This month signaled the 92nd consecutive month of job creation, and unemployment rates are the lowest they’ve been since early 2000. These strong figures are fantastic for jobseekers and the overall economy, but they do signal an underlying issue for employers: talent shortage, especially in a workforce where employees are twice as likely to quit than be laid off.
With low unemployment and steadily increasing wages, attracting and retaining high-quality candidates can be extremely challenging. How can employers stand out and build loyalty in such competitive conditions?
In my experience, the most effective way is fostering a high-functioning, people-first culture.
Thoughtful, strategic investment in the lives of your employees pays dividends and delivers real business results. You attract the best minds in the industry and are rewarded with loyal, productive, and happier employees. But it’s not easy, nor instantaneous. Developing, maintaining, and improving corporate culture is an investment that requires a substantial amount of time, care, and financial resources to truly make a difference. At Ultimate Software, for example, we cover 100% of healthcare costs for our employees and their families, while also providing a generous 40% dollar-for-dollar 401(k) match, up to the federal maximum.
Offering these benefits for thousands of employees is expensive, which explains why even the most forward-thinking executives can have difficulty deciding how much to invest in culture. But when you fully understand the comprehensive business case for why investing in your people is so important, the decision is usually much easier to make.
A positive, productive culture isn’t just great for your people—it’s also great for your business. I would know; at Ultimate, we receive just as much press for our award-winning culture as we do for our industry-leading solutions and services, and this culture influences every business decision. Even during times of financial strife, we never stopped paying for employees’ healthcare, and we never lowered our 401(k) match — in fact, we’ve steadily increased it to celebrate achieving our milestone revenue goals. And this year, we’ll hit $1B in recurring sales revenue. By being a “Best Company to Work For,” we’ve become a “Best Company” overall.
Investing in culture is an investment in the bottom line. Here’s why.
Better Hires, Stronger Output, Enhanced Retention
Inherent benefits of enhanced corporate culture include improved employee morale and engagement. At Ultimate, we’re proud of our 94% employee retention rate in a sector known for having the highest overall turnover rates, and our distinction as Fortune’s #3 “Best Company to Work For” in 2018 means that most of our job openings are met with hundreds, if not thousands, of high-quality applicants.
Moreover, countless studies have suggested that engagement positively influences productivity, performance, and retention. Organizations with a high level of engagement report 22% higher productivity, according to a large-scale Gallup Organization meta-analysis. The Corporate Leadership Council led a global study of 50,000 employees and found that the most committed employees performed 20% better and were 87% less likely to leave the organization. Considering the high cost of replacing even a single valuable employee—up to twice their annual salary—it’s imperative that organizations do everything they can to encourage their employees to perform their best and stick around.
Employee Satisfaction = Customer Satisfaction
We now understand that employee satisfaction also directly correlates to customer satisfaction. One study calculated the relationship between employee engagement and customer satisfaction as r=4.3, which is extremely statistically significant; for reference, the relationship between sleeping pills and improved insomnia was r=3.
Another study conducted by customer-service analytics firm, ForeSee, compared employee satisfaction and customer satisfaction surveys from two dozen global businesses, including Costco and Apple. ForeSee learned that employee engagement has a direct, positive effect on customer satisfaction, validating it as a causal relationship. When employees feel supported and empowered by their organizations, they’re motivated to do their best and work to ensure their customers receive that same level of care. At Ultimate, we believe our consistent 96% customer retention rate is a direct result of our lifelong investment in our culture.
Increased Sales, Better Shareholder Returns
Improved culture is also directly tied to increased profits. Alex Edmans analyzed 28 years’ worth of stock-market statistics and found that organizations that invest in employee satisfaction yielded up to 3.8% higher annual returns than their competitors. These findings are consistent with meta-analyses from Gallup, Washington State University, Bain & Company, and many others.
According to Glassdoor, increasing employee engagement investments by even 10% can raise profits by $2,400 per employee, per year. Additionally, a study published in the Journal of Occupational and Organizational Psychology tracked 755 retail-bank employees for three years and learned that employees’ attitudes had a significant impact on overall business outcomes.
Take Care of Your People, They’ll Take Care of You
Our CEO, Scott Scherr, built Ultimate around the belief that, when you take care of your employees, they’ll take care of your customers, who will, in turn, take care of the shareholders. Our commitment to this “People First” culture is so central to who we are that it eventually became our tagline, and it’s the driving principle behind everything we do. We design our products and services to help customers put their people first, because we understand that employees are the most valuable asset in every organization.
When you invest in your culture, you invest in your future. Putting your people first will ultimately pay off for years and years to come.
Visit Ultimate Software in the SHRM18 Exposition Hall Booth #2350.
Join us for the SHRM18 #Nextchat Reception on June 19, 5:00-6:30 p.m. in the SHRM18 Blogger's Lounge Room 504 AB sponsored by Ultimate Software.