The ROI of Workplace Friendships

May 31, 2021 -

Fostering Friendships Yields Massive Returns

In 2011, I started at a new company just before their Christmas party.  At the party, my girlfriend and I were socializing with some of my new colleagues and having a lot of laughs.  She proceeded to ask one of my new coworkers "so, are you my boyfriend's new work BFF?". It was an interesting question in that she could immediately tell that we had a lot in common and could be friends and that it was appropriate and expected to have a good friend at work. I've been fortunate to always have good relationships and friendships with my colleagues, so it was surprising to me to learn that not every organizational leader understands the value of friendships at work.

For those willing to do a little research, a lot of great information can be found on the importance of trust, strong relationships, and friendships in the workplace. An O.C. Tanner survey found that 72 percent of employees who have a best friend at work are satisfied with their jobs, compared to 54 percent of those who don't have a best friend at work. Further research shows that there is a lot of missed opportunity to strengthen these relationships. According to Future Workplace, "today’s workforce suffer from a lack of work friends, and it’s become a global epidemic". Their study asserted that "nearly 1 in 10 people have no friends at work, and more than half have five or fewer. Those without friends said they felt lonely either very often or always and disengaged in their work. Almost two-thirds said they would be more inclined to stay at their company longer if they had more friends."

Calculating the Costs

Poor work relationships lead to isolation, loneliness, and disengagement.  So fostering friendships should impact the following costs to a business:

  1. Cost of employee churn
  2. Cost of disengagement on productivity
  3. Cost of insurance premiums from overall wellness

For most businesses, these are huge factors.  Let's dive into the first one. Take a business with 1,000 employees with an 18% year over year employee churn.  According to a CAP study, the cost to replace a $40,000 employee would be 20% or $8,000.  If we were to be more conservative and go with a "training based replacement model" the replacement cost would be more in the range of $3,000. So the employee churn expense alone would be at least $598,154!

The Friendship Factor

Staying with the cost of employee churn, how can an organization lower this cost via improved employee friendships.  To put it another way, what would be the reduction percentage attributable to having more friendships? According to, "people with work pals are less likely to accept an offer for a new job outside their company, and the likelihood of their staying put increases with the number of workplace friends they have. Sixty-two percent of employees with one to five work friends said they would reject a job offer; that increases to 70 percent for those with six to 25 friends at work." So is we use the 70% number as the target improvement, we can assume that improved friendships will reduce the workplace churn percentage by 30%.  So reducing the 18% number from above by 30% would result in a new churn of 12.6%.

The ROI Potential

Completing our equation tells us that reducing a churn of 18% to 12.6% would yield our imaginary company a savings of nearly $180,000 per year.  Now the challenge becomes finding a solution or method of improvement in improving relationships and creating friendships at work.  As the CEO or CHRO of our imaginary company, we can safely give ourselves a budget of up to $180,000 per year on solutions and initiatives tied to churn improvement based on promoting friendships. At Peopleties, for example, we help organizations connect employees around common interests, promote social events based on these interests, and remind people of "interest icebreakers" before meetings.  All in the name of finding commonality and planting the seed of future friendships.

What's really great is that their are even greater benefits to promoting friendships beyond churn improvement!  What wasn't discussed is the cost/improvement/ROI of friendships on productivity and insurance premiums through overall employee wellness.  We'll touch on that in a future blog.