Investment in employee wellbeing has been extensive for many years, but despite this investment, it’s been somewhat harder to ascertain whether the investment has paid off. New research attempts to plug that gap, with researchers collaborating with Gallup to examine the employee engagement data collected by the company since the mid-1990s.
In total, the study analyzed 339 different surveys undertaken by Gallup, which involved nearly 1.9 million employees from 230 organizations across 73 countries. The analysis reveals that there does indeed appear to be a correlation between investment in employee wellbeing and the subsequent productivity of that employee, and the overall financial performance of the firm. What’s more, this correlation appears to hold across industries and regions.
Wellbeing KPIs
The researchers examine four key performance indicators to assess the impact of wellbeing investment: customer loyalty, employee productivity, profitability, and employee turnover. Perhaps understandably, higher levels of employee satisfaction were strongly linked with lower levels of staff turnover, but also with greater customer loyalty. Staff were also found to be significantly more productive, with all of this resulting in higher profitability levels.
The authors speculate that the boost to corporate performance from wellbeing is linked with the working conditions in particular sectors. For instance, if the sector is relatively high stress with lower levels of work/life balance, then investments in wellbeing are likely to yield better results.
They are at pains to point out that correlation does not equal causation however, and the above can only be regarded as (informed) speculation as to the causes of productivity boosts seen. They do believe however that a strong body of evidence points in that direction, with higher morale strongly linked to higher performance.
The results suggest a strong, positive correlation between the wellbeing of employees and the overall performance of the firm. While the evidence to date does suggest this is indeed causal, there remains more work to be done to confirm this, especially analyses conducted in a real-world setting rather than lab conditions.
The authors believe that their findings highlight the importance of having a reliable and consistent measure of wellbeing within firms, and suggest that such a metric should have parity with similar ones for productivity and financial performance. Efforts to raise any of the three should work in unison so that policies designed to improve productivity or financial performance also have elements of wellbeing in them too.
This will also allow for more effective and rigorous analysis of any such initiative, with this more scientific approach helping to move wellbeing policies into a more analytical world where ROI can be clearly tested and proven. For the wellbeing movement to fully mature, it’s an evolution that cannot come soon enough.
