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The surprising power of being nice to your employees

In certain fields, companies are finding bottom-line benefits to making employees happy.

Employees at work in the office of Hubspot.Keith Bedford/Globe Staff

Things that happen at Amazon have a tendency to end up transforming other industries. Just ask book publishers. So when The New York Times reported in August that the e-commerce giant was home to a "bruising" corporate culture and "conducting a little-known experiment in how far it can push white-collar workers," people took note. Was this the future of work?

It depends on the type of work you're talking about. Six years after the Great Recession, many American workers are still feeling its effects. But for a subset of highly skilled workers in fields such as technology, consulting, and finance, companies are bending over backward to make employees happy. They have to in order to remain competitive.


"A century ago natural resources were the most valuable assets," Roger Martin wrote last year in the Harvard Business Review (where I'm an editor). "Over the past 50 years the US economy has shifted decisively from financing the exploitation of natural resources to making the most of human talent." In a 2013 meta-study, Gallup found that work teams that scored in the highest quarter in employee engagement were 22 percent more profitable and 21 percent more productive than those in the lowest quarter.

Attracting and engaging top talent requires more than competitive salaries. Since buying the Watertown office complex where I work from Harvard, athenahealth has added a Frisbee golf course, a farmers' market, an array of food trucks, and a new restaurant. At C Space, a Boston-based consultancy, employees who have been at the company for 10 years get a monthlong sabbatical, in addition to their vacation, to use as they please.

"People come back energized," says C Space president Howard Kogan. Even when employees use the time for something nominally unrelated to work, like traveling the globe, they "come back with ideas how to make us a better place."


The courtship of employees doesn't stop with perks. In August, Netflix extended its parental leave policy to a full year after the birth or adoption of a child, though it only applies to salaried employees in its core digital streaming business (hourly workers in its distribution centers are not included). Earlier this month, Amazon updated its parental leave policy, extending leave for birth mothers to 20 weeks and adding six weeks of leave for non-birth parents of either gender.

Becoming a company that people are eager to work for also requires that ethereal form of competitive advantage: company culture. Academic studies have documented a correlation between a strong culture and a company's financial performance. Scholars have suggested several reasons for this, including that culture helps team members communicate; that it keeps workers from leaving the company; that it helps employees stay motivated; even that it makes customers more loyal.

Whatever the reason for the link between culture and corporate success, the simple truth is that employees care deeply about it, and therefore firms need to. When the workplace review website Glassdoor analyzed its data earlier this year, it found that employees' perception of a company's culture and values was a better predictor of employee satisfaction than salary, benefits, career opportunity, or work-life balance.

HubSpot, a Cambridge-based marketing software company, has a team of three people dedicated full time to company culture. When the team heard that employees felt disconnected from strategic decision making, the company set up a pitch session in which employees competed to persuade executives to invest in their ideas. C Space does something similar, letting employees vote for priorities.


Even the grueling work hours at ambitious companies may soon improve. For now, Amazon is far from alone in expecting long days from its staff, but as companies increasingly turn to data to discover how to get the most from their teams, they'll learn what researchers already know: Long hours often backfire.

Of course, there are real and troubling limits to these happy trends. Racial and gender bias can be difficult to overcome, even though diversity has clear benefits for businesses. Hiring for "cultural fit" too often translates to "hiring more people who look and think like we do" and poses a particular challenge for startups.

And, unfortunately, most employees can't look forward to the same improvements as knowledge workers. Cashiers, security guards, and telemarketers aren't being showered with lavish benefits, because companies don't feel that they have to offer them, given the struggle in certain sectors of the economy. As jobs have been automated or moved offshore, workers have lost the bargaining power (and private-sector labor unions) necessary to demand better workplace conditions. Wages have barely increased since the recession, and the average American worker is more likely to face employer surveillance or unpaid overtime than to be offered a sabbatical to travel the world.

In some cases these companies would actually benefit financially from treating workers better. Profit sharing and stock options can boost employee productivity, and cashiers likely do better work when they're engaged, too. There's even some early evidence that a big gap between how much executives and workers get paid can turn off customers.


Even with all this, it's unrealistic to think that market-driven efforts will fully counteract the pressures most American workers face. That's where public policy comes in. Mandating paid family and sick leave would be a good start toward improving work for those not lucky enough to land a salaried job at Netflix headquarters. But businesses shouldn't wait for legislation. For one thing, improving the workplace culture is the right thing to do. And in more cases than some executives might think, doing so can help the bottom line.

Walter Frick is a senior associate editor at Harvard Business Review. Send comments to