Despite being important to organisational success, employee wellbeing is often difficult for leaders to define and take action on.

Wellbeing goes beyond a healthy work-life balance and competitive pay—it encompasses individual experiences, manager perceptions, and organisational culture and performance. SHRM research shows that organisations that foster a positive work environment have lower turnover, thereby retaining talented and motivated employees. For leaders looking to retain top talent, this holistic view is crucial.

To bring more clarity to the wellbeing conversation, Russell Reynolds Associates ran a correlation analysis of our recent Divides & Dividends sustainability survey. We then identified three attributes that contribute to an employee’s sense of wellbeing within their organisation.

We found that only about half of employees (54%) identify as having “high wellbeing”—meaning they strongly agree/agree with the statements above.

While employers often focus on addressing employees with a low sense of wellbeing—understandable, as these employees feel 4x less impactful in their roles compared to those with high wellbeing—they actually account for a relatively small portion of organisations (6%).

Instead, organisations have the greatest opportunity with what we call the “vital middle”—the 40 % of employees who report having medium wellbeing. And this middling sense of wellbeing has a significant effect—employees in this category feel half as impactful as those who report high wellbeing (Figure 1).

This presents a massive engagement opportunity for leaders. While this 40% of employees may not be thriving, they are already at least partially engaged in the organisation and have the potential to make a significant impact—with the right support from leadership. A small investment in employee wellbeing can go a long way.

While these attributes may not directly impact more concrete metrics (such as organisational or manager performance), employee perception contributes to productivity, reputation, and net promoter scores. Via learnings from this analysis, we offer the following data-backed insights into how organisations can accelerate their employee wellbeing efforts:

1. Employees with high wellbeing are significantly more likely to report clarity around their work environment. Aligning goals and objectives across all levels of the organisation is crucial to ensure a unified direction.
2. Managers play a crucial role in fostering honesty, inclusion, and employee wellbeing. Employees who see their manager challenging unethical behavior, being transparent and honest, and vocalising issues of discrimination and inequality are more likely to report high wellbeing.
3. High wellbeing improves employee’s confidence in organisational performance. Wellbeing directly impacts how employees perceive overall organisational performance. By taking steps to ensure that employees feel inspired, connected, and able to be authentic at work, organisations can enhance confidence and engagement.

Employees with high wellbeing are significantly more likely to report clarity around their work environment

Most employees with high wellbeing (82%) feel that their role objectives are clear. Conversely, less than half (47%) of employees with medium wellbeing agree (Figure 2). In addition, 89% of employees with high wellbeing feel that they have the right team of people around them to enable good decision making, compared to only 55% of employees with medium wellbeing.

This underscores the importance of fostering wellbeing at the individual level. Not only does it create a healthier experience for employees, but it also enhances clarity, teamwork, and access to crucial information.

Managers Play A Crucial Role in Fostering Honesty, Inclusion, and Employee Wellbeing

Employees who see their manager challenging unethical behavior, being transparent and honest, and vocalising issues of discrimination and inequality are 1.4x more likely to report high wellbeing.

Across four manager behavior dimensions we measured, employees with high wellbeing were more likely to report that their managers display behaviors that help create a positive work environment (Figure 3). Employees with high wellbeing are more likely to report that their manager honestly acknowledges both successes and failures than those with medium levels of wellbeing (65% vs 49%). Related, those with high wellbeing were also more likely to agree that their manager effectively vocalises issues of discrimination and bias than their medium wellbeing counterparts (56% vs 41%).

These disparities highlight the major impact that managers have on their employee’s wellbeing. As such, senior leaders should prioritise open and honest employee relationships. According to Gallup research, managers account for at least 70% of the variance in employee engagement scores—and engaged employees are more productive, loyal, and committed to the organisation’s success.

High Wellbeing Influences Employee’s Confidence in Organisational Performance

In 2023, employees with high wellbeing were 1.4x more confident in their organisation’s performance than those with medium wellbeing (Figure 4). When taking a long-term view, 88% of employees with high wellbeing express confidence in their organisation’s future success, compared with 66% of those with medium wellbeing.

This highlights the link between employee wellbeing and retention. Those who have better experiences at work have simultaneously better expectations around their organisation’s future—meaning they’re more engaged in the organisation and ideally less likely to leave.

How to Harness Employee Wellbeing to Improve Organisational Success

In the future of work, employee wellbeing is a non-negotiable. Leaders looking to enact meaningful improvements to employee wellbeing and their organisation’s success should consider the following:

• Enusre that employee wellbeing (or related outcomes like engagement and retention) is incorporated into the objectives of senior leaders and managers.
• Clearly communicate the organisation’s commitment to wellbeing by stating concrete goals and integrating them across business units.
• Allocate resources and investments toeards cultural practices that support employee wellbeing.
• Empower employees to contribute to goals: clarify objectives and expectations for employees, ensuring clear roles and responsibilities with autonomy and flexibility where possible.
• Purposefully and consistently recognise employee achievements.
• Regularly assess, monit, and prioritise organisational culture to better assess if employees feel safe enough to bring their full selves to work. Solicit ongoing feedback, proactive support programs, and a culture that values work-life balance and mental health.

Authors

• Tom Handcock leads Russell Reynolds Associates’ Center for Leadership Insight. He is based in London.
• Beth Hawley is a member of Russell Reynolds Associates’ Center for Leadership Insight. She is based in Brussels.
• Gabrielle Lieberman is a member of Russell Reynolds Associates’ Center for Leadership Insight. She is based in Chicago.
• Peter Pickus leads Russell Reynolds Associates’ Assessment and Development Knowledge team. He is based in Washington DC.

The article was first published by Russell Reynolds Associates.

Photo by Nick Morrison on Unsplash.