The Happiness Advantage: How Employee Wellbeing Drives Results

While some employers may dismiss employee well-being as an example of ‘wokeism in the workplace,’ research suggests that happier employees perform better in their jobs. And in some cases, substantially so.  

In fact, Shawn Achor, best-selling author of ‘The Happiness Advantage’ writes that a ‘happy and engaged workforce’ is the greatest advantage a modern company can have.  

Think back to your own experience as an employee: to those times when you were happy within a specific role or industry versus those times when you weren’t. Productivity and focus can quickly spiral downwards in companies where employees are disengaged or unhappy, and this can affect output, recruitment, and even profitability.  

What is employee wellbeing?  

Employee well-being has several definitions, but ultimately, it's concerned with the physical, mental, emotional, and economic health of people working within a business.  

But for many companies, wellbeing isn’t just something that starts and ends at the office door. Well-being must also consider what’s happening in an employee’s personal life. The average UK employee will stay in the same role for between 4 and 5 years and a lot can happen in that time. There may be bereavement, long-term sickness or bouts of chronic illness, house moves, divorce, ailing relatives, difficulties with children or partners, mental health struggles, physical injuries, financial pressures, etc.

At some point, we’ll all have faced tremendous pressures in our personal life and, inevitably, there are times when these things bleed into our professional world. Most of us can’t turn our stress or anxieties off just because we’ve clocked onto our jobs.   

One study, reported in the Guardian, found that employees who’d experienced the death or illness of a family member within the last two years performed 10% worse than those who were not bereaved.  

And of course, caring about employee well-being isn’t just because some bosses are tender-hearted towards their people (although, many are), but also because it’s also good for business.  

Wellbeing can take many guises and is often individually tailored to a business, but here are some examples of initiatives by other companies.

• Encouraging flexible or hybrid working models across the company
• Redesign or re-jig the office layout to give employees access to natural light
• Create opportunities for employees to learn new skills and gain qualifications
• Train managers as mental health first-aiders so they can quickly identify employees that are struggling or showing signs of stress or burnout
• Have a weekly casual meet-up so that colleagues from different departments can say hello to each other and build connections.
• Install an ECO:POD with electricity-generating indoor bikes so employees get a physical boost during the day (exercise can help improve focus and productivity), help employees beat the post-lunch slump, and reduce their carbon footprint.
  
  
  

The importance of well-being at work 

One study by the Harvard Business Review found disengaged workers accounted for not only an 18% drop in productivity and 16% lower profitability but also contributed to 49% more work-related accidents and 37% higher absenteeism. It also reported that in the US, unhappy employees cost businesses $300 billion each year.  

And employee well-being doesn’t have to mean spending lots of money. One white paper from the O.C. Tanner Learning Group found that 79% of employees quit their jobs because they didn’t feel appreciated. In large companies, it’s easy to overlook someone’s positive contributions, but acknowledging good work and effort can have a significant impact on whether staff feel valued. Giving praise where it’s due (with a potential reward, too) could be enough to keep them in a role for longer. As we’ll discuss later in this article, the cost of replacing an employee can be a significant drain on a company’s time and resources. It’s far easier to create an environment in which people naturally want to stay.  

One of the challenges of employee well-being is that it’s easy for companies to make the right noises without doing much to address the real issues. This is called wellbeing washing, and you’ll find countless examples online of companies ignoring the root cause of employee unhappiness in favour of quick fixes that look good on social media. Things like poor management, toxic culture, employee burnout, poor communication, lack of accountability, micromanagement, bullying, cliques, inflexible working policies, etc., are glossed over in favour of pool tables, houseplants, massage chairs or taco Tuesdays.  

There’s nothing wrong with treating employees to a Tex-Mex themed lunch or putting a hundred spider plants in the office, just make sure these aren’t masking a much deeper issue.  

How Does Employee Wellbeing Drive Results? 

