It’s no secret that a happy workplace is a more inviting environment than a tension-filled office. Or that happy employees are more motivated to work a little harder and a little longer than employees who are not as motivated.
That’s pretty elementary stuff. But do employees really need to be happy, in order to perform well? Is a happy workplace a business necessity, or an employee perk?
Do businesses gain any hard, quantifiable advantages if they pay attention to employee happiness?
These are questions that are being explored more and more by workplace psychologists. And the information they’re uncovering may make Friday afternoon company pizzas obsolete.
Even if you believe that the only point of a business is to make money, you must still look after the happiness of your people, simply because studies show that happy employees will make you more money!
A 2010 report by Hewitt Associates found that companies with high levels of “happiness” or engagement (65% or greater) in their employees, outperformed the total stock market index. On average, these companies posted shareholder returns 19% higher than the average in 2009.
On the other hand, companies with “unhappy” or disengaged employees (40% or less engagement), had an average total shareholder return of 44% less than the rest of their market.
Similar results were reported by Alex Edmans, a Wharton professor. In his 2008 paper, Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices. He used a value-weighted portfolio of Fortune magazine’s list of the best companies to work for in America in 1998. By the end of 2005, this portfolio had earned over twice the market return while also outperforming industry benchmarks.
So, according to the research, it seems that having happy employees gives a company a distinct competitive advantage in the marketplace. This information supports what we at NRI have believed all along – a great workplace is the foundation of a successful business.
True, there was a time when employee happiness did not necessarily translate to the bottom line. When our economy was based more heavily on manufacturing, workers on an assembly line had fairly simple and limited tasks to complete. This meant that they were easy to train, and easy to replace.
Today’s workers, even those in manufacturing, have had the complexity of their work tasks increase. Computers and software are used at all levels of employment, and require training that ranges from very simple, to very complex.
It is no longer as easy to replace one worker with another. Today it is quite costly to recruit, train, and onboard a new hire. Keeping employees happy and engaged, particularly with respect to top talent, has become a key component in outpacing the competition. A happy workplace is not a business luxury, but a distinct contribution to the bottom line.
That conclusion won’t surprise anyone whose primary work tasks them to deal with people, especially with people under stress. In corporate relocation, we’re used to dealing with people stressed by many aspects of the relocation process: both the logistics and the emotional aspects of leaving the familiar for the unknown.
We’re also familiar with how much performance and focus improve when most, if not all, of that stress is relieved and reallocated to relocation professionals.
If it doesn’t surprise us, it’s because our experience has shown us that when people work with a positive mind-set, performance on nearly every level – productivity, creativity, and engagement – improves significantly.
What we’ve found at NRI, is that at heart, people want to do good work, and they want to be engaged in their work. And if happy employees will make you more money… then it’s just good business!