Within the workplace, we know that happier employees are more likely to emerge as leaders, earn higher scores on performance evaluations, and tend to be better teammates. We also know, based on substantial research, that happier employees are healthier, have lower rates of absenteeism, are highly motivated to succeed, are more creative, have better relationships with peers, and are less likely to leave a company. All of these correlates of happiness significantly influence a company’s bottom line.

A Happy Workplace

Beyond hiring, employee happiness should also be a consideration when measuring organizational performance. Yes, objective performance still matters greatly. But, while a high-performing division within a company may bring short-term profit, if that performance was driven by toxic leadership and management practices, then those profits could evaporate quickly if employees were to leave in response. Unwarranted attrition is expensive.

Measuring Performance

Given all the training and development requirements placed on most organizations, the thought of actively trying to develop happier employees may initially seem daunting, time-consuming, and expensive. However, the academic literature repeatedly shows that training initiatives targeting employee well-being do not require a significant time investment, are cost-effective, and carry a high ROI.For organizations willing to make a larger investment, there are of course turnkey, validated programs shown to improve employee well-being.

Enhancing Employee Happiness: 
Develop Happiness In Your Workforce

The pandemic has reminded us of some tough realities, namely that organizations can contract in turbulent times just as fast as they expand when the economy is booming.<ul><li>Organizations need happy employees because happiness is in fact contagious.</li><li>Like happiness, unhappiness is also contagious. This contagion effect places leaders in a precarious position, especially if they are presented with the difficult scenario of being able to retain only one of two employees. </li><li>With performance and other factors held constant, they should keep the one who is happiest.</li></ul>

Enhancing Employee Happiness: Retain Employees Who Are Happy

The toll that working through the global pandemic has taken on employees’ job satisfaction and emotional well-being has focused business leaders on fostering workforce happiness as never before. While many — if not most — of us are motivated by genuine caring for the people who power our organizations, we also intuitively know that employee happiness should boost job performance. Still, two nagging questions remain: Which comes first, succeeding and then being happy, or being happy and then succeeding? And just how much does initial happiness matter?

Happiness And Success

Some people just seem happier, and researchers have looked closely at heritability (factors we’re born with) and how our environment shapes our happiness. Research suggests that heritability accounts for about 40% while 60% is attributed to other factors, especially life experiences. Researchers found that while heritability accounted for about 30% of job satisfaction at age 21, the importance of heritability dropped to less than 20% when measured again at ages 25 and 30. Thus, environmental factors within the workplace become more important over time

The Reasons For Happiness

While happiness should be placed ahead of the knowledge, skills, or talent needed for a job, we conservatively advocate using measures of happiness and optimism as discriminators, or tiebreakers, because the risks are low and the benefits could be important.  Many organizations already use a variety of surveys to evaluate job candidates. Even if adding these questions about happiness and optimism to the applicant survey results in only a small increase in downstream productivity and profitability, most leaders would jump at this opportunity, because it costs almost nothing.

Enhancing Employee Happiness: Measure Happiness in Both Employees and Job Candidates

What really is happiness? The behavioural science literature often refers to happiness as subjective well-being because the meaning of happiness varies in different contexts. As with most concepts that emerge from psychology, definitions vary, but when it comes to happiness, they generally coalesce around three areas: a person’s own assessment of their satisfaction with life; how much positive emotion (such as enjoyment, enthusiasm, inspiration, or pride) they experience; and how little negative emotion (such as hostility, irritability, fear, or nervousness) they experience.

Defining Happiness

Employee well-being initiatives work best when confident leaders present the material and when senior leaders place significant emphasis on the overall effort. Leaders must be willing to invest their efforts into making the initiatives successful by not only advocating for them — for example, by securing resources for a program and promoting positive strategic messaging — but also by participating in the training and incorporating it into their own behaviours. We learn best by watching others, so let your employees learn to be happy by watching you.

The Bottom Line

Not surprisingly, money matters to employee happiness too — but research has shown that is chiefly for those employees who indicated that money is important to them. In a recent study, the relationship between income and happiness was over four times greater for people who reported that money was important to them compared with those who cared much less about money. Thus, for employees who aren’t driven by money, income may merely be a hollow way to keep score.

The Importance Of Money

Not only do happiness and optimism matter to employee performance, but they matter a lot, and both predict how well employees will do. The research highlights the competitive advantage that employee happiness offers businesses. There are some things about employee happiness that every business leader should know and be able to apply. As we emerge from a demoralizing global pandemic, we would all do well to take stock of how to influence the happiness and optimism of those around us in the workplace.

The Long Term Research On Happiness

The relative importance of some of those environmental factors has shifted recently. The “World Happiness Report 2021” noted that within the workplace, happiness before the pandemic was largely due to employees’ sense of belonging within an organization and among coworkers, the flexibility afforded to workers, inclusivity, and a sense of purpose to their work.Things changed dramatically during the pandemic: Having a supportive manager became the largest predictor of happiness — nearly twice as important as the next ranked workplace happiness factor, purpose.

Environmental Factors Influencing Happiness

Employee well-being and happiness are surprisingly powerful predictors of performance.