Positive Work Cultures Are More Productive

Creating a culture that is both customer-centric and employee-centric is possible

Published: Wednesday, January 16, 2019 - 13:01

“Although there’s an assumption that stress and pressure push employees to perform more, better, and faster, what cutthroat organizations fail to recognize is the hidden costs incurred.”
—“Proof that Positive Cultures are More Productive,” Harvard Business Review

The timeworn industry standard is to focus on purely bottom-line results. Productivity-obsessed leaders, however, experience a massive, and often invisible, cost of doing business this way. News outlets report that employee burnout is costing U.S. business alone more than $300 billion in labor costs annually. Voluntary separations and employee churn are well documented in companies, but what is less well documented are healthcare costs, which are increasing rapidly, according the U.S. Bureau of Labor Statistics.

Simply put, your “machines” are breaking down on you, and most leaders are failing to see it. In any average company, human capital is the primary expense. This means that your people have the highest replacement cost, and the highest value. I am arguing that you should start treating them as high-value assets.

It’s well proven that employees take about four months of time to train, with associated costs. In companies that haven’t resorted to 1099s primarily, there are healthcare costs associated throughout the year. Not to mention your churn rates, unemployment, recruiters, and all of the other expenses attached, should any employee choose to leave.

The cost of implementing more holistic management systems that take care of your human capital quickly become cost effective, once all your invisible costs of the old management style are brought to the surface.

I first noticed this trend at the beginning of 2017, and increasingly this year. In my work in culture design, historically leaders have wanted to employ culture-based management systems that improve engagement and productivity. But then the opposite started happening. CEOs started coming to us with the opposite issue: How do I make my teams work less?

I dug through the research and found the following statistics, and solutions, for rethinking the people-side of your business.

There is an unseen cost to workforce management systems that drive productivity alone. Research shows that company cultures with high-stress workforces are shown to have 50 percent more healthcare costs associated, 40 percent more absenteeism, 70 percent more accidents, and are far less likely to be recommended as great places to work.

The reverse is also true in noteworthy and surprising ways. Low-stress, high-productivity cultures are found to have four times more productivity with less “hand holding” from management and two times the revenues of their competitors, as reported by Harvard Business School researchers.

When employees are aligned and engaged to a bright future, on a mission that they want to be a part of, performance improves with far greater innovative outcomes and less friction.

In an environment of low complexity (for example, manufacturing workers on basic machines), mindfulness at work is shown to have an incremental gain. In medium-complexity organizations, the productivity gains from mindfulness become exponential. In high-complexity organizations, the productivity gains become what Harvard researchers call a “breakthrough organization.” Achieving breakthrough organizations are what the few culture-centric businesses have done that have achieved name-brand recognition for culture: Zappos, Four Seasons, Nordstrom, Quicken Loans, Southwest Airlines. According to James Heskett, Earl Sasser, and Leonard Schlesinger in What Great Service Leaders Know and Do (Berrett-Koehler Publishers. 2015), a breakthrough organization is one that provides extraordinary value to both customers and to employees, not necessarily at low cost, but with extraordinary returns to shareholders.

Achieving a breakthrough organization is achievable for any leadership team willing to invest in designing for the future of work. Creating work that is both customer-centric and employee-centric is possible. Designing for the future of organizational culture with new mindsets and innovative systems is how great organizations achieve long-term returns that cannot be replicated by their competitors.

First published Dec. 3, 2018, on the thoughtLEADERS blog.

About The Author

Jessica Higgins

Jessica Higgins is a marketing and culture expert whose research and publications help leaders and everyday people understand emerging trends. Higgins is a Black Belt in the field of Lean Six Sigma with specialty in systems design (DMADV), a certification in Behavior Design, a Juris Doctor of law, a Masters of Business Management, and Bachelors Degrees in Behavioral Psychology and Political Science.