The Impact and Importance of the Employer-Employee Relationship

Think of any relationship you have with a family member or friend—that relationship is probably characterized by mutual respect, care, and empathy. Relationships in our personal lives shape who we are and make life more fun and rewarding.

Now think about what it would be like to have such a mutually supportive relationship with your employer (meaning either a manager or an organization). Imagine if both a company and an employee cared about each other, did everything they could to help each other, and supported each others’ needs.

That’s the importance of the employer-employee relationship. From the first interview, an employee starts developing a relationship with their employer, and many factors influence that relationship as time goes on.

In this article, we’ll go over:

The basics of the employee-employer relationship
The transactional nature of work
Different types of employee-employer relationships
Factors that influence these relationships
The impact of good employee-employer relationships
Strategies to improve employer-employee relationships
The role of HR in fostering employer-employee relationships

Understanding the Employer-Employee Relationship

The relationship between employers and employees encompasses every aspect of their interactions with each other. Everything from the benefits the company offers to the work the employee completes are part of the relationship.

Relationships founded on respect, honesty, and support bring out the best in both parties, while relationships built on distrust, laziness, indifference, and insufficient support lead to unhappiness on both sides.

The Transactional Nature of Work

Let’s talk about the elephant in the room—work is transactional and somewhat impersonal by nature. Employees put in quality work and expect employers to provide a salary and benefits that cover their needs. That is the foundation of this relationship on both sides.

And that’s okay! Work relationships are inherently different from familial relationships, and it’s okay that employers and employees have certain expectations from each other. That doesn’t mean that each party can’t both get what they need AND treat each other with respect and care.

The good news is that companies now have an amazing opportunity to forge stronger employer-employee relationships. People expect more from work than ever before—in a study by Gallup, we learn the priorities of what employees want:

64% of employees want a significant increase in income or benefits
61% of employees want greater work-life balance and better personal well-being
58% of employees want the ability to do the work that they do best
53% of employees want greater stability and job security
42% of employees want an inclusive workplace

Money and benefits are a big part of the relationship. However, the majority of employees want more from their relationship with their employer, and companies have the opportunity to provide it, which can strengthen their relationship with their people.

Types of Employee-Employer Relationships

Relationships between employees and employers come in all shapes and sizes, but there are a few templates that most relationships follow.

Transactional relationship. Otherwise known as the “work is work” relationship, this is where employers see work and personal/social obligations as separate things. The employer-employee relationship is strictly professional, and the employer focuses on providing for employees’ work-related needs. Employees are responsible for their personal needs and wants.
Parental relationship. In this relationship, employers take on a paternal or maternal role and create a culture where employees see each other as family. Compassion and respect abound, and employers expect employees’ loyalty and trust.
Laissez-faire relationship. Here, employers allow employees to take care of themselves. Employers provide resources and freedom, and employees take their work satisfaction into their own hands.
Transformative relationship. In this culture, employers focus on providing both professional and personal support, and employees reciprocate with loyalty and effort. This is a mutually beneficial relationship that relies on creating a customized network of professional and personal support to meet employee needs.

Each type of relationship has its benefits and drawbacks: laissez-faire relationships encourage innovation and personal responsibility, but employees can easily feel uncared for or overlooked; paternalistic relationships strengthen employee loyalty and feelings of belonging, but employers may have difficulty giving feedback; and transactional relationships put the focus on productivity and making work more rewarding, but many employees want more personal support now.

Leaning into a transformative relationship can give you the best of all these. In these relationships, work isn’t just a transaction and it’s not a family commitment—it’s a place where employees are pushed to learn, grow, and excel while also supported in their professional and personal needs.

Factors That Influence the Employer-Employee Relationship

The most important thing to remember is that organizations shape the employer-employee relationship. Employers create a work culture that can focus on creativity, responsibility, respect, autonomy, trust, or anything in between. Here are the other factors that influence the relationship between employee and employer:

Trust. Do employees trust that the company has their best interests at heart? And does the company trust that employees put in their best work consistently?
Purpose. Do employees know that their work has a purpose? Do they feel that the work they do is important? Does the company stand for something good and wholesome that employees support?
Total rewards. Do the salary, benefits, and perks a company offers meet employees’ needs? Do employees know that they’re cared for and supported?
Compassion. Is there understanding between both sides? Is there mutual understanding and support instead of pointing fingers and frustration?

The Impact of a Good Employer-Employee Relationship

Developing a healthy relationship between employers and employees can bring a lot of benefits. When employers create a culture of respect, support, hard work, and trust, some of the best benefits include:

Greater motivation for everyone
3X more employee loyalty
4X more employee engagement
Fewer sick days and lower absenteeism
Lower turnover

It’s not just the bottom line that is benefited from a healthy employee-employer relationship, however. Many psychological benefits result from employees and employers working together in a healthy relationship, including less stress, more motivation, more respect, more confidence, and better performance.

Strategies to Improve the Employer-Employee Relationship

Here are a few ways to improve your employer-employee relationship:

Set Clear Expectations

Employees need to know what’s expected of them while at work. Otherwise, they’ll constantly wonder if they’re on the right track or not. Ensure that each role has clear responsibilities, objectives, and workflows.

Similarly, provide the resources that each employee needs to accomplish their goals and meet their responsibilities.

Fully Embrace Employee Recognition

Employee recognition can take many forms, including birthday celebrations, holiday gifts, social media shoutouts, handwritten notes, bonuses, or digital messages. Recognition creates a culture that increases morale, productivity, and performance because employees want to feel valued.

Offer Flexibility

In today’s world, employees need to know that they can work in the way that’s best for them (and giving them flexibility to take care of their personal lives doesn’t hurt either).

Helping employees maintain a work-life balance will show that you value their overall well-being and will support them in what’s most important to them—and when employees have flexibility, they are 3X more happy at work.

Be Authentic

Employees can smell disingenuity from a mile away. So employers need to be honest in their interactions with employees. Employers also need to ensure that their actions match their words. For example, if you have company values, ensure that company leaders follow them.

Or another example, if a company asks employees for feedback, don’t ignore it! Act on the info that employees provide.

Create Employee Development Plans

Do employees have a path for growth? Do they have work that they are passionate about and that they find meaningful? Employees will respond with greater loyalty and effort if they know that their employer cares about upskilling them.

Employers and Employees Together

The workplace isn’t a family, and work is transactional—and that’s okay! When employers put effort into creating a healthy relationship with their employees, everyone wins.