The business case for building a happy culture at work.
Some might argue that the idea of building a positive, happy culture at work is a nice idea in theory, but an expense too far in uncertain times. I would argue the opposite and have laid out below some of the many reasons why it will not only save money, but also help grow your business:
Absenteeism
In the UK, on average, 5 days are lost per employee per year. That works out at about £750 per employee, or £9,000 pa for a small office of 12 people. Add in the extra work load for the remaining employees, the stress that creates, the resultant drop in productivity and happiness levels and the true cost of absenteeism begins to emerge.
Cost of Staff Retention
It is estimated that the cost of hiring a new employee (advertising for the job, time taken sifting through CVs, interviews etc) for the average job is around £2,500. Add to that the time taken training up a new employee and the inevitable loss in productivity, and the figure will be considerably higher. So for a small office the actual cost of recruitment and training could be well in excess of £10,000 pa.
Increase Productivity
In studies over the last 20 years it has clearly been shown that happy teams are 20-30% more productive than unhappy teams. Essentially that’s saying that if you are happy in your work, you will get a lot more done. What employer wouldn’t want their employees to achieve more, in the same time, without paying them more?
Company Value
In 2012 Professor Alex Edmans from the London Business School compared the relative rise in share prices of companies in the US ‘Great Places to Work’ list, with those not on the list. And guess what? The companies on the ‘Great Places to Work’ list outperformed the others by over 3%. Translate that into a 3% increase in your company turnover just by making your office a happy place to work…
Attracting New Talent
Attracting good quality staff is an issue that comes up time and again with employers. Some would say, and I would agree, that a company is only as good as the people you employ. So being able to attract good quality, new talent is key to the long term prospects of any company. George Ward of MIT university used figures from Indeed, when they started to include happiness data on their US businesses that advertise on their website. He proved conclusively that companies with higher happiness scores attracted more and better applications.
Stress and Anxiety
Studies have shown that happier teams have 55% lower stress levels. This, in turn, leads to less time off work and fewer internal conflicts. Recently levels of stress and anxiety at work have gone through the roof, especially since the pandemic and are a major reason why productivity levels in the UK have stalled since 2008.
Customer Service
Who would you rather do business with- someone who is happy and confident in their job, or someone who is stressed and unhappy? Which company are you more likely to recommend to others? It doesn’t need a research paper to tell us which most people would prefer but how much more business could your company attract if your customer facing employees were happier in their roles?
Creativity, Collaboration and Innovation
Studies have shown that, when given a lateral problem-solving task, 75% of people in a positive mood solved the problem, whereas only 20% did when in a neutral or negative mood. Creativity and collaboration are key ingredients for innovation. Positive teams have also been shown to collaborate and support each other when under pressure.
So it would be misleading to think about building a positive culture in terms of an added cost on an already stretched list of expenditure. Instead it should be considered alongside the saving it will generate and the growth it will stimulate across the business. It will give your employees a greater sense of belonging, a loyalty and a commitment that will be the envy of your competitors. When times get tough, as they do for every business, happy, engaged employees will help pull the business through; and in better times, the business will fly. It’s a win-win for all involved.