1. Happy employees boost productivity
   Researchers at Oxford University found that happy workers were up to 13% more productive and they concluded the study by saying, ‘We found that when workers are happier, they work faster by making more calls per hour worked and, importantly, convert more calls to sales.’
   
   During this study, researchers asked 1,793 workers at a BT call centre to rate their happiness on a weekly basis. The study tracked each person’s attendance, working hours and breaks, and sales. These were then collected alongside the company’s schedules and data to measure productivity.  
   
   What’s interesting is that these happier workers didn’t work more hours but were simply more productive. The fact that the researchers chose a call centre for their study is also interesting. It would be easy to suggest that successful workers are more likely to feel happier, but as the World Economic Forum website points out, ‘routine call centre work might not in itself be considered enjoyable and fulfilling.’ What that showed in this case is that ‘happy employees bring their happiness to work rather than deriving it from the job.’ 
   
   Since then, several other studies have reported similar results, including one undertaken by the University of Warwick, which found there was a 12% increase in productivity when employees are happier but a 10% decrease when they’re unhappy.  
   
   It's something that larger companies have started paying attention to. One article on EHS Today notes that since 2014, Google has employed a Chief Happiness Officer (CHO)  quickly followed by Amazon, Air BnB and others.  
   
   

2. Happier employees go the extra mile
   Happier employees are also more likely to put in discretionary effort. This is when an employee exceeds the boundaries of their usual responsibilities for the company’s benefit. Examples of discretionary effort could be simplifying a process that saves the business time or money, volunteering for additional training or qualifications, tidying up the office before a holiday weekend or an important visit, or working overtime to ensure a project is finished to a high standard. Discretionary effort comes from the employee and is something they’re happy and willing to do because they find value in their job.
   
   This isn’t the same as the employer mandating extra work in addition to regular duties, which often leads to overworking and is frequently driven by poor project and people management. 
   
   One Gallup study suggests that up to 76% of an employee’s discretionary effort is influenced by direct management. This echoes the famous comment by Donn Carr ‘People work for people — they do not work for businesses’.  
   
   The IBM Smarter Workforce Institute and Globoforce’s WorkHuman Research Institute studied 23,000 employees from around the world across different industries. It found that discretionary effort was almost twice as likely among happier employees.  

3. Happier employees make more sales
   According to one study by Yale University, happier employees are also more likely to upsell to customers and generate more sales. While another study found that happier salespeople can raise sales by up to 37%. 
   
   And this was something the Oxford University study of the BT call centre found in its study: happier employees had a higher sales conversation rate than their unhappier peers. And they didn’t work extra hours to do it.  

4. Happier employees boost stocks
   Happier employees can also help boost a company’s stock price. Writing on Medium, Steve Spring explains how ‘the stock prices of Fortune’s “100 Best Companies to Work for” rose 14% per year from 1998 to 2005, compared to a 6% increase for those companies that didn’t make the list. 
   
   Equally, online job search and review website Glassdoor found that companies named in their “best places to work” list ‘outperformed the S&P 500 from 2009 to 2014’. 
   
   What’s interesting is that Glassdoor’s research also found the opposite was true: low-rated companies were associated with lower stock returns. Companies with poor employee satisfaction ‘significantly underperform’ in the market. This led researchers to conclude that there was an economic link between employee satisfaction and ‘broader financial performance among large publicly held companies.’  
   
   If you’re interested in finding out how they came to this conclusion, you can download the Glassdoor report here.  
   
   

5. Unhappy employees leave
   Perhaps one of the most obvious signs of a disengaged workforce is in the high turnover of staff. Unhappy employees are more likely to look for another job and leave a business, which can be very expensive, especially as the recruitment and training costs to replace them are often high. 
   
   According to Perkbox, it costs at least 20% of an average salary to recruit a new employee and 7% to train them.  What’s especially concerning for employers is that it can take 1-2 years for new employees to reach a level of productivity matched by existing staff. Simply put, it’s far easier to hold onto existing staff than to employ new ones. 
   
