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Happy Companies Experience Increased Profits

(posted: March 29th, 2013)

Actively disengaged workers cost American companies an estimated $300 billion annually in lost productivity alone.

It seems like we hear more and more that the happy workplace is a better workplace, and that happy workers are more productive - Is this really the case? Don't happy workers just become complacent?

And is it really our responsibility as leaders to make our employees happy?


Well, yes. And no.

Part of the problem is that word, "happy".

You are not responsible for whether or not your employees are happy people.

BUT - If I say that you, as leaders, are responsible for:

  • engaging your employees
  • supporting their performance
  • valuing and enhancing their well-being
  • and stimulating their drive

You would probably agree that some or all of these factors are important to employee management.

Well, these same elements are primary components of a "happy" workplace.

According to Gallup research:

In world-class organizations approximately 64% of employees are actively engaged, versus 34% at other companies.

Can you imagine the results if an additional one-third of your employees demonstrated the highest levels of commitment to the organization, and to their work?

How (and Why) To Develop A Happy Workplace

Once we change our perspective a bit, it becomes clear that a happy workplace is essential to higher productivity and higher profit, and that leaders can actually benefit the bottom line by actively working to create and support a happy work environment.

However, for you skeptics out there, there's more:

Research from Aon Hewitt shows organizations with levels of engagement at 65% or greater continue to outperform the total stock market index and posted total shareholder returns 22% higher than average in 2010.

On the other hand, companies with low engagement (45% or less) had a total shareholder return that was 28% lower than the average.

One Size Doesn't Fit All

One of the most important things to keep in mind on your path developing a happy workplace is this:

There is no silver bullet that will make all your employees happy and productive overnight.

Just as people are infinitely varied, the path to a happy workplace is, too - you may have to try different things.

The other important thing to note is that creating a happy work environment requires constant attention.

Management cannot just pick one or two things to "fix" and then assume that everyone will live happily ever after.

With that in mind, what follows is a list of what employees most often cite as the most important elements in making them happy workers, and which some of the best companies have used to create happy workplaces.

7 Steps To A Happy Workplace

#1 - Meaningful Work - This is one of the top motivators for employees.

It's obvious that a place like NASA is doing meaningful work, work that potentially impacts life on earth, but can you find meaning in what you do outside of rocket science?

I say yes, absolutely.

How can leaders help employees find meaning in their work?

You can't force it, or create policies that mandate it. But if you, yourself, find meaning and fulfillment in the work that your company does, then you can share that with your staff.

Communicate it directly through vision and mission statements, and model what it looks like to be a leader whose work is meaningful. Sometimes this comes from talking informally about your vision, sometimes it comes from talking more formally and specifically about why you do what you do, and what the company and the company's mission means to you.

"It costs between 150% and 200% of an employee's salary to replace them."

Gallup

#2 - Challenge - Perhaps surprisingly, people tend to bloom when they are asked to stretch to reach a goal.

Tasks need to be difficult, but not insurmountable, like when a team finally puts together a presentation or finishes a project after months of research and work. There also needs to be acknowledgement and celebration when a tough goal is reached.

#3 - Engagement - I'm sure we've all had the experience of the sales rep whose genuine enthusiasm for her product had us pulling out our wallet. Employees who find themselves personally invested in and dedicated to a company are much more productive than those who feel disconnected.

Some ways to help employees feel more engaged include progressive performance management plans and recognition programs, benefits packages (rather than just monetary compensation), and opportunities for education and advancement.

Companies on Fortune's list of 100 Best Companies to Work For tend to have less employee turnover than average.

"In information technology, an industry notorious for job-hopping, voluntary turnover is 5.9% at the companies on Fortune's list, vs. 14.4% industry-wide. In professional services, turnover in the best places to work is 11.3%, vs. 24.7% across the industry."

John Waggoner, USA Today

#4 - A Good Boss - Yes, this really does matter. Having a manager who is respectful, appreciative, interested, communicates clearly, and is actively involved in making an employee's job challenging enough to keep them interested will actually help you retain employees.

"Over 70% of people leave their jobs because of the way they are led."

Norman Drummond, Motivational Speaker & Coach

Create and maintain a management training program to ensure your managers are the best they can be.

#5 - Recognition - Simply acknowledging people's efforts and contributions, and praising them for a job well done, makes a huge difference in whether or not employees are happy at work.

It's important to keep in mind that you must use different kinds of recognition. For some people, a personal word from the boss is just the right thing, for others the public recognition that comes from an employee of the month program is more motivating.

I like to remind leaders to use the "Platinum Rule" - Treat others as they would like to be treated.

Keep in mind, too, some situations demand greater or more public comment, and others make more sense kept small and private.

For example, when you are practicing Management By Wandering Around, it is easy to compliment a staff member on a good suggestion, or a clever idea he is using to keep himself organized, or even offer a simple, "Hey, thanks for responding so promptly and thoughtfully to my email! I appreciate that you took the time to do that, because it really helps me out."

If somebody's good idea, or suggestion, or organizational strategy ends up being implemented by the department or office as a whole, that might demand more public recognition. For example, when it's put into place and an announcement is made to the group: "Thanks to a suggestion from Bob, we'll all be using the new paperclip scheme to organize widgets in the workplace."

#6 - Hire Well - Actively search out new hires who understand the company's vision, and who will compliment the team - you are more likely to end up with people who enjoy each other's company, work well together, and make for a more productive team.

I like to use my DiSC assessment tool to help companies make these choices.

#7 - Money Doesn't Work - Beyond a reasonable salary, money is not high on the list of what makes employees happy.

"Do not hire a man who does your work for money, but him who does it for love of it."

Henry David Thoreau, author & philosopher

Happy Employees Are Productive Employees

In general, workplaces that make people feel valued, included, competent and cared for bring out their best efforts.

While happiness my not cause productivity by itself, it is certainly a factor - It is clear that happy workers stay with a company longer, work with more enthusiasm and energy, and actually help boost morale across the organization.

Challenge Yourself
  • What are some of the ways you've found to make your employees happier at work?
  • What are some of the biggest stressors your teams face, and how have you helped your people get past them?'
  • How do you discover ways to motivate and engage your people?

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