Why Happy Employees Are 12% More Productive

Conventional wisdom holds that if only we pay workers enough, they’ll be productive. There may be more to it, though. Recent research hints there’s a link between employees’ happiness and their productivity at work. Some companies are taking note—and already seeing the payoff.

A recent study by economists at the University of Warwick found that happiness led to a 12% spike in productivity, while unhappy workers proved 10% less productive. As the research team put it, “We find that human happiness has large and positive causal effects on productivity. Positive emotions appear to invigorate human beings.”

Professor Andrew Oswald, one of three researchers who led the study, said companies that invest in employee support and satisfaction tend to succeed in generating happier workers. At Google, employee satisfaction rose 37% as a result of those initiatives—suggesting that financial incentives aren’t enough to make for highly productive employees.

Shawn Anchor, author of The Happiness Advantage, has found that the brain works much better when a person is feeling positive. At those times, individuals tend to be more creative and better at solving problems. And additional research has shown that when workers are happy they’re more effective collaborators working toward common goals. As Anchor sees it, the incentive for organizations is clear-cut—”happiness leads to greater levels of profits” for companies that take the right steps.

But the burden for improving workers’ satisfaction needn’t rest with companies alone. Research suggests there are some simple ways employees can boost their own happiness, like helping out co-workers, meditating for at least two minutes every day, and reflecting on three things to be grateful for at work.

In other words, relationships and mindfulness matter—especially early on. Harvard researchers Phil Stone and Tal Ben-Shahar have found that students with strong social support, both at school and at home, tended to be happier and better at dealing with stress. As those students become adults, they take those skills with them into the workplace. Workers with strong relationships with co-workers are likewise better at staying engaged and performing under stress.

That’s led some to argue that happier employees also make better leaders. According to Alexander Kjerulf, founder of Woohoo Inc. and the organization’s “chief happiness officer,” happiness is the “ultimate productivity booster.” Happy employees, in his view, make better decisions, excel at managing their time, and possess other crucial leadership skills.

From the looks of it, there’s certainly room to improve on the happiness factor. A recent Gallup survey found only 13% of employees are engaged at work, meaning the vast majority of working adults doesn’t enjoy their work. By one recent measure, this costs US companies roughly $450–$550 billion annually. Looked at another way, though, poor worker engagement is an opportunity for companies to boost their productivity by investing in employees’ welfare and workplace happiness.

Still, the question of how many resources to devote to that cause remains. And in the meantime, more research is needed to determine which practices are most successful in generating those outcomes. But there’s already reason to believe this is one of those rare instances when you really can make everyone happy.

Jonha Revesencio is a marketing strategist with over eight years’ experience developing digital media strategies for finance, FMCG, and tech companies. She has worked on the interactive and digital campaigns for brands such as IKEA, Dove, Panasonic, and OCBC Bank, among others. Connect with her on LinkedIn and Twitter @jonharules.