Family-Like Workplaces More Profitable
Businesses using employee-friendly, family-like policies prosper more than traditional, tightly controlled operations. That's one conclusion found in a study by the Gevity Institute and Cornell University's Center for Advanced Human Resources. To learn all four major conclusions, continue reading.
It's not magic that separates outstanding profit-performers from average and mediocre businesses.
The significant keys to profit growth and stronger employee retention, according to findings in a study of 323 businesses, are more employee-friendly and family-like human resources practices. The study was done by the Gevity Institute, a Bradenton, Florida human resources research organization, and Cornell University's Center for Advanced Human Resources.
Following are the study's four significant findings:The researchers surveyed top managers, owners and employees in 323 businesses, ranging in size from 8 to 600 employees. The average number of employees was 53.
1. Hire for culture-fit... not job fit.
In other words, hire people who fit the company's culture. It's more important that new employees fit the organization than that they have the skills to fit the job.
"Overall, we found that companies that followed a person-organization fit showed significantly higher firm performance than did companies following a person-job fit strategy," the research report states.
"Our results suggest that firms have higher financial performance and much lower turnover when following a hiring strategy of attracting, finding, and selecting employees that are a fit to the culture and values of the organization."
Businesses using the person-culture fit hiring strategy, the study found, have 7.5 percent higher revenue growth, 6.1 percent faster profit growth, and 17.1 percent lower employee turnover.
2. Strive for self-managed, empowered employees... not management-controlled employees.
Give employees greater discretion and trust, and empower them. Relax the tight controls on employees, relax the close monitoring of employees. Instead of managing with tight controls on employees, foster employee involvement and self-management. Give employees a great deal of discretion to monitor their own performance and trust employees to get the job done right the first time without direct oversight, the study concludes.
"Overall, we found that firms following [the] strategy of involvement and self-management showed significantly higher revenue growth and employee retention than companies following a tight control strategy," the research report states.
Firms using the employee self-management strategy, the study found, have 11.5 percent higher revenue growth, 3.9 percent faster profit growth, and 15.1 percent lower employee turnover.
3. Motivate with employee-friendly, family-like practices... not with more money.
The study looked at two, contrasting methods for motivating employees.
One, the more traditional, commonly accepted motivational approach is to use "individual monetary incentives." In other words, "companies can just show people the money." As the report notes, "Companies that use money to motivate people pay higher wages than their competitors. They also use [financial] incentives to attract, reward, and retain their people."
Two, the family-like community and environment approach. As the report states, "companies that create a family environment seek to create a strong attachment to the company and to other employees..." This employee-friendly, family-like approach includes practices like these: sponsoring company social events and outside activities, holding regular company-wide meetings to share information about the company with employees, and providing challenging work opportunities.
"Overall, we found that companies that follow an HR strategy of motivating employees by creating a family environment have significantly higher profit growth and employee retention than do companies following the individual monetary incentive strategy," the research report states.
Companies using employee-friendly, family-like motivation strategies, the study found, have 3.8 percent higher revenue growth, 13.3 percent faster profit growth, and 19.1 percent lower employee turnover.
4. Use all three of the HR strategies described above to achieve the best results.
The study found that the greatest improvements are in businesses using all three of the employee-friendly, family-like HR practices. These firms average a 22.1 percent higher revenue growth... 23.3 percent higher profit growth... and a 66.8 percent reduction in employee turnover.
Size and competition matter, also. All companies in the study were under 600 employees in size. The study concluded that as firms grow larger than 50 employees, the impact of these HR strategies is greater. In addition, the study's findings "strongly suggest that companies facing intense competition get the most return from implementing [these] HR strategies..."
RETENTION IMPACTS ROI:
- The cost of losing an employee in the first year is estimated to be at least three times the salary
- New employees who went through a structured on-boarding program were 58% more likely to be with the organization after three years
- 22%of staff turnover occurs in the first 45 days of employment
- Many companies leave executive on-boarding to chance and as a result experience failure rates in excess of 50% when it comes to retaining new executive talent
Let HRC help you develop an employee onboarding process that will:
- Increase employee job satisfaction levels
- Result in higher retention of high-performing employees
- Foster continued employee engagement and commitment
- Lead to faster time-to-productivity