The ROI of High Employee Morale

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A business is an investment. You want it to succeed. You pour everything you can into it.

But, while you’re ensuring your ROI makes the venture worthwhile, it’s easy to forget one fundamental truth: Employees aren’t an investment—they’re people.

Is this what’s wrong with modern business? Because hiring, training, and keeping employees is an expenditure, employees become numbers.
Even the term “Human Resources” implies people are little more than things. A resource is something you use to achieve a goal. People become a means to an end. The end is profits. But people are the end. Profits are merely the means by which we afford to live.

The crux of the situation is this: You need a good ROI so the people in your organization can afford to live. In order to hit optimum ROI, the people in your organization must have high morale.

The ROI of high morale:

Morale is the confidence, enthusiasm, and discipline of a person or group. Two statistics jump out from a Marketing Innovators whitepaper:

  • Companies with high employee morale outperform industry counterparts by about 20 percent.
  • Emphasizing high employee morale, satisfaction, and engagement yields a 47 percent increase in market value.

If employees have high morale, then they’re engaged at work. But, 70 percent of U.S. employees are disengaged. Companies with highly engaged employees enjoy 147 percent higher Earnings Per Share (EPS) than companies with the normal level of (low) engagement.

Are you interested in improving your employees’ morale and engagement? If so, keep reading!

How to increase employee motivation:

According to research from Washington State University, there are four factors that drive employee motivation:

1. Desire to acquire

Employees will respond if you give them something to reach for. WSU’s research finds that 86 percent of employers recognize this and have incentive programs. Why, then, are 70 percent of employees disengaged?

It could be that businesses are offering the wrong kind of incentives. If the goal is to hit the numbers to get a monetary reward, employees won’t be motivated unless the reward continues to increase. They get used to the regular reward as though it’s part of their paycheck.

Gamification, on the other hand, recognizes our innate desire to compete and hit checkpoints, upping the ante each time.

In its simplest form, gamification is a concept whereby game mechanics and game design techniques are applied in order to engage and motivate people to achieve specific goals. They tap into our desire to achieve and obtain status. There are multiple gamification software options, but if software isn’t within the scope of your business, gamify the experience in other ways.

Set up friendly competitions, or establish achievable goals for individuals so that they strive to beat their previous numbers. Give them instant feedback. Make work fun by establishing all sorts of checkpoints and levels, even if they’re minuscule improvements. Throw rewards and tokens of appreciation into the mix.

2. Desire to bond

According to WSU, in a study from the Mayo Clinic on weight loss, people lost more weight when they were in a group. Because we’re social beings, other people oftentimes motivate us better than we can ourselves.

Give employees plenty of chances to nurture relationships at company get-togethers and volunteer programs. Acknowledge friendships in your interactions. Laugh with them, chat with them, have a drink with them after work. They’ll associate the meaning inherent in friendship with your company.

3. Desire to defend

If employees feel like they’re part of a family, they will defend your business to the death. This isn’t just about bonding; it’s about ownership.

A sense of ownership comes with responsibility and trust from the leader. Here’s the good thing: if you gamify work and bond with employees, the desire to defend (in other words, the loyalty) will follow. That’s because gamification steadily increases levels of responsibility, and bonding prioritizes good communication.

4. Desire to understand

When you prioritize communication and bonding, you create understanding.

Appnovation’s co-op program provides a good example. The office layout is “open and free.” Coworkers are in close proximity to each other, and everyone is “casual, friendly, and welcoming.”

Although the co-op employee doesn’t understand all the intimate details of the business right away, the open environment and his interactions with others give him a sense of understanding.

USC Dornsife points out that companies such as Mozilla, Facebook, and Google have adopted an “alternative” workspace model to increase productivity. This is a model in which “employees are able to decide how and where they would like to work.”

So, think about setting up an open and free workspace. Model transparent, casual communication within the space, and you’ll create a culture of understanding.

Consider a shortened work week:

A shortened work week asks employees to work smarter and harder. It also gives them more personal time. Who doesn’t want more of that?

Writing for Business Insider, Aaron Taube points out that a shorter work week could achieve the following:

  • Make people healthier by cutting stress, thereby improving morale
  • Help employees focus
  • Improve productivity through empowerment (and more sleep)
  • Waste less time
  • Help us compete with economies (such as Germany) that have fewer people and work less, but produce more

A shorter work week creates a healthy sense of urgency. For example, Germany is the 17th biggest nation, but has the 4th biggest economy; the Germans work 1,436 hours a year compared to our 1,804. Per capita, the country rivals our productivity, and they mandate six weeks of vacation time annually.

In Sweden, they’re experimenting with six hour work days. Swedish startup Brath “produces as much if not more than its competitors,” and they’re able to do this because of concentrated creativity. Brath’s six-hour day and the accompanying morale boost attracts better employees and helps the company keep them.

Prioritize communication:

The Marketing Innovators paper I cited earlier made this key finding:

“Communication was identified as the single key organizational characteristic for explaining employee satisfaction; employee satisfaction is a key antecedent to employee engagement, and companies with engaged employees have customers who use their products more often, resulting in greater profitability.”

Increase profitability through open and frequent communication. Do you have introverted employees? Draw them out with open communication. Ask them questions. They’ll feel you value their opinion even though they don’t express it that often.

Are you still in the planning stages of your business? Document your planning and turn it into a story. When you bring on employees, tell them the story. I guarantee you they’ll want to hear it.

The bottom line:

What’s great about improving employee morale to increase ROI? It’s a simple idea, and simple ideas are the best. You’ve got your concept, you’ve got your people. What more do you need?

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Daniel Matthews
Daniel Matthews
Daniel Matthews is a freelance writer from Boise, ID with a passion for exploring topics ranging from company culture, the future of work, tech, entrepreneurship, and small business. Before becoming a freelance writer, in his twenties he helped launch two small businesses as a consultant.
Posted in Management

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