Happiness Is the New ROI

Happiness Is the New ROI

Building a Company Culture that Pays Dividends

Getting culture right from the day an entrepreneur starts his or her company is the largest determinant of long-term success. Twitter logo When I talk with entrepreneurs and business leaders, I ask them what values and principles they're going to lead with. If you don't set those values up front, the environment around you will define it, and you may not end up with something you like.

It's fine when everything in the business is going well. But when things get tough—problems with co-founders, a recession, whatever the challenge—your culture will guide you through it. Your values and principles will determine how you weather the hard times and define the character of your company when conditions improve.

When starting my company 15 years ago, before writing the business plan, I developed a Corporate Manifesto. I conceptualized what I thought an improved company of the future would look like, and how it would treat its employees and customers. I wanted to nurture an environment where employees were excited about coming to work every day. I thought that if they enjoyed their lives overall (with work being such a big part of our lives), they'd be better mothers, daughters, husbands, fathers, siblings, and so on because of the relationship they share with our company. My premise was that if the company focused first on taking care of its people, the people would take care of those around them, our customers and ultimately, our company.

Happiness Is Good Business

According to a Gallup study, only three in ten employees are engaged at work. Half of the current work force essentially sleepwalks through their workday. A separate study by Gallup showed that half of employees were considering a new job. Many of my employees are young and could take up to 18 months to hit their stride. If my company trains team members who then walk out the door every other year, my business wouldn't be sustainable because I'd have to continue hiring and ramping up new employees just to replace the ones who don't stay.

On Fortune's Best Companies to Work For feature, editors say past year revenue growth for the largest Fortune 100 companies was 3%, compared to 30% at the Fortune 100 Best Companies to Work For. Twitter logo Companies with the highest percentage of engaged workforces show a 19% increase in income compared to a 33% decline in income for the companies with the lowest employee engagement rate.

According to a study by the Russell Investment Group, the cumulative returns for public "best companies" between 1998 and 2014, were 584%, compared to 191% for the S&P 500. What sets these companies apart in financial performance is that they are places where people love to work. According to the CEO of Great Place to Work®, Michael Bush, "Great workplaces have significantly less turnover, outperform peers in the stock market and enjoy high levels of collaboration, communication and trust—crucial ingredients to innovation. The 100 best are setting the standard for all businesses."

Values Cost Money

Values play a big part of any company's culture and retention strategies. These can't be just words on a wall. If you make vision and mission statements, are you going live them? Something inevitably will happen to challenge your values and I've always believed that a business value only becomes a value when it costs the company money.

As an example, the cost of my company's healthcare plan (we cover the majority of employees' out-of-pocket expenses) is growing. Although I could cut this cost to increase profitability, I want to maintain it. The security it provides for employees probably pays for itself many times over. This and other benefits (health club memberships, yearly health check-ups, flu shots, charitable donations, continuing education, etc.) are core to our values.

Nurturing employee happiness can have great returns for any company. It's because the best people stay, they love what they do, they excel, they attract other great people and they are motivated to go above and beyond for each other and our clients. If you’re leading a company, put happiness at the core of what you are doing. Twitter logo You'll be pleased with what you get in return.

Shawn Riegsecker is CEO of Centro, which is currently the #9 Best Medium-Sized Workplace in the U.S.

Attend the Great Place to Work® Conference on April 7-8 in San Diego, CA to see Shawn Riegsecker and other great workplace leaders speak bout their outstanding workplace cultures!