The cheapest way to improve productivity: make your employees happy

Some employers view their relationship with workers as purely transactional: The company pays employees for their services, and staff members are responsible for getting their work done. Happiness doesn’t even enter into the equation, but we now know this is a mistake.

A slew of research has found that employee happiness has a dramatic effect on performance. A study published in the University of Warwick’s Economic Research Institute Journal revealed, “human happiness has large and positive causal effects on productivity… Positive emotions appear to invigorate human beings, while negative emotions have the opposite effect.”

So how can companies promote workplace happiness? Here are five best practices companies can use to promote employee happiness in the workplace:

1. Give people choices. People like to have a say in shaping their workday and controlling their own destiny. Daniel Pink, author of the New York Times bestselling book Drive: The Surprising Truth About What Motivates Us, drew on four decades of scientific research to discover that autonomy is one of the three pillars of the “motivation formula.”

Autonomy means giving employees control over when they work, where they work, and what they work on. It means allowing for self-determination and flexibility, and focusing on results, rather than face-time. Choice and autonomy are proven to be powerful drivers of employee motivation and performance.

“We found that knowledge workers whose companies allow them to help decide when, where, and how they work were more likely to be satisfied with their jobs, performed better, and viewed their company as more innovative than competitors that didn’t offer such choices,” wrote Diane Hoskins in the Harvard Business Review.

2. Help people achieve emotional wellness. The World Health Organization found that the cost of stress to American businesses is as much as $300 billion. And its estimated that two-thirds of visits to the doctor’s office are for stress-related conditions. These visits cause costs to soar in the form of decreased productivity and absenteeism.  

Stressed employees do not perform at their peak level, and it doesn’t matter whether the stress is directly related to work. For example, money trouble is one of the most powerful sources of stress out there. The American Psychological Association reports five out of the eight top sources of stress in America are financial. If an employee is worried about their personal finances, that stress will be reflected in their work.

As an employer, it is your best interest to help your employees achieve emotional wellness. It’s important that employees don’t feel overburdened or overwhelmed by their work. They need time to unwind, at or away from the office. And since socialization and exercise are known stress reducers, you can promote emotional wellness by encouraging employees to engage in these activities. In addition, many successful organizations provide confidential counseling services through a third-party.

3. Cultivate purpose and meaning. One of the other pillars to employee satisfaction and happiness is purpose. Harvard Professor Rosabeth Kanter wrote that people want to work for companies where they feel that they’re making a meaningful difference in the world. People who believe in what they are doing are happier, more motivated, and more productive.

Employers can cultivate purpose in the workplace by writing a meaningful mission statement and placing it around the office. This will help remind employees on a regular basis why they are there and why they do what they do.

The next step is to ensure that employee goals align with the organizational goals, which is best done through one-on-one meetings where individuals can share their thoughts with their managers, and feel that their voice gets heard. Managers can also instill a sense of purpose by giving every employee the opportunity to use their strengths.

4. Spread happiness. Putting someone in charge of spreading happiness — appointing a “happiness evangelist” — can be an incredibly effective way to foster a cultural change. Most leaders have a hefty amount on their plate, and don’t have a lot of bandwidth to dedicate to “softer” issues like how people are feeling. Moreover, they are probably not trained to do so.

A happiness evangelist (or in Google’s case, the Jolly Good Fellow) is responsible for creating an environment where people feel valued and happy. They can spearhead initiatives to improve workplace satisfaction, like catered lunch, regular happy hours, or work-from-home Fridays, as well weed out sources of dissatisfaction. This person ensures that employee happiness remains a priority and prevents issues from festering to the point where performance is compromised.  

5. Reward and recognize. It is human nature to respond positively to recognition and rewards. An analysis from Gallup that spanned 10,000 business units found that “the act of recognizing desired behavior increases the repetition of the desired behavior, and therefore productivity.” Employee recognition leads to greater employee satisfaction and enjoyment of work, better teamwork, higher retention, lower negative effects from absenteeism and stress, and even higher loyalty and satisfaction scores from customers.

Incentivizing employees and celebrating success makes employees feel valued and boosts confidence. It helps them feel a sense of accomplishment, which is a powerful motivator, and reinforces their sense of meaning and joy in their work. Rewards and recognition can take many forms, including from gift cards, time off, public recognition at a weekly company meeting, and of course, promotions. In any case, they inspire employees to do their best.

The impact of happy employees on an organization is dramatic. A Russell Investment Group study found that stocks for companies on the Fortune 100 “Best Companies to Work For” list significantly outperformed the average. Caring about employee happiness isn’t just the “right” thing to do, it is the smart business thing to do.

Read Next: Work hard, work happy: The secrets to more productive employees

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