Moods and Morale – Are they leading indicators of financial performance?
Gary Hamel a visiting professor of Strategy and Entrepreneurship at London Business School – “Human beings are resilient, inventive and passionate, but our organisations mostly are not. Our bureaucracy infused management models have left us with organizations that are less capable than the people who work within them. Therein lies the imperative and the opportunity: creating organisations that are fit for the future, by creating organisations that are fit for human beings.“
The problem continues to be that the leadership of many organisations remains stuck in a 20th century mentality of top down, command and control based authority. Sir Ken Robinson is offering sound advice when he talks about ditching cultures of command and control and creating climates of possibility.
There is no more proof required to highlight that organisations are not firing on all cylinders. There is also no point embarking on installing employee engagement programs without first deciding what factors contribute to an employee being engaged or disengaged.
Employee engagement is a broad term. It often lacks depth in relation to measurable causes and solutions. In this post we discuss how metrics like morale and mood impact productivity and employee wellbeing.
Metrics such as profit, retention and revenue are indeed important but they are lagging indicators of performance. To be predictive we should look at leading indicators. What measures might be predictive of Financial Success? We believe, understanding and awareness of employee morale may be a leading indicator of financial performance.
Leader’s moods have previously been described as the dimmer switch of productivity.
A study in 2005 by Andrew Miner from the University of Minnesota examined the correlation between positive and negative moods at work.
Miner’s team found that a negative event at work affected an employee’s mood five times more than if a positive event had occurred. He outlined: “Employee’s generally went about their work in mildly positive states, as most people do, but when a negative event occurred it captured attention through large changes in mood”.
According to Miner, organisations should therefore focus more attention on reducing negative events at work, than on increasing the frequency of positive events.
Research carried out in September 2013 on behalf of Bupa indicates that a lack of motivation and sub optimal health is causing workers in Britain to work well below peak productivity and is holding back growth potential. *
In 2011 Nancy Rothbard, Associate Professor of Management at Wharton University highlighted through a study how negative moods led to a 10% decline in productivity.
Their findings suggest that to enhance performance, it is critical to both acknowledge and reset the negative moods that employees and managers bring with them to work.
A survey carried out by Orion Partners highlighted that almost half (47%) of the 2000 workers surveyed said that their managers made them feel threatened, rather than rewarded. Some managers style of leadership and perceived mood creates feelings of threat which will limit people’s ability to perform and in severe cases, increase the risk of workplace anxiety and stress.
It is clear that mood and morale can become tangible cultural metrics which act as an indicator of employee engagement and future financial performance
Next week we will examine more engagement metrics and outline why many engagement programs fail to deliver sustainable value.
*Survey carried out by Onepoll in September 2013. The total number questioned in the survey was 5000.