurable impact on their morale and results in successful contributions.

The first step toward fixing the problem is to take time to assess how your employees feel about their current roles and what the company can do to ensure you are positioning the business as an employer of choice. Remember to recognize exceptional workers within the organization. Having employees who are valued, recognized and appreciated for their efforts will generally boost the overall morale of the organization. These employees may also provide critical business and employee referrals to further contribute to the company’s success.

Management immediately can do a great deal to help increase employee morale. Consider the following ten tips:

  1. Analyze the Business Situation. Question where improvements need to be made or enhancements should take place for employees to effectively and efficiently carry out their work duties.

  2. Communicate with Your Employees. Inform employees about changes within staff, budgeting, etc. and take feedback into consideration. Transparency and open, honest two-communication are a key to improved morale.

  3. Increase Workplace Incentives. Provide an environment with growth opportunities, as well as monetary and non-monetary rewards. One simple example that can be easily overlooked is to thank your employees periodically for their efforts in email communications or face-to-face in staff meetings.

  4. Make Employee Morale Activities Genuine. No one likes forced fun (even if they pretend to), and your employees recognize insincere behavior. Obligatory office outings and cheap, thoughtless gifts (How many stress balls emblazoned with the company logo can one person have?) will be recognized as such, and you risk damaging morale rather than improving it.

  5. Consider the Environment. Don’t settle for the same ole, same ole in your office layouts. According to Harvard Business Review, the “conventional” workspace (drop ceilings, monochrome cubicles, drab carpeting) is being phased out in favor of connected spaces that encourage innovation and demand collaboration while still prizing individuality. Google, for instance, had a room in their former Chicago office that was crafted to resemble a speakeasy. Or Groupon, which uses carnivals, tiki huts, and enchanted forest motifs to spark employee creativity.

  6. Let ‘em Sleep. Say what, now? According to a study conducted by scientists at the University of California, San Diego, naps are more effective than caffeine for increasing alertness and promoting learning on some memory tasks. Creating a space for workplace naps can be as simple as designating an unused office as a nap room and fitting it with a reclining chair. However, those with a bigger budget can invest in a fleet of nap pods.

  7. Feed ‘em. If daily lunches aren’t in the budget, you can likely manage a weekly catered lunch. Potlucks are also a budget-friendly way to provide your employees with a meal: You buy the main dishes and have everyone else contribute sides and desserts.

  8. Get Rid of Toxic Managers. If you have managers who intimidate, condescend, behave rudely, belittle people in front of others, give only negative feedback, lie, act sexist or racist, withhold critical information, blow up in meetings, refuse to accept blame or accountability, gossip, or use fear as a motivator, they need to go. Remember: People don’t leave companies; they leave bad managers.

  9. Offer Referral Bonuses. Start a referral program and pay your employees who refer job candidates that are hired. You don’t have to pay it all at once. Give a portion when the person starts work, when they hit their first anniversary, when they’re promoted, etc.

  10. Can the Email. Email can be a productivity killer but it also increases stress. In fact, several studies have shown that employees experience a spike in blood pressure and heart rate after reading an email in the office or after hours. Instead of email, use instant messaging software and face-to-face communication to lessen or completely negate its impact.

Resolve to make employee morale a priority. A business can prosper with the right mind-set, tools, and the greatest asset – its employees. When employees feel respected, appreciated and recognized, the increased success of business will generally follow.

For more resources and best practices on building a culture of engagement, explore our HR Center of Excellence Employee Experice hub.

More to Discover

Case Study: Boulder Country Club

Case Study: Boulder Country Club

Paycor’s enhanced implementation service model creates a fast start for Boulder Country Club. “The transition to Paycor has been amazing. The hands-on guidance and support they offered during implementation saved us so much time. Paycor took control of the entire process so I could focus on other things.” - Amber Maranya, HR Director, Boulder Country Club Prior to Paycor Boulder Country Club is a private club that serves 850 members across northern Colorado and offers everything from golf and tennis to fitness and swimming. Their previous HR & payroll platform was designed for small businesses and couldn’t easily track hours worked for commissioned employees. After evaluating multiple well-known providers, HR Director Amber Maranya...

If an Employee Tests Positive for COVID-19, Here’s What to Do

If an Employee Tests Positive for COVID-19, Here’s What to Do

Everyone needs a plan to fall back on if and when an employee gets sick or tests positive for COVID-19. Below you'll find the step-by-step guide on how your company should proceed if one of your employees tests positive for Coronavirus.Get Communication Letter Template to Use if Employee Tests Positive for COVID-19 6 Steps To Take If an Employee Tests Positive for COVID-19 Offer Support We’re all moving fast in this new world and it can feel like we’re flying blind, so this is just a reminder of what you already know: if an employee lets you know they’ve tested positive for COVID-19, take a moment to be there for them. As a leader of your company, there are of course professional limitations of what “being there” means—you won’t be able...

Emergency Sick Leave for Childcare: What Employers Need to Know About FFCRA

Emergency Sick Leave for Childcare: What Employers Need to Know About FFCRA

The Families First Coronavirus Response Act (FFCRA) is a big part of the government response to the current public health crisis, offering emergency sick leave and paid family medical leave to those affected by Coronavirus. Take a look at our guide on managing employee leave scenarios.The FFRCA doesn’t just apply to employees who are directly affected by the virus—those who are infected, caring for the infected or quarantined. It also puts in place measures for the parents or guardians of children whose schools or day care facilities are closed due to the pandemic.These measures will apply from April 1, 2020 through December 31, 2020. How Does the FFCRA Work for Parents? If an employee has been on payroll for at least 30 days and cannot...

Essential Business Letter (Template)

Essential Business Letter (Template)

Many states and cities are imposing complete or partial lockdowns, with most businesses forced to temporarily shut their doors or move to remote work and only “essential businesses” unaffected. This has left many employers and employees asking what exactly counts as an essential business.Download Essential Business Letter Template What Counts as an Essential Business? On March 19, the Cybersecurity and Infrastructure Security Agency (CISA, overseen by the Department of Homeland Security) issued guidance on what business count as critical infrastructure. Some businesses are obviously essential—hospitals, pharmacies and law enforcement. The list is extensive—other essential businesses include stores selling supplies which allow people to...