7 research-backed ways employee well-being affects your company’s performance
Have you thought about why employees stay at a company?
Employee retention is one of the biggest concerns of HR managers, and with good reason. When good employees leave, the cost to find and replace people usually starts around 150% of that person’s salary. When someone good leaves your company, projects get delayed. Team dynamics change. And then there’s the learning curve associated with any new person getting ramped up to take over where the other employee left off.
Sometimes when an employee leaves, it’s unavoidable.
But much of the time, it is avoidable. And by spending just a little more time looking at what makes employees want to stay at companies, you can save yourself a lot of headaches later. HR managers have been focused on employee retention for many years. However, there is a limited number of levers they can use to impact employee retention. If only there was something new in their toolkit…
Enter workplace well-being. The issue of well-being in general has been popular for many years. However, no one had really applied the ideas of well-being to the workplace.
So in 2016, we began a multi-year effort to examine the potential impact of well-being at work for organizations. To do this, we included a set of established organizational outcome measures related how well a company performs. And the correlations we found were pretty incredible. Not only did they relate to organizational performance, but also to employee retention.
Make sure to read to the end to download the tip sheet to enhancing well-being!
A quick statistics refresher (skip if you know it)
The numbers you’ll see below are correlations. The word correlation comes from co- (meaning together) and relation (belonging to the same family, connected). Correlations work on a scale from 1 to -1.
If a correlation is zero, it means the two things aren’t related.
If it’s a positive decimal number between 0 and 1, it means these two things are positively related. If thing one goes up (well-being), then thing two goes up (job satisfaction).
A negative correlation means the number is between 0 and -1, and if thing one goes up (well-being), then thing two goes down (turnover intention).
Last note: correlation doesn’t mean one thing causes the other. It just means there’s a statistically significant connection.
So, what did the research find?
Higher well-being, higher job satisfaction
Employee workplace well-being had a .787 correlation with employee’s job satisfaction. Job satisfaction means how happy an employee is with their current position – the job that they do every day. This means that for every bit you can increase your employee’s well-being, there’s a positive increase in how they rate their job satisfaction. This means that efforts made towards improving employee well-being should also result in an increase job satisfaction.
Higher well-being, higher company loyalty
Affective commitment is essentially the same as company loyalty. Affective commitment is part of Meyer and Allen’s Three Component Model of Commitment that explains an employee’s commitment to an organization as a psychological state. Basically, each of these three components (affective commitment, continuance commitment, and normative commitment) affect how an employee feels about the company that they’re working for.
Affective commitment is an emotional bond to the organization. Do they like the people they work with? Do they like their supervisor? Do the company’s mission and values align with the employees values? If you have a high level of affective commitment to the organization, you enjoy your relationship with your company and you’re likely to stay because you want to stay.
Higher well-being, higher organizational citizenship behavior
Organizational citizenship behaviors are things that you do for your company that’re above and beyond your job description. Things like volunteering for a committee or helping out a coworker that needs a hand moving boxes or supplies. For example, at The Myers-Briggs Company we have a Diversity and Inclusion committee, and being part of this committee is not part of anyone’s job description. It does take extra time, but it’s something that ultimately is good for the company culture and the people in your workplace community. At our company, joining a team or committee like that would be an example of an organizational citizenship behavior.
Research found that when employees have a higher workplace well-being they also have higher levels of organizational citizenship behaviors. And organizational citizenship behaviors are positively connected with company performance outcomes.
Higher well-being, more likely to help coworkers
There is also a positive relationship between workplace wellbeing and employee’s individual organizational citizenship behavior. Compared to organizational citizenship behavior (OCB) above, individual OCB specifically talks about helping coworkers individually above and beyond an employee’s job description. Individual OCB is ‘I help my team members’ and OCB is ‘I help my organization.’
Sign a coworker’s birthday card? Help organize a happy hour or holiday gift exchange for your team?
People who have a higher employee well-being also report being engaged in activities to help their coworkers above and beyond their job description. And organizations that have higher individual OCB tend to have higher organizational performance.
Higher well-being, employees less likely to say they want to leave the company
If an employee is planning to leave the company in the near future, but not actively searching for a job, they have a high turnover intention. Generally, the question we asked is if people are looking to leave their current job in the next 1,2,3 or more months.
As you know, high employee turnover is a big problem for HR. Not only does it take time to get things in order for that employee to leave, but then the burden falls on HR to update the job description, search for and find new job candidates, go through multiple rounds of interviews, and onboard those candidates.
But this research has found that as employee well-being increases, employee’s turnover intention decreases. And as turnover intention decreases, so do HR headaches. A lower employee turnover rate has a positive effect on organizational performance outcomes.
Higher well-being, employees less likely to be searching for a new job
“Over the years on the issue of employee retention, a lot of times people leave a job for things that’re beyond their control. Maybe they were in an accident, had a heart attach or maybe they even retired. But other times people leave because they don’t like the job,” said Dr. Rich Thompson, Sr. Director of Research at The Myers-Briggs Company.
“If you ask people ‘do you have any intention of leaving’ they’ll often say ‘yes, I do, I’m planning to leave.’ But if you ask if they’re actively searching for a job, a lot of times people will say no. So there’s a disconnect in people’s behaviors at times compared to what they report. This is why we ask about both turnover intention and job search.”
The employee well-being research shows that as employee well-being increases, job search decreases. And fewer employees searching for a new job is connected to higher organizational performance.
Higher well-being, lower continuance commitment
First of all, what is continuance commitment? It’s part of Meyer and Allen’s Three Component Model of Commitment that explains an employee’s commitment to an organization as a psychological state. Basically, each of these three components (affective commitment, continuance commitment, and normative commitment) affect how an employee feels about the company that they’re working for.
Continuance commitment is essentially amount which you think that leaving the organization would be costly to you. When an employee looks at the pros and cons of quitting, they might think about the risks. Things like losing your salary, your seniority at the company, and perhaps even losing your work friends. The theory states that older employees have a higher continuance commitment because they have more to lose if they were to quit.
A high level of continuance commitment means employees stay with the organization because they feel like they must stay because the risks of leaving are too high.
Our research found that as employee well-being increased, they felt they had less to lose if they left, which is ultimately better for the organization’s performance because employees stay out of wanting to stay, not because they feel like they have to stay.
Want to learn more about what you and your employees can do to help your well-being? Check out our tips here on what employees and employers can do to monitor and enhance well-being at work.