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Employee morale is important in any work environment for several fundamental reasons. Above all, it has a direct effect on the productivity level of an organization. If the morale of one individual or the employee morale of the entire workforce is low, it has the tendency to spread and result in a spiraling down effect that can affect the company in many ways. Morale also has a direct impact on how long workers plan to stay with their current firm, which can lead to a lost investment in training resources if they move on to other positions more quickly than expected.
A hidden effect of low employee morale often revolves around the issue of pride in work. While employee morale may be low with productivity goals still being met, the unseen effect is that these goals are just nearly being met. Workers tend to do just the bare minimum to get by when they feel that they are not appreciated or have no definite future at the company. This also leads to increased levels of accidents, sick leave, and litigation by disenfranchised workers who have left the firm and feel they were unfairly treated there.
The opposite of low employee morale is high morale, which can lead to better-than-expected positive contributions to an organization. It can lead to increased levels of innovation and creativity, and employees who are willing to go out of their way to help coworkers or management understand and cope with unforeseen problems, which results in decreased inefficiency. Happy employees tend to want to stay with their company indefinitely, and personally identify with its success as their own.
People skills in a company workforce, such as in sales and customer service departments, are also keenly tied into employee morale. If morale is low or high, it directly affects sales and customer retention. It can also result in delayed promotions for the staff in these departments. Low morale will hide the natural people skills that these employees have, and cause some to be overlooked for promotions that they may rightly deserve.
The causes of low employee morale can be many, with some being external to the company and beyond its control, such as economic conditions or strict regulations. Often the internal causes of decreasing employee morale, however, can be relatively easily remedied. They can involve such issues as management micromanaging the responsibilities of employees out of fear and distrust, or discrimination on the job that violates labor laws. Unnecessarily harsh working conditions and pay that is not sustainable for an employee long term, can also result in high turnover of staff. When such conditions are satisfied and the workforce has a clear sense that the employer has everyone's best interests at heart, morale can be high, even in the absence of ideal working conditions.
To me, a good counterpoint on this is: why are some companies completely unconcerned with employee morale? It's a fact that a workplace that promotes good morale has employees who are more productive, prompt and efficient. Good morale almost always translates into low turnover.
The ugly truth is that many companies don't care because their attitude is, "I can get a dozen more like you" and if an employee remains at a company, they will invariably want a raise in pay or benefits, which costs the company money.
The problem with this philosophy is when a long-time employee quits, they take their store of experience and institutional knowledge with them. A company spends more money training a new employee and bringing them up to speed than would be spent on a raise or benefits increase. Plus, the new employee still must gain experience.