In today’s competitive business world, many companies are focused on profits, shareholder value, and, more recently, their return in investments in AI solutions and big data infrastructures. However, as companies grow, they often overlook a fundamental driver of long-term success: employee happiness and employee engagement. John P. Strelecky, in his book The Big Five for Life, sheds light on this very topic, offering an approach that positions employee happiness as a core metric of business success. Strelecky’s insights hint at a “magic formula” that links employee happiness to productivity and, ultimately, to a company’s profitability.
What is The Big Five for Life?
The Big Five for Life is a compelling book about leadership, purpose, and how aligning personal and professional goals can transform a workplace. Strelecky introduces the concept of the “Big Five for Life” — the five things each person wants to accomplish in life, which, when aligned with their work, can drive happiness and fulfillment. The book provides a roadmap for leaders to create an environment where employees feel connected to a purpose and are encouraged to bring their full selves to their work.
Why Employee Happiness Matters
For years, organizations have sought ways to quantify the link between employee satisfaction and business success. However, most efforts fall short because they struggle to connect the intangible aspects of employee engagement with the concrete measures of profitability, such as EBIT or EBITDA. Simply asking the Employee NPS question, “How likely are you to recommend us as a workplace to your family and friends?” fails to capture the holistic and complex nature of employee happiness and engagement, leaving the true impact on business outcomes unclear.
Strelecky’s underscores that when leaders focus on creating an environment where people are happy and aligned with a larger purpose, they naturally become more engaged and productive. This, in turn, translates to greater profitability, though it’s not always easy to measure. The “magic formula” Strelecky hints at provides a practical approach to bridge this gap — offering a method to estimate potential productivity gains by enhancing employee happiness.
The Magic Formula to Measure and Enhance Employee Happiness
Embedded within The Big Five for Life is a powerful framework that allows leaders to quantify the potential productivity and profit increases that result from improving employee happiness. To use this framework effectively, the formula requires several key inputs, which you can easily implement in an Excel sheet. Here’s how it works:
1 Company Data Input: Start by entering some baseline data of your company (see fields in xls sheet marked in ‘blue’):
Last year’s profit
Number of employees
Employee turnover rate and ToBe target (optional but helpful for a more precise calculation)
Sickness leave rate and ToBe target (optional but helpful for a more precise calculation)
Productivity ToBe target (typically set at 80%, as 100% is often unrealistic for most companies)
2 Employee Happiness Interviews: Conduct a brief survey or interview with a small, yet representative sample of employees across the company. For guidance on sample size, refer to SurveyMonkey’s sample size calculator. You could also start by surveying just your team or department to gauge productivity levels and gain valuable insights from their responses. However, if your goal is to understand the impact on the profitability of a specific business segment or the entire organization, it’s best to include all relevant areas of the company in the survey.
Ask employees to rate the following statements on a scale from 1 (not at all) to 10 (totally agree):
Our employees come to work every Monday morning full of joy.
Our employees complete their tasks independently, without constantly receiving instructions from their superiors or having to be monitored.
Our employees have understood the purpose of our organization.
Our employees understand how what they do daily helps our organization in fulfilling its purpose.
Our employees fulfill their own purpose in life through the job they are paid for.
3 Calculating Potential Productivity and Profit Gains: By combining responses from these interviews with your company’s baseline data, you can estimate productivity gains tied to improved employee engagement. Simple calculations allow you to project potential profit increases based on higher engagement scores. The current productivity score is calculated from the average results of the survey questions. Additionally, the impact of employee turnover—factoring in a productivity loss of 50% over a period of approximately six months (see detailed explanation in the Excel)—and sick leave are also accounted for. The target productivity score (previously set at 80%) is then adjusted based on the desired levels of sick leave and employee turnover. This projected increase in productivity is ultimately translated into potential profit gains. Don’t be surprised by the significant profit potential, as illustrated in the example below. There’s substantial untapped potential within your workforce, ready to be unleashed.
Key Areas of Focus: Leadership
While the formula provides a powerful tool, it’s up to leadership to prioritize employee happiness to realize these gains. Here are core areas where leaders can focus their efforts to foster a thriving work environment:
Purpose Alignment: Every organization should have a clear, compelling purpose that resonates with employees’ individual goals and values. People want to feel that their work is meaningful and connected to something bigger than themselves.
Transparency and Communication: An environment of openness, where there are no hidden agendas or siloed communication, empowers employees to trust their leaders and feel involved in the company’s journey.
Autonomy and Skill Development: Give employees the autonomy to make decisions and the resources to develop their skills. When people have the freedom to grow and contribute, they naturally become more invested in their work.
The True Measure of Business Success: People First
Strelecky’s formula is a reminder that true business success begins and ends with people. Companies that prioritize profit over people may see short-term gains but often struggle with long-term sustainability. On the other hand, organizations that invest in their employees’ happiness and alignment with purpose can achieve sustained success.
So, if you want a winning formula for business success, start with your people. Embrace their purpose, support their growth, and foster an environment where they can thrive. The dividends in productivity, loyalty, and profitability will naturally follow.
Now it’s your turn! Use the Excel template below to discover your company’s untapped productivity potential.
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