Are Happy Employees More Productive? Here’s What the Research Says.

How happy are your employees? We all have good days and bad days, but are happy employees more productive?

It’s a big question to ask, and one that incorporates many variables, but I’m going to set out to answer it.

Defining Satisfaction

First, we have the messy problem of defining what, exactly, employee “satisfaction” is.

There are several facets to consider here:

Happiness and morale.

Employee happiness and morale are tightly interwoven. Morale refers to how an employee feels when they’re at work, while happiness can refer to how they feel while working or outside the work environment. Either way, this is a tricky concept to define.

Aristotle claimed there were two types of happiness: hedonism, or the temporary pleasures of experiencing something good (like the taste of ice cream or the ego boost of a compliment), and eudemonia, a kind of existential, long-term happiness that comes with feeling good about your life.

Modern psychologists debate that there are even more types of happiness to consider, and all those types of happiness should be considered as part of your employees’ overall levels of satisfaction.

Engagement.

We can also consider whether your employees are engaged. Rather than being tied to a subjective emotional state, engagement refers to an employee’s general experience while working. The pinnacle of engagement in the moment is flow, the mental state of being immersed in a task, which usually arises when a task is sufficiently challenging without being frustrating, and sufficiently interesting to hold one’s attention.

Engagement over a long term may also refer to how an employee feels in their workplace environment—such as whether or not they’re recognized by leadership for a job well done. See our list of employee engagement quotes as well as these team building activities to motivate your employees!

Fulfillment.

Then, there’s a sense of fulfillment that can come when an employee feels like they’re doing something worthwhile. This is more of a long-term concern, and depending on the employee, it may have to do with the benevolence or direct impact of the work they’re doing, or their work’s ability to help them achieve their personal goals.

Employee satisfaction could involve some or all of these factors, and some I haven’t even mentioned. And of course, this is all complicated by the fact that employees may be satisfied by different elements of the job; two employees in the exact same position, in the exact same set of circumstances may have radically different levels of satisfaction.

Still, we can use what we know about employee happiness and satisfaction to determine how big a role it plays in someone’s productivity.

What the Research Shows

So are happy employees more productive?

Most of us have an intuitive sense that we’re more productive when we feel happy or satisfied. When we’re excited to go to work (if that ever happens), we tend to take on projects with enthusiasm, and work on those projects more expediently.

When we dread getting out of bed, the day seems to drag by. But let’s not rely on subjective personal anecdotes—let’s look to the empirical evidence.

The Industrial Labor Relations Review Study

One study from Industrial and Labor Relations Review, published in 2012, studied employees in Finnish manufacturing plants between 1996 and 2001 to examine the relationship between employee satisfaction and productivity. They used measurements of “job satisfaction” from the European Community Household Panel (ECHP), which was subjectively reported, and tied that to establishment productivity.

Once they isolated the variables, they found that each standard deviation of job satisfaction correlated with a 6.6 percent increase in value for each hour of work. In other words, a significant boost in job satisfaction can help your employees get 6.6 percent more done every hour.

The Harvard Business Review Study

But that’s only one study, and it centered on manufacturing workers in Finland. One comprehensive study in the Harvard Business Review attempted to compile data from a number of different studies and sources, ultimately concluding that the happiness and engagement of your workforce is the single greatest variable for success.

On average, a happy, engaged workforce will increase your sales by 37 percent, improve productivity by 31 percent, improve accuracy on specific tasks by 19, and increase the health and longevity of your employees.

The University of Warwick Study

The University of Warwick also found, unsurprisingly, that happy workers are more productive. But rather than asking participants for a report on their happiness or job satisfaction, this experiment induced different levels of happiness to see what effects it had on productivity.

They divided their 700 participants into random groups, with some being shown clips of a comedy movie, some being given free chocolate, fruit, and drinks, and some being questions about recent family tragedies. Happy workers (i.e., the ones eating chocolate and watching comedy movies) performed 12 percent better than the control group, while unhappy workers (i.e., the ones thinking about family tragedies) performed 10 percent worse.

The Effects of Workplace Stress

We can also look at workplace stress as a significant factor in employee productivity. According to the American Psychological Association, organizations end up losing more than $500 billion total because of workplace stress, and stress-related absences are responsible for the loss of more than 550 million workdays.

Other reports have found that more than 80 percent of doctor visits are at least somewhat stress-related.

There are also studies that look at engagement, specifically.

As reported in the Harvard Business Review, studies by the Queens School of Business and the Gallup Organization found that workers who described themselves as disengaged had 37 percent more absenteeism, 49 percent more workplace accidents, and 60 percent more issues with accuracy and defects.

On top of that, workplaces that had the lowest engagement scores had 18 percent lower productivity, with 16 percent lower profitability, and a 65 percent lower share price.

In summary, happiness, morale, engagement, and fulfillment are all important to productivity, no matter how you define any of those terms. Companies with more satisfied employees get more done during the day, have lower absenteeism, and end up being more profitable (or at least beating the competition).

The Turnover Factor

We can also consider the effects of employee satisfaction on turnover, and the associated costs. An unsatisfied, unhappy, or disengaged employee will be far more likely to quit, experience burnout, or increase their risk of being fired. It’s estimated that to replace a full-time, salaried employee, it costs about 6 to 9 months’ salary (including recruiting and training expenses).

That means for someone making $50,000, it could cost your business $25,000 to $37,500 to replace them.

Let’s assume that in average circumstances, one employee per year leaves your organization due to dissatisfaction. That’s an annual cost of roughly $30,000. Therefore, if you can spend less than $30,000 on morale and satisfaction improvements that reduce morale-based departures to zero, it’s worth the investment from a turnover perspective alone—not even considering the boosts to productivity.

