The Quantitative Benefits of Treating Your Employees Well.

We are often told to treat others like we would ourselves and overall, most individuals try to look out for each other and do good by their neighbors. These are basic concepts that are taught from birth in most cultures, and most can agree on are for the good of society. I often wonder why in business, sometimes the employees are not treated with the same type of respect that one might treat them with if they were not their employee, but just a neighbor or a friend. This isn’t always the status quo, and many companies have great company policies that do help employees and they pay them good market wages. However, we can all attest that there are companies out in the markets that do not value their employees in the manner that they would a friend or a neighbor. I wanted to do some research and see if there is actual data to back up that treating your employees better can result in a more profitable company.

???????????The first thing I came across in my research was the fact that high pressure companies’ health care costs were about 50% greater than other organizations (Seppala & Cameron, 2015). The American Psychological association has found that about $500 billion is siphoned off from the U.S economy because of workplace stress and 550 million workdays were lost each year due to stress on the job (Seppala & Cameron, 2015). This is really impressive seeing as this is 2.2% of the U.S’s 2021 $23 trillion GDP (IMF, 2022). For comparison this 27% of Canada’s, 16% of the U.K’s and 42% of Mexico’s entire 2021 GDP (IMF, 2022). ?

???????????Another important aspect that was mentioned was disengagement and the costs to firms for employees who have chosen to disengage based on a negative and high stress work environment and culture. It was found in studies that disengaged workers accounted for 37% higher absenteeism, 49% more accidents and 60% for errors and defects on the job than engaged workers (Seppala & Cameron, 2015). ?Organizations with low employee engagement scores experienced 18% lower productivity, 37% lower job growth and 65% lower share price over time (Seppala & Cameron, 2015).

Businesses with highly engaged workers on the other hand, were found to have 100% more job applications which is important in the face of what some have coined the great resignation (Seppala & Cameron, 2015).

According to a Gallup study of 23,910 business units, units in the top 25% of engagement were shown to have 12% higher customer advocacy, 18% higher productivity and 12% higher profitability (Stewart, 2010). The same study looked at earnings per share growth of 89 organizations and those with employee engagement scores in the top 25% enjoyed growth of 2.6 times that of organizations with the below average engagement scores (Stewart, 2010). There is also a clearly defined benefit between engaged employees (70%) and non-engaged employees (17%) on their understanding of how to meet customer needs in their business (Stewart, 2010).

Loyalty to the organization is another important aspect of keeping your employees engaged with their work. Engaged employees are also 87% less likely to leave the organization than their disengaged colleagues along with 78% more likely to recommend their companies products and services vs the disengaged employees (Stewart, 2010). Research has shown that workplace stress leads to an increase of almost 50% in voluntary turnover (Seppala & Cameron, 2015). Other research has found that 80% of improvement in turnover arises from employees behavior response to higher wages while having the additional impact of higher productivity gains from the employees (Emanuel & Harrington, 2020). ?

Overall, I concluded after my research that there is a clearly defined benefit to companies to treat their employees better and raise wages. This was shown through greater productivity, profitability and less turnover for the firms who decided to do so. ?This was also shown in the lessened health care costs to the firms because of burnout from their workers. The verdict is clear to me that as an employer it is in your best interest to take care of your employees and it is always easier to keep good employees than hire new ones. You can ask anyone in a hiring position in the current job market. I hope that this information has been valuable and thank you for taking the time to read over my conclusions and I hope that this becomes something that you can utilize in your business to help maintain and get the best out of your existing employees.

References

Seppala, E., & Cameron, K. (2015). Proof That Positive Work Cultures Are More Productive. Harvard Business Review. Retrieved from https://hbr.org/2015/12/proof-that-positive-work-cultures-are-more-productive.

World Economic Outlook Databases. IMF. (n.d.). Retrieved July 26, 2022, from https://www.imf.org/en/Publications/SPROLLS/world-economic-outlook-databases

Stewart, H. (2010). Do happy staff make for happy customers and profitable companies? Journal of Direct, Data and Digital Marketing Practice, 11(4), 275–280. Retrieved from https://link.springer.com/article/10.1057/dddmp.2010.9#citeas.

Emanuel, N., & Harrington, E. (2020). (rep.). The Payoffs of Higher Pay: Elasticities of Productivity and Labor Supply with Respect to Wages. Harvard University.

Richter, F. (2022, January 11). Infographic: The great resignation. Statista Infographics. Retrieved July 26, 2022, from https://www.statista.com/chart/26186/number-of-people-quitting-their-jobs-in-the-united-states/?