The Attitude Effect

The idea that employee attitudes affect work performance is not new. Management professor Frederick Herzberg’s employee motivation research from the 1950s is still taught in business schools. His classic Harvard Business Review article, 
“One More Time: How Do You Motivate Employees?” debunked the traditional kick-in-the-pants approach and clarified that neither physical nor psychological punishment motivates employees.

Herzberg also studied “hygiene factors,” such as work conditions, salary, relationships, status, the work itself, recognition and advancement, and whether each factor was associated with greater satisfaction or produced an avoidance reaction. Factors such as policies, administration, working conditions, salary, and interpersonal relationships triggered avoidance, while achievement, recognition, the intrinsic value of the work, and advancement were motivating factors. Herzberg coined the term “job enrichment” to describe methods for improving both motivation and performance.

A half-century later, the Harvard Business Review devoted its entire January/February 2012 double issue to the topic, “The Value of Happiness: How Employee Well-Being Drives Profits.” Research into the “science of happiness” has produced a Performance-Happiness Model, prompting savvy employers to re-evaluate their corporate cultures.

As an electrical contractor, are you required to keep your employees happy to achieve higher productivity and profitability? Yes and no. Despite the widespread discussions of happiness in the workplace, the real issue is employee engagement.

Leigh Branham—managing principal of Keeping the People Inc., and a noted expert on attracting and retaining high performers­—is the author of “The 7 Hidden Reasons Employees Leave.” Referring to the Saratoga Institute’s survey of 19,700 employees in 17 industries who had voluntarily left their jobs, he points out that 88 percent quit because they became “disengaged” for reasons unrelated to their compensation. Reluctant to burn bridges, most of them still used pay as their reason during exit interviews.

Raising the level of employee engagement, according to ­Branham, requires an employer to cultivate satisfaction and provide “something else” to encourage extra effort. Leaders of the best companies have discovered that mutual reciprocity exists, and employees won’t take advantage of the company’s investment in them but will achieve a higher level of productivity and improved performance if the company values them enough to invest in their professional development. The younger generation of workers has a new attitude toward training: they focus on lifetime employability and the need to continuously develop their skills and potential instead of relying on lifetime employment with one company—they will stay where they are appreciated.

Effects of disengagement

The Gallup Organization has estimated that the 22 million actively disengaged workers in the United States cost as much as $350 billion per year in lost productivity. A separate study found that employee attitudes about an organization could be used to predict future sales and profits.

The U.S. Department of Labor estimates that approximately 2.8 million workdays are lost each year due to employee illness and injuries. Other studies have found that emotions—such as anger, anxiety and frustration—lower performance, raise accident and illness rates, affect heart rates, and cause parts of the brain to shut down.

Department of Labor data also reveals that the primary reason people quit their jobs is lack of appreciation, and a survey of 10,000 employees of Fortune 1,000 companies cited lack of recognition as a major reason for leaving a job. 

Meanwhile, the American Management Association estimates the cost of replacing an employee at 30 percent of salary, and other research estimates the cost of replacing a manager at up to 150 percent of salary. Branham’s website ( contains a turnover-cost calculator in the “Tools” link under the “Resources” section.

The pervasiveness and accessibility of social media offers any disgruntled, underappreciated employee a platform to create a public relations disaster for an unwary employer. The 77 percent of the 10,914 workers surveyed in the Blessing White 2011 Employee Engagement Report that reported feeling helpless and hopeless were not only unproductive, but also had the potential to destroy company reputations by texting, tweeting, blogging, and Facebooking their complaints to the world.

Benefits of engagement

Higher levels of employee engagement are associated with improvements in retention, loyalty and well-being; higher profits, productivity and stock prices; elevated morale; and lower rates of absenteeism, accidents and even lawsuits. Fortune magazine analyzed the stock prices of companies from 1998—the first year that the “100 Best Companies to Work For” survey was conducted—through 2010. Companies on the best workplaces list earned an average annual return of 10.06 percent, compared to the 3.83 percent average return for the Standard & Poor’s 500 index of leading U.S. equities; the best workplaces also earned superior returns in each separate year.

