Employee wellbeing is about business results: the proof

There is a growing awareness of the impact that employee wellbeing programmes have on individuals, businesses, the economy and society. Along with this, interest has grown in the investment community in wellbeing as a leading indicator of financial performance and market value. Helen Wright explains how linking wellbeing to business objectives boosts performance, engagement and employer brand. 

Research shows that organisations with effective employee wellbeing programmes outperform the market. Wellbeing is more than just a “wellness” programme; it includes people’s physical and mental health and the social/relationship aspects of their work environment. It is a key driver of engagement, so, for many “employers of choice”, focusing on employees’ wellbeing is a conscious business decision.

Some wellbeing programmes may require investment, but the business benefits make it worthwhile. But to be effective, wellbeing does not always mean spending money. Recognising people as individuals, showing appreciation and treating them as adults by providing flexible working are no-cost ways of addressing work-life balance, a key driver of wellbeing.

Organisations now compete more on quality and innovation, which is driven by an organisation’s human capital. Caring for employees’ wellbeing not only ticks your duty of care as an employer, it also makes you more competitive and ultimately successful.

Working conditions

“If we leave the human factor out of our business calculations, we shall fail every time” could be a quote from any number of today’s business leaders. In fact, it comes from Victorian industrialist William Lever who, along with fellow business leaders Joseph Rowntree and John and George Cadbury, recognised that providing employees with not just good working conditions but housing and education for their children would help them flourish and be good for business.

Fast-forward a few hundred years and we see employers offering similar support to employees at key stages of their lives, such as helping them buy a home through preferential mortgage schemes or easing women back into work after having a baby through one-to-one coaching or buddy schemes.

Employee wellbeing affects not only the lives of individuals, but also has an impact on businesses, the economy and society. There is increased awareness of the non-fiscal aspects of wellbeing or “happiness”.

This has led to a number of government initiatives to try and tackle the growing issue of the effect that poor working environments have on employees’ lives and the cost to the economy through lost working days and increased sickness payments. These include guidelines published in June 2015 by the National Institute for Health and Care Excellence (NICE) for employers to help improve employees’ health and wellbeing and the government’s desire to measure how “happy” or satisfied people are through the national wellbeing survey (launched in 2010).

These measures serve as a reminder that when an employer takes on an employee, it also takes on their physical, emotional and psychological baggage, as well as their skills and experience, and so has a duty of care for their welfare.

What is wellbeing?

Wellbeing goes beyond “wellness”, as important as that is. It is a complex blend of the physical, psychological, social and relationship aspects of employees’ working lives. It includes factors such as their working environment and how they get on with their colleagues. Is the work/life balance right? Do people feel respected and valued? Are they treated fairly?

And what about the “hygiene factors” of life, the basic requirements for good health? If these could be made easier – for example, not having to wait weeks to get a doctor’s appointment or being confident that you could work at home without notice if the childminder is off sick – employees would be able to focus on their work.

One best-in-class media organisation has set up an onsite medical centre, which not only enables employees to get quicker and longer appointments than they would have on the NHS, it has also literally been a life-saver by spotting cancer early in one particular case. This, in itself, justified the investment required in setting up the medical centre, ably supported by the quantitative results from across the business.

Wellbeing measured

Great Place to Work runs employee surveys for its clients. These measure the levels of trust and engagement in an organisation and what drives them. Wellbeing is a key driver of engagement and, as such, it is measured through its surveys. These use a number of key statements to measure wellbeing, two of which are:

  • “This is a psychologically and emotionally healthy place to work”.
  • “People are encouraged to balance their work life and their personal life”.

When comparing the results of top-performing organisations – those who were ranked as Best Workplaces in 2015 – with the benchmark of average organisations, there is a difference of up to 29 percentage points in one key measure of wellbeing, which is to have an emotionally and psychologically healthy work environment. As well as having high scores for wellbeing, these organisations also have high scores for trust and engagement.

What drives employee wellbeing?

Through the organisation’s research, four key drivers of wellbeing have been identified:

  • values and ethics;
  • teamwork;
  • work and environment processes; and
  • recognition.

Values and their corresponding behaviours shape an organisation’s culture. A poor cultural fit or inappropriate, weak or non-existing values can all affect employees’ sense of belonging, job satisfaction and personal wellbeing.

Teamwork fosters collaboration and co-operation which, as well as being good for productivity and innovation, can help break down silos, increase employees’ sense of worth and create stronger bonds between colleagues.

Having the right tools and efficient supporting systems and processes makes it easier for employees to do the job they have been tasked with and removes or reduces some of the everyday irritations and barriers they face. These can lead to frustration and stress and make employees feel undervalued as the perception is the business is not prepared to invest to make improvements – or does not understand or appreciate the issues they face.

Feeling valued is a key part of recognition. One of the most common criticisms heard from employees about their managers is the lack of recognition they receive, from the simplest thanks for a job well done to managers not taking an interest in them as people. Showing simple but sincere recognition costs nothing, but the impact can be invaluable.

Examples include a personal note to the employee from the organisation’s head, or dinner for two for the employee and their partner – which also tacitly acknowledges that the employee has a life outside work which may have been disrupted if, for example, the employee has had to work long hours or away from home.

How line managers affect wellbeing

An employee’s relationship with their manager is a key factor in their wellbeing. Part of a manager’s role is to provide the kind of environment where people can flourish, both personally and professionally.

Many managers fall short on this part of their role, which can make life for employees difficult, or even unbearable, and can lead to staff turnover and the inevitable impact this has on the business. It is no surprise then that top performing organisations have better managers.

As reported in Personnel Today, research by Great Place to Work shows that there is a difference of between 33 and 61 percentage points between the top 10 best-in-class organisations (those ranked as Best Workplaces) and the bottom 10 unranked organisations when it comes to leading indicators of management quality. This naturally leads to poor engagement levels among employees – a corresponding gap of 42 percentage points between these organisations.

Does size matter?

There is often debate about whether or not it is easier for large or small organisations to have better wellbeing outcomes. Large organisations are seen as having the resources to fund benefits such as healthcare, generous maternity and paternity packages and attractive work spaces for relaxing or socialising.

Conversely, small organisations, while they may not be able to fund such facilities, are more likely to have the kind of emotionally and psychologically healthy environment where wellbeing can flourish. This includes the “softer’” aspects of the workplace such as team spirit or a sense of “family”, where employees feel valued and supported and where flatter management structures offer more scope for getting involved in decisions and projects.

Putting a price on employee wellbeing

Finally, the importance of wellbeing to the financial performance of a business is increasingly recognised by investors, who are looking at wellbeing and engagement levels as leading indicators of performance and market value.

Great Place to Work knows from its research how organisations can profit when they have effective wellbeing programmes. One organisation, a recruitment specialist, saw revenues more than double just five years after introducing a radical and innovative wellbeing programme. Staff turnover levels were down too, to a low of 16.7% in 2014 in an industry where the average is estimated at between 25% and 35%.

Research carried out by Professor Alex Edmans of the London Business School on Great Place to Work data showed that Best Workplaces, organisations which have high levels of employee wellbeing, outperformed the stock market by around 2%-3% per year over a 25-year period.

The desire of Victorian industrialists like Lever, Rowntree and the Cadbury brothers to improve their workers’ lives stemmed from their religious and philanthropic upbringing – it was the social mission that was the primary driver, not the profit.

Today, the notion of a social mission driving a commercial organisation can be found in many organisations. At Great Place to Work, the social mission is to help improve society by improving people’s lives at work. And the more that recognises and addresses the physical, psychological, emotional and social needs of employees the better.

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