The coherence between leadership, engagement and the bottom line for companies

• Is there a connection between profit and the executive leadership behavior in your company?
• Is there an unused potential to increase productivity in your company?

Research from positive psychology has shown a connection between productivity, profit and work engagement in companies. There are even some investors that are using the engagement rates in companies to choose companies to invest in. And they claim that those stocks increased by average 50% in a 2-year period. They meant that in the long run company stocks are driven by long-term workplace indexes like work engagement.

Gallup figures based on research from 142 countries and 180 million employees have shown that only 20 percent of employees globally are actively engaged in their job, ie that they are motivated, dedicated, involved and enthusiastic about their work,- and are looking for new and better ways to achieve better results for their companies. These employees are also more innovative. They are the employees who create growth and new customers for the company.

International research shows that work units and companies that score in the top quartile of the engagement scale are 17 percent more productive and 21 percent more profitable than those in the lowest quartile!

Since leadership is about creating results through employees, it should be a goal for every leader to get more employees into the category of actively engaged.

So how does one increase the engagement rate in a company?

Positive psychology brings research-based knowledge of what we humans do when we function optimally, are extra motivated, perform, thrive and achieve results. Leaders who understand the human psychological mechanisms about what creates motivation and commitment, and what are the criterias that get people into creativity and performance mode, get paid for it in dollars and cents. Research have indeed shown that the engagement rate has an effect on the bottom line and gives a high return on investment (ROI). In addition to 17 % higher productivity, companies in the top 25% of the engagement scale have 20% higher sales, 10 % higher customer metrics and 21 % higher profitability than the lowest 25% on the engagement scale have (Gallup, 2017).  The top 25 % do also have lower absenteeism, turnover, shrinkage, and fewer employee safety and quality incidents (Gallup, 2017). So the benefits for working with the organizational culture and work engagement are huge.

There are several techniques that can be used to increase the engagement rates in companies. They all have to with understanding how the human mind, motivation and performance triggers operates. One can for instance work with techniques for creating a culture of strength use, growth mindset and growth-promoting culture, recognition or working with techniques to increase the level of positive emotions at work.

Successful organizations like Microsoft, IBM, Disney and Google have all implemented elements and techniques from positive psychology in their organizations. For instance one of the first things Microsoft’s Nadella did when he took over the company in 2014, was to focus and emphasize on building the corporate culture. His philosophy was among other to develop a growth mindset and growth-promoting culture in everyone throughout the organization. This growth- based culture has become one of the cornerstones of the company after Nadella became CEO and he was promoting this in videoblogs to the employees worldwide every month. Nadella also implemented a culture where innovative ideas from anyone working at Microsoft could get a chance of making their ideas a reality. Microsoft under Nadella’s leadership tripled the value of the company from 2014-2018.

Google found that the most effective teams in Google had elements that included psychological safety, had a focus on meaning at work, and was influenced by the workers feeling their work positively impacted the greater good. Google also have a “wall of happy”; simply a wall of post-it notes where colleagues can publicly give thanks and recognition to each other. One should not underestimate the value of recognition; as Laszlo Bock, senior Vice president of People Operation at Google once said; ”Public recognition is one of the most effective and least used leadership tools”. It is about putting it into a system.

All these are some examples of positive psychology techniques. This is eventually all about investing in the human capital already existing in the company.

Successful companies take employees seriously and create win-win situations for employees, management and organizations. Successful leaders know that organizations can only achieve improved results through wagering on their employees.

Positive leadership is about how leaders can use research-based positive psychology and motivation theories to create larger engagement and well-being, improve relationships and increase performance and productivity in the workplace. In this way, managers can create win-win situations for both management, employees and company.

Written by Dr. Merethe Drønnen.
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