Why Morale and Engagement Are So Important

David Bowles

If there is one word that encapsulates the benefits that accrue from a high morale organization, it is this: performance. This refers to performance at the individual level and that of the organization as a whole. Evidence for morale correlating highly with, and driving, performance is strong and growing.

If you have competition such as most organizations in the private sector (although increasingly public sector organizations have competition), then high morale will increase your competitiveness. If you serve customers, your customers will be more satisfied when served by high morale employees; those customers will also be more likely to return to you. If profits are your goal, you will increase the likelihood of these. If you have a publicly traded stock, even your earnings per share can correlate strongly with your morale level. If you are in the public sector and have a mission, like in the military or law enforcement, you will be much better at fulfilling that mission; indeed many in the military say that without good morale, missions become much more difficult or even impossible to achieve.

At the individual level, the high morale employee will experience less stress than the low morale one and as a result, less absenteeism and sick days; the high morale employee will be more engaged, willing to work harder, be more committed to the organization’s goals than the low morale one, and certainly be a stronger advocate for the organization with others such as customers, family and friends or potential employees.

Combining morale with organizational performance is one of the central focuses of the morale field of study, since consultants in this area are so often faced with the "so what?" question, such as:

"I like the general idea of high morale and it sounds like a good thing, but what does it really do for me?"

An alternative and more negative view is often:

"I’m in business to compete and make a profit; this stuff is a waste of time and won’t change a thing."

Against this background, to counter these still widely held views and demonstrate just how powerful morale is, we will summarize many of the performance and effectiveness benefits of the high morale organization here. Everything you will read on this topic is backed by solid data, in nearly all cases from multiple sources.

Morale Provides a Competitive Edge in Good Times and Bad

Surviving a crisis (for the organization alone or for the society in general) is far easier when morale is high. The team pulls together and works as one. Sacrifices are shared much more easily. High morale is therefore more than protective armor, although it does play that defensive role: it offers an offensive path through the crisis, which those lacking it will not be able to follow.

High Morale Supports the Implementation of Organizational Strategies

It’s not your plans that are important; it’s whether you can implement them. A good strategy is a fine thing, but it is useless unless you can make it happen. Making it happen depends to a large degree on your people, and therein lies the power of morale.

The Morale Process (Measurement-Implementation) Gives Employees a Voice

It sounds like a circular argument, but it is true: Simply measuring morale and feeding back the results, when carried out correctly, improves morale. Over and over again, employees have thanked us for being in their organization, collecting their opinions and letting them know how they and their colleagues feel as a group.

High Morale Helps Organizations Attract and Retain Talented People

Organizations selected by Fortune and the UK equivalent Sunday Times Best Places to Work, trumpet their appearance on such lists in recruitment advertising, not just at the point of sale like at Starbucks, but also in newspaper and online ads. They are eager to let the world know how good it is to work for them.

High Morale Makes the Workplace Easier to Manage and Increases Productivity

Stripped of the dramas created by negative morale situations and the challenges of dealing with people who like to perpetuate them (from individuals with no management responsibility to managers themselves), the high morale workplace becomes less fearful, stressful and more "fun." Management time can be focused on things that make the organization more productive, not just "putting out fires" related to personnel, or replacing the people who have left.

High Morale Reduces Workplace Accidents, Reduces Absenteeism, Reduces Workplace Stress, Improves Employee Health and Reduces Sick Days Taken

Plenty of evidence exists for all of these claims; in fact the evidence is so overwhelming that it is hard to imagine why organizations do not implement practices that would lead to a maximum level of morale, even if only to gain just these advantages; and yet many do not.

High Morale Organizations in the For-Profit World Have Better Financial Performance than Low Morale Ones

There is strong evidence from multiple and highly credible sources that morale is positively correlated with higher stock prices, higher earnings per share, and even five year survival following an IPO.

High Morale Organizations Can Have Higher Customer Satisfaction than Low Morale Ones

A great deal of research shows the morale-customer satisfaction connection, and demonstrates causal connections between the two.

Morale is a Leading Indicator and Allows Organizations to Prevent Potential Negative Situations

By examining trends based on previous employee survey data you have collected, you can have a sense of how the future will play out if you take no action. This is especially true when a poorly performing manager is having a negative effect on employee morale.

The Morale Process Is One of the Most Democratic Activities in Which an Organization Can Participate

There is nothing quite like giving every single person who works in an organization the chance to say exactly what they feel, knowing that top management will look at every piece of data and every written word.

High Morale at the Individual Level Is Connected To Job Performance by That Person, and Is As Good a Predictor of That Performance as Other, Well Tested Measures

Multiple studies now demonstrate that there are few activities one can undertake better than knowing a person’s individual level of morale, in order to predict how they will perform on the job.

Faced with the overwhelming evidence for the power of morale and its effect on organizational performance, some put forward the idea that the relationship is actually reversed, i.e. performance drives morale. While there is a "loop" effect, in that a customer’s positive feedback about a company’s product or service to a sales representative can boost that individual’s morale, for example, the evidence supports a much stronger effect in the other direction, from morale to performance.

Recent data from Gallup show that the US workforce is only 29 percent "engaged" at work, and the Conference Board states that US job satisfaction has been falling for two decades. Europe is, if anything, even lower. With the US and Europe facing ever more intense competitive pressures from high workforce morale countries like India, China and Brazil, they cannot afford to fall behind; it is in their interest to do all that they can to enhance the morale aspect of work life. If they do this, the morale and engagement of their people will be one of their key competitive edges in an increasingly global marketplace.

Excerpted from Employee Morale: Driving Performance in Challenging Times by David Bowles and Cary Cooper. Copyright © 2009 by the authors and reprinted by permission of Palgrave Macmillan, a division of Macmillan Publishers Limited. All rights reserved.