Employee performance can make or break your business. As a manager, you want to make sure that your team is productive, efficient and motivated. But even the best employees can lose their focus or become disengaged, which in turn, affects the company's bottom line. Stress, workplace conflicts, poor communication and lack of training are some of the main factors that affect work performance. Addressing these issues in a timely manner could save your business and give it a competitive advantage.

Factors That Affect Employee Performance

Did you know that only 34 percent of American employees are engaged at work? Or that one in three workers and nearly half of millennials would quit a job that doesn't offer learning opportunities? More than 59 percent of employees say that learning and development opportunities influence their happiness in the workplace.

All of these factors – and many others – impact work performance and productivity. Happy employees are 12 percent more productive and get better results than their peers. That's why Facebook, Microsoft and other industry giants invest heavily in employee satisfaction.

Google, for example, offers a unique work environment at its famous Googleplex, which includes free bike repair services, free dry cleaning, free massage, subsidized child care, mobile libraries and other perks. As a result, over 86 percent of its employees say they're satisfied with their job. If you want your business to thrive, it's essential to be aware of the factors that affect employee performance and address them before they spiral out of control.

Stress and Work Performance

Workplace stress is a performance killer. In this competitive age, employees feel pressured to meet work demands and organizational goals. Approximately 40 percent say that their jobs are very or extremely stressful. About 73 percent of workers experience psychological symptoms due to stress, while 77 percent report stress-related physical symptoms.

A poor work-life balance, lack of job security, conflicting work roles and heavy workload are all common causes of job stress. Employees who are facing these issues get sick more often, perform more poorly and feel less motivated. In fact, stress is responsible for 60 percent to 80 percent of accidents on the job. According to Eastern Kentucky University, American companies lose $150 billion annually because of employees who are not functioning optimally.

As a business owner, you're directly responsible for employee satisfaction. Simple things, such as allowing remote working and flex time, can make all the difference. Allow your team to work from home one day a week or in case of emergency; remote workers are more productive than those working in an office, according to a study published by Stanford University. Provide them with the tools and resources they need to be successful in their roles, set realistic job expectations and treat everyone in a fair manner.

The Impact of Workplace Environment

Strive to create a workplace environment that attracts, retains and motivates employees so you can maximize their productivity. If your employees feel comfortable and engaged at work, their job performance will skyrocket. The workplace environment has a direct impact on communication, collaboration, creativity, innovation, error rate and absenteeism.

Poorly designed workstations can lead to back and neck pain, headaches, fatigue and poor overall performance. Excessive noise and other distractions affect mental focus on productivity. An unsafe workplace may result in accidents and injuries. These are just a few of the factors affecting the working environment.

Groupon’s Seattle office, for example, features a game room, a tiki bar, open work areas and snack dispensers. This kind of workspace encourages collaboration and spurs creativity. Spotify provides its employees with a recording studio, game rooms, out-of-office excursions and hangout spaces. Facebook, which was named the best workplace of 2018, has offices with snack and salad bars, free food and beverages, pizza stations, virtual reality rooms and artwork.

Engaged Employees Perform Better

Employee engagement and work performance are strongly connected. The people who work for you want to receive recognition for their efforts, know what is expected of them and have the opportunity to learn and grow. According to Gallup, organizations with an engaged workforce report:

  • 41 percent lower absenteeism rates
  • 59 percent lower turnover rates
  • 70 percent fewer safety incidents
  • 40 percent fewer quality defects
  • 10 percent higher customer metrics
  • 20 percent more sales
  • 21 percent higher revenue
  • 17 percent higher productivity

Engaged workers are loyal to their employers and care more about their results and the services they deliver. They're also more eager to learn and grow professionally, show a greater commitment to quality and achieve better results. It's their hard work that drives business growth and success.

Praise your employees for their accomplishments. Provide constructive feedback and show that you care about their needs. Seek ways to reward and motivate your top performers. If you notice that something is wrong, ask questions and discuss with your team.

Support Employees' Financial Wellbeing

More than 66 percent of American employees are struggling with debt. About 60 percent find it difficult to save for retirement, while 48 percent have a hard time covering basic living expenses. According to a 2016 survey conducted by Lockton, financial problems are a major stressor for one in five employees. This affects their job performance, productivity and engagement.

If your employees are concerned about their finances, they might not be able to do their job properly. They will spend their work time thinking about upcoming bills and reviewing financial statements. They'll also feel less motivated to accomplish their tasks and meet your expectations.

A fair wage and financial rewards can lower your turnover rates and increase employees' satisfaction. Consider offering performance bonuses, commissions, staff discounts and other incentives to your team. Another option, especially for small businesses on a tight budget, is to provide financial education. Online courses, workshops and free consultation services can help your employees make smarter financial decisions and avoid debt.

Employee Skills and Traits

Invest in your employees' education and professional development. If they lack the skills needed for the job, you can't expect them to achieve peak performance. Make sure they are aware of the company's culture, products, services and processes. Provide on-the-job training, seminars and workshops so they can develop their skills and learn how to apply them.

Don't underestimate the value of employee training. Companies that prioritize this aspect generate up to 24 percent higher profits compared to those that don't invest in employee development. Furthermore, 40 percent of workers who don't receive proper training quit their jobs within the first year.

A comprehensive training program can increase employee engagement and satisfaction, reduce turnover rates and give your business a competitive edge. Your staff will be better prepared for the job and get more done in less time. They’ll also stay with your company longer and put in their best efforts to make sure it succeeds.

There are many other factors that affect work performance. Employee motivation, organizational culture, leadership and rewards are just a few examples. Conduct surveys to find out what your employees value most and what can be improved. Keep an open mind and experiment with different strategies. Remember, your team is your greatest asset.