The employer-employee relationship is one of modern day’s most important relationships. When the match is good, the result for the employee is higher personal fulfillment, creativity, and productivity, which ultimately benefit the employer. When relations go sour, the stress on an employee can be crushing and the impact on workplace morale can spread.
So critical is this relationship that mobile apps, developed by companies such as Good.co and Plasticity, are using sophisticated personality tests and surveys to help boost workplace happiness, whether that means finding the perfect match between jobseekers and employers or helping companies better engage and motivate workers. Employers are also increasingly recognizing the importance of strong corporate social responsibility programs as a way to attract and retain top talent.
There is no shortage of research linking mission-driven work to happy workers. But a company cannot simply advertise itself as socially and environmentally responsible and expect to reap the human resources benefits. The ethos of the company has to percolate through the entire organization to ensure employees are happy – and that they stay that way.
Measuring happiness impact
In a 2014 survey conducted by Deloitte, companies that responded said leadership, employee retention, human resources skills, and talent acquisition were their most urgent issues. This is not surprising, as the cost to replace a skilled employee can average 21 per cent of an employee’s salary.
A study by SHRM Research found that happy employees are 87 per cent less likely to leave their organizations than disengaged employees.
This is common sense. But what makes employees happy? To help answer that question, San Francisco-based Net Impact conducted a survey, the results of which informed a report titled “What Workers Want in 2012.” It found that for 53 per cent of workers, having a job where they can make a positive impact was important to their happiness. That figure rose to 72 per cent for students about to enter the workforce, which according to Deloitte will make up 75 per cent of the global workforce by 2025.
It’s a message that hasn’t fallen on deaf ears. Companies have been tripping over themselves to implement worker engagement programs that help employees feel like they are having a social impact, said Michael Palanski, an associate professor at Saunders College of Business at the Rochester Institute of Technology.
But these programs, in isolation, do not necessarily lead to a happier workforce, he said. “There is a difference between being committed and being happy.”
An employee can be committed to a company’s mission and still be unhappy with how that mission is being carried out. “People are typically committed to an organization, but their happiness is determined by their immediate boss,” said Palanski, adding that value congruency between an employee and his or her supervisor is usually the crux of the employee retention problem.
If a manager is taking orders from the top without being committed to the cause itself, the employees reporting to that manager are less likely to be engaged. This supports an oft-repeated line by human resource experts: people don’t leave jobs, they leave people.
Aon, Canada's top global human capital and management consulting firm, conducted a survey of seven million employees across more than 6,000 companies in 68 industries and 155 countries. While the survey didn’t have an indicator called “my boss is a jerk,” most of the indicators are directly related to leadership style, said Ken Oehler, global engagement practice leader at Aon.
Tackling turnover
The major factors that determine worker engagement, such as career opportunities, communication and recognition, fall under the responsibility of senior management, said Oehler. “The concept of an organization as a thing is an illusion,” he said. “Organizations are made up of people.”
If companies can align their motivations with their actions and seek out employees who are equally committed, then they are likely to have a happy workforce, added Palanski.
It’s not easy to tell how many companies are actually achieving this goal. The causes of employee turnover are difficult to pin down because they differ from industry to industry and country to country. What is considered normal turnover for a fast-food restaurant in the United States could signal a crisis for a clothes retailer in Germany.
Nevertheless, the Global Reporting Initiative (GRI), a leading organization in the field of sustainability performance disclosure, has included employee turnover in its reporting standard since its first version was released in 2000.
Along with other labour-related metrics, employee turnover allows third parties to assess a company’s past and present labour practices, said Bastian Buck, GRI’s director of reporting standards.
But GRI acknowledges that employee turnover is a complex indicator. Understanding the specifics of the industry, economy and history of the organization is critically important, Buck explained.
This year’s Corporate Knights Global 100 ranking showed, as one example, significant differences in turnover rates for two Canadian gold mining companies: Barrick Gold and Kinross. The former had one of the highest employee turnover rates in 2013 at 14.6 per cent, while the latter only had a 5.7 per cent turnover that year.
Without more contextual information, one could speculate that employees at Barrick Gold are leaving because they are less happy, less motivated and engaged, than those at Kinross.
A quick Google search, however, reveals that the industry has been reeling from falling gold prices over the past two years. To cut costs, Barrick began to lay off employees in June 2013, while Kinross delayed cuts to its workforce until January 2014 – the latter not being reflected in 2013 results.
The problem is that current workplace turnover metrics don’t distinguish between voluntary and involuntary turnover, which is critical to understanding how well a company is performing outside of external economic factors.
Perhaps if we could see how many employees voluntarily left Barrick Gold compared to Kinross, we could more accurately conclude which company has the happier, more motivated and engaged workforce.
Until then, we can only speculate.
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