The golden rule - Your company will be more worth with satisfied employees
We have heard the phrase "make your loved one happy and you will have a happy life". The same can be said about the relationship between employees and market value, according to a Harvard Business Review study conducted by Glassdoor. The more satisfied the employees, the higher the share price rises - and the customers become happier too.
It is biological You may know that if you yawn (or pretend to yawn) it is very common for others to yawn directly after you. You do not even have to see the yawning itself to become "infected" and it is not about any kind of hormones transmitted by the air. In fact, it is enough to read about it or hear the sound of a yawn in order to "get going" yourself. Researchers have long studied the phenomenon and some of the hypotheses were that the susceptibility to being affected was due to fatigue or boredom. But that did not explain the actual reflex that causes others around to start doing the same. Then came an English psychology study at Leeds University (2007) where research leader Catriona Morrison pointed out that empathy is the cause. The reflex thus not only applies to yawning but is quite universal. We humans are simply "infected" by how others are feeling and there is nothing we can turn off when we go to work as employees or to business as customers.
A new study presented in the Harvard Business Review by recruitment firm Glassdoor shows similar relationships between employee satisfaction and market value. The way to the customers' hearts goes through the employees.
Clear connections Glassdoor, one of the world's largest job and recruitment companies, compared its own ranking list "Best Places to Work" with Fortune's "Best Companies to Work For" and the stock market index S&P 500. Glassdoor examined a large amount of variables and data that ranged over a ten-year period (2008-2018). Among other things, they looked at 300,000 customer ratings of various products and services according to the American Customer Satisfaction Index (ACSI). They compared the employees' reviews of the workplaces in question. It included 293 large employers in 13 different industries.
The results pointed with great clarity in one and the same direction: Employee satisfaction has a direct connection to companies' profits and stock market values. Companies that place themselves on the top lists of the best workplaces see their share prices jump up by a growth rate of close to 1% (75 thousandths). Conversely, the least popular employers outperform.
Complementing previous knowledge Already in the early 1900s, merchants understood that customer satisfaction is important. It is from that period that the expression "The customer is always right" comes. That insight is pretty much accepted today. That is, satisfied customers will return, while too many dissatisfied customers will cause the company's income to fall and that in the worst case, companies may close down if they do not sharpen. Investors and stock market savers are watching this and are also awarding it: The more satisfied customers, the more the company simply becomes worthwhile.
Of course, in markets where there is a monopoly, it does not matter if the customers are satisfied. They have nowhere else to go. But in saturated markets with many competitors, where everyone competes for the customer's money and favor with equal products and services, where companies must constantly look for new ways to differ from the crowd.
This is where Glassdoor has found a competitive edge in the connection between not only how customers feel but also how employees feel. For the well-being of the latter they affect the former. This was particularly noticeable in industries where there are frequent interactions between corporate employees and customers, such as cafe chains and malls, but also in contexts where the connections are not as obvious. Corporate culture and activation of employees' commitment should simply not be underestimated or ignored in profit calculations.
It pays to be nice. We already knew that. But yet.
Understanding of "Biblical Proportions" The understanding of this psychological mechanism seems to have persisted for thousands of years. Many people also recognize the Bible's "Golden Rule": "Treat others the way you want them to treat you." (Matthew 7:12)
Obviously there is more to the proverb than just moral cues and sermons from religion and politics. In any case, it seems that this rule of law and etiquette is a basic prerequisite for good business, for purely psychological reasons. Your company is worth more with satisfied employees. You put the customer first by caring and putting the employees first. Win-win for everyone!
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