How Treating Employees Well Impacts Profits and Sales - Research Paper Example

How Treating Employees Well Impacts Profits and Sales Introduction For any organization to develop and maintain competitive advantage, there must be a strategic plan which should include detailed steps needed to be taken to achieve all stated goals and objectives. Nevertheless, such strategic plans involve incorporation of several concepts and techniques intended towards organizational development. Of importance is that, employees must be considered the primary assets of any company or organization. In this regard, it is correct to say that employee wellness is crucial. Moreover, it is also apparent that employees need to be motivated to produce top results in their organizations (Rousmaniere, 2013). To be precise, if the level of employee motivation in an organization will be high, the result will be increased profits and sales for the organization. In light of this, this paper will investigate the rationale behind treating employees well to benefit an organization. Although there are several other factors to consider for an organization to maximize profits, people responsible for the management of organizational matters hold the highest value in moving towards the fulfillment of organizational goals. Rationale for Treating Employees Well There are several reasons stating why better treatment of employees results in improving job performances, as well as in maximizing profits and sales. In fact, a study conducted by Leblebici (2012) on the impact of workplace quality on employee productivity documented that an organization that treats employees well tends to have a creative workforce that not only contributes to the formation of strong organizational culture but also produces top results. For example, if managers of a company develop and implement an attractive compensation plan for employees, the result will be very positive for the company as employees will tend to work hard to achieve rewards and benefits included in the compensation plan. This will result in improved employee productivity, as well as increased sales and profits for the company. While talking about the reasons that make positive employee treatment productive for the achievement of organizational goals and objectives, let us talk about employee satisfaction which is one of the main factors having links with positive employee treatment and improved organizational performance. It is a fact that every employee wants to in an organization that understands the needs of employees and take effective measures to meet those needs. The level of employee productivity is usually high in organizations which respect the needs of employees and provide them with safe and flexible workplace environment. Employees highly contribute to the development of organization as long as they feel satisfaction with the workplace environment provided to them by their managers (Leblebici, 2012). For example, in organizations where employee safety and benefits are considered critical for the development of organization, the level of employee performance goes high because employees become able to concentrate more towards work instead of worrying about their professional life and safety. Treating employees well not only increases organizational performance in terms of increased sales and profits but also draws more employees into an organization. For example, an organization that treats its employees well stands a chance of creating an organizational culture that creates a good picture of the organization. When this happens, employees and other stakeholders spread the word, and this encourages other potential employees to apply for positions available within the organization. It is a fact that employees do not like to work for an organization that has poor of its culture because of improper employee treatment, such as, lack of compensation plans and job insecurity (Leblebici, 2012). Employees do not apply for jobs within such organizations and try their luck with the organizations that are known for their employee friendly culture. Benefits of Treating Employee Well According to Science Careers (2009), when an organization gives its employees benefits, such as, health insurance, paid leavers, performance-based bonuses, and promotions, employees concentrate on their work with full devotion instead of worrying about other issues. This results in increased employee productivity, as well as improved sales and profits for the organization. An organization can do a lot to improve the efficiency levels of employees. Increasing employees’ wages is one of the many factors that an organization can use to increase the level of employee productivity. While cutting wages can be a strategy to minimize costs, increasing wages can also be useful because it results in decreasing employee turnover while increasing worker productivity (Rousmaniere, 2013). Benefits are geared towards helping the personal life of employees to help them invest most of their energies in work. It is a fact that employees, who do not have to worry about issues such as the health and job security, tend to be productive and responsible (Leblebici, 2012). This is also evident from Maslow’s theory of human motivation. According to Maslow (1954), the needs of human beings follow a systematic hierarchy. They seek to satisfy the most basic needs first and then move to the next level. In this regard, human needs are like a pyramid where the most basic needs stand at the lowest level. The needs are classified into five levels with each level containing some particular human needs. Every next level of needs becomes the target only when the needs at the preceding level have been met successfully. For example, once a person meets his/her basic needs, such as, food, shelter, and clothing, only then he/she seeks to fulfill the needs lying at the next level of Maslow’s hierarchy. If we talk about efforts towards employee wellness in organizations, we can say that when an organization comes up with the