The Jackson Organization surveyed 26,000 employees from 31 organizations to see whether company recognition of employee excellence affected profitability. Companies that effectively expressed appreciation for the value of their employees had returns on three profitability measures of more than three times the level of companies that did not. The specific measures included return on equity, return on assets and operating margins.

A 2012 Gallup survey of almost 50,000 businesses and 1.4 employees in 49 industries and 34 countries found employee engagement to be an “important competitive differentiator” that contributed to increased profitability and productivity and decreased both absenteeism (37 percent) and turnover (25 percent). The companies that scored highest were 22 percent more profitable and achieved 21 percent higher productivity measures.

Taking action

Are your employees engaged, feeling appreciated, eager to come to work and performing at maximum capacity? Ask them. Email Leigh Branham ( for a copy of his survey, or create your own. If you are unsure whether your employees will tell you the truth, use a third-party consultant to interview individuals, or facilitate focus groups to learn what they like about your company and what changes they would suggest. Then take action to implement as many of the workable ideas as possible.

Most employees, Branham said, start their jobs with a desire to be engaged in the work, and their disillusionment progresses through several phases. First, they become aware of triggers in the work environment that create frustration, anger, or stress. In the second phase, they take action, sending out resumes, interviewing with other companies, considering offers, and debating whether to quit or stay. This disengagement process produces “warm chair attrition,” i.e., where employees are still physically present but not fully dedicated to excellent performance.

Managers should look for signs, including refusal to share information or make eye contact and higher levels of error or conflict, absenteeism, tardiness or accident rates. Don’t rely on the exit interview to reveal too late what you could have done to keep a valuable employee. Branham recommends checking in often with employees and a more proactive “stay interview” to remind the employee that he or she is valuable, and ask questions such as, “What is important to you?” and “What will make you stay with the company and feel that you are contributing?” Study the attitudes of company leaders, and replace “Our employees should feel lucky to have a job at all” with “We want people to feel lucky to work here and to have found this company.”

Think about the current culture of your company. Have you created an environment of trust or fear? How do you respond to mistakes—punitively or as opportunities for everyone to learn and improve your procedures and processes? Are you a master gardener who pulls a weed as soon as you notice it, or are you an amateur who waits until they have overtaken the entire plot? Do you identify the underlying reasons for poor performance and coach employees as individuals, or do you fire too quickly and incur preventable turnover costs?

Martin Seligman, Ph.D., the author of “Learned Optimism,” is best known for his work in positive psychology. He lists three essential selection criteria for filling challenging jobs: aptitude, motivation and optimism. His website offers a free webinar (…) on employee motivation and happiness that lists key factors influencing whether an employee achieves job satisfaction, remains engaged and stays with the company. They include the following: purpose—a sense of working toward something bigger than oneself; autonomy—a feeling of control and that one’s choices matter; and connections—good friends at work, social support and especially a good relationship with one’s supervisor.

For her book, “Make More Money Making Your Employees Happy,” trial consultant and author Noelle C. Nelson, Ph.D., researched the effect of improving happiness among employees of small and large companies. Nelson warns employers that creating a culture of appreciation requires more effort than simply saying “thank you” occasionally. It is important to create clear expectations, provide adequate tools, training and sufficient time to complete assigned tasks, and offer frequent, targeted feedback on performance to minimize insecurity. Recognize and reward accomplishments and encourage creativity and innovation by welcoming and implementing suggestions for changes.

Leaders should lead by example, modeling a positive attitude and acknowledging the contributions of employees. When problems or mistakes occur, it’s important to fix and learn from them instead of placing blame. High achievers should not be punished for excellence; often they are overloaded with extra responsibilities instead of being rewarded. Whenever possible, fun should be integrated into the work environment, and good relationships between colleagues should be prioritized, because they lead to improved customer service.

It may not be essential to ensure that your employees are blissfully happy, but keeping them engaged is essential to improve your profitability regardless of economic conditions. A little appreciation goes a long way, and the benefits are worth the investment.

About the Author

Denise Norberg-Johnson

Financial Columnist
Denise Norberg-Johnson is a former subcontractor and past president of two national construction associations. She may be reached at .

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