8 Reasons Why it Pays to Have Happy Employees

New findings show that when companies focus on keeping their employees happy they get better production and increase their chances of success.

Growing up I was constantly told that if I wanted to be happy I needed to work hard and become successful.  But with recent discoveries in the field of positive psychology, I am happy to announce that the old-school “formula for success” is backward! Contrary to this long-established opinion – new findings show that when you focus on being happy first – you are in a much better position to find more success!  In other words – happy employees bring about success rather than success bringing about happy employees.

Full disclosure, the inspiration for this post is Shawn Achor and his book, The Happiness Advantage.  After reading his book I was committed to spreading this message to my family, friends, business colleagues – and yes – my online followers as well.  I specifically decided to apply these new findings to an area that could benefit greatly from it – and that area is the workplace!

Armed with my new-found interest, I wanted to uncover ways in which this new mode of thinking could benefit both employee AND employer.  Could it actually benefit a company if its employees were happier?  I am more confident than ever that the answer to that question is a resounding yes!  And to prove it – I have assembled a list of 8 reasons why it pays to be happy at work:

1. Being happy at work makes you more productive

In 2015 a study was conducted in England by the Social Market Foundation and the University of Warwick’s Centre for Competitive Advantage in the Global Economy.  The study set out to understand the link between happiness and productivity in the workplace.  Their findings – happy employees were 12-20% more productive than their unhappy counterparts. This is fairly dramatic, as the study also points out that in regard to GPD and economic growth – an increase of just 3% is considered very large.

2. Happy employees are more creative

There have been several studies that have found a link between happiness and creative output.  In one such study out of the University of Toronto, psychologist Adam Anderson explains, “With positive mood, you actually get more access to things you would normally ignore. Instead of looking through a porthole, you have a landscape or panoramic view of the world.”  His conclusion – creative output increases with happiness.  In another study, creativity researcher Dr. Shelley Carson observed, “Increases in positive mood broaden attention and allow us to see more possible solutions to solve creative problems.”

3. Happy employees make more money

Barry Staw, a business professor at the University of California-Berkeley, conducted an interesting study where he and his colleagues measured the initial level of positive emotions in several hundred employees and then analyzed their job performance over the next 18 months. Their findings – those who were happier at the outset ended up receiving better performance evaluations and higher pay. It stands to reason that happy, satisfied workers are more likely to achieve better job outcomes because they’re more engaged and invested in what they’re doing.  In another study published in the journal Proceedings of the National Academy of Sciences, researchers found that people who report higher life satisfaction as adolescents earn significantly higher levels of income later in life.  The adolescents that reported to be “very happy” earned 10% more than the average income, while those who were “profoundly unhappy” made about 30% less than the average.

4. Happy employees are more effective leaders

Dana Joseph, Ph.D., at the University of Central Florida, consolidated 25 different studies on leadership to conclude that the trait that contributes the most to a leader’s success is “positivity.”  What Joseph coined as “trait positivity” (the general tendency to respond positively to situations) was the best predictor for effective leadership.  “Positive affect allows [leaders] to be inspirational, motivational, and respectful of their followers,” says Joseph. “For example, when you’re giving a speech to a room and you have difficulty being positive, it’s difficult to inspire and motivate the audience.”  So, for hiring managers trying to predict which individual will be an effective leader, they should place greater importance on candidates’ overall happiness levels.

5. Happy salespeople outsell their counterparts by 20-40%

In the mid 80’s MetLife’s CEO John J. Creedon was concerned with the high turnover rate of their sales staff. So much so that he approached psychologist Doctor Martin Seligman at the University of Pennsylvania and asked him to test a theory on the importance of optimism in people’s success – in this case, his salespeople.  Seligman tracked thousands of MetLife sales reps who had taken two tests during the hiring process.  One test was the standard screening test for new employees, the other was a unique test created by Dr. Seligman to measure the amount of “optimism” in a new hire.  Two years later Seligman compared sales results against his original test and found something remarkable: reps who scored in the top half for “optimism” sold 37% more insurance than those “pessimists” in the bottom half. In November of 1997 HR Magazine reported, “Met Life then changed its hiring practices to include screening candidates for optimism. In less than two years, the company had more success hiring agents, expanded its sales force . . . and increased its market share of the personal insurance market by 50%.”

6. Happy employees are better at handling stress

Sonja Lyubomirsky, Professor at UC Riverside, has devoted much of her life to what she calls “the science of happiness.” She’s written many books on the subject, including The How of Happiness and The Myths of Happiness. In a 2007 research paper, she and two other researchers (Howell & Kern) explored the connection between happiness and health.  Their conclusion – that well-being can “directly bolster immune functioning and buffer the impact of stress.”  Mary Steinhardt is a professor of Health Behavior and Health Education in the College of Education at The University of Texas. She, too, believes that happy people are better at handling stress.  In a paper she published in June of 2014 in the journal Stress and Health she writes, “[My belief] is that positive emotions open us up and help people use a broader range of coping strategies.  It might not matter as much at low stress, where people can handle it, but at high stress, you want to be able to adapt to adversity.”

7. Happy employees provide better service and earn more profits for their organizations

In 2012, Gallup conducted its 8th customer engagement meta-analysis – combining 263 research studies across 192 organizations in 49 industries and 34 countries. The Gallup researchers studied the difference between engaged (happy) and disengaged (unhappy) workers – 1.4 million to be exact.  They measured these workers based on 49,928 work units.  What did they find?  Work units in the top quartile in employee engagement (happy) outperformed bottom-quartile units (unhappy) by 10% on customer ratings, 22% in profitability, and 21% in productivity. Work units in the top quartile also saw significantly lower turnover (25% in high-turnover organizations, 65% in low-turnover organizations), shrinkage (28%), and absenteeism (37%) and fewer safety incidents (48%), patient safety incidents (41%), and quality defects (41%).  Daniel Goleman, internationally known psychologist and author of the best-seller “Emotional Intelligence” has also studied the effect of “engagement” on the bottom line.  In his book “Primal Leadership” Goleman refers to a 2002 study that shows for every 2% increase in the “service climate” (ie employee happiness), revenue grew by 1%.

8. Happy employees are healthier

In 2008 Gallup released a global health study that quantified the average cost of an unhappy employee. They take significantly more sick leave, staying home an average of 1.25 days more a month than their happy counterparts. That equates to 15 extra sick days per year.  In 2010, Columbia University Medical Center researchers published a study on the link between positive emotion and coronary heart disease.  Their findings – people who are “generally upbeat, enthusiastic, and content” have less risk of developing heart disease than those who are not. David A Snowdon, professor of neurology at the Sanders-Brown Center on Aging at the University of Kentucky, conducted a longitudinal study on aging and Alzheimer’s disease and concluded that sisters who were happy lived longer—in some cases as much as 10 years—than sisters who displayed less positive emotions.

So there you have it folks.  The next time you’re feeling down and you head to work with a frown on your face – remember – that’s bad for business!

Stay positive people!

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