It’s been said time and again: Employees can make or break a business. But could the way management treats those same workers make a noticeable difference in the bottom line? New research suggests that it could. A report showed “for the first time” a positive correlation between a company’s use of worker-centered strategies and its financial growth.
Workplace policy research
Researchers at the Future Forward Institute, including Harvard lecturer Dr. Angela Jackson, compared workplace policies and practices with financial data for 355 companies on the Fortune 500 list. Their goal? Determine the financial costs and benefits associated with the strategies used in Jackson’s Win-Win Workplace framework, which focuses on centering employee needs and creating an equitable work environment.
A number of promising results came out of the research, including strong profit performance among businesses that ranked high in centering their workers’ voices. In fact, nearly half (44%) of those who did center workers voices were strong performers, which Jackson defined as being in the top 25% of the companies she analyzed. Similarly, 39% were also in the top quarter for their asset worth.
Companies that retooled their benefit packages to better suit their workers’ needs also saw strong profits—with 54% in the top quarter of profit earners—and valuation, where 56% were in the top quarter. Also, 47% were in the top 25% when it came to assets and profits as a percentage of their total sales.
All in all, the research suggests a strong correlation between employee-centered equity in the workplace and financial outcomes.
“If you look around with many interviews, most employers tell you we center [the] employee voice, we hear that all of the time,” says Jackson. “But if you look at research, you’ve got 63% of employees reporting that their employer doesn’t care about them [based on a Dec. 2020 Gallup Poll]. So, even if an employer feels like you’re centering them, you’re not centering them in the ways that matter… to them.”
Winning strategies for employers and employees
The Win-Win Workplace Framework consists of nine pillars aimed at maximizing the potential of human capital through equitable, employee-centered strategies. (An in-depth look at the pillars is included in Jackson’s forthcoming book: The Win-Win Workplace: How Thriving Employees Drive Bottom-Line Success.)
The first pillar is “Centering Employee Voices,” which the report defines as “creating formal channels for feedback from employees — and then using that feedback to improve the workplace.” It’s at the heart of the other eight strategies, so it’s no surprise that it emerged as the single most important pillar in the research.
For example, Jackson spoke about an unnamed, fast-casual restaurant in her research that included a 401(k) in its benefit package for non-corporate employees. The employer was surprised by the lack of participation in the program, saying that it was something he would have “killed for” when he first started out.
But when he took the time to get his employees’ input, they listed an entirely different set of priorities, such as caregiving benefits, transportation assistance and access to emergency funds.
Changes to the benefit package were made accordingly and Jackson’s research team revisited the question: Do you feel like your employer understands and cares about you?
“We saw that number go up by 15%, which is pretty significant,” she says.
Equitable treatment leads to financial success
Jackson gives another example of a food company that located production in rural areas where land was cheaper. But in the process, leadership didn’t realize that the lack of transportation in these areas would result in attendance issues and turnover. By listening to those who were struggling to get to work, the business was able to keep its employees by contracting with a transportation provider.
This type of proactive focus on equity for employees benefited the bottom in a few different ways. First, it kept production going. If not enough employees could make it to work, whole production lines could be shut down. Second, it kept turnover low and saved on hiring and training costs.
Jackson noted that the company tracked how adding these benefits contributed to the bottom line. “Lots of times in HR … when we talk about benefits, it’s seen only as an expense,” she says. “When headwinds are good, we have lots of money to invest in lots of programs. When things are leaner, some of those programs go away. And so the measurement is still a key. What we saw [was] the sustainability of these programs.”
Ultimately, Jackson’s examples and research demonstrate that, by valuing employees and giving them what they actually need to be successful, they can be empowered to perform better. Likewise, employees who are truly heard feel valued, increasing their level of engagement. And with better engagement and performance come higher profits. The report did mention that more research around these topics was needed.
“The future demands a new approach: The traditional workplace model hinders employee thriving. Businesses must embrace a future of work centered on employee well-being and participation,” the report said.
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