How Happiness Drives Employee Performance

If you want to stir up a challenging engaging conversation with an HR person, simply drop these two words: employee performance. Seems like a logical, easy-to-explain process. But, in fact, it poses a large amount of questions to which there is no final answer, as of yet.

A new era for employee performance

It used to be about the numbers, the objectives. How well did an employee perform in reaching the targets set. Sales numbers, marketing numbers and success rates. That was back when money was the main focus of any business and there was plenty to go around.

However, in light of recent economic changes, priorities have slightly shifted. Employee performance is not only about the numbers, not anymore. It’s also about the employees themselves. The people performing those measurable actions. But in order to measure that person’s efficiency and performance, it will take more than a calculating formula.

Riding this new wave are visionary CEOs, who are already recognizing the value of employee happiness.

“Employee satisfaction is the key to customer satisfaction.”

Dirk Hellmuth, CEO of Allianz Global Benefits

Employee performance re-designed

The classical review method for employee performance remains the cornerstone. Regular team meetings, goal setting, mid-year and end-year reviews.

Employee performance 2.0 entails another set of interactions along the way. Risa Fogel, head of IT business solutions at New York-based Cushman and Wakefield, is one of the people who are setting the ground rules for Employee Performance Review 2.0.

“I meet with my team regularly, set goals and have mid-year and end-year reviews. But the real performance management comes in between: It’s those biweekly check-ins. It’s telling people what they’re doing right, what they’re not doing right and allowing them to adjust their behavior. I think if you wait until the middle or end of the year, you have lost an opportunity. I always tell people I am never going to surprise them at one of those two formal times when we are sitting down for a review.

It is a bit of a challenge. We are a very global organization, very decentralized, so I have staff in other countries with whom I do not have a lot of face-to-face time. Some of them I’ve met once in four years, so setting people’s goals can be difficult.”

Josh Patrick is another maverick when it comes to employee performance review. His solution: performance coaching. According to him, performance coaching is about the present and the future. It’s not meant to be a review of the past. Such a process is designed to be easy to use. His advice is to have these coaching sessions every three to four weeks, starting with direct reports. After internalizing this practice, it should be easily downscaled to smaller teams.

So, how does it work?

“It’s a system to help employees focus on continuous improvement. That means you should never punish employees when they talk about mistakes they have made. Instead, ask what they’ve learned.

Performance coaching is about one-on-one attention that’s focused directly on employees and their needs. You’re offering support to help them become better, and you’re helping your employees think through and plan concrete actions that will move the needle at your company.”

How does happiness drive employee performance?

“People are more productive and creative when they have more positive emotions. In fact, we found that, if happier on a given day, people were not only more likely to come up with a new idea or solve a complex problem that same day but also to do so the next day.

Ultimately, though, the source of productivity is the individual knowledge workers who get things done every day. And the evidence is clear: People perform better when they’re happier.”

Teresa Amabile, co-author of The Progress Principle, along with Steven Kramer

Their research also proved that, despite the centuries-old idea that pressure drives performance, it’s meaningful work that determines higher levels in productivity. A concept deemed of very little importance by the majority of managers, employee happiness is the key to high productivity.

“Managers can help ensure that people are happily engaged at work. Doing so isn’t expensive. Workers’ well-being depends, in large part, on managers’ ability and willingness to facilitate workers’ accomplishments — by removing obstacles, providing help and acknowledging strong effort.”

Teresa Amabile and Steven Kramer, Do Happier People Work Harder?

Growth Opportunities

Employees perform best when their work environment stimulates growth. Not only professional growth, but also personal growth. Gaining new knowledge and developing new skills is a powerful motivation driver that translates into increased productivity.

“Costs can be limited but payback substantial.  Growth opportunities take many forms, yet all can be of value to employees – and therefore to management.” Victor Lipman, Forbes contributor.

Workspace Design

Diane Hoskins, co-CEO of the design and architectural firm Gensler, has been studying the link between design and business performance. Her research indicated that different aspects in workplace design had a substantial influence on employee satisfaction and productivity levels.

The Gensler 2013 Workplace Survey showed that, when given the power of organizing their workspace, employees experienced higher levels of happiness, motivation and performance. Read more here.

Emotional Connections

Sigal Barsade and Olivia (Mandy) O’Neill performed a longitudinal study entitled ”What’s Love Got to Do With It?: The Influence of a Culture of Companionate Love in the Long-term Care Setting”. They surveyed 185 employees, 108 patients, and 42 patient family members at a large, nonprofit long-term healthcare facility and hospital. To confirm the results, they did a follow-up study, surveying 3,201 employees in seven different industries from financial services to real estate. Both studies had the same outcome:

“People who worked in a culture where they felt free to express affection, tenderness, caring, and compassion for one another­ were more satisfied with their jobs, committed to the organization, and accountable for their performance. (…) Employees who felt they worked in a loving, caring culture reported higher levels of satisfaction and teamwork.  They showed up to work more often.”

Find out more about a culture of love in “Employees Who Feel Love Perform Better”.


It might seem counter intuitive that a happy employee is more productive. There have been numerous detractors to this belief. But the companies who have come to this conclusion are thriving and will continue to do so.

Their business strategy is happy employees – happy customers – happy company. At the end of the day, what more could you want?

Image via under C.C.0 license