The CIPD began life in 1913 as the Workers’ Welfare Association. The driving force behind its creation, Seebohm Rowntree, was a highly successful businessman who recognised that the well-being of his employees was good business, not just philanthropy.

Why, then, one hundred years later, is the proposition that employee well-being goes hand in hand with business performance still regarded as a question rather than a fact?

In part, it is because these are complex relationships that are indirect, where other factors intervene, and where it can be difficult to distinguish correlation from causality. It also reflects a shortage of meaningful, practical and comparable metrics. We are still in the early stages of turning people from a cost into an asset to be measured and valued on the balance sheet.

Nevertheless, there is a considerable body of evidence to suggest that actions to strengthen employee engagement and enhance well-being can produce measureable improvements in variables that matter, such as staff turnover, absence, customer service, enthusiasm and commitment. An accessible summary of relevant UK evidence can be found in the Employee Engagement Task Force’s “Nailing the evidence” report.[i]

More often than not, though, these effects cannot be monetised easily and used to drive ROI calculations. That is why we need better metrics.

Research by Edelman, a public relations firm, across a range of countries shows that how employees are treated is one of the top concerns people have when forming their opinion of a company.[ii] Employees are often seen as a more credible source of information about a company than the CEO. Companies that ignore the welfare of their employees are taking a risk with their reputation.

Job satisfaction is a simple measure of employee well-being.[iii] However, it shows the extent to which these measures can vary across countries (see chart).

International companies therefore need to be alert to the national context facing their different operations. Aspects of the employment package that have a strong positive effect on employee well-being in one country may have little impact in another.

So how can companies improve employee well-being?  There is no set list but research suggests the following can all affect job satisfaction:

• Pay and reward
• Job security
• Fair treatment
• Working conditions
• Supportive line management
• An organisational culture that encourages trust and ethical behaviour
• Training, development and opportunities for advancement
• Job design
• Effective two-way communication between management and employees

In turning these into practice, international companies will need to work out how to balance “one company” policies that treat employees the same everywhere with a degree of adjustment for national requirements, customs and preferences (as cultural differences can have an effect on their impact).[i] To give two examples:

• CIPD recently worked with a Gulf State public service organisation where 80% of employees are from overseas. This required a wide range of targeted reward strategies as the factors most effective in motivating European and American employees (the financial package) were very different from those motivating local employees (opportunities for learning and development and career progression).
• Our research on ‘Next Generation HR in Asia’ found that confronting poor performance was seen as counter-cultural in some countries, but some organisations had found that tapping into the highly competitive and rigorous traditions of performance evaluation in their education systems enabled them to transform corporate culture.[ii]

Labour is more internationally mobile than ever before. International companies need to focus on employee well-being if they are to attract and keep the right people.

This article is part of a series managed by the Economist Intelligence Unit for HSBC Commercial Banking. Visit HSBC Global Connections for more insight on international business. 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.