The Relationship Between Employee Morale, Productivity, and Retention

We've written at-length about each of these topics individually, but it's important to cover the relationship between employee morale, productivity, and retention. The age of entrepreneurs being the only important stakeholders in a company has passed. Today, employees are increasingly becoming a business organization's key stakeholders. This is due to both the globally growing demand for quality products at reasonable prices and constantly increasing competition. It is more important than ever to have highly motivated employees that can give an edge against the competition.

If you're looking to build employee morale, you have to consider ways to keep them productive. And if you're looking to have productive employees who want to stay with your company, you'll need to boost employee morale. They all go hand-in-hand. Let's talk about it more in detail.

What is Employee Morale?

Employee morale is the psychological state of employees and is often determined by their satisfaction with their work. When employee morale is high, employees are typically more productive and less likely to leave the company. Conversely, when employee morale is low, employees are less productive and more likely to leave the company. This makes sense, as unhappy employees are not motivated to do their best work.

Having productive employees has always been a goal for companies. But today, the goal is to have highly motivated employees that are productive and glued to the organization. Employee retention is important because a good worker who is dissatisfied with their work may easily find another position, and that position may be with the competition. Employee retention is more than just reducing employee turnover. It is about holding onto high-quality employees that are motivated by excellent management practices.

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How Does Morale Impact Productivity?

Productivity refers to the amount of work that is produced by a worker within a certain period of time. Productivity can be affected by many factors, including employee morale. When employee morale is high, workers are typically more productive because they are motivated to do their best work. On the other hand, when employee morale is low, productivity tends to be lower.

What About Retention?

Retention is the rate of how long employees stay with the company. Retention rates are affected by many factors, including employee morale and productivity. When employee morale is high and employees are more productive, retention rates tend to be higher because workers want to stay at the company where they feel valued and appreciated. On the other hand, when employee morale is low or productivity isn't up to par, retention tends to be lower as workers look for other opportunities outside the business that will better suit their needs.

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Importance of Excellent Management

High employee morale is a major factor in the success of any organization. In order for companies to retain their employees, they must have a strong management system using strategies that inspire employees both individually and collectively. Managers are the direct link of communication between the company and its employees. Therefore, it is important to the success of a company to have well-trained managers that can communicate clear company goals and motivate their employees to make efforts towards those goals.

The Relationship between Employee Morale, Retention, and Productivity

The relationship between these three factors (employee morale, productivity, and retention) can have a significant impact on the success of any organization or team within an organization. HR professionals and executives should place employee morale, productivity, and retention high on their list of priorities in order to create a positive work environment that encourages employees to stay with the company for the long haul.

Employees stay because the company is adequately fulfilling their needs and they are given opportunities that allow them to fully use their skills. While decent pay and benefits are important, employees want to feel like they are contributing to a goal and making a difference. A company needs to have a purposeful and gratifying culture, based on values and principles that make sense, are fair, and provide a positive work environment.

A company culture that encourages its employees to advance in their skills and provides opportunities for increased responsibilities will successfully retain employees. This is where management comes in. Managers are the ones responsible to maintain a company culture where employees are inspired and have a sense of belonging. Once employees feel like they are part of something more than just a job, productivity will come naturally.

To see what inspired leaders can do to build and maintain employee morale, and get a better understanding of the relationship between employee morale, productivity, and retention, check out “Building Morale” from A Better Leader.

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About the Author Jennifer Orechwa

With over 25 years in the industry, and now as IRI's Director of Business Development, Jennifer has gained a unique perspective on what it takes to build a culture of engagement. By blending a deep understanding of labor and employee relations with powerful digital marketing knowledge, Jennifer has helped thousands of companies achieve behavioral change at a cultural level.

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