It seems intuitive to think that creativity is a key aspect of an innovative company culture, so therefore making your creative people happy is going to support your innovative efforts.

A recent study set to try and quantify this by testing whether there was any correlation between the way R&D staff were treated, and the innovative output of the company.

The researchers trawled through the KLD Socrates database to measure a range of employee engagement style metrics, before then cross referencing these scores with the patent output of these firms over a 20 year period (I know, I know, patents are a poor proxy for innovation).  To try and overcome this, the authors also looked at the citations each patent received from other patents, with the thinking being that the more cited patents were the more valuable.

Treating people well

The authors also attempted to isolate the treatment of employees from the various other things that influence innovation, whether it’s the size of the company, the investment in R&D, general income and cash levels, spending on capital and so on.

Once all of that was accounted for, the study did indeed find that companies that treated staff better produced not only more patents, but patents of higher quality.

To further test the theory, the authors then examined the stock market performance of each company in the study, with specific attention given to the days shortly after each patent was awarded.  The idea was to gauge the reaction of the markets to each invention.

Once the general movement of the markets was accounted for, it found a direct link between employee treatment and the number of patents, and that those patents were both highly cited and highly regarded by shareholders.

Not content with that, the authors then looked at the long-term performance of the company by its growth rate over the years following each patent.  Perhaps unsurprisingly, the same pattern persisted.

Interestingly, it also emerged that those top performing companies were also regular features on the 100 Best Companies to Work For list run by Fortune each year.

It’s been widely reported that when employees are happy they do better work, and what’s more, when they feel the company cares for them, they tend to care more for the company in return.  It’s perhaps inevitable therefore that creative staff who feel valued tend to do better work.

“Employees are crucial to corporate innovation, and firms that offer employees a greater voice motivate employees to participate more actively and creatively in the innovation process,” the authors conclude. “By offering their employees satisfying workplaces, firms can also recruit and retain talented people who play key roles in innovative activities.”