ways that can help employees meet their basic needs, employees start moving up to the next levels of the hierarchy of needs, and for each upper level, they show more concentration towards work because they become able to meet their basic needs with the cooperation of the organization for they work. For example, when employees get higher wages, promotions, and opportunities of participation in skills training programs, they show more responsibility towards their work which consequently improves organizational performance in terms of increased sales and profits. One of the main aims of any organization is effective utilization of resources which can occur only when the focus of the employees of an organization will be completely on their individual job responsibilities. When employees are able to fully concentrate on their work, they are able to show increased productivity with the same resources thus increasing the level at which organizational resources are utilized towards profit making. This is important because the aim of an organization, as stated earlier, is maximum utilization of available resources which may include machinery, time, knowledge, and expertise. When an organization becomes able to utilize its resources efficiently, the result is maximization of the profits which is another main goal of any organization. However, all of these aims are deeply associated with the better treatment of employees. When an organization provides numerous benefits to employees, such as, better remunerations, benefits and allowances, flexibility, and autonomy, they become willing to go beyond an extra mile to the firm more than expected. These benefits and rewards motivate employees and consequently help organizations to maximize their profits (Oxley, 2011). In this regard, it can be said that an organization benefits by giving benefits to its employees. Happy Employees Translate to Happy Customers In the endeavor of making profits, every organization seeks to make its customers happy in order for them to return and buy more, as well as to bring more customers through recommendations. The main question that an organization asks is, ‘how do we make our customers happy?’ Of course, there are a number of the ways in which an organization can make its customer happy. Some of the ways include increasing the quality of products, reducing prices, and making access to products easy for customers. However, the main way to make a customer happy is by making employees happy. An organization can make employees happy and relaxed at work by applying a number of strategies such as providing a supportive working environment. Many organizations have, for instance, introduced facilities such as gyms, massage facilities, nursery facilities for workers with young children, and even in some cases free baby care services. Google is one of the organizations that put huge emphasis on employee welfare. Google provides a number of unorthodox facilities to its employees such as free gourmet meals, travel insurance, paid maternity leave, fun stuff around the office, and on-site medical care (Wolford, 2012). Such employee wellness measures by Google ensure that employees are freed from petty and unproductive tasks such as doing laundry or cooking. This is what makes it possible for the employees of Google to concentrate on more important issues. When employees are treated like this, they not only feel relaxed but also make customers happy and relaxed. This consequently results in increasing the business of the company which is evident from the fact that Google is currently placed at the top spot in the list of 100 best companies to work for (CNN Money, 2013). Moreover, employees and business of Google has made the able to earn $50 billion in 2012 (Investor Relations, 2013). While talking about translating happy employees to happy customers, one more thing which holds importance is that there is a great link between happy customers and happy employees. Nurturing relationships with the customers is a key part of a successful business strategy (Honignam, 2013). Companies wanting to keep customers happy protect the rights of their employees first because they are the people who come in direct contact with the customers (Welsh, 2008). The happier the employees of an organization will be, the easier it will be for the organization to make customers happy and guarantee more sales and strategic advantage in the market. Additionally, when an organization treats employees well, customers also tend to develop loyalty with the organization. This statement is correct because customers are usually satisfied with the products produced by proficient employees. When this happens, customers spread the word about the high quality products of the organization. This helps an organization in many ways. For example, it helps the organization increase its customer base by attracting new customers. This consequently increases the volume of sales thus maximizing the level of profit for the organization. Benefits Increase Sales through Increased Employee Motivation While innovation is one way to keep the customers happy and satisfied, it also has brings a number of advantages for an organization. For example, innovations make it possible for an organization to reach a niche market which the rest of the competitors may not even be able to get. In other words, innovations are useful in making sure that the firm has expanded its horizons while expanding its income. It is also important to mention here that innovations by employees depend on how happy and satisfied the employees of any particular organization are. An organization, which treats employees well in all areas, is more likely to have a highly skilled and creative workforce. Unmotivated employees are less likely to be creative and innovative. Again, this is in line with the Maslow’s hierarchy of human needs. That is, employees become extremely creative and innovative only when they have reached the actualization level of needs. An organization, which prioritize employees’ needs and take considerable steps to help employees achieve the lower needs, benefits by having a bunch of highly skilled professionals who put their efforts to increase sales and profits for their respective companies. Innovation does not just refer to the manufacturing of new products. Rather it also refers to the ways that can be used to minimize the business costs of a firm. For instance, when employees of a firm come up with a new way of doing things that are likely to cut off some manufacturing costs, the firm will be benefited in terms of reduced costs and increased profits. Ways through Which an Organization Can Treat Employees Well Now the question here is about the ways an organization can treat its employees well. The primary way through which an organization can treat its employees well is by introducing a comprehensive compensation plan where rewards should be based on some defined standards. In addition, the basic salary of any organization that needs to maintain competitive advantage should be adequate to retain employees. This is in terms of meeting their basic needs and other necessary needs. This ensures employees that their services for their organization are being valued. In fact, employees seek to work for an organization that offers attractive salaries to its employees. With higher salaries, employees tend to perform their duties in a professional manner since they believe that their salary matches the efforts that they put in for their organization. Employees play a key role in ensuring the success of a company in market. They are the main driving force of a company that works hard to achieve the goals and objectives set by the managers of the company. Therefore, managers should play special attention towards the development of effective employee benefit plans because definitely improve employee performances. A company should give rewards and benefits for all those employees who show excellent performance in a particular amount of time. Although money and benefits are not the only ways to make employees work hard to achieve organizational goals, but they can definitely be some of the most important factors that drive organizational performance. In addition, an organization needs to come up with some effective programs intended towards increasing employee motivation. One of such programs may be related to the health of employees. Organizations which value the health of employees through providing employees with free health coverage are likely to be more productive than others. Employees of such organizations perform their duties more effectively leading to a positive overall impact on organizational development. Here, let us take example of Edwards Jones Investments which is a financial company based in Des Peres. Some of the main incentives that the company offers to its employees include free meal at office, bonuses, paid weekend vacations for employees and their families once in every two months, and involving employees in free of cost training programs and seminars. The company gets a number of benefits with the implementation of the incentive plans. The incentive plan results in driving the employees towards achieving organizational goals of increasing the level of revenue. In Edwards Jones, managers relate incentives with employee performances. The company rewards such employees whose performances match the eligibility criteria set for the rewards. Incentive plans are productive for a company whether they are individual based or team based. Edward Jones uses incentive programs for multiple reasons. Some of the major reasons for implementing such programs include encouraging the performances of the employees, hiring and retaining talented employees, encouraging employees’ loyalty with the company, increasing moral of the employees, achieving quality in every business activity, reducing employee turnover, and increasing the level of profits through increased employee satisfaction. It is due to good employee treatment and management policies that the company expected to achieve a minimum gross of $264,000 in 2012 (Greengard & Walter, 2011). And today, the expectations have been proved true and the company has become able to fix its place in the Fortune 100 companies of 2013. Non-Monetary Incentives While talking about employee wellness programs, let us also talk about some non-monetary incentives because they are considered very beneficial for employees, and consequently, for organizations. Although there are many ways to improve employees’ performance, such as, appraisal systems, better salaries, and provision of a better work environment, but non-monetary rewards are such factors that really drive the performance of employees and make them work for the achievement of organizational goals of increased sales and profits. Some of the main non-monetary incentives include restaurant tokens, movie tickets, tuition reimbursement, flexible job timings, healthcare benefits, daycare facility, and paid sabbaticals (Douglas, 2012). There is no financial cost associated with the provision of these incentives to employees. An organization that endorses non-monetary incentives is considered to have realized the importance of treating employees well. The argument behind the use of non-monetary incentives as a way to increase psychological motivation is that non-monetary incentives increase the predicted utility of employees. Intrinsic (non-monetary) rewards are intangible in nature and are used to increase employee satisfaction with their jobs and to make employees work hard for the company. These rewards help managers in creating a win/win form of motivation for employees, as well as for the company. Some of the examples of intrinsic rewards include appreciation by the managers, team encouragement through certificates, and acknowledgement of performances in front of higher officials. These types of rewards play a valuable role in the accomplishment of organizational goals of increased sales and profits. Here, we should take example of Boston