Organisational Behaviour

Employee wellbeing and organisational performance
16074365
November 12th
, 2017
Business administration
Organisational Behaviour 6BUS1142

Table of Contents
Introduction .....................................................................................................................................1
Wellbeing initiatives .......................................................................................................................2
1. Business performances...................................................................................................2
1.1 Customers .........................................................................................................2
1.2 Profit and Productivity.......................................................................................3
1.3 Innovation ........................................................................................................3
2. Personal indicators .........................................................................................................4
2.1 Employee turnover ............................................................................................4
2.2 Absenteeism ......................................................................................................5
2.3 Health and safety ...............................................................................................7
Conclusions......................................................................................................................................8
References........................................................................................................................................9

Introduction
Throughout the years, there has been a shift from manual labour jobs to office-based work. In
fact, in 1981, one out of three men and one out of five women had a manufacturing job whilst, in
2001, this has decreased to one out of five and one out of ten respectively. In addition to this
decrease, there was an increase of workers in the service industry which changed the employees‟
expectations of their working environment (Building a case for wellness, 2008). Today,
employees require more personal services beside health and safety benefits as they are less likely
to be injured at work. They are hoping for more flexibility such as the ability to work at home
and the flexibility to customize their schedule. When it comes to improving employee
engagement and wellbeing, this evolution creates a transformation from a classical managing
approach to a more human relations managing approach.
Employee engagement is a concept that has become more and more important in organisations
despite the fact there exist no unique general definition. According to the report made by Engage
for Success, employee engagement is defined by a “ workplace approach designed to ensure that
employees are committed to their organisation‟s goals and values, motivated to contribute to
organisational success, and are able at the same time to enhance their own sense of
wellbeing”(MacLeod and Clarke, 2014). Currently, the UK has both an employee engagement
deficit and a productivity deficit. Some argue that those two deficits are correlated. Moreover,
the UK has more than 2.4 million untrained managers which cost the economy £84bn each year
(Chartered Management Institute, 2017).
Based on academic resources, case studies, primary and secondary research, this report will
critically analyse the evidence that employee‟s wellbeing has a positive impact on employee
engagement which improves organisational performance. In this report, an improvement in
organisational performance will be denoted as either an increase in productivity or take the form
of cost saving.
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Wellbeing initiatives
Wellbeing is a state where an individual feels good and functions effectively. He is able to
handle both the stress of his personal and work life productively while contributing to his
community (MacLeod and Clarke, 2014). Wellbeing and productivity can be measure based on
business performances and personal indicators.
1. Business performances
1.1 Customers
Highly engaged employees pay more attention to customers which affects customer retention
positively. Loyal customers are the most valuable clients since they are more likely to repurchase
and recommend the company than new customers. Customers need to be listened to and
understood. PwC, a firm that provides professional accounting and advisory services with more
than 16 500 UK employees, implemented a framework called „„The deal‟‟. The deal helps the
organisation to put emphasis on employee recognition and personal growth by improving their
workplace and reward them fairly. The deal assures that people have the ability to create long-
lasting relationships through the firm (Figure 1).
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PwC also established other programmes where people managers provide support and advice to
each employee. There are workshops where employees learn how to effectively deal with
demands of customers (PWC, 2017a). PwC found that „„70% of engaged employees indicated
they have a good understanding of customer needs compared to only 17% for non-engaged
employees‟‟ (Rayton et al. 2012). It also found that client advocacy also increased; Clients are
8.52 out of 10 more likely to recommend PwC (Our sustainability performance data and
commitments, 2017).
1.2 Profit and Productivity
Profit is a strong motivator to organisations as it is directly linked to its survival. Organisations
are constantly trying to find ways to increase financial performances. Over a study period of 1
year with 50 different companies and 664 000 employees, companies with highly engaged
employees improved their operating income by 19.2%, while companies with low engagement
rate had a decline of 3.8% ( Rayton et al. 2012). Some may argue that it is performance that
drives employee engagement, however, Marcus Buckingham disagrees. According to him, „„the
relationship between engagement and performance [is] four times stronger than the reverse,
leading him to conclude that it [is] engagement that [drives] performance‟‟ ( Rayton et al. 2012).
Organisations have to invest in programmes that increase the employees‟ wellbeing which will
then create an attachment between the employees and the organisation. Once the employees feel
engaged, they will invest themselves into the company which will have a positive effect on the
productivity and ultimately generate profit.
1.3 Innovation
Innovation is the key to a sustainable organisation. When it comes to the technology industry, the
market is really competitive, thus, firms have to innovate in order to succeed. One of the
approaches to help employees develop creative ideas is to offer them the appropriate work
environment. In fact, 3% of less engaged employees assert that work do not help them develop
their most creative ideas while 55% of the more engaged employees say the opposite ( Rayton et
al. 2012). One of the organisations who had an increase in innovative ideas caused by employee
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engagement programmes is Google. Employees are encouraged to spend about 20% of their time
working on a project they desire. This allows them to develop their creativity ( Gargiulo, 2011).
This management method is in contrary to the principles of scientific management where
managers give specific instructions to their employees. Some may argue that it is too effective t
to give employees so much freedom. Google also offers its employee free food, massage rooms,
fitness facilities and even hair dressers. Employees have access to googleplex which is a facility
with multiple services such as access to creative spaces and gardens. Investing in its employees
has helped Google increase its net income from $10,619US millions in 2012 to $19,748US
million in 2016. Employees were able to develop innovative technological ideas such as Google
translation, Google direction and traffic, Google universal search and much more.
2. Personal indicators
2.1 Employee turnover
Replacing employees is costly. Companies often have to spend money training their workers plus
paying their wages. Replacing employees can cost up to 150% of the departing employees‟
salary (Rayton et al. 2012). A decrease in employee turnover improves the organisational
performance by reducing cost. Organisations who invest in programmes to increase employee
engagement can decrease turnover by 87% (Rayton et al. 2012). Employees need to feel that they
are valued and that the manager cares. If they feel demotivates, stressed or has no attachment
with the organisation, they are more likely to resign. In 2016, John Lewis partnership developed
the 4Ps. It now refers to its employees as partners (It‟s your business, 2016). This gives the
employees a sense of belonging. They feel empowered and responsible for the company‟s
outcome (Chartered Management Institute, 2015). John Lewis had a partner turnover of 28.6%,
which is -2.1% from the previous year (It‟s your business, 2016). Even if the turnover is still
high, John Lewis gives itself until 2028 to complete the project. If it maintains this decreasing
rate, by 2028 it will have a turnover of less than 6%.
Southwest airline is a company who focuses on its employees. Its motto is to put people first and
profit second. Employees are motivated when they feel valued. It is the first in the airline
industry to have a profit sharing plan for its employee. 85% of Southwest airline employees are
4

