Sirota Survey Intelligence has conducted thousands of employee, customer and supplier attitude surveys around the world since 1972. We have found that companies with truly enthusiastic workforces are very rare. Only 14 percent of the firms we have studied can be described as having enthusiastic employees. More than half of the workplaces we have surveyed (56 percent) have merely satisfied employees, while workers in 14 percent can be characterized as indifferent, and the remaining 16 percent as downright angry.

Our research shows repeatedly that the relationship between morale and performance is reciprocal—a "virtuous circle." High employee morale yields high performance, which, in turn, magnifies employee morale. Strong employee morale can pay off in spades for a company. In both 2004 and 2005, the stock prices of companies with high morale—those in which at least 70 percent of workers expressed overall satisfaction with their organizations—outperformed similar companies in their same industries by a ratio of 2.5 to 1. Meanwhile, the stock prices of companies with medium or low morale lagged behind their industry peers by greater than 1.5 to 1.

Why is high employee morale so strongly related to stock prices? Morale is a direct consequence of being treated well by a company, and employees return the "gift" of good treatment with higher productivity and work quality, lower turnover, a decrease in workers shirking their duties and a superior pool of job applicants. These gains translate directly into higher company profitability.

By their actions, management inadvertently destroys the enthusiasm almost all new employees bring to their positions and companies.

There are three factors that fuel employee enthusiasm: fair treatment, such as equitable wages and benefits or laying off people only when other alternatives have been exhausted; a sense of achievement or pride in one’s job performance and company; and camaraderie among coworkers. And these factors seem to have a cumulative effect. Our research shows that employees are four times more enthusiastic about their jobs when all three of these elements are present in the workplace, rather than only two of these. Employees are 15 times more enthusiastic when all three factors are present in the workplace than when only one factor is present.

The Morale Morass
Many leaders fail to recognize that enthusiasm is the natural state of employees and, by their actions, management inadvertently destroys the enthusiasm almost all new employees bring to their positions and companies. Our research clearly shows a measurable decline in morale in employees after they have been working for an organization for six months. This deterioration worsens as workers gain additional experience.

At most workplaces, management unwittingly demotivates employees by treating them as something disposable and nearly invisible, like paper clips. Specific attitudes and behaviors that contribute to this negative culture include considering employees expendable at the first sign of business difficulty; treating the vast majority as lazy and unreasonable in their demands; and failing to provide adequate recognition and reward for contributions.

About half of the workers we survey report receiving little or no credit for their contributions, and almost two-thirds say management is much more likely to criticize them for poor performance than praise them for good work. To sustain employee enthusiasm, managers need to stop treating employees as expendable objects who require constant supervision to perform. Instead, they need to recognize that the great majority of employees come to work to work—not to loaf and not to fight with each other or with management.

People must be treated with a fundamental fairness when it comes to the basic conditions of employment. The great majority are reasonable in what they want, such as competitive wages and a sense that the company has concern for them and their needs—just as a company expects employees to care about corporate goals and objectives. Loyalty cannot be a one-way street. Finally, managers must build a real partnership culture for the long term, where employees are treated as allies—a culture in which individuals and groups are eager to work together, serve customers in exceptional ways and beat the competition.

Management policies and practices geared to equity, achievement and camaraderie create an environment of genuine partnership—and will complete the virtuous circle that leads to employee enthusiasm and its many business benefits.

Art by Matt Mahurin.

David Sirota, PhD, is founder and chairman emeritus of Sirota Survey Intelligence and lead author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want.