Too many companies bet on having a cut-throat, high-pressure, take-no-prisoners culture to drive their financial success. But a large and growing body of research on positive organizational psychology demonstrates that not only is a cut-throat environment harmful to productivity over time, but that a positive environment will lead to dramatic benefits for employers, employees, and the bottom line. Although there’s an assumption that stress and pressure push employees to perform more, better, and faster, what cutthroat organizations fail to recognize is the hidden costs incurred.
First, health care expenditures at high-pressure companies are nearly 50% greater than at other organizations. 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.
Second is the cost of disengagement. While a cut-throat environment and a culture of fear can ensure engagement (and sometimes even excitement) for some time, research suggests that the
inevitable stress it creates will likely lead to disengagement over 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.
And disengagement is costly. 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.
Lack of loyalty is a third cost. 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.
For these reasons, many companies have established a wide variety of perks from working from home to office gyms. However, these companies still fail to take into account the research. A Gallup
poll showed that, even when workplaces offered benefits such as flextime and work-from-home opportunities, engagement predicted wellbeing above and beyond anything else. Employees prefer
workplace wellbeing to material benefits.
Wellbeing comes from one place, and one place only — a positive culture.
Creating a positive and healthy culture for your team rests on a few major principles. Our own research on 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.
As a boss, how can you foster these principles?
The research points to four steps to try:
1. Foster social connections. A large number of empirical studies confirm that positive social connections at work produce highly desirable results. For example, 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. 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. As a boss, you have a huge impact on how your 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 Compassion Lab at the University of Michigan suggest that leaders who demonstrate compassion toward employees foster individual and collective resilience in
challenging times.
3. Go out of your way to help. Ever had a manager or mentor who took a lot of trouble to help you when he or she did not have to? Chances are you have remained loyal to that
person to this day. 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.
4. Encourage people to talk to you – especially about their problems.
Not surprisingly, trusting that the leader has your best interests at heart improves employee
performance. Employees feel safe rather than fearful and, as research by Amy Edmondson of Harvard demonstrates in her work on psychological safety, a culture of safety i.e. 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.
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.
In sum, a positive workplace is more successful over time because it increases positive emotions and well-being. This, in turn, improves people’s relationships with each other and amplifies their
abilities and their creativity. It buffers against negative experiences such as stress, thus improving employees’ ability to bounce back from challenges and difficulties while bolstering their
health. And, it attracts employees, making them more loyal to the leader and to the organization as well as bringing out their best strengths. When organizations develop positive, virtuous
cultures they achieve significantly higher levels of organizational effectiveness — including financial performance, customer satisfaction, productivity, and employee engagement.
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NOTE: This article first appeared in Harvard Business Review was co-written with Kim Cameron, the William Russell Kelly Professor of Management and Organizations at the Ross School of Business at the University of Michigan and the author of Positive Leadership and Practicing Positive Leadership. This posting on the Mindful Work Blog is with the author's permission and was acquired from her website - Emma's version contains numerous links to further research and references: Emma's Posting
Emma Seppälä is Science Director of the Center for Compassion and Altruism Research and
Education at Stanford University and a leading expert on health psychology, well-being, and resilience. Her research has been featured in the New York Times, ABC News, Forbes, the Boston Globe,
U.S. News & World Report, the Huffington Post, INC, and Fast Company.
Seppälä consults for Fortune 500 leaders on building positive organizations. A sought-after speaker, she has addressed academic, corporate, and
governmental institutions, including Google, the National Science Foundation, and the World Bank. www.emmaseppala.com