The employee experience is one of the strongest predictors of long-term business results. Here’s why.
When you invest in workplace culture, your business is more profitable.
Employees with consistently positive experiences in the workplace are more likely to stay with the organization. They experience less burnout, give higher levels of effort, and drive faster rates of innovation.
The cumulative result: Companies with high-trust cultures are more profitable and have higher stock market returns.
According to research from FTSE Russell, companies that make the Fortune 100 Best Companies to Work For® list outperform the market by a factor of 3.36. Over time, that is a staggering difference.
In 2023, recession fears have more companies looking to cut costs. With increasing pressure on business leaders to innovate and grow the bottom line, HR leaders must make their case: Workplace culture is a key predictor of financial success, in recessions and for years afterwards.
Here are five ways the data proves workplace culture drives profit:
1. Great workplaces have higher retention rates.
Companies that make the Fortune 100 Best Companies to Work For list — the flagship recognition list produced by Great Place To Work® each year — experience half the turnover of their peers. High-trust culture also helps companies recruit top talent. For the 100 Best Companies, employees are six times more likely to recommend their employer to others.
In the inaugural Singapore Best WorkplacesTM in Healthcare & Biopharma 2023, 90% of employees in Best Workplaces feel they work in a great workplace as compared to just 75% for the rest in the industry. 88% of employees at Best Workplaces say they take pride in their work and the organization as compared to 74% for the rest.
2. Great workplaces have lower levels of burnout.
Worried about productivity? Workers who are burned out might be “quiet quitting” rather than helping you reach crucial business goals. Or they might be actively seeking their next job.
Employees from the Singapore Healthcare & Biopharma Best Workplaces List share the top 3 things they value in their workplace culture.
– Can I count on my colleagues? 86% of staff ranked on the Best Workplaces List experience a sense of community, knowing they can count on their colleagues to cooperate (compared with 71% in other companies).
-Can I count on my leaders? 85% of staff say management deliver on their promises, compared with 67% at others.
– Are my leaders competent? 86% of employees say their managers hire the right people for the job (18% more than in other companies).
For the organizations on the 2023 Fortune 100 Best Companies to Work For® List, produced in partnership with Great Place To Work®, employees gave more in record fashion. Revenue per employee — a key productivity measure that every leader fixates on — increased an incredible 7% year-over-year for these companies. That’s almost double the 4% year-over-year revenue per employee increase among last year’s winners.
Profits don’t create great workplaces. It’s the other way around.
3. Great workplaces innovate faster.
When employees trust their employer, they work harder, contribute more, and drive higher levels of innovation and productivity.
In Great Place To Work research, the highest levels of innovation occur when every employee is empowered to participate — “Innovation By All.” For companies where higher numbers of employees report innovation and inclusion, median year-over-year revenue growth is more than five times higher than companies in the bottom quartile for connecting employees to innovation.
When workers agree that their colleagues adapt to change, that they look forward to coming to work, and that management seeks out new ideas, business results follow.
But it matters who is being left out.
Every survey will have a percentage of employees who are not having a positive experience. What should alarm business leaders is when certain categories of workers report having disproportionately worse experiences.
- Are your front-line employees being excluded from the broader mission of the organization?
- Do women managers feel as supported and celebrated as their male colleagues?
- Do all races, ethnicities, gender identities, and LGBTQ+ folks feel like they can bring their full selves to work?
If the answer is no — or even “I don’t know” — you don’t have an “Innovation by All” culture. With the best organizations seeing their revenue grow 550% faster than less inclusive organizations, it’s expensive to leave workers behind.
4. Great workplaces rebound faster from a recession.
In the ASEAN region, in 2022, we surveyed close to 146,000 individuals representing 260,000 employees across seven countries in ASEAN, across a wide range of industries and company sizes, including both local enterprises and multinational companies. Many of these organizations are Great Pace to Work Certified™ companies and Best Workplaces list winners.
What do employees value at their workplaces? Among our Certified community, these are consistent traits within the workplace: a positive, high-trust experience around inclusivity, innovation, fairness and integrity.
We also found that particular aspects of the work experience were vital for employees. They are: feeling treated as a full member of the organization, management following through on promises, and fair promotions and feeling welcome when joining new teams. Another critical experience is “Innovation By All” – a sense that everyone in the organization is invited to generate new and better ways of doing things.
5. Great workplaces have higher stock returns.
It’s not just short-term cost savings that make a great workplace culture so valuable to businesses. Research from Alex Edmans of the London School of Economics shows investing in workers leads to long-term business success.
Edmans analyzed the history of the 100 Best Companies lists from 1984 to 2009. Controlling for firm size, industry, past returns, and many other variables, Edmans demonstrated that companies on the list outperformed the stock market by 2% to 3% per year.
With the best organizations seeing their revenue grow 550% faster than less inclusive organizations, it’s expensive to leave workers behind.
But isn’t employee well-being just an indicator of running a profitable business? The more money you make, the more perks and benefits you can offer alongside inflated salaries, right?
Treating employees well doesn’t just correlate with higher stock returns, it predicts future performance. It takes four to five years before the market catches up to the value of employees’ job satisfaction.
Do you have a culture that you’re proud of?
Compare the experiences of your employees with the most credible benchmark data available. Learn more about our data in the upcoming How to get Great Place to Work CertifiedTM Webinar on 10 May, 2023, and how to earn Great Place To Work Certification.
Daphne believes in building community-relatable content, telling stories through narratives that add value in today’s workplace and in culture-building. Her idea of a great workplace is one that thrives on openness, support and inclusivity while building trust and working towards a common business growth and purpose. A journalist, she spent 15 years writing for trade publications, lifestyle magazines and broadsheet supplements. Daphne was also active in the Parent Support Group of her daughters’ school, chairing the volunteer-run committee for 3 years. A mum of two teenagers and two adopted dogs, she enjoys riding on her trusty bicycle to discover new sights and sounds in Singapore.
Ted Kitterman is a content manager for Great Place to Work®. Ted has experience covering the workplace, business communications, public relations, internal communications, work culture, employee well-being, brand purpose and more. His work shines a light on the unparalleled data and insights offered by Great Place to Work’s decades of research, helping the company share its vision of a great place to work For All™.