What does your employees' well-being have to do with your company's performance? Plenty. First, some facts:
The long-term goal: When you join a company, you should expect your life to be better in many areas.
- Employees who are thriving in their overall well-being have 41% lower health-related costs compared with those who are struggling and 62% lower costs compared with those who are suffering.
- Overall well-being relates to illness, which is associated with lower employee productivity and missed work.
- People who have thriving well-being have a 35% lower turnover rate than those who are struggling.
So report Tom Rath and Jim Harter, Ph.D., authors of the bestseller Wellbeing: The Five Essential Elements, the result of decades of research into well-being. Their study revealed that well-being encompasses five distinct, interrelated elements -- Career, Social, Financial, Physical, and Community -- and all of them affect the bottom line.
In this interview, Rath, who leads Â鶹´«Ã½AV's workplace research and leadership consulting practice, and Harter, Â鶹´«Ã½AV's chief scientist for workplace management and well-being, tell how companies can improve employee well-being and boost company performance.
Â鶹´«Ã½AV Business Journal: How are most companies promoting well-being among their employees? And is it effective?
Tom Rath: Right now, many employers with good intentions plug in programs that aim to improve physical health -- a health risk appraisal is one -- and that might not be sending the right message to an employee. It says, "We're going to measure your physical wellness every year to see if you might be a risk and costing the company money," not "You're a valued individual worth investing in over time." As a result, these companies get very, very low participation.
So what is a better approach to promoting employee well-being?
Rath: The most important thing executives can do is send a very clear message to their employees that they care about each person's overall well-being and that they want to be a part of helping it improve over time. I've been encouraged by seeing the way some large employers have said, "We're going to start a dialogue about each of the five elements and help each person know why it's important that they spend a little time on their Social Well-Being, their Financial Well-Being, and being involved in the community."
That could make for quite a recruitment message: Take a job here, and we'll help improve your whole life.
Jim Harter, Ph.D.: I think people tend to enter a company through one or two elements -- Career Well-Being and Financial Well-Being -- and that drives so much of their behavior. But when you're thinking about any major life change, you should consider all five -- Career and Financial, of course, but also Physical, Social, and Community Well-Being -- and anticipate how those elements will be affected. That could influence a person's decision and ultimately, his or her well-being. Only 12% of employees strongly agree that they have substantially higher overall well-being because of their employer. We've got a lot of work to do.
Rath: If our economy, or the relationship between individuals and employers, was working correctly, that number would be at least 50%. Of course, employee engagement plays a part in this. Only 29% of Americans are engaged in their jobs, and only 11% are engaged worldwide. Those 11% who are thriving in Career Well-Being are also more than three times as likely as actively disengaged employees to be thriving in their lives overall.
Dr. Harter: I think the long-term goal is that when you join a company, you should expect your life to be better in many areas. After joining an organization, the reality of the experience needs to live up to the expectation. Many new employees find that the reality doesn't align with their expectation once they get past the six-month honeymoon period.
What happens if it doesn't?
Dr. Harter: Then your engagement drops, and that affects all kinds of other things. It certainly affects your productivity, it can affect your physiology, and we've got plenty of evidence that it affects your daily mood. Then you bring that home, and it affects your family. So there are many consequences.
The companies that have been working on engagement over the years have set themselves up well as it relates to well-being. They've built up some trust. Engaged workers can say, "I can trust what's going to happen. If I do something in the company's best interest, I won't be reprimanded for that." You know, that isn't the case in many places. Or, "I know that I have a chance to do what I do best. If I do something well, there's a pretty good chance I'll be recognized for it. I've got someone looking out for my future." All these kinds of things build trust, and trust allows people to open up a little bit more and allow the organization to help them improve their well-being.
Rath: That's part of what we need to turn around as well: increasing the number of people who trust their employer or their insurance company with sensitive information on personal topics. We need to get to a point where employers and employees can say, "We're in this together because high well-being is good for both of us, for personal and financial and emotional reasons."
Only 7% of employees strongly agree that their employer does things to help them manage their finances more effectively.
Isn't that a stretch for many employees and employers?
Rath: I don't think it's as much of a stretch as it may seem. I've spoken with a few employers who have moved away from what has to be some of the least attractive language you could use about health risk to start talking about well-being. As soon as they do, their participation rate goes up dramatically simply because they're reframing the conversation and how they want employees to be involved in a workplace. For well-being to take hold, it's got to be something that individual team members are getting excited about in their own lives. It can't be something that a company is forcing top-down through hierarchical structures.
Dr. Harter: When we studied great managers, it was clear that they were working on improving overall lives while they were improving performance. They weren't just improving the workplace; they were thinking about the whole person. Now we can quantify the difference that well-being can make for an organization. Well-being becomes much more than what you put on your mission statement -- it becomes an important part of what the organization practices with its employees every day.
How does that work in practice?
Dr. Harter: I think you just nudge.
Nudge?
Rath: I've seen people be effective, even among local teams, by offering something that improves well-being in a small way -- people who get passionate about smart investment strategies and managing finances for retirement, for example. They take ownership and say, "I'm going to teach the group about this." Another person who is passionate about Physical Well-Being can get the group moving. That works too.
Dr. Harter: That Financial Well-Being example is a good one -- we've seen it work in our own offices. We've had meetings at Â鶹´«Ã½AV where if you go sit and listen, you start thinking about your own Financial Well-Being. You don't have to do everything that you're taught. What the meetings do is kind of nudge your mind into a topic that you might not have thought about before, and you end up acting on it. Listening to those discussions and being a part of them allows you to individualize the message a little bit better and act on it, which I think is a big deal.
Only 7% of employees strongly agree that their employer does things to help them manage their finances more effectively. Well-being is not only about learning content with the expectation that you can apply all of it; it's more about making that content relevant to your own situation. Learning things from peers, especially in the financial world, matters a lot more than learning something from an expert.
Why is that? You'd think that people would see experts in well-being as more credible than their peers.
Dr. Harter: Experts bring new ideas, of course. But when you learn something from a peer, you're learning in a credible way how to apply it to your own life. I think most people don't want someone who makes a lot more money than them preaching about how to manage money, because they're not in the same situation. As far as well-being goes, the great thing about any company is that there's an established network of people, and any initiative works better if many people are working toward achieving the same thing and talking about what they're doing and why.
Rath: Many large, reputable, and admired employers are making being involved in the community a cultural value -- to the point that it's a core part of their brand. So you know that if you join that company, you'll find a social expectation there that creates what I call "positive peer pressure" -- the majority of your peers are going to be volunteering time and working to give back to the community. In one study, workgroups with the highest level of employee engagement -- those in the top quartile -- were 56% more likely to give money to the community, and they gave 2.6 times more money than people in less engaged teams. And nine in 10 of the people we surveyed said they get an emotional boost from volunteering.
Dr. Harter: That reflects back on the brand too. Organizations that are involved in their communities -- and that care about their employees and improve their overall well-being -- have a different image in the marketplace. That's a valuable advantage for potential employees and customers.
-- Interviewed by Jennifer Robison