New research co-authored by Globoforce and IBM has found that companies in which employees report a better experience boast nearly three times the return on assets and more than two times the return on sales.
How much is it really worth keeping employees happy, healthy and engaged? To us in the Careers section, it is essential that workplaces do everything in their power to look after their employees’ wellbeing – the moral imperative there alone is enough to support that.
We recently reported on survey results indicating that half of Irish workers have felt anxious or depressed due to their work and don’t feel sufficiently supported by management in this respect.
Additionally, as Careers editor Jenny Darmody only just recently highlighted, overworking employees can have serious and even fatal consequences.
So really, the question of whether companies should take care of their employees or not has a pretty obvious answer in our eyes. However, there is now research that indicates there is a serious financial incentive to looking after workers.
The Globoforce WorkHuman Analytics and Research Institute teamed up with IBM Smarter Workforce to publish a new report, The Financial Impact of a Positive Employee Experience, which investigates the financial returns for companies that take care of their employees.
It found that the organisations scoring in the top 25pc of ‘employee experience’ report nearly triple the return on assets and more than twice the return on sales when compared to companies in the bottom quartile.
Employee Experience Index
Employee experience is a multifaceted index that is the product of a large-scale research project jointly undertaken by the two companies to investigate and measure what determines an optimal employee experience. Globoforce and IBM surveyed 22,000 employees from all across the globe from a cross-section of industries in thousands of organisations.
It resulted in the creation of the Employee Experience Index (EEI), which measures employee satisfaction under five headings: belonging, purpose, achievement, happiness and vigour.
Previously, the firms released international rankings of the countries in which employees reported the highest levels of employee experience.
Reaping the financial benefits
Now, this index has been married with analysis of some of the key metrics of fiscal success for a company.
Return on assets (ROA) and return on sales (ROS) are two of the most commonly used measures of profitability. ROA is the ratio of net income to assets and is used to determine how profitable a company is relative to its total assets. A high ROA indicates that a company is earning more money on less investment, which is obviously ideal.
ROS, which is also known as operating profit margin, is the ratio of income to sales. It calculates how efficiently a company is generating profits from its revenue.
Companies that score highly on EEI report returns that significantly outpace those of companies that don’t perform well. While the paper concedes that these findings are correlational, and that conclusions about findings cannot necessarily be asserted, it further delves into the correlational increase in returns when EEI is high. It finds that increasing EEI by as little as 0.25 points can result in a 0.86 percentage point increase in ROA and a 1.81 percentage point increase in ROS.
Driving employee experience
The report is quick to stress that cashing in on this fiscal boost does not need to be a costly affair. Improving employee experience need not be resource-intensive – it’s really more about making some key changes that will create a more ‘human’ workplace.
Globoforce and IBM state that a human workplace is one characterised by things such as allowing work-life balance, providing opportunities for feedback and growth, fostering positive co-worker relationships, enabling meaningful work, and empowering workers so that they feel they have a voice.
So really, it’s just about recognising the humanity of your employees and treating them as such.
Provide reasonable and helpful accommodations to employees suffering from physical or psychological health problems.
Allow flexitime so that workers can tweak their schedules in small but significant ways, such as allowing them to come in a little later so they can drop children to school.
Encourage employees to switch off when they leave the office so that they aren’t ‘always on’. While it may mean an employee isn’t always available to answer emails, it’ll make it way less likely that they’ll experience burnout.
These tiny tweaks don’t have to break the bank or drastically alter workflow but, as this research demonstrates, they could lead to a bigger payoff.
