5 Steps to Greater Profitability ... Starting at the Bottom

I've always been an advocate of treating all employees well and now the research is in that supports my contention.

Profit at the Bottom of the Ladder  found that there is a link – unexpected by the researchers – between improved conditions for bottom-rung employees and profit. They expected to find that companies could provide good benefits to low-level employees and still be profitable. But they found much more. They found that well-treated low-level employees increased company profits.

After six years researching companies large and small around the world, Jody Heymann and Magda Berrera concluded that "the findings demonstrate that investments in employees at the bottom can be an advantage both in times of economic growth and recession."

Their recommendations fall into five categories, each supported by case studies and statistics.

1. Supporting the health of the lowest level of employees
   If you are sick, you can't work at all or, if you do show up, you can't work efficiently. On-site health care, providing medicine (or insurance), and flexible leave policies can increase productivity.
2. Training and career advancement for employees at every level
   Lower turnover, greater efficiency, and easier recruitment were the results when companies offered opportunities to learn new skills and train for higher-level jobs. People want to do better. When they have a chance, they'll stay on the job and try harder. What's more, they become better managers because they know what's involved in getting the job done.
3. Offering incentives
   Whether higher pay, profit sharing, or membership in a production team of their peers, incentives make people work harder and smarter.
4. Engaging line workers and acting on their recommendations
   People who actually do the work know the job best. Their ideas can streamline production, increase productivity or save money. Listen to them!
5. Ensuring that companies and communities can grow together
   This is right out of the corporate-social-responsibility handbook! It could also be a page from the "How to Ensure Your Longevity" handbook. If you want to hire good workers in 5 years or 10 years, make sure the schools in your community have the resources to do a good job. 

Many of the recommendations apply to businesses large enough to afford, say, an on-site clinic, but many apply to businesses of all sizes. Training, incentives, listening, community involvement: Even owners of small businesses can use these tools. It may take some creativity to come up with the right mix of benefits and costs but you can start with #3: Ask your workers!

And remember, we're talking about long-term profits and sustainability here, not next month's Income and Expense Report. We're talking survival and growth.

As the report reminds us, a company's success depends on the quality of the work done by those who actually make the product or deliver the service. They need to be rested, healthy, and motivated, just like the CEO or the owner.

What examples do you have of companies who've factored employee satisfaction into their business plan?