proud to work for this organisation. With more than 50 000 employees, this airline has an
engagement rate of 78% (2016 one report, 2016). In the industry, southwest has the lowest
employee turnover rate. According to Colleen Barrett, „„Southwest‟s employee turnover [was]
consistently under 5%, with 4.59% for the years 2003 and 2004‟‟ (Miles and Mangold, 2005),
while the average turnover rate for the airline industry was around 20% to 30% (Stein, 2000).
Southwest airline‟s success is a proof that, in contrary to F.W Taylor, employees are motivated
by other factors than only money. Money can be an incentive but employees care more about
their overall wellbeing. F.W Taylor‟s scientific management focuses on productivity. This form
of management states that task should be standardized and measured. Each task has a specific
duration and this duration is used as a benchmark to efficiency. Employees are monitored and are
considered productive once they reach the benchmark. F. W. Taylor believed the employee‟s
sole motivation was money. In the UK, only 36% of employees say that they are rewarded for
their performance, despite that fact that they have a salary. This proves that money what is
considered to be a reward. Employees are in need of recognition (Cheeseman, 2017).
2.2 Absenteeism
Absenteeism is a problem faced by many employers. It is not only costly, but time consuming
since the employer has to find the right replacement. According to CBI, the annual cost to the
UK economy due to sickness absence is more than £17 billion. In a case study of 55
organisations, 45 out of 55 had a decrease of an average 30 to 40% in days lost caused by
sickness (Building a case for wellness, 2008). The organisations had a managing ill-health
programmes that focused on work attendance and sickness absence management. This method is
similar to the human relations management approach by Elton Mayo since when there is an
increase in absenteeism, managers meet the employee and discuss about the employee‟s work
conditions. Managers have seen that, often, employees are absent because their morale is low or
their working conditions are not as desired. By having appropriate programmes, they are able to
increase productivity and decrease absenteeism. As seen in the figure below (Figure 2), the
wellness programmes had many benefits that improved the organisational performance.
5

