Martin Becker at the University of Münster explains the motivation behind his paper, “The Effect of Positive Management Practices on Firm Profitability – Evidence from Text Mining,” accepted in The Journal of Applied Behavioral Science, and discusses how positive management practices can improve employee well-being and attract talent in highly competitive labor markets.
Sustainability in companies has long been more than just regulation and compliance. A comprehensive sustainable business model that offers customers an all-around sustainable experience will have a strong competitive advantage in the future. In order to mobilize sufficient innovative power and creativity to meet this change, companies need to focus on the well-being of their employees, especially in today’s times of increased uncertainty, new stressors, and highly competitive labor markets (according to Huselid, Marler & Boudreau, and Youssef & Luthans). With that, a physiologically and psychologically healthy workforce is not only a part of a sustainable transformation, but a fundamental requirement for one. But what are the drivers of employee well-being, how can companies keep their employees healthy and motivated, and how can they retain and attract talent?
Motivated by these central questions, I began to analyze text reviews that were posted on an employer evaluation platform (kununu.com). Nowadays, such platforms are considered flagships for job seekers to get insight into what it would be like to work for a potential future employer. I discovered that the behavior of a company’s supervisors has a significant impact on the emotions of its employees. Hence, I used text mining and unsupervised machine learning techniques to evaluate a large body of text reviews, identify management practices that elicited positive emotions among employees, and investigate whether such practices contribute to increasing firm profitability. The examined data, combined with the applied text mining approach, even allowed for analyses at the level of entire organizations, which represents interesting study opportunities for future researchers. Complementing traditional research, text mining and machine learning applied to unstructured data can enrich the literature by finding undiscovered patterns or by validating the generalizability and zeitgeist relevance of established theories.
The results of the study reveal a number of positive management practices that can be subsumed under six main dimensions: respectful interaction, open communication, interpersonal support, intellectual support, reasonable instructions, and managerial competence. For instance, in regard to the dimension respectful interaction, supervisors are described as treating their employees with respect, appreciating them and giving them the feeling of meeting them at an equal level, emphasizing the importance of leadership virtues such as respect, gratitude and humility.
Moreover, the findings demonstrate that a higher prevalence of such positive leadership behaviors in organizations not only evokes positive emotions among the workforce but also contributes positively to firm profitability, even at the study level of large German organizations. This link might be explained by the fact that positive employees have better health conditions, are more resilient toward negative events, are more creative, innovative, in a better mood, and form more positive social relationships with their supervisors and employers. These beneficial effects of positive emotions have been well documented in the fields of positive psychology, positive organizational scholarship, and positive organizational behavior.
In light of this study’s findings, organizations should ensure that employees in leadership positions understand and adopt positive management practices, as these highly contribute to the workforce’s positive emotions and, consequently, firm profitability. Moreover, a high prevalence of positive management practices has been shown to improve evaluations on employer rating platforms, eventually helping companies to attract new talent. A healthy and motivated workforce and the ability to attract talent in highly competitive labor markets will be the cornerstone for a successful sustainable transformation. This study offers a pathway in that direction.