   Glassdoor explains that the average cost of hiring a new employee is around £3,000. In the US, this figure has been pitched at around $4,700, with an additional $1000 for onboarding. There’s also the significant drain on company time in recruiting, interviewing, training and supporting a new employee, taking existing staff away from their own roles to facilitate the process. 
   
   People will always move on to other positions, roles, or industries, but high staff turnover due to unhappiness and disengagement can be prevented. It can often be identified by looking at the average time people spend in positions and exit-interview information.
   
   It’s almost always going to be easier to listen to employee concerns about workload, flexible working restrictions, office culture, management issues, burnout, etc, as these concerns come up rather than allowing them to fester and encourage employees to leave. 
   
   If employee unhappiness is strongly linked with salary or wages, then it’s worth bearing some of the figures above in mind. Replacing an experienced and productive employee may be more expensive in the long run than simply negotiating a wage increase.  

How to implement well-being into your business 

All businesses will have a different strategy, but there are some things that all companies can do in the beginning to ensure any well-being initiative is successful.  

• Firstly, understand that this is a long-term strategy. Happiness can be boosted by staff picnics or beanbags in breakout areas in the short-term but are unlikely to address the serious issues that may be holding your company back.  
  
  
• Talk to your employees about their experiences in the company.  Employee surveys are always a good idea. These can be anonymous or can form the basis for one-to-ones or group focus sessions. You may find that there’s a relatively simple fix to something that’s causing disengagement amongst employees. For example, if workers report feeling disconnected with the company, then there are ways around that. It could mean a monthly meeting to discuss updates and share information. It could be a bi-monthly email or a memo. It could mean implementing an inter-department coffee morning so employees can mix with colleagues in other sections of the business. Once you’ve identified a problem, then you can do something about it.
  
  
• Once you have the employee-led view of the company, then look at HR data to see what’s really going on. How many sickdays are people taking? How productive are employees? If your company allows hybrid or remote working, then how do these days impact absenteeism or productivity? During exit interviews have employees explained why they’re leaving? Do you have a problem with burnout or long-term sickness? Do some managers have complaints filed against them? If so, what for? 
  
  
• Make sure that someone is responsible for implementing and monitoring any strategy. It could be a team-wide effort or under the remit of one person, but it will require someone to take the lead because otherwise even the strongest of starts will fizzle out. You’ll also need to bring line managers onboard too. They’ll not only have an insight into what employees are facing, but they will also control much of the workload. You may recognise gaps in their knowledge which can be rectified with training courses on people and task management.  You will also need to have some way to track and measure progress and to see where course corrections may be necessary to stay on track.
  
  
• You could also look at décor and arrangement of the working environment. Some office spaces are ridiculously outdated and, quite frankly, thoroughly depressing places to work. Research shows that natural light can have a positive impact on creativity and productivity, so make the most of windows and daylight.  You may find it helpful to read about biophilic design, which endeavours to bring the outdoors inside and has been shown to boost productivity and focus in the workplace. If you have an open-plan office, then employees may find it difficult to concentrate with the levels of activity and noise going on around them. While you won’t always be able to change this completely, try offering noise-cancelling headphones or small meeting booths or pods that can block out sound. You may also find the idea of activity-based working useful – creating zones around tasks rather than having set desks to sit at.  You may be able to significantly boost employee happiness by making their working environment a nicer space.
  
  
• You can also look to external partners for help. There are a lot of different facilitators who will work with companies either to identify difficult areas or to help implement initiatives. Having someone else from outside the business (without bias) to help assess and measure the data can be useful and may yield surprising results. 
  
  
  Employee wellbeing isn't just about creating a working environment in which employees feel supported and able to thrive; it's also about employers recognising the huge benefit that comes with having an engaged and happy workforce and the impact that can have on all areas of a business, including output and profit.  

Find out more about how the ECO:POD can support wellbeing and productivity in your office.