Why Happy Employees Are Your Ultimate Scale-Up Hack

Have you ever been to a restaurant where the waiter was grumpy, unhelpful, and obviously didn’t want to be there?

As Founder and CEOs of a burgeoning scale-up, you’re aiming to carve out a significant niche in your market. A critical aspect of achieving this is not just focusing on customer satisfaction but on fostering an environment where your team are not just satisfied but happy and engaged. Let’s explore why prioritising employee happiness could be your most effective strategy for scaling up efficiently.

The Unseen Engine: Happy Employees Drive Growth

The brutal truth is employees who wouldn’t write rave reviews about their experience working at your organisation aren’t going to deliver first class customer service. Gallup’s extensive research has long supported the premise that team member engagement is a cornerstone of business success. Their studies consistently show that companies with high employee engagement report 21% higher profitability. But beyond numbers, engaged employees contribute to a robust, positive corporate culture that naturally enhances customer experiences. They become compelling ambassadors of your brand, motivated not by mandates but by genuine satisfaction and enthusiasm for their roles.

Rethinking Priorities: Employee Satisfaction Before Customer Satisfaction

Conventional wisdom may tout the customer as king, but in the scale-up phase, your employees are your ace in the hole. They are the ones interacting with your customers, building your products, and representing your brand. If they believe in the company, their authentic engagement is transmitted directly to your customers. I don’t agree with Simon Sinek on many things but he aptly pointed out, “Customers will never love a company until the employees love it first.” This isn’t just a catchy phrase; it’s a fundamental truth in business.

Consider Richard Branson’s philosophy: putting employees first ensures they take care of your clients in turn. This direct correlation is not merely anecdotal; it’s a proven strategy that built a billion-dollar empire under Branson’s leadership.

The numbers don’t lie.

Individual team culture has a profound effect on employee engagement. In fact, Gallup found that 80% of the employee engagement score on their Q12 survey is driven by the manager and team. 

According to Gallup’s findings, our relationship with our manager has a 70% influence on how we feel at work, and yet managers spend only 7% of their time managing people. Managers who fail to meet the engagement needs of their team don’t just hinder individual performance—they stifle the entire team and ultimately, the company’s growth. It’s a stark reality that managers across the globe are struggling to effectively engage their teams. According to Gallup’s recent State of the Global Workplace report, actively disengaged employees significantly outnumber their engaged counterparts, with 24% feeling disengaged, including a staggering 15% who report feeling actively disengaged, compared to just 13% who are engaged. This suggests that for many, work is more often a source of frustration rather than a source of fulfilment.

This pervasive disengagement has dire consequences for business health. Teams characterised by low engagement are not just less productive and profitable; they’’’re also less loyal. This lack of loyalty can lead to high turnover rates, which are disruptive and costly—costing businesses up to 1.5 times the annual salary of each departing team member.

The contrast between disengaged and engaged teams is stark. Engaged teams experience significantly lower turnover rates—24% to 59% lower. They also boast 10% higher customer ratings, 21% greater profitability, and 17% higher productivity. Additionally, engaged teams see 28% less shrinkage, 70% fewer safety incidents, and 41% less absenteeism.

The transformation when teams shift from disengagement to engagement is profound. Work becomes a place of inspiration and achievement rather than drudgery. However, achieving this shift requires managers who may not naturally excel at people management to receive targeted support and training. For companies looking to thrive, investing in developing managers’ skills in engagement and motivation isn’t just beneficial—it’s essential.

Strategic Happiness: Practical Steps to Engage and Energise

To transform your organisation into a breeding ground for innovation and customer satisfaction, focus on creating a workplace where happiness is integral to the culture. Here are three strategic actions to enhance employee happiness:

1. Empower and Listen:

• Implement regular feedback loops and act on the information received to show that you value their opinions and strive to improve their work environment. Tools like Gallup’s Q12 and FridayPulse can be instrumental in measuring and understanding employee engagement at a granular level. They give you information about where you need to focus your effort, and are invaluable for building high-performing teams and driving team member engagement, ultimately creating a happy company culture and a productive working environment. I’ve written an entire blog about Gallup’s survey questions and Friday Pulse that give you insights into how you can use them in your business.

