Employee happiness as a business strategy

The increasing focus on employee happiness is starting to put pressure on companies to acknowledge its business importance. In order to do that, they will require more data and clear financial arguments. Let’s do a recap on employee happiness and see how it translates into a business strategy.

Wellbeing economics

An older brother to happiness, wellbeing is a concept that has been discussed in economics for a long time. Compared to happiness, an idea that tends to raise many eyebrows when put in the same sentence with the word “measuring”, wellbeing can be analyzed more easily. Initially, subjective wellbeing was also viewed as largely not measurable. But where there’s a will, there’s a way. The Organization for Economic Co-operation and Development breaks wellbeing into three broad notions: life evaluation, affect and eudaimonia or psychological flourishing. (Source)

Life evaluation is a reflective estimation of how we perceive our lives to be. It’s never an objective assessment because we know our brain processes an experience according to the peak-end rule. We’ll only remember and evaluate the most intense emotion associated with that experience, the peak, and the emotion we felt at the end.

Affect, on the other hand, is the feeling we capture at a given point in time, related to a particular experience. It’s how we feel, as opposed to remembering how it felt. As you can imagine, affect is much more difficult to translate into statistics than life evaluation. One way to measure it is by recording the feeling exactly when it happens or at a very close point in time after it happened. Hppy uses this tracking and measuring method to record and translate moods into a Happiness Index.

Lastly, eudaimonic wellbeing is a deeper concept that encompasses the sense of meaning or purpose in life, along with other subjective perceptions that are not covered by life evaluation or affect.

Now, here’s how this information is relevant to you and your company: Wellbeing economics is a new way of measuring success. Subjective wellbeing or employee happiness is what’s keeping your talent engaged, by directly impacting turnover rates and productivity.

Let’s talk business

Happiness makes people more productive, as confirmed by a recent study. In three different styles of experiment, randomly selected individuals are made happier. The treated individuals measured a 12% increase in productivity.

“Companies like Google have invested more in employee support and employee satisfaction has risen as a result. For Google, it rose by 37 percent; they know what they are talking about. Under scientifically controlled conditions, making workers happier really pays off.”

Andrew Oswald, author of the study

According to another recent report on wellbeing and policy, job satisfaction is on a long-term downward trend in most advanced countries. The report details four generally agreed features of a workplace that provides for high wellbeing:

Employees must have a clear idea of what is expected of them and how it relates to the bigger picture.

They must have reasonable freedom over “how” they do their work.

They should be consulted over things that impact them directly.

Employees should be rewarded in ways that make them feel personally valued by their employer. Tip: non-financial incentives are equally effective as financial ones, often surpassing them.

“If worker morale is so important for an employer it must be in the employer’s interest to measure it.”

In a more pragmatic translation, unhappy employees are expensive. According to the US Bureau of National Affairs, $11 Billion is lost annually due to employee turnover.

Gallup estimates the costs at $450 billion to $550 billion a year in lost productivity, for the US economy. Their findings also conclude that companies with engaged employees outperform those without by up to 202%.

“Business units with highly engaged workers (in the top quartile of all business units) achieve 22 percent higher profit in comparison to those with fewer engaged workers (in the bottom quartile)”

Jim Harter, chief scientist of workplace management and well-being for Gallup (Source)

A bold strategy: Amazon paying unhappy workers to quit

At one point, Amazon  was offering $ 5,000 to its warehouse employees if they decide to leave. As crazy as it might seem at first, there is a logical trail of thought behind it.

In a letter to shareholders, Chief Executive Jeffrey Bezos outlined the details of a rare human resources strategy the online retail giant has attempted. (Source)

“In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company. (…) The goal is to encourage folks to take a moment and think about what they really want. In the long run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”

Amazon Chief Executive Jeffrey Bezos

Following the Zappos model, Amazon decided to go all-in on employee happiness because they believe that it makes great business sense.

And they’re not the only ones. According to the same source, Netflix is another company that offers employees a large sum of money if they decide to quit.

This is just one example of how you can use employee happiness as a business strategy to ensure your company’s success. Like any solution, it only fits certain businesses, in certain conditions.

More data is on the way

Built on the well-known concept of ROI, Return on Values is a three-year, $1 million dollar research project that asks the question, “What is the relationship between culture and profit in small and mid-size businesses?”

The study includes a longitudinal survey sent to more than 25,000 U.S. companies; and deep dive case studies of 30 exemplars. The ROV is an initiative of Inc.’s Small Giants Community  and the Center for Values-Driven Leadership (CVDL) at Benedictine University. University of Michigan’s Center for Positive Organizational Scholarship is a research partner for the project.

In January 2014 they started the second round of survey distribution, followed by an upcoming analysis of the results in August 2014. The study is set to end after a final analysis of the total findings in August 2015.

We recommend keeping an eye on this bold and original initiative that will surely change the way we see employee happiness and value-based company cultures.


Pioneers have the luxury of playing with ideas. Craft your own version of an employee happiness business strategy and benchmark your thinking.

Make sure you track and measure your efforts, to ensure a proper ROI or ROV.

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