Fairness leads to higher levels of well-being and productivity at the Best Small and Medium Workplaces

In a 2023 market survey of more than 4,400 workers from Great Place To Work®, only 36% of employees at an average company said they believe they receive a fair share of their company’s profits. Only 51% said promotions were fairly awarded, and just 45% said their manager avoids picking favorites.

It’s a different story at the 2023 Fortune Best Small and Medium Workplaces™.

At these companies, 86% of employees believe they get a fair share of profits—136% higher than the typical U.S. company. A whopping 91% of employees believe their manager doesn’t pick favorites, 105% higher than a typical workplace.

Research from Great Place To Work, which produced this year’s 100 Best Small Workplaces and 100 Best Medium Workplaces lists based on more than 242,000 individual survey responses from eligible companies, shows that fairness has a profound impact on both employee well-being and business success.

“When employees believe the workplace is fair, they put their trust in leaders and in the organization,” says Michael C. Bush, CEO of Great Place To Work. “Workers want to know that they will receive fair compensation for their work, be treated justly and impartially when considered for promotions, and given equal opportunities for growth.”

Fairness is a top driver for employees to give extra effort in their job, a key element for innovation and productivity.

“Fairness might sound like a fuzzy concept, but its presence or absence has real consequences for business performance,” Bush says. “When you crunch the data, employees who believe their workplace is fair are having a superior experience and delivering superior results compared to their industry peers.”

When employees believe people are paid fairly for their work, they are 36% more likely to say people give extra effort at their company. When they believe profits are shared fairly, they are 28% more likely.

As for the workers themselves, higher levels of fairness lead to more well-being. Employees are 2.8 times more likely to experience well-being when they say they receive a fair share of profits. When they believe promotions are fairly awarded, they are 1.3 times more likely to experience well-being.

How to improve fairness

Here are some of the top ways to ensure your employees believe their workplace is fair:

1. Clear and transparent communication around pay

Just because your organization offers a competitive compensation package doesn’t mean your employees believe the offering is fair.

Do employees understand all the ways your benefits help them succeed? The best companies embrace pay transparency, offer financial education and well-being tools, and train managers to talk about total rewards.

And the business benefits, too. When workers say they receive a fair share of the profits, they are 28% more likely to say people give extra effort at their company and 46% more likely to stay with their company long-term.

2. Open and inclusive pathways for promotion

In the absence of information, employees often make false assumptions about decision-making that affects them. That’s why the best companies try to make the criteria behind promotions transparent.

It’s crucial to audit the “pathway to promotion.” What groups of employees are harder to find the higher you look in the organization?

When employees at small- and medium-sized workplaces believe they are being treated fairly, regardless of age, they are 1.8 times more likely to experience well-being. And when treated fairly regardless of race, they are 1.3 times more likely.

To help everyone find opportunities to advance, invest in mentorship and make criteria for senior roles explicit and available to all employees. Make sure all employees know when a job is open, and offer feedback when internal candidates don’t get selected.

3. Recognition for all employees, regardless of role.

Making sure your workers feel appreciated isn’t just good for morale; it’s good for business.

When employees say everyone has an opportunity for special recognition, they are 1.5 times more likely to say people give extra effort.

Employees at every level of the organization must feel seen and valued. When employees believe anyone can get recognition, they are 1.2 times more likely to believe their work is meaningful—a key driver of retention, innovation, and well-being across all companies and industries.

Our research shows that the best recognition programs are specific, timely, and connected to clear business goals. Make it easy for employees to get recognition from their managers and colleagues, and workers will reward you with top-level performance.

To find out how your company can become Great Place To Work Certified™ and apply for Best Workplaces™ lists, start here.

Ted Kitterman is a content manager at Great Place To Work®.

Find all of Fortune‘s Great Place to Work rankings here.