Cut-throat, competitive, high-pressure: that’s the culture of too many companies. But research shows this culture does not drive financial success but in fact is harmful to productivity over time. It’s a positive environment that lead to a better bottom line.

A negative environment simply costs companies, says Science Director of Stanford University’s Center for Compassion and Altruism Research and Education, Author of The Happiness Track, and Founder of  Fulfillment Daily, Emma Seppala, Ph.D. in her Harvard Business Review article “Proof That Positive Work Cultures Are More Productive.”

The hidden costs
Health care.
 “Health care expenditures at high-pressure companies are nearly 50% greater than at other organizations,” says Seppala. “The American Psychological Association estimates that more than $500 billion is siphoned off from the U.S. economy because of workplace stress, and 550 million workdays are lost each year due to stress on the job. Sixty percent to 80% of workplace accidents are attributed to stress, and it’s estimated that more than 80% of doctor visits are due to stress. Workplace stress has been linked to health problems ranging from metabolic syndrome to cardiovascular disease and mortality.”

“The stress of belonging to hierarchies itself is linked to disease and death. One study showed that, the lower someone’s rank in a hierarchy, the higher their chances of cardiovascular disease and death from heart attacks. In a large-scale study of over 3,000 employees conducted by Anna Nyberg at the Karolinska Institute, results showed a strong link between leadership behavior and heart disease in employees. Stress-producing bosses are literally bad for the heart,” adds Seppala.

Disengagement. Stress often leads to disengagement in the long term. “Engagement in work — which is associated with feeling valued, secure, supported, and respected — is generally negatively associated with a high-stress, cut-throat culture,” says Seppala.

Disengagement costs companies. “In studies by the Queens School of Business and by the Gallup Organization, disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. In organizations with low employee engagement scores, they experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time. Importantly, businesses with highly engaged employees enjoyed 100% more job applications,” explains Seppala. The facts speak for themselves.

Lack of loyalty. “Research shows that workplace stress leads to an increase of almost 50% in voluntary turnover. People go on the job market, decline promotions, or resign. And the turnover costs associated with recruiting, training, lowered productivity, lost expertise, and so forth, are significant. The Center for American Progress estimates that replacing a single employee costs approximately 20% of that employee’s salary,” says Seppala.

Working from home, office gyms, and kitchens stocked with snacks don’t make up for the damage from disengagement. “Employees prefer workplace wellbeing to material benefits,” says Seppala. “Wellbeing comes from one place, and one place only — a positive culture.”

Six characteristics of a positive work culture
So how does an employer create a healthy workplace? Seppala says the qualities of a positive workplace culture boils down to six essential characteristics:

  • Caring for, being interested in, and maintaining responsibility for colleagues as friends.
  • Providing support for one another, including offering kindness and compassion when others are struggling.
  • Avoiding blame and forgive mistakes.
  • Inspiring one another at work.
  • Emphasizing the meaningfulness of the work.
  • Treating one another with respect, gratitude, trust, and integrity.

How to create a healthy workplace — in four steps

1. Foster social connections. Positive social connections produce positive results. “People get sick less often, recover twice as fast from surgery, experience less depression, learn faster and remember longer, tolerate pain and discomfort better, display more mental acuity, and perform better on the job,” says Seppala. “Conversely, research by Sarah Pressman at the University of California, Irvine, found that the probability of dying early is 20% higher for obese people, 30% higher for excessive drinkers, 50% higher for smokers, but a whopping 70% higher for people with poor social relationships. Toxic, stress-filled workplaces affect social relationships and, consequently, life expectancy.”

2. Show empathy. Bosses can greatly influence how their employees feel. “A telling brain-imaging study found that, when employees recalled a boss that had been unkind or un-empathic, they showed increased activation in areas of the brain associated with avoidance and negative emotion while the opposite was true when they recalled an empathic boss. Moreover, Jane Dutton and her colleagues in the CompassionLab at the University of Michigan suggest that leaders who demonstrate compassion toward employees foster individual and collective resilience in challenging times,” explains Seppala.

3. Go out of your way to help. When managers or mentors go out of their way to help, the people they help often remain loyal. “Jonathan Haidt at New York University’s Stern School of Business shows in his research that when leaders are not just fair but self-sacrificing, their employees are actually moved and inspired to become more loyal and committed themselves. As a consequence, they are more likely to go out of their way to be helpful and friendly to other employees, thus creating a self-reinforcing cycle. Daan Van Knippenberg of Rotterdam School of Management shows that employees of self-sacrificing leaders are more cooperative because they trust their leaders more. They are also more productive and see their leaders as more effective and charismatic,” says Seppala.

4. Encourage people to talk to you – especially about their problems. Employees want to know their leaders have their best interests at heart. Once they feel safe rather than fearful, their performance improves. Seppala says research by Amy Edmondson of Harvard demonstrates a culture in which leaders “are inclusive, humble, and encourage their staff to speak up or ask for help leads to better learning and performance outcomes. Rather than creating a culture of fear of negative consequences, feeling safe in the workplace helps encourage the spirit of experimentation so critical for innovation. Kamal Birdi of Sheffield University has shown that empowerment, when coupled with good training and teamwork, leads to superior performance outcomes whereas a range of efficient manufacturing and operations practices do not.”

The bottom line
“When you know a leader is committed to operating from a set of values based on interpersonal kindness, he or she sets the tone for the entire organization. In Give and Take, Wharton professor Adam Grant demonstrates that leader kindness and generosity are strong predictors of team and organizational effectiveness. Whereas harsh work climates are linked to poorer employee health, the opposite is true of positive work climates where employees tend to have lower heart rates and blood pressure as well as a stronger immune systems. A positive work climate also leads to a positive workplace culture which, again, boosts commitment, engagement, and performance. Happier employees make for not only a more congenial workplace but for improved customer service. As a consequence, a happy and caring culture at work not only improves employee well-being and productivity but also improved client health outcomes and satisfaction,” says Seppala.

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