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A Literature Review of the Effect of Employee Well-Being on Productivity and Retention
A current topic that is showing increasing importance in the workplace is employee well-being. The changing workplace environment brought about by the Covid-19 pandemic has challenged the definition of a workplace. Employees have grown accustomed to a different working environment, causing new discussions about how a workplace is defined and how that affects worker productivity and employee retention. Research shows that the challenges faced by Covid-19 can be turned into opportunities to build organizational identity, and increase performance (Lian et al., 2022).
Outline
This paper will focus on the following research questions:
● Which workplace policies correlate to employee well-being?
● Which leadership practices correlate most to an employee's well-being?
● What effect does employee well-being have on productivity?
● What effect does employee well-being have on employee retention?
Definitions
Well-Being
Employee well-being generally refers to the psychological well-being of the individual employee. Many factors contribute to the employee's feeling of well-being. Somers, Birnbaum, and Casal (2019) include factors such as work stress, burnout, and exhaustion as negative influences on employee well-being. Positive influences include flexible work schedules, worker training, job development, and a pleasant work environment which might include easy parking and amenities at work (Hills, 2022).
Workplace Policies
Workplace policies are systems put in place by a business, generally through its human resources department to regulate employee behavior. These systems could include expectations of the job, insurance coverage, paid time off, employee benefits, and so forth.
Leadership Practices
Leadership practices include how management guides employees to do their jobs correctly while trying to maximize productivity. Some of the most effective leadership practices include training and development, professional development, and employee involvement (Shayegan et al., 2022).
Productivity
Productivity is defined as the amount of output delivered by an employee. Therefore, the greater the output per employee the better it is for the company. Happy employees are up to 20% more productive and companies that have engaged employees to average 147% greater earnings per share (Sapling as cited in Hills, 2022).
Retention
Retention is the rate of employees remaining at a given job. There is a great expense to companies related to employee turnover. There are extra expenses attributed to the cost of training new employees and a loss of output due to the loss of experience while a new trainee acclimates to their role. Employee turnover can cost a company up to 5.4% of its annual budget (Moore et al., 2022).
Literature Review
Workplace Policies Affect Employee Well-Being
Employee well-being is a complex idea. Employees take into account many variables when it comes to their workplace satisfaction. The first factors that are generally thought of, concerning employee well-being, usually pay, benefits, and paid time off. However, to employees, all aspects of the workplace experience can be important factors. Ease of parking, the cafeteria or break room, employee training (Hills, 2022), and even social causes supported by the workplace are valuable when employees consider their well-being (Hong-yan & Zhi-Xia, 2022).
The literature reveals that understanding workplace policies and their effect on employee well-being is complicated; many intertwined variables can cause a different outcome with just a small change. For instance, breaks taken during the workday can be either beneficial or detrimental depending on what occurs during the break (Lyubykh et al., 2022).
Social media breaks are taken by 97% of knowledge workers (Syrek et al., 2018 as cited in Lyubykh et al., 2022). Social media breaks can have either a positive or negative effect on the employee's recovery from their work. Physical exercise breaks have been shown to not hurt, and many times improve performance (Lyubykh et al., 2022). Nap breaks have been shown to have a short-term negative effect (immediately after awakening), but a long-term positive effect (greater productivity at the end of the day) (Lyubykh et al., 2022).
Two of the most important factors of breaks are respite activities and autonomy. Respite activities are considered socializing, leisure, and non-work activities which have a positive effect on employee well-being (Chong et al., 2020 as cited in Lyubykh et al., 2022). Employees that have autonomous work breaks, where they can decide when to take them, and what they can do, also enjoy a greater sense of well-being (Lyubykh et al., 2022). In general, the context (psychological detachment from work and relaxation) and timing of breaks can have a positive effect on employee well-being.
Interestingly, it is found that there are similarities between what happens during a work break and the experience of the workplace itself. Relating to others, having a feeling of control, and relaxing are keys to having a successful work break (Bosch et al., 2018; Rhee & Kim, 2016 as cited in Lyubykh et al., 2022). The idea of having a feeling of control and relating to others also contributes to workplace well-being (Mazzetti & Schaufeli, 2022). So, there is an overlap of this feeling of relatedness and control that permeates the positive effect of workplace well-being and extends into the work break experience (Bosch et al., 2018; Rhee & Kim, 2016 as cited in Lyubykh et al., 2022; Mazzetti & Schaufeli, 2022).
