Evidence shows that happiness at work drives employee engagement and future business success, but leaders are still wary of promoting happiness. Embedding happiness at work into your company values is great for your corporate culture - and your bottom line (and far more effective than focusing just on employee engagement!).
In fact, today is the UN’s International Day of Happiness. This year it falls in the middle of the working week, which is a good reminder that taking happiness seriously should also include thinking about happiness at work. While the UN has declared that “happiness is a fundamental human goal”, the majority of business leaders do not embrace happiness quite so effusively. I think they’re missing a trick.
Earlier this month, when I spoke at Glassdoor’s Best Places to Work, 2019 event in London, I made the case for making happiness a core business value and explained how it can help build a positive corporate culture. As a statistician I am always keen to show how the data backs up my case, and I outlined three different ways that employee happiness drives business success:
1. Improves employee retention
In many ways this is unsurprising as we all know when we are unhappy at work, we start to look for a new job. Still, the evidence from our clients is startling. It shows that unhappy employees are twice as likely to leave as their happy colleagues. This means that a 0.5-point rise in team happiness (on 5-point scale) leads to 17.5% lower staff turnover the next quarter. Regularly collecting data on employee happiness acts like an early warning system for businesses to gauge flight risk.
2. Drives productivity
Most people make an almost unconscious assumption that success leads to happiness, but recent evidence shows that the other way is even more powerful – happiness leads to success. The most persuasive piece of research in this area was carried out by Gallup’s chief scientist Jim Harter with over 2,000 teams in his study. They measured team-based happiness (positive perceptions of work) and financial success twice six months apart. They then showed that happiness predicted future success twice as strongly as success was predicting future happiness.
3. Increases share price
For many business leaders the ultimate business goal is to increase shareholder value. While the whole stock market may rise and fall, how their company does compared to the market, is a critical business metric. In advance of the Glassdoor event I found evidence that showed companies who had high Glassdoor scores outperformed the stock market by between 6-10% per year (every year). I also looked at share price performance of the top 20 companies in the Glassdoor’s UK Best Place to Work list and it was very satisfying to note that 10 out of the 11 listed companies had outperformed the FTSE-100 index in 2018. I wrote a fuller article that looks into this in more depth – read Culture eats the stock market for breakfast here.
Happiness beats employee engagement
Taken together these three pieces of hard financial evidence show the value of businesses investing in corporate culture. For many years now the focus has been on improving employee engagement as the bridge between people and performance. But I would argue that engagement is not only a poorly defined construct, but to the employee it really just feels like corporate code for increasing productivity. However, a happiness-approach feels more like an organization is genuinely seeking to create a great culture. This, somewhat ironically, will lead to better engagement and increased productivity - and higher share prices!
The business case is really an answer to the question “why should I take happiness at work seriously?’ but of course that begs the question of “how do we promote happiness at work?”
At the Glassdoor conference there was brilliant example from the Best Place to Work 2019 winner Anglian Water. As well as entertaining us with stories of cleansing dirty water into fresh drinking water, their People Director Susannah Clements talked passionately about how their CEO Peter Simpson really leads on promoting a great culture. They are acutely aware that they are not a growing business (as they are a geographically-defined utilities provider) but having a good culture enables them to compete for talent and retain good staff. Susannah was touchingly emotional as she talked about her work, it was the most moving and authentic example of “organizational pride” I have ever heard
How to create a great culture
Whilst being a great leader is critical in creating a positive culture, it should be complemented with a system that brings out the best in employees. As a systems thinker as well as a statistician I am very in favour of collecting weekly data so that teams and leaders can learn together how to build a positive culture.
By measuring happiness weekly – we call it the Happiness KPI – companies learn how everyone is feeling in the organization at any time. When teams score highly, it is a clear signal that things are going well, whereas low scores signal the very opposite. It helps leaders gather front line feedback and learn when to intervene in real time.
The data itself doesn’t change anything though. We suggest that teams start each week with a brief meeting to discuss how last week went – what went well and what didn’t – and together reflect on how to build on their successes and deal with their frustrations. This iterative approach generates more mutual understanding and collaboration, building happier, more focused and better aligned teams. Together with leadership from the C-suite, these are the two key foundations of building a positive corporate culture in any business
So, thanks to the UN for reminding us today that happiness is to be taken seriously. My only criticism is that one day a year just isn’t enough. Happiness at work needs to be embedded into the working week - measuring employees’ experience each week, ensuring teams discuss their results, and making small incremental changes to how we work together. By doing these simple things you really can build a great place to work and build success, whatever your business.
Friday Founder & CEO
 Estimated from Friday client data (2018); Travelex; 9,000 employees measured monthly for past three years
 Harter et al. (2010) Causal impact of employee perceptions on the bottom line of organisations; James Harter et al; Perspectives on psychological science 5(4); 2010
 Chamberlain, A (2015) Does Company Culture Pay Off? Analyzing Stock Performance of “Best Places to Work” Companies; Glassdoor USA