Happiness and the bottom line
The evidence is in: Positive, engaged workers are more productive and are key to the success of their companies.
The cost of disengagement
According to Gallup, there is a strong link between the level of employee engagement and business outcomes such as profitability and productivity.
Gallup found organizations with an average of 9.3 “engaged” employees for every “actively disengaged” employee in 2010 and 2011, reported 147 percent higher earnings per share (EPS) than their competitors.
However, companies with an average of 2.6 “engaged” employees for every “actively disengaged” worker reported 2 percent lower EPS than their rivals. That’s because disengaged workers are more likely to take sick leave, steal from the company and quit at a higher rate.
On a national level, Gallup estimates that “actively disengaged” workers cost the United States up to $510 billion a year. In Germany, the figure ranges from $140 billion to $172 billion annually, while in Britain the cost is between $81 billion and $109 billion.
The truism that happy workers are productive workers is slowly gaining credence among chief executives around the world.
More and more companies are investing in the physical and psychological well-being of their employees to improve their performance and, ultimately, the company’s bottom line. Strategies are varied, ranging from foosball tables and Friday beer carts to on-site fitness facilities and in-house social events. But the objective is the same: to boost productivity by increasing employee happiness and health.
The idea is great in theory, but do these measures actually produce tangible results for companies?
Shawn Achor, chief executive of applied-research consulting firm Good Think Inc., says they do. In his book The Happiness Advantage, Achor points to a mountain of evidence showing that positive workers outperform their pessimistic colleagues by a wide margin across a range of industries. “The data couldn’t be clearer that these policies consistently deliver big dividends for companies,” says Achor, who researches and teaches about positive psychology in the workplace.
For example, Achor says, optimistic salespeople outsell their pessimistic counterparts by 56 percent, while doctors in a positive mood show almost three times more intelligence and creativity than doctors in a neutral state. “Data abounds showing that happy workers have higher levels of productivity, produce higher sales, perform better in leadership positions and receive higher performance ratings and higher pay,” Achor says.
Despite multiple studies supporting the link between workers’ happiness and their productivity, most companies still remain behind the curve when it comes to taking steps to improve the general well-being of their employees. The U.S. research group Gallup’s latest State of the Global Workplace survey found only 13 percent of employees across 142 countries were “engaged” in their work, while a whopping 87 percent felt either “not engaged” or “actively disengaged.”
Engaged workers are committed, unengaged workers are killing time, while actively disengaged workers are trying to damage the company. The results suggest “at a global level work is more often a source of frustration than one of fulfillment,” Gallup says. “It also means countless workplaces worldwide are less productive and less safe than they could be.”
But some companies have caught on.
Adobe Systems, which Forbes magazine ranks as one of the happiest workplaces in the United States, has introduced a range of strategies such as flexible work hours, wellness programs and social events to boost the general well-being of its more than 11,000 employees around the world.
The aim is to “create an environment for individuals to be successful while also contributing to the success of the business.”
Three years ago the company went even further by replacing its antiquated annual performance review process with a “check-in” system, which provides employees with real-time feedback from their managers on their progress. “The yearly process took an inordinate amount of time, was viewed as a dreaded dental appointment by managers and employees alike and resulted in a spike in voluntary attrition in the months after review time,” Adobe says. “It focused on past performance rather than focusing on a person’s progress forward.”
The new system has been credited with saving Adobe managers about 80,000 hours that they used to spend conducting reviews and a steady fall in the attrition rate.
But boosting employee happiness doesn’t always require a financial investment. At least one study shows that the simple act of sending and receiving emails can increase employees’ feeling of social connection and have a big impact on their performance.
The Massachusetts Institute of Technology analyzed the email traffic and financial success of 2,600 IBM employees and found that those workers with strong electronic communication links with their manager and colleagues earned more money for IBM than those who were more distant – an average of $948 for every email contact.
The results come as no surprise to Sue Langley, an Australia-based specialist in emotional intelligence and positive psychology. “If we create a flourishing environment, we actually get flourishing people and output,” says Langley, the chief executive of training and consulting organization Emotional Intelligence Worldwide.
But Langley stresses that positive psychology is not about “ignoring” problems in the workplace and “pretending to be happy.” Rather it is aimed at creating more balance. And, in her experience, it works. Langley says one of her clients, an Australian company of about 8,000 workers, saw a massive 40 percent reduction in sick leave and a tripling of its income three years after introducing strategies aimed at fostering a more positive work environment. The changes included boards for employees to write positive thoughts, performance reviews that focused on strengths rather than weaknesses and telling jokes at the start of meetings.
Strategies tend to be less successful, however, when companies don’t consult their employees about what they want.
“Many companies do something randomly rather than ask employees if that’s what they want,” says Tyna Taskila, a senior researcher at applied research consultancy The Work Foundation in Britain. “The key to ensuring employee engagement is to get them involved in the process from the very beginning when planning and implementing wellness programs,” she says.