Happy employees contribute to better profits, says global report

The financial returns are higher for companies taking care of their employees, reveals a report by Globoforce WorkHuman and IBM Smarter Workforce.

Companies that score high on employee experience have better financial results as well. This reiterates the fact that employee happiness is a must for organisational success.

The newly published report, The Financial Impact of a Positive Employee Experience, by IBM Smarter Workforce Institute and the Globoforce WorkHuman establishes that employee experience is positively associated with employee work performance, discretionary effort, and turnover intention.

A key finding of this report is that organisations that score in the top 25 per cent 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.

For this report, psychologists and experts in HR consulting from Globoforce and IBM surveyed 22,000 employees from across the globe, belonging to a cross-section of industries in thousands of organisations.

The investigation also resulted in the creation of the Employee Experience Index (EEI), which measures employee satisfaction under five headings— belonging, purpose, achievement, happiness and vigour.

Companies, which managed to score highly on EEI, reported returns that significantly outpace those of companies that didn’t perform well. The report is quick to stress that cashing in on this fiscal boost does not need to be a costly affair. It highlighted that improving employee experience is not resource-intensive but really more about making some key changes that will create a more ‘human’ workplace.

Globoforce and IBM stated that a human workplace is one characterised by 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.

The study suggests that senior leadership and managers play crucial roles in creating many of those opportunities and ultimately ensure a positive and supportive work environment.

However, the study reveals that a majority – more than 70 per cent – of HR practitioners think that senior leadership could be doing more to improve employees’ experiences at work.

Organisation also need to improve on on two key parameters – work-life balance and better recognition for employees. According to the report, less than a quarter (22 percent) of hr practitioners say that  say their organisations do enough to provide opportunities to recharge, and less than half (49 percent) say there is sufficient recognition of the good work that employees do.

The report also stresses on recognising the humanity of employees and treating them as such.

Previously, this report released the rankings of international countries in which employees reported the highest levels of employee experience.

In the current report, this index has been married with analyses 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.