Work breaks can also have a negative effect. When employees talk about work during their break it can hurt the rest of their day. Also, employees benefit from socializing together during their breaks, but not when it is a forced behavior (Lyubykh et al., 2022).
It is important to note that organizational hassles can have a greater negative effect on employee well-being than operational hassles (Mansell et al, 2006). That is to say that the atmosphere at work can have a greater effect on employee well-being than the work itself (Mansell et al, 2006).
Leadership Practices Affect Employee Well-Being
An engaging leadership style is defined as a manner in which, according to Mazzetti and Schaufeli (2022), "leaders inspire, strengthen and connect their followers thereby satisfying their basic psychological needs of autonomy, competence and relatedness" (p.2). Mazzetti and Schaufeli (2022) go on to define autonomy, competence, and relatedness. Autonomy is defined as the feeling of being in control. Competence is the employee's feeling that they are doing their task effectively, and the feeling of relatedness occurs when the employee feels cared for (Mazzetti & Schaufeli, 2022). Hills (2022) goes as far as to recommend a workforce experience officer (WEO) whose job is to create and maintain a positive workplace experience. This positive workplace experience should reflect the mission, values, and vision of the company (Hills, 2022). The WEO should build a team of stewards that looks after the workers and works to build memorable experiences for the staff (Hills, 2022). The WEO is also responsible to provide the tools necessary for workers to do their best and should create excitement about the work at hand (Hills, 2022).
It is important to note that enhancing employee well-being through training initiatives is well worth the effort and carries a little cost with a great return on investment (Lester et al., 2022). Examples of low-cost initiatives could include the Gratitude Visit which is where an employee writes a 300-word essay to a fellow employee telling them how they changed their life for the better (Lester et al., 2022). Three Good Things is another method of raising happiness in the workplace. Three Good Things is an opportunity for a worker to write down three good things that happened to them each day, for a week, and what caused those good things (Lester et al., 2022). Gratitude Visits and Three Good Things exercises are both low-cost ways to raise positivity and happiness in a workplace, which in turn, raises the well-being of the employee. Employees with a higher level of well-being are more productive and stay at their jobs (Lester et al., 2022; Kennedy et al., 2022).
In contrast, a dominant leader who facilitates a zero-sum mindset creates an atmosphere of less cohesiveness. This zero-sum mindset permeates the team atmosphere and causes employees to believe that they cannot move forward unless it is at the expense of a teammate (Kakkar & Sivanathan, 2022). Hills (2022) also gives examples of ways to harm the workplace. Hills (2022) gives five examples of what not to do including sugar-coating the job description so that the new employee does not have a real idea of what the job entails. Similarly, hiding the bad parts of the job, when an employee is new, only to present them after the employee has been around for a couple of months, also creates a negative work experience (Hills, 2022). Finally, Hills (2022) argues that renegotiating staff pay and benefits to a lesser amount, not positively recognizing worker efforts, and frequently changing their policies and procedures all lead to a negative workplace environment.
Employee Well-Being’s Effect on Productivity
One factor connected to employee well-being is work-time flexibility. In the 2020 Harris poll, 82% of American employees said that they would work longer days if they could work fewer days a week (Kennedy et al., 2022). Microsoft Japan gave employees Fridays off and realized a 40% gain in productivity (Kennedy et al., 2022). Employee happiness is important to a company's bottom line. People that are happy miss fewer days of work, are more creative, are highly motivated, and are less likely to leave their jobs (Lester et al., 2022). Happy employees are also more productive (Lester et al., 2022).
Workplace friendships can add value to a business. Having friends at work can increase the level of emotional support a worker feels, can build a sense of camaraderie, and can have a positive effect on productivity (Rangnekar, 2022).
In a more minor context work breaks have also been shown to affect productivity, however, whether it is positive or negative depends on the break-time activity (Lyubykh et al., 2022). Camaraderie and social interaction at the workplace can be valuable to build teamwork and employee relatedness which have both been shown to improve employee well-being and productivity (Mazzetti & Schaufeli, 2022). However, when social activities during breaks are pushed by management, and not occurring naturally, it can have a negative effect (Lyubykh et al., 2022). This negative effect could be tied to the reduction of the employee's feelings of autonomy which is a negative factor in employee well-being (Mazzetti & Schaufeli, 2022; Bosch et al., 2018; Rhee & Kim, 2016 as cited in Lyubykh et al., 2022).
Employee Well-Being’s Effect on Retention
Organizational-level perceived support is the belief of the employees, as a group, that their employer cares about them (Kim et al., 2022). Organizational-level perceived support (OLPS) is both a determining factor in the increase of an employee's feeling of well-being, as well as a factor in an employee staying with their employer (Kim et al., 2022).
