Why stronger employee morale boosts profitability

The link between morale and profitability in an organization is a strong one. Employees who are happy in their jobs and feel valued by their bosses tend to naturally possess higher levels of morale in the workplace.

Leaders who place focus on investing in their employees are often constantly on the move looking for ways to maintain a healthy level of morale in the department, division or company they lead. This philosophy is not only beneficial to the employees, but to the organization too because in the end it all boosts profitability.

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Benefits of a healthy organizational morale

Employers who use threatening, bullying or scare tactics to try and boost profitability in the end usually fail over the long-term. People in general do not respond well to these kinds of approaches and low morale is likely to surface. Sure, staff may work to meet their minimum requirement out of fear of losing their jobs, but they will likely not go above and beyond their call of duty to go the proverbial extra mile. Productivity and, ultimately, profitability are going to suffer.

On the other hand, employers who put a high priority on ensuring morale in their organization is healthy, are typically rewarded with staff loyalty and higher productivity. These leaders recognize that techniques such as positive reinforcement, regular feedback, reward systems, support and open communication do indeed work and they regularly engage in these principles to ensure employees are happy with their jobs.

When a business takes this kind of proactive effort to retain good employees and use the aforementioned techniques as a part of its organizational philosophy, it can effectively create an environment which is laced with strong levels of morale.

Better performance

People who enjoy healthy levels of morale are likely to perform to the best of their ability; staff with good feelings about their jobs also tend to offer innovative ideas to help grow the business. When employees feel appreciated and respected, they tend to feel ownership in the business and want to see it thrive. All of which contributes to higher levels of profitability.

Increased innovation

Innovation is another one of the components that drive profitability, and employees who help generate new ideas typically help an organization reach larger heights, improving standing in a competitive market and increasing revenues. Staff members who have healthy morale levels take pride in their work and often perform with better levels of professionalism, all of which add value to a business.

Better employee retention rates

High morale in a company also tends to lead to better employee retention. This reduces costs in recruitment, application, hiring and training processes; when these expenses are reduced, that money can be rerouted to invest in other projects that will help the company grow.

There are many benefits to employers investing resources in increasing morale rather than defeating it. The philosophy that relies on threats and pushing employees too hard is outdated and non-innovative. Sure, it might be effective in rocky economic times when jobs are hard to come by, but the economy eventually turns around. And once the job market picks up, those employees who feel devalued and mistreated are probably going to bolt at the first opportunity. These kinds of companies will experience higher levels of turnover once recession conditions cease.

A better approach is to invest in leadership approaches that nurture a work environment filled with enthusiasm, appreciation and positive vibes. This, in turn, often results in employee confidence and they'll have the desire to succeed in their jobs and make their company the best it can be. Additionally, employees are more likely to look forward to the work day.

When employees possess higher levels of morale, this tends to increase productivity, which in turn increases profitability. On the other hand, employees plagued with low morale, often feel despondent and less apt to work at high performance levels.

A good leader recognizes the relationship between morale and profitability and makes strives to keep morale at a healthy level in the areas of which they lead.

[ Related reading: Ways cross-training can help build employee morale ]