30-Second Summary:

  • Employee morale can help or hurt a company, depending on whether it’s low or high.

  • Good morale leads to more engaged employees, increases employee retention, and yields greater productivity.

  • Boosting morale is possible through programs like VTO, offering office perks and bonuses, giving praise, and more.

  • Companies don’t have to spend a lot of money to improve employee morale, but they do need to make it a priority

Employee morale can make or break a company. When employees are unhappy, it does more than just impact individuals personally; it impacts the entire business, harming productivity and increasing churn. Conversely, when employees are engaged in and happy at their jobs, it translates into productivity that can boost a company’s bottom line. Good morale and morale-building, then, are important to a business’s success.

What is Employee Morale and Why do Businesses Need It?

Understanding employee morale is an important first step in improving it. Employee morale is how employees feel while at the workplace and about their workplace. It includes job satisfaction, outlook, and employee attitudes about both their work and their employer. It is affected by everything from pay and benefits packages to perceptions of meaning and communication styles. When employee morale is high, employees are more engaged in their work, which positively impacts the company, as attitude and content are good for productivity and overall business health.

In order for a business to thrive, employees must feel supported, respected, appreciated, and motivated. Good morale leads to better teamwork, higher productivity, increased employee engagement, improved employee retention, and an environment that makes people want to come to work. Happy and engaged employees, in every instance, are going to be more productive, so investing in employee morale is incredibly important.

While employee pay raises, PTO and extra sick leave are obvious employee benefits that improve morale, there are other ways to accomplish it that don’t require a permanent financial commitment or, in some instances, any money at all. Here are five ways almost any type or size of company can improve employee morale.

1. VTO

VTO or “volunteer time off” is paid time off for employees who volunteer with a nonprofit. Employees, especially millennials, have shown they are more likely to seek employment from companies showing corporate social responsibility (CSR). Research also indicates that employees who view their company’s CSR in a positive light and who get to engage in VTO are more engaged and less likely to leave a company and head elsewhere.

While some companies organize off-hour volunteer events and encourage employees to use the unpaid time to benefit nonprofits, being given VTO opportunities so that employees are compensated for their volunteer efforts makes volunteering and working more compelling. VTO is a win-win for employers, employees, and nonprofit businesses. Developing a VTO program and VTO policy are great ways to showcase your company’s values.

How to Run a VTO Program

One way to set up a VTO program and encourage employee engagement is to include employees in the nonprofit partner decisions. Survey employees about their favorite charities and let them plan the events. You can vote on which activities employees would like to do, and you can also implement VTO time so individuals can select their own nonprofit activities. Some companies tie VTO eligibility to work performance, but making VTO requests open to everyone will result in instant morale building for the entire company.

2. Show Gratitude to Employees

Being appreciative is a free way to boost employee morale, and it has a powerful impact on the recipient. While some employers may feel like paying employees is enough, expressing public and private gratitude shows employees they are seen and that their efforts are appreciated and encouraged. When employees feel dismissed, unseen, and unappreciated, the quality and quantity of their work suffer. When employees experience gratitude and kindness in the workplace, it helps an employee feel valued and encourages them to work hard and stick around.

3. Provide Constructive and Positive Feedback to Employees

Regularly providing positive feedback along with constructive criticism to employees is also essential to workplace morale. Workers need guidance and they want to know whether or not what they are doing is in line with the company and/or management’s wishes. When feedback is only negative or is missing entirely, employees may develop negative feelings about their job and become unproductive. When managers only focus on negatives or fail to provide feedback at all, it fosters unfavorable outcomes. Positive, constructive feedback is part of the formula that leads to workplace success, both in terms of rewarding people for their work and building morale. Like gratitude, positive exchanges are a free way to generate goodwill and good performance in the workplace.

4. Office Perks

Office and workplace perks, whether small or large, are seen by many employees as being as important—or nearly as important—as pay. Popular perks include:

  • Extended PTO
  • Flextime
  • Offsite team-building activities
  • Educational funds
  • Letting people work remotely
  • Offering VTO

Since the COVID-19 pandemic, remote working has become especially popular, and offering the option to telecommute can attract top talent as it widens the applicant pool. It also positively contributes to improving employee morale and retention. In fact, 64% of employees would choose to permanently telecommute over receiving a pay raise. Why? Remote work gives employees a sense of freedom and responsibility while affording them more free time. Depending on the length of the commute, this can mean huge savings in gas and auto maintenance, and everyone values having extra time to spend with friends and family and on hobbies.

5. Bonuses and Profit Sharing

Pay raises are an obvious and time-tested way to encourage employees, but when a traditional pay raise isn’t feasible, bonuses and profit sharing are extremely effective ways to boost employee morale. An added benefit: performance-based bonuses give extra motivation to employees.

Giving a bonus benefits employers too, because it doesn’t require a commitment to a permanent expense, as with a pay raise. According to a Zippia study, average bonuses for salaried employees are 11% of one’s yearly income and 6.5% for hourly workers. Regardless, bonuses can be large or small and still be impactful in terms of employee appreciation and morale-boosting. Profit-sharing is an alternative to bonuses and can be shared across the board or determined by worker performance ratings, full-time employee status, and the like. Along with boosting morale, profit sharing can give employees a sense they are in control of their own success.


The burden of employee morale should not just fall on employees. It needs to be an intentional and cooperative effort between management and employees that involves making everyone feel like they’re valued and part of something important. Acknowledging and rewarding success begets more success, so no workplace can go wrong by investing in their employees’ morale.

Sonary offers valuable resources for businesses and human resources departments. Find out more about HR software that can track PTO, VTO hours, pay periods, and more.