Figure 2: (Building a case for wellness, 2008).
East Sussex County Council also had a decrease in absenteeism as a result of wellbeing
programmes. It invested in programs that helped leaders to find the cause and impact of
absences. The employees were listened to and supported which resulted in a decrease of the
sickness level by 18%. This helped the company save extra cost caused by agency staff.
6

2.3 Health and safety
The evolution from manual labour to office-based jobs has changed employees‟ expectations of
health and safety services. Employees are now seeking psychological health benefits much more
than physical health benefits since they are not as exposed to physical injuries at work. In a case
study made by PricewaterhouseCoopers LLP in the UK with 3000 employees in the financial
services industry, a stress management, counselling and healthy living program helped increase
employee satisfaction. As a result, there was a decrease by 80% of absence caused by stress and
there was 5% less smokers. It is estimated that there was about £250 000 of cost savings.
From 1999 to 2003, in a case study made in the manufacturing industry with 5000 employees,
health and safety programmes have helped decrease lost days caused by accident injuries at work
by 36%. This has helped save more than £100 000. This shows that even if there is a decrease of
labour in the manufacturing industry, wellness programmes remains relevant.
Employees are seeking for a workplace where they can be themselves with no discrimination.
There should be both gender equity and diversity. More and more organisations have anonymous
services where employees can report harassments. Prioritizing inclusion has many benefits. It
makes people have a sense of belonging which encourage them to bring their input to the
organisations. This is how innovations are created; in spaces where people are free to express
themselves. Organisation can even benefit from having people with different backgrounds and
languages skills which can open door to doing business internationally.
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Conclusion
To conclude, there a many evidence to support that employee wellbeing improves organisational
performances. Employee wellbeing improves employee engagement which has a positive impact
on productivity and the overall organisation‟s performance. This can be seen in the interaction
between employees and customers, through the increase in net income and the innovations
brought by employees. The effectiveness of some wellbeing programs are often seen through
cost savings instead of increase in income. This can explain why some employer cannot see the
return on investment. Wellbeing programs leads to decrease in employee turnover, decrease in
absenteeism and improve employee‟s health and safety. It is clear that even if in the past the
classical approach was efficient, the human relations approach is as effective and has improved
many organisations performances.
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References
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engagement-and-what-they-do-right [Accessed 1 Nov. 2017].
Chartered Management Institute.(2017). BoE’s Haldane: Poor management to blame for poor
productivity. [online] Available at: http://www.managers.org.uk/insights/news/2017/march/boes-
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Cheeseman, R. (2017). 6 Ways to Reward and Recognize Employees. [online] Blogs.oracle.com.
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[Accessed 1 Nov. 2017].
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Miles, S. and Mangold, W. (2005). Positioning Southwest Airlines through employee branding.
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Stein, N. (2000). Winning the war to keep top talent. Fortune, 141(11), 132 – 136.
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