The High Cost of Low Team Morale (And How to Fix It)

As a business owner or managing partner, you regularly monitor important key performance indicators (KPIs)—such as cash flow, profit margin and revenue growth—to help you measure the health of your business and make sure you’re on track to meet your goals. But there’s one often overlooked KPI that can have a huge impact on your bottom line, either setting you up for lasting success or crippling your growth: team morale.

It’s true. When you look at the cost of low morale, including increased absenteeism (employees regularly missing work), presenteeism (employees showing up for work but not being productive)—and day-to-day issues like increased errors and revisions, poor customer service, and low engagement—it’s clear a firm with low team morale isn’t going to reach its performance potential.

High team morale, on the other hand, is an enormous asset to any business. Employees who enjoy their work are able to build more productive relationships with coworkers and managers and engage in work collaboratively. Over time, these benefits combine to create an environment in which team members can deliver a higher quality of work more consistently, easily overcoming obstacles and identifying solutions that can push your company to greater levels of achievement and profitability.

So, what can you do to start measuring team morale as a part of your KPIs? First, you need to be on the lookout for signs of low team morale. Then, you’ll want to identify the most effective and efficient ways to combat it within your organization.

Identifying the Signs of Low Team Morale

If you’ve been in the workforce for any period of time, you’re probably very familiar with the basic signs of low team morale: unhappy teammates, frequent meetings that go on forever, and lots of eyerolling. One of the most challenging things about addressing low team morale is that it can have chronic and subtle signs, as well as obvious and acute ones. Your first step in identifying the signs of low team morale is to be on the lookout for the possible ways your team can express it:

Subtle signs of low team morale

  • Increased absences and tardiness
  • Silence at meetings
  • “Meetings after meetings,” where employees gripe and vent
  • Exclusionary and clique-y behavior
  • Jealousy among team members
  • Missed deadlines and fumbled projects

Obvious signs of low team morale

  • Vocal arguments in the workplace
  • Lack of discipline
  • Backbiting and in-fighting among departments
  • Deteriorating appearance of your workplace and team members
  • High turnover

How to Rebuild Low Team Morale

Unfortunately, you can’t solve a problem like low team morale overnight. But as someone in a leadership position, you do have the power to affect change around three of the most important workplace factors that directly impact team morale: environment, culture and communication.

  • Environment

    As a leader, it is your job to create a space where people want to come to work. And since the definition of a good environment will vary according to your employees, it’s important to get input and buy-in from the staff working in the space.

    For example, if you notice staff members experiencing stress due to commuting or work-life balance challenges, consider allowing more flexible work hours or more mobility based on the principles of a results-based work environment. Or, if you notice staff members struggling to stay healthy during periods of high stress and work hours (like tax season) consider catering company lunches or stocking the kitchen with healthy snacks during different times of the year.

    From the lighting to noise levels to the office furniture, listen to the presences of the staff and try to create a comfortable a space as possible. Small environmental tweaks to show team members you care about their workday experience can go a long way in building high team morale.

  • Management Culture

    Studies suggest the biggest single impact on team morale is their relationship with their manager. A good manager alone has been shown to double employee satisfaction and trust.

    If you haven’t already specifically and proactively addressed the training and hiring of managers within your organization, it’s time to start. Make sure you have a program in place to train managers to communicate in respectful, amicable and professional ways. And, just as important, make sure each new manager has a clear understanding of the culture you’d like to build within your organization and what role they’ll play in fulfilling it.

  • Communication

    In a toxic culture with low team morale, communication is often the first thing to suffer. One study found employee morale was directly linked to a lack of communication. To counteract dysfunctional communication, consider whether or not your leadership team could be more transparent about how business decisions are made, what is going on within the company and what you expect from your team members.

    For example, what can you do to provide clarity on how your managers evaluate employee performance? Would your team benefit from a new communication method to share news around the office, such as email newsletter, physical bulletin or internet chat application like Slack?

    Open communication and clearly-stated expectations will help reduce individual communication issues on your team. It will also invite team members to participate in a shared company vision that makes them feel like a part of the bigger picture of your business’s story no matter where they fall within the company hierarchy.

Low team morale can have a powerfully negative impact on your organization, but it doesn’t have to be a permanent one. Consider how you can affect change within your company’s environment, management culture and style of communication to improve the attitude, engagement and performance of your team.