Workplace culture is a critical component of any organisation's success. Positive and healthy workplace cultures have been found to drive business profitability in many ways. By fostering a supportive environment that promotes employee engagement, productivity, and innovation, companies can achieve better customer satisfaction, brand reputation, and financial performance.
Investing in workplace culture is like planting a seed for future growth. If you don’t put in the time and resources to nurture the seed now, it will never have the chance to sprout and flourish. But, if you invest in it properly, the rewards will be bountiful.
FTSE Russell research shows that companies making the Fortune 100 Best Companies to Work For® list outperform the market by 3.33. That's a huge number.
Increasing recession fears in 2023 have companies looking for cost-cutting measures. HR leaders need to make their case to business leaders: Workplace culture is one of the most powerful predictors of financial success, both in recessions and years afterward.
High-trust workplace cultures can lead to higher employee engagement and productivity. When employees feel valued and supported, they are more likely to be motivated and committed to their work. According to our Great Place to Work statistics from the Trust Index Survey, among Ireland’s Best Workplaces, 83% of employees feel "people here are willing to give extra to get the job done", with this dropping to just 57% among non-certified organisations. This proves that when companies invest in providing an outstanding employee experience for employees, they are more likely to go above and beyond. This is a testament to the positive impact team building, communication, and great leadership can have on an organisation. It is clear that creating a great employee experience is key to boosting morale and engagement, and in turn, productivity. So, the moral of the story is, if you take care of your employees, you won't have to worry about them taking care of your business!
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Strong workplace cultures can also help attract and retain top talent. When employees feel connected to their workplace, they are more likely to stay with the company and recommend it to others, reducing recruitment and training costs.
The cost of replacing an employee in Ireland can reach up to €15,000 (1), depending on the level of seniority and expertise. However, companies that invest in a positive workplace culture have a lower turnover rate and can reduce these costs significantly. Some 78% of employees at Best Workplaces say they want to work at their organisation for a long time. By contrast, among companies that did not achieve Great Place to Work certification, just 50% of employees agreed with that statement. By having a positive workplace culture, companies can create an atmosphere that employees want to stay in, resulting in a lower turnover rate.
High-trust culture also helps companies recruit top talent. For the 100 Best Workplaces in Ireland, employees are two times more likely to recommend their employer to others. An impressive 81% of employees at Ireland’s Best Workplaces agreed that they would strongly endorse their organisation to friends and family as a great place to work. When people actually enjoy their work and the people they work with, they’re more likely to spread the word. Ensuring your employees genuinely enjoy their job and view their workplace in a positive light means they will be your biggest advocates for talent attraction. Having employees who are eager to spread the good word to friends and family about your organisation is one of the best sources of referrals. Your employees know your organisation inside out, and if they are choosing to endorse you to the people they are closest to, it’s clear there is a great workplace culture present.
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A culture that fosters innovation and creativity can lead to the development of new products and services. This can lead to increased profitability. When employees are encouraged to think outside the box and take risks, they are more likely to come up with innovative ideas. This can give the company a competitive edge.
Being a successful leader means listening to employees. Some 79% of those employed by our Best Workplaces felt that “management genuinely seeks and responds to suggestions and ideas”, compared with just 44% among non-certified organisations. This is likely because Certified organisations are committed to creating a culture of collaboration and engaging with their employees. As a result, employees feel more empowered to provide feedback and know that their suggestions and ideas will be taken into consideration.
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A positive workplace culture can also lead to better customer service and satisfaction. When employees are happy and engaged, they are more likely to provide excellent service to customers, leading to repeat business and positive word-of-mouth recommendations. A study by Accenture found that 51% of Irish consumers are willing to pay more for products and services that are provided by companies that have a positive impact on society. (2) This suggests that companies that prioritize corporate social responsibility and create a positive workplace culture can attract and retain more customers.
85% of employees at the Best Workplaces agreed that “Our customers would rate the service we deliver as "excellent.", contrasting this, just 62% responded positively at non-certified organisations. This indicates that the employees at Best Workplaces are better trained and motivated to deliver excellent customer service, compared to employees at non-Certified organisations. It also suggests that Best Workplaces have more effective customer service processes in place, which leads to better customer satisfaction.
Workplace culture can also drive profitability by reducing costs associated with absenteeism, turnover, and workplace accidents. A positive culture can help reduce these costs by creating a safe and healthy work environment, promoting work life balance, and fostering a sense of community and support among employees.
According to a study by IBEC (Irish Business and Employers Confederation) in 2019, absenteeism costs Irish businesses approximately €1.5 billion per year (3). This cost is based on direct and indirect costs, including sick pay, replacement costs, decreased productivity, and management time.
Regarding turnover, among the Best Workplaces employees, 72% think their job has a special meaning, versus 55% at non-Certified organisations. Therefore, it is clear that there is a direct correlation between commitment to employees, workplace satisfaction, and a decrease in absenteeism. When employees are engaged, they are more likely to have a sense of purpose and remain loyal to the organisation, thus reducing the costs associated with turnover.
Last but not least, a great workplace culture is first and foremost a safe workplace.
A very high 95% of employees at our Best Workplaces agree that their workplace is a safe place to work, and 74% of them think it is a "psychologically and emotionally healthy place to work". Contrasting this, 74% of employees at non-certified organisations think their workplace is safe, and a meager 39% agree that their workplace is a psychologically and emotionally healthy place to work.
In addition to being a crucial requirement, protecting employees' safety and health also helps save costs in several ways. Firstly, ensuring the reduction of workplace accidents, injuries, and illness. This, in turn, can result in lower workers' compensation claims and healthcare costs. Additionally, a safe work environment can enhance productivity and efficiency, leading to increased profitability.
In conclusion, workplace culture plays a crucial role in driving business profitability. A positive culture can lead to higher employee engagement and productivity, lower turnover and recruitment costs, increased innovation and creativity, better customer satisfaction, and cost savings. It is therefore essential for businesses to prioritise building a positive workplace culture to improve profitability and achieve long-term success.
About Great Place to Work®
Great Place to Work® is the global authority on workplace culture. We help organisations quantify their culture and produce better business results by creating a high-trust work experience for all employees. We recognise Great Place to Work-Certified™ companies and the Best Workplaces™ in more than 60 countries.
To join the thousands of companies that have committed to building high-trust company cultures that help them attract, retain and take care of their people, contact us about getting Certified today.
References
(1) Fingal Chamber, https://www.fingalchamber.ie/news/details/employee-turnover-more-than-doubles-in-12-months-as-employers-battle-to-keep-staff
(2) Accenture, https://www.accenture.com/us-en/insights/strategy/reimagined-consumer-expectations
(3) Ibec, https://www.ibec.ie/connect-and-learn/research/absence-report-2020