How Strong Workplace Relations Drive Productivity and Retention

In most organisations, people rarely leave the work itself, rather they leave the relationships around the work. How supervisors speak to their teams, how conflict is handled, whether people feel listened to and treated fairly. These “soft” factors show up very clearly in “hard” numbers like productivity, quality, safety and turnover.

This article explores how strong workplace relations support both productivity and retention, and what practical steps managers and business owners can take to strengthen them. The principles apply across sectors; from warehousing and logistics to manufacturing, construction, health and community services.

What do we mean by “workplace relations”?

When we talk about workplace relations, we are talking about:

The relationship between employers and employees
How managers and supervisors interact with their teams day to day
How colleagues work with each other across shifts, sites and departments
The systems, policies and consultation processes that sit behind those interactions

In practice, good workplace relations show up as:

Straightforward, respectful communication
Clear expectations and reliable follow-through
Fair treatment and consistent processes
Issues being raised early and dealt with quickly
A general sense that “we’re in this together”

Poor workplace relations, on the other hand, show up as:

Constant misunderstandings and finger-pointing
Favourites and unfair treatment
Rumours, side conversations and low trust
High levels of stress, conflict and complaints
Good people leaving – sometimes without saying why

There is a strong evidence base linking the quality of workplace relationships with performance, safety and retention. For example, research on workplace environment and employee commitment has found that supportive relationships and a positive climate have a direct impact on task performance and discretionary effort.

How strong workplace relations drive productivity

Psychological safety and teamwork

A major study at Google, often referred to as Project Aristotle, analysed more than 180 teams to understand what made some consistently high-performing. The standout factor was psychological safety: people felt safe to speak up, ask questions, admit mistakes and offer ideas without fear of being punished or humiliated.

Psychological safety is a workplace-relations issue at heart, which depends on:

How leaders respond when things go wrong
Whether people are blamed or supported to fix problems
Whether questions and ideas are genuinely welcomed

When teams feel safe:

Problems are raised early, when they are still cheap to fix
People share tips and help each other instead of working in silos
Continuous improvement happens naturally, with ideas coming from the shop floor

All of this leads to higher productivity, fewer re-works and better customer outcomes.

Engagement and effort

Employee engagement research consistently shows that people work harder and smarter when they:

Feel valued
Have a voice in how work is done
Experience supportive relationships with their manager and colleagues

Evidence reviews by organisations such as the CIPD and the Institute for Employment Studies highlight feeling “valued and involved” as a key driver of engagement, which in turn predicts performance and discretionary effort.

More recent studies continue to reinforce the links between engagement, productivity and retention, particularly where engagement is built through fair treatment, good communication and clear expectations.

As a result, strong workplace relations lead to people putting more energy into the job and the team; not just the bare minimum to get by.

Workplace relations and employee retention

Trust and fairness

People are rarely upset by an unpopular decision on its own. They are usually upset because it feels unfair, or because the way it was handled damaged the relationship.

Research on organisational justice shows that employees are far more likely to stay when they believe:

Decisions are fair
Processes are consistent and transparent
They are treated with dignity and respect

A number of studies have linked low perceived fairness and poor-quality relationships with higher turnover intentions (ie. The likelihood that someone is thinking about leaving). CIPD’s work on turnover and retention also highlights fair treatment, involvement and well-being as core retention levers, not “nice-to-have” extras.

Development conversations and staying power

Strong workplace relations also make performance and development conversations more honest and useful. When the relationship with a supervisor is built on trust and respect, people are more willing to:

Talk about where they are struggling
Ask for training or support
Discuss career paths within the organisation

A 2024 meta-analysis of employee development and turnover intention found that development opportunities (ie. coaching, feedback and training) have a significant relationship with intention to quit. When people feel that their manager and organisation are investing in them, they are less likely to be on SEEK during their lunch break.

Conflict, bullying and the “push” to leave

Where workplace relations are poor, conflict is often left to fester. In the worst cases, this can tip into bullying or harassment. Recent research continues to show clear links between exposure to bullying and higher turnover intentions and psychological strain.

From a practical point of view:

Unresolved conflicts distract people from their work
Time is lost to complaints, investigations and re-rostering
The organisation can gain a reputation as “a difficult place to work” in the local labour market

Good workplace relations practices do not mean that everyone always gets along, but they should ensure disagreements are handled early, fairly and respectfully, with clear processes and expectations that people trust.

Practical steps to strengthen workplace relations

The good news is that improving workplace relations does not always require a new system or a large budget. Many of the biggest wins come from everyday behaviours and basic management hygiene.

Everyday behaviours for supervisors and managers

For frontline leaders, simple habits make a big difference:

Be clear and consistent
Hold regular, short check-ins
Treat people fairly (and be seen to do so)
Tackle issues early
Show basic appreciation

Systems, policies and consultation

Workplace relations sit on top of HR and IR structures, in the form of policies, procedures and agreements. To support strong relationships:

Clarify roles and expectations, ensuring position descriptions, KPIs and site rules are clear and up to date.
Use fair and transparent processes, including selection, promotion, performance management and disciplinary processes.
Build in genuine consultation, which may include representative panels or consultative forums depending on the organisation.
Train leaders in people skills, particularly supervisors who may have been promoted for their technical abilities.

Monitoring the health of workplace relations

To keep a realistic view of workplace relations, organisations can:

Track turnover and absenteeism by site, department and manager
Use pulse surveys to check trust, fairness, communication and psychological safety
Monitor informal signals: grievances, bullying complaints, exit interview themes, union feedback and EAP usage

Universities and professional bodies increasingly emphasise that effective retention strategies involve a mix of fair processes, development opportunities, flexibility and well-being. These all depend on constructive relationships between management and staff.

Bring in the Big Guns

Specialist HR and industrial relations support is about designing the frameworks that allow good workplace relations to thrive, and helping leaders apply them consistently.

External HR/IR consultants typically support organisations to:

Review and simplify policies, procedures and codes of conduct
Design or interpret enterprise agreements and awards in a practical, business-friendly way
Train managers and supervisors in performance conversations, conflict resolution and consultation
Lead or support fair processes around investigations, grievances and restructures
Use data from turnover, absenteeism and engagement to guide targeted interventions

For organisations with multiple sites, mixed workforces (permanent, labour hire, casuals) or complex union environments, getting this right can remove a significant source of friction and risk.

Bringing it together

Strong workplace relations are a core driver of productivity and retention. Fortunately, there are small actions we can take today, which have a major impact tomorrow:

Invest in the people skills of supervisors and managers.
Build fair, simple and transparent HR and IR frameworks.
Deal with issues early, respectfully and consistently.
Keep checking the “relational temperature” of the workforce.

Do that, and you’ll find yourself building the kind of workplace where people choose to stay, give their best effort and speak up to make things better: day after day, shift after shift.