2. Recognise and Reward:

• Develop a recognition program that not only rewards results but also acknowledges efforts and innovations. Make recognition frequent, public, and tied to specific achievements to reinforce desired behaviours and boost morale.
  
  It’s vital to ensure that the rewards offered resonate with the company’s long-term objectives and ethos. For instance, rewarding gym attendance with ice cream might confuse if your company champions healthy living. Tailor rewards to reinforce the identity and values your business wants to uphold. For example, rewarding employees who consistently meet fitness goals with a spa day or a nature hike can underline a commitment to well-being and self-care. Some companies get creative with their rewards, introducing unique incentives like the “Foxtrot Oscar bonus” or the £5 M&S vouchers initiative seen at TNT, promoting a positive and supportive work culture. The most effective reward systems, I think, are those that align with your company’s values, encourage the right behaviours, and motivate employees to excel—all while driving your company towards broader success. It’s crucial to keep these systems under review, adapting based on employee feedback and business performance to ensure they remain relevant and effective.

3. Be open to giving and receiving honest feedback

• People think they’re straightforward, but most people aren‘t. They have a tough time being direct with others about their faults, poor performance, and incorrect behaviour. They’ll tell you they want to be straightforward and admire people who are. But when push comes to shove, they aren’t straight-forward. They fear having hard conversations.
  
  A manager’s job is to help their employee become the best version of themselves that they can be. That can’t happen if a leader avoids the tough conversations that are needed to help an employee recognise what kinds of behaviour undermine their strengths. Only once they know what to work on can they continue to improve. A great example of this from my early time at Rackspace. We created a reward for employees where we’d pay for a weekend away at a hotel as a reward for the best employee of the quarter. During that time, I noticed that an employee was really struggling. Let’s call him Daniel. He was at the bottom of the pack. The feedback I received was that Daniel never answered the phone. When the phone rang, he looked the other way and faked looking busy. I told him this. I said, ‘Daniel, you’re at the bottom of the ranking because you never answer the phone.’ Straightforward feed-back. Transparent feedback. Candour. Guess what happened in the next quarter? He was employee of the quarter, and people complained that they never got to speak to a customer because Daniel always answered the phone.

4. Develop and Promote:

• Invest in your employees’ growth through training, workshops, and seminars that help them advance their skills and careers. Ensure that career progression opportunities within the company are clear and attainable, which is a significant factor in employee satisfaction and retention.
  
  Fostering a culture of growth through employee development is crucial for long-term business success. Research shows that 54% of staff retention is linked to perceived investment in development, highlighting the importance of nurturing growth to keep talent. Implementing coaching, particularly using managers and peer-to-peer systems, enhances continuous learning and identifies potential leaders while fostering a supportive culture. Companies like NextJump exemplify this with structured development programs encouraging employees to work on their weaknesses in a supportive setting. Regular feedback and clear career paths are essential, enabling real-time growth discussions and helping employees understand their performance and development opportunities. Prioritising a learning culture is vital for sustainable growth, ensuring that all levels of an organisation are engaged, skilled, and motivated for enhanced performance and success.

Conclusion: Happiness as a Strategy

As leaders of rapidly growing companies, adopting an employee-first approach isn’t just about creating a pleasant workplace but about strategically positioning your company for sustainable growth and success. Engaged employees are not only more productive and committed but they are also your brand’s best advocates. By nurturing an environment where employees thrive, you’re indirectly cultivating a customer base that perceives your brand as responsive and robust, accelerating your scale-up phase.

Ironically, by shifting focus inward, the outward gains can be exponential. Start with your team, and the customers will follow — happy, engaged, and loyal.