Staff satisfaction can treble profits, study claims

A new report reveals businesses that meet “high-performing” criteria, such as leadership style and employee wellbeing, are up to three times more profitable than other businesses.

At today’s Future Jobs Forum in Canberra, the Federal Government released a two-year study titled Leadership, Culture and Management Practices of High-Performing Workplaces.

The study, which cost $1 million to produce, is based on a survey of 5,600 employees from 78 major Australian companies and multinationals.

The index used in the study consists of 18 performance measures across six areas including financial indicators such as profit margin and productivity.

The remaining areas cover corporate attributes such as innovation, fairness, leadership, employee emotions and wellbeing, and ability to adapt quickly.

According to the study, businesses that meet these criteria are up to three times more profitable than their competitors.

In real dollars, high-performing companies with happy employees are up to $8.84 million more profitable each year than their low-performing counterparts.

This represents an additional $40,051 in annual profit for every fulltime employee.

However, only 15.5% of the companies sampled were deemed high-performing workplaces, including Microsoft and international geoscientific company acQuire Technology Solutions.

When compared with the low-performing workplaces, high performers were 12% more productive, up to three times more profitable and had 23% less staff turnover.

They were also 25% more innovative with regard to their products and services, and spent 29% more time managing their people.

Vicki Crowe, managing director of Canon Recruitment, says while she’s not surprised by the figures, they are worth making note of.

“At the end of the day, if employees are highly engaged and performing at their best, naturally that’s going to go down to the profitability of the company,” Crowe says.

“One of the most common things people say to me is that as an employee, they talk to their bosses but they don’t feel listened to.”

“Bosses need to engage their employees – keep them informed as to where the company’s heading – so they feel part of it. That seems to inspire a lot of people; feeling included.”

According to Crowe, start-up founders often expect too much from their staff, which can hinder their performance.

“A lot of start-ups fall into the trap of really pushing their people and expecting them to work at the same level they are, and it gets to the point where staff feel they’re not performing,” she says.

“Often people push employees in small business because you have to multitask, but they push people into areas they’re not comfortable in and their performance goes down.”

“You need to sit down with them and talk about how you can get the best out of them… I refer to the Vroom theory, which is a theory on expectancy of what people expect in the workplace.”

“If people derive satisfaction from what they go, get pleasure from it and feel they’re making a contribution, they will be high performers because you’re meeting all of their needs.”