Consulting Group (BCG) which has been able to achieve the targets of increased sales and profits through the provision of non-monetary rewards to employees. BCG is one of the largest consulting companies of the United States and is ranked in the top spots of Fortune 100 companies. Some of the main benefits that the company provides to its employees include paid vacations, dinner coupons for couples, issuance of job commitment certificates, fully paid sabbaticals, free gym membership, and health coverage. It is due to these benefits that the company has been able to achieve high revenues. For example, according to (CNN Money, 2013), the revenue of the company in 2011 reached $3550 millions, which shows the link between good employee treatment and sales and profits of a company. Training and Development An organization that endorses training and development as part of employee development is actually serving the employee wellness program, as well as its own mission of increasing the level of sales and profits. That is, when employees will have their skills refined, they will be able to do well for their companies, thus improving the overall organizational performance. Employees have also been considered to like the idea of training and development as a key part of their career development. This argument is true because advanced training and skills are valuable assets that any employee can have. Employees understand that such incentives make them marketable in any organization. They tend to work hard to enhance whatever they learned during training and development programs. Consequently, it proves beneficial for an organization in terms of increased levels of production and profit margin. In this regard, training and development can be used by an organization to improve performance. Many potential employees like to join an organization that endorses training and development. Therefore, an organization focusing on employee training and development stands a better chance to hire competent employees. Flexible Hours and Time-off Awards Nowadays, employees require some additional time to give to their personal lives. For instance, employees need some time for their families, church, and social activities. When an organization gives employees some time off for these matters, employees concentrate more on their duties when they come back (Werner, Schuler & Jackson, 2012). In addition, employees require flexible working hours. For instance, it would not be ethical to make employees work for over 50 hours a week. It is the responsibility of the management of an organization to develop a flexible schedule for its employees in order for them to concentrate on their tasks without worrying about their personal life issues. Conclusion Treating employees well or not is not a choice for an organization because employees have their rights provided by the constitution. However, an organisation can enjoy a number of considerable benefits by focusing on employee wellness programs properly. In fact, those employers who take good care of their employees always end up benefitting from their actions. This is because in business, and especially in today’s capitalistic world, one only gets what he/she pays for. Failing to pay and remunerate employees in a good way means that employees will not be motivated to work with full dedication and will only give the minimum possible to the organisation. Therefore, managers of every organization should focus on the development of effective employee benefits programs to build and increase employee motivation and raise the levels of profits and sales for the organization. References CNN Money. (2013). Google. Retrieved from http://money.cnn.com/magazines/fortune/best-companies/2012/snapshots/1.html CNN Money. (2013). The Boston Consulting Group. Retrieved from http://money.cnn.com/magazines/fortune/best-companies/2013/snapshots/4.html Douglas, E. (2012, March 28). Monetary Vs. Non-monetary Rewards: Which Are More Attractive?. Retrieved July 23, 2013, from http://blogs.edweek.org/topschooljobs/k-12_talent_manager/2012/03/monetary_versus_non-monetary_rewards_which_are_more_attractive.html Greengard, S., & Walter, K. (2011). Edward Jones Sets Aggressive Targets for Hiring New Reps. Retrieved from http://www.workforce.com/articles/edward-jones-sets-aggressive-targets-for-hiring-new-reps Honignam, B. (2013, March 21). 10 Ways to Make Customers Fall in Love with Your Business. Retrieved July 23, 2013, from http://blog.kissmetrics.com/true-love-with-customers/ Investor Relations. (2013). Google Inc. Announces Fourth Quarter and Fiscal Year 2012 Results. Retrieved from http://investor.google.com/earnings/2012/Q4_google_earnings.html Leblebici, D. (2012). Impact of workplace quality on employee’s productivity: case study of a bank in turkey. Journal of Business, Economics & Finance, 1, 1: 38-49. Maslow, A. ( 1954). Motivation and Personality. New York City, NY: Harper & Collings . Oxley, D. (2011, January 11). Why treating employees well increases profits . Retrieved July 13, 2013, from Helium: Where Knowlege: http://www.helium.com/items/2076471-why-treating-employees-well-increases-profits Rousmaniere, D. (2013, March 26). Morning Advantage: Why It Pays to Pay Your Employees Well. Retrieved July 13, 2013, from Harvard Business Review: http://blogs.hbr.org/morning-advantage/2013/03/morning-advantage-why-trader-j.html Science Careers. (2009, August 29). Treating Employees Well. Retrieved July 13, 2013, from Science Careers: http://blogs.sciencemag.org/sciencecareers/2009/08/treating-employ.html Welsh, K. (2008). Happy about Customer Service?: Creating a Culture of Customer Service Excellence. California: Happy About. Werner, S., Schuler, S.R., & Jackson, S.E. (2012). Managing Human Resources (11th ed.). Mason: Cengage Learning. Wolford, J. (2012, August 09). Google Employee Get Awesome Benefits on Both Sides of the River Styx. Retrieved July 13, 2013, from http://www.webpronews.com/google-employees-get-awesome-benefits-on-both-sides-of-the-river-styx-2012-08 Read More