Executives are becoming more aware of the impact that the physical and mental health of employees, as well as the health of their organizations, has on their companies’ value. In fact, researcher Dr. Dee Edington says that the health of employees can significantly improve a company’s bottom line.
Additionally, research conducted by McKinsey & Company in more than 800 organizations around the world found that healthy companies generated total returns to shareholders three times higher than those of unhealthy ones.
It’s clear from evidence like this that investing in safeguarding employee and organizational health is well worth the effort. However, many companies aren’t sure how to start creating this kind of outcome.
From my perspective, it all begins with creating and fostering a caring culture within the workplace – and here’s why I feel this is so important.
Caring for Employees Creates a Domino Effect of Value
When organizations create a caring workplace with foundations built on trust and empathy, employees can achieve a sense of empowerment that enables them to perform at their best. And when a caring culture becomes a strategic priority, an interconnected triad of organizational health emerges.
This triad in turn fuels a company’s ability to achieve its goals and sustain business success. Here’s a quick look at the components of this organizational health triangle, which includes employees, customers, and an organization’s ecosystem, and how they impact each other.
- It starts with well-cared-for employees. From Edington’s perspective, the key to a healthy company is to focus on people – on ALL of the people in a company. “The rationale is that people, if they are in the best of physical and mental shape, will add to the financial value of the company,” says Edington. I agree with this premise, and believe when people feel healthy, respected, and cared for, their company can reach its goals at an accelerated speed.
- When employees feel cared for, the customer experience improves. A report by the research firm Insync highlights how employee commitment and advocacy behavior can have a direct and profound impact on customer loyalty. The report says that 70% of customer brand perception is determined by experiences with people. Additionally the report finds that 41% of customers are loyal because of a good employee attitude. It is evident that when employees are happy, there is greater customer satisfaction and loyalty, which leads to greater financial sustainability and increased sales.
- With happy employees and loyal customers, a company’s value improves. I believe that a healthy business culture has benefits that extend beyond employees and customers. The positive impact of a caring culture can extend to an ecosystem outside a company and affect such things as the value of shareholders, corporate citizenship, and an organization’s brand.
Caring Drives Profitability Too
The McKinsey research found that sustained organizational health is one of the most powerful assets a company can have. And it states that when companies manage with an equal eye on performance and health, they more than double the probability of outperforming their competitors.
The research company also shared a profile of a global chemical manufacturer that shows exactly what kind of impact a healthy culture can have. After implementing organizational health practices, the company realized a 50% increase in productivity, with US$350 million in additional profits and an annual-run rate savings of approximately US$180 million.
Measuring the Impact of a Caring Culture
SAP has been fostering a caring culture for several years now. We know that our organizational health contributes to our vision and purpose. We are dedicated to helping the world run better and improving people’s lives, including those of our employees.
Because we want our employees to stay healthy and balanced and to perform at their best, we ask them to rate their personal well-being and working conditions via regular surveys. From these anonymized results, we calculate the annual Business Health Culture Index (BHCI) as a measurement of the general cultural conditions at SAP.
Based on our internal model and assumptions (which are externally audited by PwC), we can then quantify the connection between the BHCI and our operating profit. For instance, in 2014, the BHCI increased, and for each percentage point, the positive impact on our operating profit was approximately between €65 million and €75 million in 2014.
To sum up, caring is not only a win-win for employees’ individual heath, our ‘Be human culture’ is also a business imperative that can help a company achieve gains with customers and within its ecosystem.
Learn more about our BHCI and other ways SAP is helping to improve lives through our other health initiatives.