Why Is Employee Morale So Important?

Female employee looking sad and frustrated while working at her desk photography33 / Deposit Photos

Business organisations exist to fulfil specific needs that exist in the marketplace; their ultimate raison d'etre is to cater to the requirements of their target customers. To achieve this task, however, they have to enter into agreements and relations with other entities, like suppliers, regulatory agencies and, of course, employees.

This leads to a whole network of relationships, where each party is trying to fulfil their end of the bargain, but, as they are part of the internal structure of the organisations, employees are of particular importance in this regard. It is their job to keep the organisation functioning and on the path to success.

To keep them focused on that, the firm has to keep up its end of the bargain - to provide job satisfaction. Staff morale in an organisation indicates how well the firm and its leadership is taking care of the needs of its employees, with low employee morale likely to stem from multiple causes such as low pay, overwork and a lack of positive work culture and environment.

The Importance of Employee Morale

With this in mind, it should, therefore, come as no surprise that thriving companies usually have high morale in the workplace, while the converse is true for firms on the brink. To put it plainly, the importance of keeping up morale among your employees - in any organisation - cannot be overstated.

To illustrate this point, here are four ways in which poor morale can affect your business:

1. High Levels of Employee Turnover

Employee attrition - within reason - is a regular aspect of a business. People move on from an organisation for different purposes, such as retirement, education, and family reasons. But low workplace morale gives rise to something more insidious - employee turnover.

Unlike attrition, which is unavoidable, turnover is something that an organisation can mitigate. High turnover almost always reflects poorly on the organisation and is taken as a clear indicator that something is wrong with the workplace there.

Attracting and retaining top talent becomes increasingly harder at companies that suffer from high rates of employee turnover. This can lead to a vicious circle that affects the productivity and overall efficiency of the business.

The entire hiring and recruitment process can cause a significant drain on your organisation's resources and time, too. It is not something you should have to do regularly, until and unless you have a massive corporation employing thousands of people.

2. Low Motivation, Productivity, and Creativity

Wonders can happen to your business when your employees are highly motivated and loyal, chief of which is a higher level of productivity; after all, it has been proven that happy employees tend to work harder than those that feel under-appreciated and overworked. They will be at the office on time or even earlier, and will be willing to go that extra mile when required.

In the workplace, there will always be some employees who are not 100% satisfied with their job; these individuals can, at times, slow down your business with their lack of drive and commitment. When one individual can cause such an impact, imagine the state of your organisation if a majority of your employees start behaving like that!

Take a hard look at leading fast-food chains, such as McDonald's and KFC, for instance; they are frequently at the butt end of jokes for their perceived poor customer service. However, with their employees receiving low pay and minimal growth prospects, these outlets don't exactly have the best workplace environments. While, as a huge MNC, they can handle the subsequent high rates of attrition, competitors such as In-N-Out Burger are showing that by putting a more significant emphasis on the happiness of employees, the business generally benefits as a whole.

3. Poor Employee Health

Low workplace morale is quite commonly associated with higher levels of stress among the workforce, and it's not just your employees' state of mind that will suffer; stress is a psychological phenomenon that can have a massive impact on the human body, as well. It can lead to poor health and make people more susceptible to diseases and conditions.

Given enough time, it can even indirectly kill, with heart attacks and other cardio-related diseases often linked to stress. In high-stress work environments, employee suicides also tend to increase; several Japanese firms, with their emphasis on extreme productivity, have been subject to intense scrutiny in recent years for this very reason. 

Employee mortality may be an extreme effect of low workplace morale, but other less innocuous effects can cause a severe drain on your company's resources. Frequent sick leaves lead to loss of productivity, for instance, and when those leave days are paid for by your firm, it is another additional expense.

If you think that reducing or removing paid sick leave can mitigate this, think again, too. Numerous studies indicate that paid leave benefits can improve stress levels in employees; in contract employees, it was found to increase their productivity and commitment to work.

4. Lack of Focus 

Depending on the nature of the workplace, low morale can lead to a wide range of mistakes due to lack of focus or attention. If your workplace is outside the traditional office setting, in a manufacturing or service environment, for example, it can increase the chances of accidents, injuries, or worse. Not only is this dangerous for your employees, but the implications for your business reputation can be significant, too.

Even within an office setting, low staff morale can lead to a lack of attention to detail, which can, in turn, lead to catastrophic errors. You could potentially end up losing valuable customers or, worse still; it could attract lawsuits or unwanted regulatory oversight if it affects crucial aspects like taxes.


Employee morale is something that is universally accepted as an essential aspect of running a business. Yet, it is also something that many firms fail to address effectively. This is because workplace satisfaction and employee morale hinge on several things, as highlighted by Abraham Maslow in A Theory of Human Motivation.

It is not something as simple as providing a raise (though that can help as well); instead, there are many other factors at play that you have to identify and address. Employee work hours is one, while a positive and non-discriminatory work environment is another.

You may have to juggle and tweak many things to get the formula right, but the payout is worth all that effort; the alternative is certainly not something you would want hanging over your business indefinitely.

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