Profits Follow People: The Surprising ROI of Workplace Well-being

Research shows the clear benefits of well-being in the office, but I wanted to shift the focus to what really matters to business owners: ROI.

Lea Udrescu

9/20/20243 min read

When a company considers investing in a new service or product, two main factors guide their decision-making process:

Will it save us time?
Will it make us money?

When talking about the return on investment (ROI) of designing for wellbeing, it typically is framed around the following points:

Increased productivity from more engaged employees, reducing absences and distractions.
Positive client interactions from satisfied employees, leading to repeat business.
A strong company culture that attracts top talent, adding long-term value and a competitive edge.

But how does this translate into reality? And how does company culture directly impact ROI?

Key Factors That Influence ROI

To fully understand the impact of company culture on ROI, it's essential to first consider the larger factors that influence returns, such as:

Market dynamics: The competitive landscape and demand for your product or service.
Timeframe for returns: The duration over which investments deliver measurable returns.
Marketing effectiveness: How well your brand connects with customers.
Competition: The actions and strengths of your competitors in the same market.
Resource allocation: Budget, talent, and technology investments that improve performance.

Given these variables, businesses often look for ways to position themselves for maximum success, whether by scaling up, entering new markets, increasing spending on R&D, or enhancing marketing efforts. However, there's a less obvious yet equally powerful driver of ROI—company culture.

Why Company Culture is a Critical Investment

While investments in technology, advertising, or R&D are common strategies for improving ROI, focusing on improving your company’s culture can have significant and often underappreciated benefits like:

Reduced absenteeism: Happier employees take less sick leave, which ensures consistent productivity.
Higher quality of work: Motivated employees are more likely to put in their best effort, leading to better results.
Increased customer satisfaction: Engaged employees provide better service, creating a better experience for clients.
Lower turnover rates: A positive work environment reduces costly employee turnover, saving on recruitment and training.
Improved hiring quality: Companies with strong cultures attract higher-quality candidates, boosting the overall talent pool.

All these factors have a direct impact on a company's bottom line.

How Company Culture Impacts ROI

In a research paper by Harris, G.H. et al. they found that businesses with highly satisfied employees saw not only higher revenues but also lower costs and improved customer loyalty (2011). These findings emphasize just how critical a positive company culture is to business success.

A specific case study highlighted in the paper focused on SYSCO, a company that linked employee satisfaction with business outcomes. By improving HR processes and creating a culture that prioritized employee retention, SYSCO increased the retention rate for delivery associates from 65% to 85% over six years. Given that the hiring and training cost per associate was $35,000, SYSCO saved nearly $50 million in the process (Cascio, 2006). This is a prime example of how focusing on employee satisfaction can lead to both cost savings and higher revenues.

What Happens Without a Focus on Culture?

It's important to acknowledge that not all companies place a strong emphasis on culture, and that’s a valid choice for some. Many businesses continue to see success through focusing solely on other traditional strategies like increasing capital investment, expanding marketing efforts, or improving operational efficiencies.

For these companies, growth might come from more direct approaches like scaling operations, but they may be missing out on some indirect, yet powerful, benefits. Without a focus on employee well-being and satisfaction, there may be:

Higher turnover rates, leading to increased recruitment and training costs.
Lower employee engagement, which can result in reduced productivity and lower-quality work.
Inconsistent customer experiences, as disengaged employees are less likely to provide high-level service.
A talent gap, as high-performing candidates often seek workplaces that align with their personal values and well-being.

These factors don’t necessarily derail success, but they do indicate potential missed opportunities. A company that relies primarily on external growth strategies might find itself spending more time and resources to maintain the same level of success that could be more easily achieved with a stronger internal foundation.

Takeaway: Invest in Culture, Reap the Rewards

While market strategies, technology, and resource allocation are essential components of improving ROI, company culture is often the missing link. By investing in the well-being and satisfaction of your employees, you can see direct and measurable improvements in profitability, customer retention, and overall business performance.