3p Weekend: 5 Reasons for Companies to Care About Employee Satisfaction

With a busy week behind you and the weekend within reach, there’s no shame in taking things a bit easy on Friday afternoon. With this in mind, every Friday TriplePundit will give you a fun, easy read on a topic you care about. So, take a break from those endless email threads, and spend five minutes catching up on the latest trends in sustainability and business.

Employee engagement and satisfaction is a hot topic in the sustainability space right now, but some companies may still find themselves asking: What is a happy employee really worth? Well, quite a bit actually. To prove it, this week we rounded up five reasons for companies to start caring about employee satisfaction. (If you can't keep your eyes off the clock, feel free to 'accidentally' leave this article in the office copy machine.)

1. Healthier profits

While it's not set in stone that unhappy employees lead to business failure -- or vice-versa -- research shows that companies with satisfied staff tend to pull in higher profits.

A 2010 Gallup study determined that an unhappy staff can foreshadow a downturn in profits. Gallup revisited the subject in 2012 and found that companies in the top quartile for engaged employees, compared with the bottom quartile, had 22 percent higher profitability. In another recent study of 64 organizations conducted by IBM Kenexa, researchers found that organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement, Forbes reports.

2. Better stock returns

Want better stock returns? Boosting employee satisfaction may be just the ticket, according to an academic study released earlier this month.

Specifically, researchers looked at the relationship between employee satisfaction and stock returns, using lists of the “Best Companies to Work For” in 14 countries as their database, Triple Pundit contributor Raz Godelnik reports. The researchers found that “employee satisfaction is associated with positive abnormal returns in countries with high labor market flexibility, such as the U.S. and U.K., but not in countries with low labor market flexibility, such as Germany.”

In other words, greater employee satisfaction contributes to higher stock returns, at least in labor markets that are more flexible, so that's something for executives to keep in mind if they notice declining stock prices and more long-faces in the break room.

3. Increased customer loyalty

In a recent blog post on Triple Pundit, Gwen Migita, VP of sustainability and community affairs for Caesars Entertainment, drew a direct link between customer loyalty and employee engagement in sustainability programs.

"At Caesars Entertainment, we have found that the best way to engage our customers in our sustainability journey is by engaging our most valuable asset: our employees," Mitiga wrote. In fact, a study commissioned by the company and conducted by Harvard Business School found that customer loyalty and satisfaction – that is, customers’ willingness to return to one of the company's hotels or casinos and their overall experience – is directly linked to employees’ level of participation in sustainable activities at work.

4. Fewer mishaps

Another key takeaway from Gallup's 2012 report is that engaged and satisfied employees also tend to have fewer mishaps at work: Companies in the top quartile for engaged employees, compared with the bottom quartile, had 28 percent less theft and 48 percent fewer safety incidents, according to the findings.

5. More participation in CSR programs

This one should probably go without saying, but you'd be surprised how many companies fail to draw a link between satisfied employees and the success of corporate social responsibility (CSR) programs. It's just common sense: An engaged, satisfied employee will be far more willing to participate in volunteer initiatives, corporate giving programs and other CSR opportunities at work, while unsatisfied employees are likely counting down the minutes until they can get out the door.

So, it's no huge shock that companies that are well known for happy employees, like Microsoft, Patagonia and SAP, are also industry leaders in employee volunteering and other CSR programs. The bottom line is: If a company wants to curate a sustainable and socially-responsible brand image, it's important to start at its own HQ if executives want employees -- or the rest of us, for that matter -- to take notice.

Image credit: Glen Wright via Flickr

Based in Philadelphia, Mary Mazzoni is a senior editor at TriplePundit. She is also a freelance journalist who frequently writes about sustainability, corporate social responsibility and clean tech. Her work has appeared in the Philadelphia Daily News, the Huffington Post, Sustainable Brands, Earth911 and the Daily Meal. You can follow her on Twitter @mary_mazzoni.