Let employees steer their own ship, and run the place like a family, and revenue, profit growth and turnover ALL may improve … in double-digits, says a new study
Some employers might think the keys to getting maximum results from a business enterprise are tightly managed employee procedures, a “strictly business” atmosphere, and employees chosen primarily because their skills best fit the job.
Quite the opposite, says a surprising study by the Gevity Institute, a Bradenton, Florida-based human resources consultant. The study was done in conjunction with Cornell University’s Center for Advanced Human Resources.
Gevity and Cornell studied 323 businesses, with employee sizes ranging from 8 to 600. The average size was 53 employees. Their objective was to quantify the effect of specific human resources policies on financial results and turnover.
What they found was this:
Fit the employee to the company, more so than to the job
The study showed that choosing employees because they fit into company culture was more important than matching job skills to the task at hand. Using this recruitment strategy increased revenue and profit growth by 7.5 percent and 6.1 percent, respectively, and cut turnover by over 17 percent.
Relax those controls!
A second key finding was that self-managed, trusted and empowered employees are happier and more productive than those who perform under tight guidelines and close monitoring. The improvements in revenue and profit growth were 11.5 percent and 3.9 percent, with turnover reduced more than 15 percent.
“We’re one big happy family!”
Companies like to boast that they are more like families than business organizations, but those that really are improve their results, said the study. And they improve them more than by offering individual monetary incentives.
“Use increased socials and company meetings” to create a “family-like environment,” say the study’s authors, and you win both ways … better results and lower expenses than if you used individual money incentives to retain workers. How much of a win did the study show? Revenue and profit growth rose by 3.8 percent and 13.3 percent, respectively, for companies run this way, while turnover dropped over 19%.
Betting the trifecta
The greatest improvements, said the study, was seen in companies that employed all three strategies, and the result was truly startling. Those betting on this business trifecta kicked up revenue growth by 22.1 percent and profit growth by 23.3 percent, while they cut turnover a remarkable 66.8 percent.
Results most pronounced in certain business conditions
The improvements, say the study, were most pronounced in small businesses of over 50 employees, with high growth goals, and in highly competitive markets. The power of the surveyed policies was virtually doubled under those conditions, and sometimes tripled.
For example, companies in highly competitive business sectors using money as an employee retention incentive showed turnover of 27.8 percent. But put a family atmosphere in place in the same type of company and turnover dropped to under 8 percent.
And if that’s not enough of a reason to schedule an employee social, what is?
To read the full report, visit http://www.gevityinstitute.com/library/cornell_reports/Cornell4_full_report.pdf