A new study shows that well-rounded employees are not only good for corporate productivity, but for the bottom line as well.
Supporting employees in all areas of their lives can increase engagement and contribute to lower health costs and turnover rates, according to the Gallup Consulting report The Economics of Wellbeing by Tom Rath and Jim Harter.
"Every day in your organization, some employees don't show up, don't give their best effort, erode your productivity, and cost you millions of dollars because they are struggling or suffering in important areas of their lives," the authors write.
Gallup collected data during a two-year period from 5,271 full-time employees across the United States, and studied the relationships between well-being in the first year and then conservatively estimated employer-realized health costs the next year.
Employees with "thriving" overall well-being had 41 percent lower health-related costs compared with "struggling" employees, a difference of $2,993 per person. "For every 10,000 employees, this represents a difference of nearly $30 million," say the authors. In addition, the study found that thriving employees leave at a 35 percent lower turnover rate than struggling employees. "For every 10,000 employees, this represents $19.5 million," according to the report.
Well-being is defined as how well people are doing in the combination of five major areas in their lives:
- Career: liking how you spend your time each day
- Social: having strong relationships
- Financial: effectively managing your finances to reduce stress and increase security
- Physical: having good health and enough energy to get things done on a daily basis
- Community: being engaged and involved with and in the area that you live in.
Well-being is rated as "suffering" or at high risk; "struggling" or moderate or inconsistent; and "thriving" or strong, consistent, and progressing.
Because it deals with what a person does day in and day out, career well-being is the one area that most affects a person's overall life experience, say Rath and Harter. High or low well-being in the other dimensions show up in the workplace in the following ways.
- Social: People who have high-quality friendships at work are seven times as likely to be engaged in their work.
- Financial: Managing finances well or financial security has three times the effect of income alone on employees' overall well-being.
- Physical: Those with high physical well-being have more energy, deal with stress better, and get more done faster.
- Community: Involved employees enhance an organization's image and positive effect on the community.
Supporting employees in beefing up their well-being can have bottom-line impact for organizations, according to the report. "Just as the most successful organizations have worked systematically to optimize their levels of employee engagement in recent decades, they are now turning their attention to employee wellbeing as the way to gain an emotional, financial, and competitive edge."