How Much Does Workplace Environment Matter - New Research Finds Organizational Climate Predicts 57% of Performance

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New research shows how employees' feelings about their work drives 57% of performance. In an international study on organizational climate, the study finds that relationship skills, especially building trust, are essential tools for leaders.

A new research study by Six Seconds’ Institute for Organizational Performance shows that key relationship factors predict 57% of the difference between low and high performers in organizations. Trust alone predicts 46% of the difference showing how feelings about the workplace have a significant impact on employee performance. Other findings show how different groups are motivated differently by these factors.

Using the "Organizational Vital Signs" assessment -- a highly effective measure of workplace climate -- the study examined how organizational climate affects performance. The test examines six factors: Accountability, Collaboration, Leadership¸ Alignment, Adaptability, and Trust. These climate factors were tested to see how they affect performance -- measured as a combination of customer service, job performance/productivity, and retention.

“There are two key findings that will help leaders improve performance,” says Joshua Freedman, director of the study and the Institute. “First, there is a measurable and strong link between how your people feel and how they perform. Second, different groups in your organization have dramatically different drivers of performance, and you’ll miss the opportunity if you stick to conventional ways of tracking those groups.”

1. Relationships Drive Performance

The strong link between climate and performance is specifically tied to customer service, productivity, and retention. Using a “forward stepwise regression” statistical analysis, research scientist Dr. Carina Fiedeldey-Van Dijk was able to show how specific elements of the climate predict performance in each area. In customer service, for example, 47% of the difference between low and high scores is predicted by climate factors of accountability, collaboration, alignment. Different factors play in each area; 43.4% of retention, for example, is predicted by leadership, alignment, collaboration.

According to Freedman, it means that “Relationships can no longer be a‘ soft’ area that gets a passing nod – building strong relationships is a core leadership competency.” It’s an area Freedman knows well. A leading expert in the field of emotional intelligence (“EQ”), Freedman’s team of top EQ consultants works with organizations from Amex to Sheraton to Pfizer, as well as with schools and government agencies. The team provides highly effective tools to enhance the relationship skills that improve performance.

2. Different Groups Have Different Drivers

The second key finding is that different groups in the study have very different predictors for performance. For example, for the group that is least satisfied with the organizational climate overall, collaboration predicts almost 30% of customer service. By contrast, collaboration only accounts for 3% among people who are satisfied -- for this group alignment (having a connection with the organization’s mission) is by far the most important factor. While a generally positive climate helps improve performance, the study shows that training and development efforts tailored to a group’s satisfaction level are more likely to be effective.

The 395 people in the study range from their 20s to 60s, from entry level workers to CEOs; they work in education, industry, government, and service businesses. Just over half the subjects were from the US, others from Europe, Canada, Asia, Latin America, and Africa. These demographics were thoroughly scrutinized to detect how they might impact on organizational climate or job performance.

Neither gender, age, nationality, nor even differences in industry sector was found to significantly impact the results. Dr. Fiedeldey-Van Dijk states: “As in many of our projects, traditional demographics proved inadequate for explaining climate and performance differences. If you really want to understand the people in your organization, you’ve got to look beneath the surface.”

The study found five accurate demographic groupings that shed light on performance - for example, “Non-executive long-serving employees.” In this group, 44% of customer service is predicted by collaboration, accountability and leadership. Meanwhile, 56.2% of retention is predicted by factors of alignment and adaptability. Understanding these groups clearly lets leaders and HR professionals more effectively manage the “people side” of the business.

The Organizational Vital Signs (OVS) test is available to help organizations gain a clear understanding of their climate. The Institute team uses it to design organizational development programs and measure their impact. “The tool quantifies the hidden drivers of organizational performance,” Freedman explains, “which lets leaders keep these factors on the radar. That’s a key benefit – just paying more attention to these areas makes a tremendous difference.”

More details on the study are available from the Institute web site at http://www.EQperformance.com/ovs.php

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