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The Friendship Effect

December 20, 2012
3 min read

While companies spend millions recruiting and retaining employees, they often fail to consider a powerful (and generally free) workforce incentive that significantly predicts employee stability and productivity. What is this incentive? Friendship.

Friendship is more often seen as something that happens outside work. Sure you might make friends at work, but the general feeling is that real friendships happen with people outside the hours of 9-to-5. But while "work friends" are great for happy hours, water cooler conversations and lunch, they also positively impact employees' opinion of their job and employer. And, yet, many employers do not fully understand just how impactful healthy friendships on the job are for improving overall workforce profitability -- and this is particularly true in the hourly workforce, which accounts for roughly 60 percent of the positions in the U.S.

According to a new series of studies by workforce intelligence company Evolv, collectively titled "The Friendship Effect," companies may want to rethink the benefits of job-related relationships and consider the studies' conclusion: Friendship at work matters and can significantly impact workforce profitability.

"Our studies found that rather than just a pleasant happenstance, work friendships significantly affect employee attrition and productivity," said Dr. Michael Housman, Evolv's Director of Analytics. "It is this simple: employees referred by their friends are less likely to quit and are more productive; employees who are trained in a generally 'friendly' culture stay twice as long; and if you have friends at work, you are more likely to stay at that job."

In the first study, conducted in collaboration with researchers from Yale's School of Management, Evolv used data from nine employers in three different industries -- trucking, call centers and high-tech -- to examine referred workers. The study found that referred employees were 8 to 20 percent less likely to quit. In addition, referred workers were less likely to engage in certain forms of misbehavior, and in some industries, had higher productivity.

The second study looked at the impact of trainers and found that trainers who foster camaraderie and friendship produced employees with an average length of tenure two to three times that of peers trained by other less effective trainers. Using data from 22,000 hourly employees, 162 trainers and 17 locations, Evolv's study revealed the most effective trainers created open and active discussions in class, asked questions and checked trainees for knowledge. These trainers performed significantly better than those trainers who were focused on time management, maintaining tight control of the classroom, and adhering to the training curriculum. In addition, the results pointed to a strong link between in-training and post-training employee survival, indicating that the most effective trainers produced better-prepared employees, who then not only stayed on the job longer, but who were also more productive. Ultimately trainers who fostered more friendly and interactive environments delivered more productive employees.

The third study examined the impact of more general social behavior across a sample of 21,115 employees, and found that employees who knew three or more people working at the company were more likely to stay than those who knew none. Here again, the conclusion is clear: friendship matters in the workplace and environments better able to harness 'the friendship effect' are able to improve workforce productivity.

Dr. David Ostberg, Evolv's Vice President of Selection Science, said these studies point to the importance of social embeddedness in the workplace. "The more socially embedded a person is in an organization, the more likely they are to establish deeper bonds on the job, which of course helps them deal with the normal hiccups in any position," Ostberg said. "Basically, these employees are less likely to turnover and more likely to perform at a higher level because they're more invested, socially speaking."

But what does this mean for employers? How can companies create a 'friendlier' workforce? Surprisingly, a significant part of the answer may be to use better technology.

Measured Friendship?

People that have some type of connection to a workforce are more productive and loyal, but not every candidate can be a referral, so how can companies take advantage of the studies' revelations?

New technologies leverage vast amounts of internal company data to measure and optimize how the workforce is managed, trained, rewarded, etc. These technologies also help companies uncover improvement areas they can introduce that positively impact culture and ultimately employee profitability.

Companies like Evolv collect vast quantities of data and then mine this data for insights into employee behavior. Coupling data with predictive analytics means companies can uncover opportunities for improving how they manage and engage their workforce.

And how does friendship fit in? The data show friendship really matters and it's one of countless improvement areas that can be uncovered and implemented by leveraging better technology grounded in analytics to understand the workforce.

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