Can today’s employee morale predict future company profits?
Can today’s employee mood predict future company profits?
The short answer?
Research shows that profits at one point in time are predicted by employees’ feelings about the company at earlier points in time.
By tapping into an ongoing People KPI you can take action in time to avoid problems in the future, and maximize sales and profits through higher employee engagement.
Happiness in the workplace = increased company profits
Researcher James Harter and his colleagues found in their Gallup study that business unit sales and company profits at one point in time are predicted by employees’ feelings about the company at earlier points in time.
A team of economists led by Andrew Oswald, a professor of economics at Warwick Business School, found that “Happier workers … were 12% more productive. Unhappier workers were 10% less productive.”
Consider the implications
“If happiness in the workplace brings increased returns to productivity, then human resource departments, business managers and the architects of promotion policies will want to consider the implications.” the team said.
Dr Bruce Rayton, from the School of Management at the University of Bath, says: “Engagement predicts future performance better than performance predicts future engagement. In particular, engagement predicts performance several years into the future.”.
So what would you base your predictions on?
Many of today’s ‘best practices’ in companies were invented under very different business conditions, and are increasingly being seen as not in tune with today’s fast paced business world.
The annual employee survey is one ‘best practice’ example that got under heavy fire when we interviewed 120 companies around employee engagement.
This is why we recommend getting continuous and updated insights into how your people are doing at work.
Don’t just analyze trends from the past…
According to AON’s analysis, each incremental percentage of employees who become engaged would predict an incremental 0.6% growth in sales (therefore, a 5 percentage point improvement in engagement predicts a 3% increase in sales growth).
Most departments deliver predictive analytics, it’s expected and required. But how correct are these predictions if the people that are going to execute the plans are on a completely different track or following a different curve… which you won’t spot until the next employee survey in 9 months?
How does Acting-Too-Late translate into euros or dollars?
…analyze the future!
Sales leaders predict their future sales numbers by checking how much they sold in earlier periods, how they trend up or down, the number of new clients entering the sales funnel and then they come up with some numbers to predict future sales.
By tapping into an ongoing People KPI you can maneuver in time to avoid problems in the future, and maximize sales and profits through higher employee engagement.
As research shows, this way you can easier predict your company’s future sales and profits.
And take action to shape a brighter future if you don’t like your prediction…
Curious about a device to measure employee mood in real-time?