Linking staff reputation and happiness to executive pay the next logical step

Australia has been hamstrung by ailing productivity for decades now – happy people are more productive than their unhappy colleagues. Imagine the exponential economic benefits from an overall happier Australian workforce, writes Jarrod McGrath.

There’s an air of reputational maturity blowing across major ASX-listed companies. Inspired by their own reputational woes no doubt, companies like Qantas, Telstra and Woolworths are directly linking executive pay to what people think about them.

Woolworths, for example, is adjusting part of its “sales-per-square-metre” metric with a reputation metric that will be independently reviewed. Telstra gives “customers” a 25 per cent weighting in its primary performance measures and links executive remuneration to reputation, and there are more examples across the ASX leaderboard.

These moves reflect an evolved maturity that a company’s success, and even shareholder returns, come down to more than just the bottom line.

What’s missing from nearly all of the country’s largest companies’ scorecards, though, is any recognition of staff reputation and wellbeing. Customers and the general public can be let down by organisations at a point in time. Staff need to deal with how they are treated by and how they perceive their employer almost every day.

There’s a chasm between a typical leadership team and its coal face. Pay gaps between top and bottom are growing, the gender pay gap sits at 21.7 per cent, underpayment is rampant as companies fail to invest in traceability between their payment and award systems, people feel aggrieved with forced return-to-office policies, and recognition and appreciation are low.

A recent study from Reward Gateway and Edenred unveiled a telling disconnect whereby two-thirds of employees don’t feel appreciated in the workplace, while over 75 per cent of HR managers believed staff were appreciated.

Just like public reputation, there are good tools available to independently track and measure internal temperature. Employee Net Promoter Score (eNPS) – the employee equivalent to the more widely used customer Net Promoter Score (NPS) – is the obvious one. It asks just one question with two possible answers: “How likely are you to recommend us as a place to work for your family and friends?”

Being brave enough to ask that question, and ranking its importance so that the data is regularly put in front of senior leadership, leads to important discussions that start with why, and what can we do to improve?

Also, like public reputation, tracking and improving staff reputation has a positive impact on an organisation’s bottom line and shareholder returns.

Anecdotally, it doesn’t take a genius to recognise that happy, engaged staff are a drawcard for other happy, engaged staff, as well as happy customers that can further improve overall reputation. They’re less likely to leave, and so reduce the cost of hiring and revenue lost while new team members come up to speed.

The research supports happy people’s positive effect on shareholder return – a joint Oxford and Harvard study found companies with greater profitability and higher stock market performance tend to have staff who report greater happiness, purpose, and job satisfaction as well as lower stress.

Achieving this is about more than Friday drinks or throwing a cracking holiday party every year. The antidote to a disengaged workforce is listening to and engaging with their passions, giving them a say in the company’s “why” and how it operates while ultimately delivering on the company’s organisational goals and objectives.

Clearly, the value of this is lost in the psyche of Australian leadership and boards, which is a lose-lose-lose for people, executives, and the wider economy.

Australia has been hamstrung by ailing productivity for decades now – happy people are more productive than their unhappy colleagues. Imagine the exponential economic benefits from an overall happier Australian workforce.

As the government embarks on its ambitious Future Made in Australia (FMIA) pledge, it would be foolish for it and the benefiting industries not to recognise the value a happier, more engaged, more productive workforce could bring to the table.

Jarrod McGrath is the CEO of Smart WFM and author of The Modern CEO and The Digital Workforce.