Why Investing In Your Employees Makes Good Business Sense

Is investing in your employees good for business? According to a new report, “Profit at the Bottom of the Ladder,” (Harvard Business Press), the answer is unequivocally, “Yes.”

 

Jody Heymann, who led the study behind the report, researched twelve companies in nine countries. Every company had policies that improved conditions for their lower-level workers. She examined how they succeeded despite spending on non-essentials, such as employee education and healthcare. In every case, investment in workers improved companies’ bottom lines.

The study credits several employee-focused tactics with increasing companies’ productivity and reducing their costs. Here’s a list of some examples:

  • On-site healthcare: SA Metal opened its own health clinic, so employees wouldn’t have to waste work hours traveling to doctors. Employees’ needs were served, and they produced more for the company.

 

  • Training and career opportunities: Xerox Europe, frustrated by high turnover rates of call center employees, started highlighting career opportunities within the company. Within one year, 20% of its low-level employees were promoted to higher-level positions. Workers who sensed a better career future were more likely to continue working at the company.

 

  • Listening to employees: Great Little Box Company offered a cash incentive to employees who suggested ideas that saved the company money. An employee suggested an additional use of an existing machine, thereby increasing productivity. The “hands-on” workers often have the best ideas for improving tasks.

 

  • Flexible vacation policy: Autoliv Australia saw its worker turnover decrease significantly after implementing a more flexible policy about leaves and vacations. Workers with a sense of autonomy feel more positive about their jobs.

 

  • Improving teamwork: American Apparel assigned its workers to teams, and then paid individuals based on team output. That incentive led garment production at a one of its factories to triple. Encouraging employees to work together increased productivity.

 

Positive employee conditions generate financial success. An investment in your employees equals an investment in your business.