Though you may not be able to qualify it as “productivity,” there are tremendous cost savings in turnover when employee satisfaction improves as well.

6 Ways to Improve Employee Satisfaction in Your Workplace

Okay, so happy, satisfied employees are universally better for your business. What steps can you take to improve happiness in your workplace?

You can start by encouraging your employees to adopt more positive habits, such as:

1. Writing down things they’re grateful for.

Expressing gratitude is one of the easiest ways to foster a positive mentality. It forces you to consider the good things in your life that you might otherwise take for granted, and trains your mind to focus on positives, rather than negatives.

Asking your employees to write down a few things they’re grateful for during the day, or on an occasional basis (like once a month) can help them stay focused on the positive aspects of the job—since every job will have pros and cons.

2. Writing positive messages to others.

Writing down expressions of gratitude is helpful for your employees on an individual basis, but you should also be encouraging employees to engage with each other in a positive way. Communication can be a major source of stress in your organization, so consider encouraging more positive communications between your employees.

Ask your managers to find new things to compliment about their subordinates, and offer encouragement on an unconditional basis.

3. Meditating.

Regularly practicing mindfulness meditation will help your employees reduce their stress on a daily basis, but will also facilitate real, physical changes in the brain. Focusing on the present moment, and avoiding distractions even for just a few minutes can help employees find peace.

It takes time to get “good” at meditating, but it’s well worth the investment.

4. Exercising.

Physical exercise is a good way to reduce stress, and it comes with a host of other benefits. Frequent exercisers are at significantly reduced risk for heart disease, obesity, diabetes, and a host of other ailments; they’re also more confident, and have higher energy levels throughout the day.

Exercise may not directly change a person’s job or work environment, but it can equip them with a healthier mind and body, which can work wonders on a chronically stressed person.

5. Journaling.

Journaling is a powerful tool for self-awareness, emotional intelligence, and stress reduction. It forces you to detail your feelings, rather than letting them take control, and challenges you to examine why those feelings exist.

As long as your employees have a private space to journal, this method can be extremely helpful. Don’t miss our complete guide to productivity journaling.

6. Targeting sources of stress.

It’s easy to bundle all your frustrations into a lump sum of “workplace stress,” but this isn’t productive, and can actually lead to further dissatisfaction. It’s better if your employees develop the habit of properly identifying the key sources of stress in their environments, so they can actively work on reducing those frustrations (or changing how they respond to them).

Causes of Workplace Stress

You can also take measures to make your workplace more inviting, and less stressful. According to Stress.org, the four biggest causes of workplace stress are, in order:

1. Workload issues.

For the most part, heavy or inordinate workloads are major sources of stress. If one of your employees is overloaded with work, or if their responsibilities are extending outside their normal range of expertise, it can cause stress. Incidentally, having too small a workload can also be a problem—it can make employees feel expendable, useless, or bored during the day.

2. People issues.

Interpersonal relationships can also get in the way of employee morale. When someone doesn’t get along with a teammate, a boss, or even a client, it can make the entire day miserable. You can’t control the personalities of the people who work for you, but you can control the environment they all share.

3. Work/life balance and/or personal issues.

You can’t help it when an employee has family issues to deal with, and unfortunately, they’re likely to bring those issues in with them when they come to work. You can, however, reduce the dissonance between personal and professional worlds by limiting after-hours emails, granting extra time off, and allowing scheduling flexibility to handle personal responsibilities.

4. Lack of job security.

Employee satisfaction and happiness can also drop if they feel their jobs are in jeopardy. This can happen if the company isn’t performing well, if there’s a new round of layoffs, or if an employee doesn’t feel valuable.

Tips to Reduce Stress in the Workplace

Be sure to see our entire post outlining various stress management techniques you can use to relieve stress fast. You can also adopt these changes to provide all-around benefits:

1. Create a calm, warm atmosphere.

People work better when they feel like they belong in their work environment. Use changes in your layout, lighting, music, and décor to facilitate a relaxing, enjoyable environment where your employees can still get work done.

2. Listen to your employees, and encourage them to voice their opinions.

Ask your employees for feedback on a regular basis, and listen to what they have to say. They know their sources of stress and dissatisfaction better than everyone, and if they feel they can voice their opinions without being judged or scolded for it, they’ll do so. If multiple employees cite the same specific problem, you’ll know what you need to fix—and sometimes all it takes is a new app or add-on to relieve the burden.

3. Allow flexibility.

Giving your employees more scheduling flexibility allows them to handle their personal responsibilities without worrying about them, or worrying about their job security. It creates a more understanding environment, and one that your employees will certainly appreciate.

4. Focus on positive feedback, rather than negative feedback.

Negative feedback has its place in some areas of instruction or self-control, but when it comes to goal motivation and overall feelings of contentment, positive feedback is better. Make sure, when reviewing employees or providing feedback for their work, you give more positive feedback than negative feedback, and always frame your negative feedback in a constructive way.

This will limit feelings of resentment, while maximizing employee satisfaction. See our list of employee recognition ideas for ways to give positive feedback to your employees in a way that motivates them and makes them happier.

5. Cater to individuals when possible.

Not all employees will be happy, engaged, or satisfied with the same environment or the same assortment of management strategies. When possible, try to cater to the individuals on your team. Some might respond to different rewards or circumstances better than others, so put your knowledge of your team’s preferences to good use.

No matter what level of satisfaction your workers currently have, or what systems you already have in place to improve it, your organization can run smoother and happier once you get your email management under control.

Sign up for a free trial of EmailAnalytics today, and get a visual on your entire team’s email productivity, so you can adopt the changes necessary to make your workplace even better!