Gamification is also valuable when it comes to employee retention (Nivedhan & Priyadarshini, 2018). Gamification steals from the world of athletics and utilizes the idea of making the work environment more game-like so that employees and employers are more like a team (Nivedhan & Priyadarshini, 2018). Different aspects that would be included in gamification strategies are getting employee feedback, helping to develop employees, and recognizing and rewarding employees (Nivedhan & Priyadarshini, 2018). These gamification strategies mimic the research of Shayegan et al (2022). Both Shayegan (2022) and Nivedham & Priyadarshini (2018) cite the importance of developing employees, gathering feedback from employees, and recognizing and rewarding employees. By using these gamification strategies employee absences have been shown to decrease by 35% and employee retention and productivity have been shown to rise by 10 to 15% (Nivedhan & Priyadarshini, 2018).
Limitations
There are multiple different levels of limitations regarding the data found during this literature review. Using survey methods to identify different individuals' well-being, the differences in each individual's needs for considering their well-being, and the complicated manner of the nature of the experience which contributes to each individual's well-being can all limit the usefulness of the data collected.
Generally, when a person is asked about their well-being it is in the form of a survey. Surveys that are used for accessing employee well-being many times contain descriptive labels such as “seldom happy” or “often happy”. These descriptive labels are vague and can be interpreted differently between respondents negatively affecting reliability (Leedy & Ormrod, 2018). The descriptive labels may also be defined differently by the same respondent over a time interval, thereby negatively affecting the test-retest reliability (Leedy & Ormrod, 2018).
Another potential problem, when surveying employees about their well-being, is the differing needs of each individual. People value different workplace factors differently. Paid time off may be more valuable to a young couple with no children, whereas flexibility of the work schedule may be more important to a single mom. Trying to determine which factors have the greatest effect is almost impossible to define. Different people have different needs, and even, the same person may have different needs depending on their life stage (Roczniewska, 2022). Roczniewska (2022) argued that looking at the group level, rather than the individual level, could lead to better determining employee well-being.
Finally, as was shown previously, even the same factor can produce different results depending on its variability. Work breaks can be either productive or detrimental depending on what occurs during the break (Lyubykh, 2022). So, even if an employee desired to have more work breaks to improve their well-being, it might not benefit them as much as they assume and could affect them negatively (Lyubykh, 2022).
Conclusion
Employee well-being can be attributed to many factors in the workplace. It is clear that a work environment that is pleasant and has leaders that show genuine care and encourage worker growth, contributes to employee well-being. Employee well-being contributes to productivity and employee retention which, in turn, leads to a more successful company.
It is also important to understand that not only do policies and behaviors affect the individual workers independently but they affect the individual worker through the way the teams they are assembled interact. Roczniewska (2022) calls these the supra-individual factors. The supra-individual level is any level above the individual, so groups, teams, and divisions would be examples of the supra-individual level (Roczniewska et al., 2022). There are three supra-individual factors global, shared and configural properties (Klein & Kozlowski, 20000 as cited in Roczniewska et al., 2022). Global factors are the team or organization as a whole, the size or location of the team would be considered global factors (Roczniewska et al., 2022). Shared properties might include more aspects of the individuals within the group and could include team attitude, the team's perception of leadership styles, and their perception of workplace constraints (Roczniewska et al., 2022). Configural factors are defined by the individuality and variance within the group (Roczniewska et al., 2022). Focusing on these supra-individual factors may be a way to remove extreme variables within teams so that the company can focus on its employee policies (Roczniewska et al., 2022). Understanding employees at the group level, rather than the individual level may allow businesses to determine best practices that broadly improve the well-being of their employees (Roczniewska et al., 2022).
The research found in this literature review displays the importance of emphasizing a beneficial organizational structure (how an organization is run), as that affects employee well-being more than the operational structure (the actual work an employee does (Mansell et al., 2006). The variances experienced at the individual level, as seen in the work break example, show that it is impossible to satisfy every employee in their every need. However, categorizing individuals and grouping them to form like-minded groups of employees and addressing their needs in a more general way can be a successful way to raise employee levels of well-being (Roczniewska et al., 2022). Employee well-being, in turn, is tied to greater productivity and employee retention (Lester et al., 2022). Thus a beneficial organizational structure made up of leadership practices and workplace policies that provide employee development, recognition and autonomy can have a positive effect on employee well-being which then has a positive effect on the company's productivity and employee retention.
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