The science of happiness continues to change the way we work, think and live. The value happy employees bring to workplaces deserves attention in the business world, perhaps now more than ever. After decades of psychological research and inquiry into what makes people happy, the evidence that continues to emerge is compelling.

Happiness isn’t just a good idea. It’s extremely good business.

Gone are the days where people worked simply to make a living and considered happiness as a bonus. Increasingly employees are looking for a job that goes beyond providing a salary; it should be satisfying, rewarding, and provide opportunities for personal growth. Employees want their career to match their values, offer autonomy, and provide positive emotional relationships. For many, happiness in the workplace has become an essential condition, and rightly so. Happiness at the heart of organisational culture both attracts and retains the most productive people.

When we consider happiness at work, we look at those highly involved in, enthusiastic about and committed to their work and workplace. Engaged employees are happy employees. Given Gallup measured the overall percentage of engaged workers during 2020 to be 36% – we still have plenty of room for improvement.

The advantage of happiness

Shawn Achor, the author of The Happiness Advantage, makes a compelling case that the most significant advantage in today’s economy is a happy and engaged workforce. He highlights research that proves happiness raises nearly every business and educational outcome: increasing sales by 37%, productivity by 31%, and accuracy on tasks by 19%.

In a landmark meta-analysis of over 200 studies conducted on 275,000 people worldwide, positive psychologists Sonja Lyubomirsky, Laura King and the late Ed Diener found that happiness leads to success in nearly every life domain, including work performance, health, longevity, relationships, sociability, creativity, and energy.

This point is critical. Happiness is a prerequisite for success, not simply a happy by-product.

Tangible outcomes

Happier people are more productive:

Studies show that wellbeing has a more substantial impact on work performance than job satisfaction. People who are naturally happy score higher on management effectiveness tasks. When people are in a good mood, they solve problems faster, more collaboratively and creatively. Happy leaders receive higher ratings from customers and are more likely to have happier and healthier employees.

Businesses with high employee wellbeing report greater customer loyalty, productivity, and profitability. Gallup studies over decades link these outcomes to employee engagement – people’s day-to-day involvement and enthusiasm for work. They found business units in the top quartile on employee engagement averaged $80,000 to $120,000 higher sales revenue per month.

Consider how much a very modest 1% increase in productivity would benefit your business?

Happier people are healthier people:

People who score highest on psychological tests develop about 50% more antibodies to the flu vaccine than less happy people, a striking difference echoed by increased immunity following 8-week wellbeing interventions. Other studies have found that happiness or positive mental states like hopefulness, optimism and contentment appear to reduce risk or limit severity of cardiovascular disease, pulmonary disease, diabetes, hypertension, and upper-respiratory infections.

How much difference will a decrease in sickness absence by just one day per employee per year make to your bottom line?

Happier employees stay longer:

Happy, satisfied workers are less likely to demonstrate “job withdrawal” through turnover, burnout, and retaliation against the organisation. Instead, they are more likely to go beyond their job requirements, spread goodwill, help others, make constructive contributions, and commit to developing themselves within the organisation.

How much would a 10% reduction in staff turnover save your business?

Calculating happiness ROI

Tony Hsieh, the founder of Zappos and author of Delivering Happiness at Work, famously grew a shoestring start-up to a $2 billion company by creating a business model fueled by happiness.

Here is his ROI calculator if you want to calculate how much your business can benefit by increasing the level of happiness in employees, even to a modest degree.

Researchers such as Fred Luthans and his team at the University of Nebraska are developing financial modelling methods to estimate the value happier employees contribute over time.

For example, micro-interventions that develop psychological resources by increasing hope, optimism, confidence, and resilience have been estimated to reap (conservatively) 2% annual returns, realising $585 million in revenue in the average mid-sized business, and far higher value in retention of A-list employees.

Forward-thinking businesses are increasingly recognising that happiness translates into tangible business outcomes which impact the bottom line.

Positive emotion: The key success factor

Many researchers believe that positive emotions and mood are the prime drivers that bring about success.

Positive emotions lead people to think, feel and act in ways that broaden their thinking patterns, build their personal and social resources, and encourage them to work toward positive goals. When things are going well, and they feel positive, they can relax and expand their resources and relationships, take the opportunity to try out new strategies and skills, set new goals and prepare for challenges ahead.

The flow on effect of positive emotions forms the science behind Barbara Fredrickson’s Broaden-and-Build Theory. She has found that positive emotions reset negative emotions, creating an upward spiral that counters downward spirals of negativity. This positive energy spreads through organisations to enable cooperation during organisational transformation and growth.

Add to this the powerful effect of ‘emotional contagion’ within groups—both positive and negative — and you will see how important positive emotions can be for the climate of an organisation and the wellbeing of the whole business.

It is important to understand that just as positive emotions boost our happiness and improve our thinking, negative emotions also have essential benefits. In some circumstances, they are critical to our survival and can help us evaluate actions and risks.

How to support people to be happier at work

To what extent can we increase the level of happiness in organisations?

If we look at the research, Sonja Lyubomirsky and her colleagues explored the elements that make up the differences between people and their happiness. Some of the differences between two people are related to our genetically determined set point (or range). Another component will be connected to our circumstances. The final element that is useful to consider is this is within our power to change – our intentional activities! Yes, the activities we choose to engage in every day have the capacity to change our happiness levels.

When it comes to operating a successful business, happiness pays for itself.

The advice we give our clients is three-fold.

Firstly, focus on increasing the duration and intensity of the ups and decreasing the duration and intensity of the downs. This focus maximises the impact of positive emotions and makes a significant difference to your business and the people who work in it.

Secondly, teach people practical strategies they can put into place in their everyday work life to increase their level of happiness and those of others.

Finally, create an environment that supports people to feel happier and perform at their best. That includes integrating positive practices into business strategy, people development initiatives, processes, and systems at all levels of the organisation. Even small positive actions can make a difference when designed to leverage the way people work best.

Business and human capital leaders seeking to increase the level of happiness in their organisations can start by looking at some key areas.

Important questions for leaders to ask

Do we focus on what we are doing well and can do better than what is wrong?
Do our people experience enough positive emotions? Do we provide opportunities for them to laugh and enjoy themselves?
Do our leaders know how to create a positive emotional climate that engages people and makes them feel happy about coming to work?
Do we enable people to play to their strengths? Are people in roles that suit their strengths and allow them to be appropriately challenged and grow?
Do our people understand the purpose of our organisation and what we stand for? Do we strive to make work meaningful day to day?
Do we identify and reward “positive deviance” – those individuals and groups who dare to go against the norm and exemplify positive behaviours and excellence? Do we learn from and support them to increase their positive influence?

Want to learn more about creating a positive culture in your workplace?

Head to our Positive HR Toolkit website for an interactive kit of positive psychology tools and solutions covering every stage in the employee lifecycle.

Our programmes and assessments help build positive, healthy and flourishing organisations. Please get in touch with one of our passionate team here who would be delighted to assist you.

Learn with Sue is an online membership like no other. Interact with the brightest minds in positive psychology who have dedicated years to identify the secrets of “what makes a good life” both personally and professionally. Access a library of resources, tools, and tips to help you implement the science to boost your wellbeing. For more information about a Learn with Sue membership visit Learn with Sue