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Happy Workers, High Return

When it comes to analyzing the reasons behind a company’s performance, there are several key factors that are typically looked at. There’s the demand for the product, status of competitors, corporate structure, leadership….the list goes on. However, as the role of human resources has become more and more prominent in the modern business world, there’s another element that all corporations should be taking into account: employee happiness.

In a recent Bloomberg video, Carolyn Everson, the Vice President for Global Marketing Solutions of Facebook discussed the importance of satisfaction and health in the workplace: “At the end of the day, I think, whether companies are successful or not is based on the people that work there. Recognizing that people--not products--are your most important assets is the advice I would give.”

And there is a lot of recent evidence that supports Everson’s guidance. A Gallup survey polled around 55,000 employees discovered that the below four attitudes show strong correlation with high returns.

  1. Workers feel they are given the opportunity to do what they do best every day
  2. They believe their opinions count
  3. They sense that their fellow workers are committed to quality
  4. They've made a direct connection between their work and the company's mission

Yet another Gallup survey discovered that less than one third of workers were engaged in their jobs, and that the “lack of employee morale is leading to between $450 and $550 billion per year in lost productivity.” This means that unhappy workers cause unimpressive yields.

In his book,  The Link Between Job Satisfaction and Firm Value, with Implications for Corporate Social Responsibility, Alex Edmans, a professor at London School of Economics, analyzed  Fortune’s “100 Best Companies to Work for in America” over a 28-year period. He found that the corporations that made the list, which takes into account corporate achievements and culture,  “generated higher yearly stock returns than comparable companies not on the list,” and consistently beat financial analysts’ earnings estimates.” Compared to companies not on the list, the “[best companies to work for] showed annual returns that were an average of 3.8 percent higher when the author controlled for risk factors.”

The main takeaway is this: companies who prioritize the satisfaction of their employees are more likely to witness an intrinsically motivated workforce--who on average miss less work and exhibit higher individual productivity--, a lower employee turnover rate, and collectively, higher returns.

Businesses can increase worker satisfaction in a number of ways. The first is monitoring and maintaining a healthy and inclusive workplace culture. This can be done by setting core values that grow in proportion to a company’s number of employees, through fun team building activities and social events, by using pulse surveys and other feedback solutions to stay aware of the opinions and ideas of the workforce, and by providing a welcoming atmosphere and advocating regular meetings to stimulate communication in the workplace.

Perhaps one day, the corporate world will follow Carolyn Everson’s vision of “a future where companies are not only going to have to report their financial earnings, but the health and happiness of their employees”-- a world where employee health is equal in importance to meeting deadlines and satisfaction is prioritized.

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