There appears to be two inter-related, socio-economic challenges that are affecting the workplace: persistent low productivity and the growing levels of poor wellbeing across almost every industry. Productivity can be affected by many, intricate things and across the world, events like the pandemic, the cost-of-living crisis, the 2008 financial crisis and Brexit can all be blamed for playing their part. However, part of our productivity collapse must be because our employees are losing hope.
In studies of mammals like rats playing with each other, larger animals develop more dominance hierarchies. The larger animal wins by pinning the smaller one down, but if they do this more than 70% of the time, the game breaks down and the small animal withdraws from play completely. I can’t help but believe part of what we are seeing at the moment is the smaller animal withdrawing from the game.
For millions, the social contract has broken down. Work was supposed to pay enough to live a comfortable life, yet millions in full time work are struggling to pay for essentials, home ownership among young people has now halved and record numbers of young number are still living at home. We have to work just as hard as our parents but aren’t getting the same deal they did. As a result, economically speaking, the under 40’s (now representing around 50% of the average workforce) are the unluckiest generation in history.
What do we know about the links between wellbeing and productivity?
There is a clear and very well evidenced link between those employees who are happy and healthy and their overall productivity. We also know that unhealthy and unhappy employees are less productive and less present at work. Common features of the modern workplace like burnout and stress have also been found to hamper productivity. However, despite this knowledge, some of our common attempts to grow productivity are actually harming our wellbeing.
For example, mass layoffs have been found to reduce productivity in 74% of those employees who are retained. Overtime (a tool used to attempt to achieve more from our people) is often associated with stress. Another example is contracting out. In the UK, the NHS attempted to improve productivity by contracting our cleaning services, but by doing so inadvertently harmed employee wellbeing and reduced productivity. The quality of hospital cleanliness reduced, causing issues with patients that created more work for employees.
So this poses a question for us to consider; if our pursuit of productivity gains has the potential to undermine employee wellbeing in the long run, and if wellbeing is a strong determinant of employee performance, this means that productivity growth may have the potential to double back on itself over time. Is our obsession with improving performance detrimental to the wellbeing of our people, or is there another way to create high performing teams?
What does high performance look like?
If we are to attempt to break the trend of growing low productivity, we must remind ourselves of what high performance looks like before we get into the ‘how’.
High performers tend to be 400% more productive than the rest of your employees. As a result, the top 5% of your employees will account for 25% of your people’s entire output. But high achievers have often been found to need more wellbeing support at work than other employees.
For example, high achievers have a higher rate of depression and are at higher risk of burnout. In education, when a school is marked as high performing, it tends to become designated a risk category as high performing schools will inevitably show students who struggle with their wellbeing. Additionally, some research has found that high performers tend to request more support for stress and wellbeing to maintain their high performance.
So how can we create high performing teams? How could we create more high performers and support those that are already achieving so much for us? The secret appears to lie in your approach to wellbeing.
High performance is high wellbeing
Some of the most modern and persuasive evidence in this area is showing that not only do we need wellbeing to sustain and create high performance, but it also actually has to come first. A major study spanning six countries over nine years found that, to have high performing teams, you must have high subjective wellbeing. Another looking at the performance and wellbeing of one million soldiers found that wellbeing actually predicts outstanding job performance. These two, large and compelling studies show us that happiness and wellbeing are more a cause of, than a consequence of success.
So this poses a question: Can we alter our current practices in such a way that productivity growth can be achieved without a detrimental effect on employee wellbeing so that we can bring some of that hope back to our people?
Engage more in activities designed to enhance and support wellbeing
One effective way to support employee wellbeing and positively impact employee performance is through low intensity wellbeing support, such as encouraging more movement. According to research from the University of Illinois, walking for just twenty minutes a day improves cognitive functioning and academic performance. We should also be doing more to ensure our people get quality sleep. I’ve calculated the ROI of a helping an employee to get a good night’s sleep to be around £2,000 a year to the employer in productivity gains.
In addition, the benefits you offer are also proving to have an impact on employee productivity. When we support an employee to build better financial resilience against knocks in the future, we can help them perform better. Financial precarity significantly undermines the quality of an employee’s output at work. Employees who are offered health insurance are more productive. Offering more employee recognition increases performance by 12%. The decisions you make around rewards, benefits and recognition are among some of the primary factors that will drive performance in your organisation.
We have so many, small but effective levers we can pull to help our employees to feel more fulfilled, protected, resilient and cared for. The more of them we can pull to support their wellbeing, the more we improve our company performance. Thankfully, more and more employers are now understanding this. Even in the unlikeliest of places, like the much aligned Amazon where outgoing CEO Jeff Bezos said in his last letter to investors and shareholders:
“Despite what we’ve accomplished, it’s clear to me that we need a better vision for our employees’ success”.
In the US, the Business Roundtable’s Redefined Statement of Purpose for Corporations agrees. This association of more than two hundred of the US’ leading CEOs from the likes of Walmart, Pfizer, Blackrock, Walgreens Boots, JP Morgan and Johnson and Johnson are all now committing to doing more to support their employees. The redefined purpose even goes as far as saying that we must invest more in our employees and that this starts with providing benefits.
Wellbeing is an essential ingredient of performance
There is a large, positive correlation between employee wellbeing and various firm-level measures of performance across all industries. According to a major study of 158,000 people across 450 employers, the healthiest workplaces save an average of 11.5 days of unproductive time per employee a year. That equates to employing another five people per hundred already employed! But a commitment to wellbeing must come first.
When it comes to performance, wellbeing is symbiotic. Evidence from studies of two million employees, covering three hundred and thirty-seven countries, over two hundred and thirty different organisations and forty-nine industries proves this. There is a significant, strong positive correlation between worker wellbeing and profitability. Another evaluation of the evidence by Harvard and Oxford Universities in 2023 shows the closest link yet between employee wellbeing and organisational success. Assessing fifteen million wellbeing surveys by employees at more than fifteen hundred publicly listed companies goes much further than proving causality, but points to the power of employee wellbeing to predict higher profits and share prices.
The decisions you make as an employer are providing a safety net against some of the worst things life can throw at your employees. Who wouldn’t want to work harder for a company that did that?
Gethin Nadin, award-winning psychologist and bestselling HR author