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The Employee Productivity-Happiness Loop: How One Influences the Other

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The Link Between Employee Happiness and Productivity

Employee happiness has increasingly become an imperative in business. Forbes published certain statistics that revealed happy employees are as much as 20% more productive in the workplace than unhappy employees.

Indeed, employees’ happiness is the key to unlocking productivity and letting it spread across the organisation. Promoting workplace happiness benefits organisations in several ways, including:

  • Higher creativity levels

  • More energetic individuals

  • Better output

  • Reduced burnout

  • Increased employee retention rates

The happy attitude of the employees can turn your average profit-making organisation into a highly profitable venture. The reason is the link between employee happiness and productivity, which translates into better work and customer service.

No magic trick is involved; let’s explore how employee productivity is directly proportional to the employees’ happiness level.

How does employee happiness impact productivity?

Employee happiness brings significant transformation in the organisational setup and boosts productivity levels. Here is how happy employees are more productive and the benefits they bring to the company.

#1. Happy employees foster meaningful relationships

Meaningful relationships boost employee engagement by over 50%. When employees are happy, they are generally more engaged and motivated in their work, which can lead to improved performance and productivity. Additionally, when employees have positive relationships with their colleagues, they are more likely to feel supported and valued in their work, which can help to create a more positive and collaborative work environment. Therefore, organisations see higher productivity levels among their employees.

Building meaningful relationships in the workplace can also help to foster a sense of community and belonging, which can be particularly important for remote or distributed teams who may not have the opportunity to interact in person on a regular basis. By creating opportunities for employees to connect with one another and form meaningful relationships, organizations can help to promote a more positive and supportive workplace culture.

#2. Happy employees are quite creative

Certainly, No modern business can run smoothly without creative people!

A clearer headspace lets employees generate innovative ideas and utilise them for organisational benefits. Research has shown that happy employees are more likely to engage in creative problem-solving and innovative thinking. For example, a study published in the Journal of Organizational Behavior found that employees who reported higher levels of happiness and well-being were more likely to engage in creative problem-solving at work.

Additionally, they can confidently share their point of view and bring their best version to the workplace. And when their creativity is at its best, employee productivity will never cease to grow.

Overall, employee happiness fosters a positive work environment that supports employee happiness and well-being. By doing so, organizations can help to promote greater creativity and innovation, which can be critical for success in today's rapidly changing and competitive business landscape.

#3. Happy employees attract new talent

Happy employees can be a valuable asset for organizations looking to attract new talent in several ways:

  • Positive Word-of-Mouth: When employees are happy and satisfied with their work, they are more likely to speak positively about their experiences to others, including potential new hires.

  • Referrals: Happy employees may be more likely to refer friends, family, or colleagues to open positions within the organization. Referrals can be a highly effective way to find new talent, as candidates who are referred by current employees are often more likely to be a good fit for the organization's culture and values.

  • Employer Branding: Happy employees can also be an important part of an organization's employer branding efforts. By highlighting the positive experiences of current employees through social media, marketing campaigns, and other channels, organizations can help to create a strong and attractive employer brand that can help to attract top talent.

  • Reduced Turnover: When employees are happy and satisfied with their work, they are less likely to leave the organization. This can help to reduce turnover and the associated costs of recruiting and training new employees, which can be attractive to potential new hires who are looking for a stable and supportive work environment.

By investing in employee happiness, organizations can build a strong employer brand and reputation that can help to attract new talent and support long-term success.

#4. Happy employees are more engaged

Engagement and happiness go hand in hand. Simply put, happier employees are more engaged and passionate toward their work. They strive to excel at everything they do, which converts into higher ownership of their growth. As a result, employers drive benefits from engaged employees who bring energy to their jobs.

Research has shown that happy employees are more likely to be engaged in their work. For example, a study published in the Harvard Business Review found that employees who reported higher levels of happiness were more likely to be engaged in their jobs, as well as more likely to be productive and satisfied with their work.

There are several reasons why happy employees may be more engaged. They are:

  • Generally more motivated and enthusiastic about their work.

  • More likely to feel a sense of connection and purpose in their work.

  • Likely to be highly engaged and productive, which can contribute to greater job satisfaction and overall well-being.

#5. Happy employees possess more vital interpersonal skills

Employers, co-workers, and customers find interaction with happy employees pleasant. Moreover, interpersonal skills help to facilitate effective communication and collaboration in the workplace where happy employees are:

  • More likely to be empathetic towards their colleagues and coworkers

  • Likely to be effective communicators

  • Better able to manage their own emotions and reactions

  • Efficient at resolving conflicts

By investing in employee happiness and well-being, organizations can help to build a strong and cohesive team that is better able to achieve its goals and succeed over the long term. Motivated employees fuel the employers’ vested interest in the organisation’s financial growth with their productive work.

#6. Happy employees are healthier

An employee’s physical health impacts organisational success. Visibly, happier employees bask in the glory of good health and deliver their best. They have positive attitudes and a sense of purpose in their work, which can contribute to greater overall life satisfaction and well-being. This, in turn, can have a positive impact on physical health.

The motive behind present-day organisations prioritising their workforce’s mental and physical health is to increase productivity. Ultimately, with increasing productivity come better results for the company.

Tips for Building Happiness Among Your Team

Building happiness among your team can be a challenging task, but it is also an essential one if you want to create a positive and productive work environment. Here are some key tips for building happiness among your team:

  1. Promote work-life balance - Employees deserve the opportunity to spend quality time with their family & friends. This will reduce burnout and absenteeism from work for general well-being reasons.

  2. Invest in employees’ professional growth - A company that invests in its employees’ professional growth is more likely to retain workers. You can offer them online courses to help them upgrade their skills and grow within the company.

  3. Develop an inclusive workplace - Work toward DEI (diversity, equality, and inclusion) goals by employing people from different cultures, creeds, and religions. On top of that, it must also include the prevention of discrimination based on physical abilities.

  4. Offer remote and hybrid working - A remote or hybrid working arrangement creates a better work-life balance. If you can offer your employees the freedom to work remotely and come to the office on pre-determined days, they will stick longer. But plan before you choose the suitable model.

  5. Recognise & celebrate their success - You must recognise and celebrate your team’s efforts instantly and without delay till the annual event. For instance, managers can thank their team members by gifting them goodies or taking them for a team lunch.

  6. Provide non-monetary benefits - Consider providing non-monetary benefits such as one-on-one lunch with team members or extra leave. While you can offer numerous non-monetary rewards to your employees, choose them wisely to suit your corporate setup.

In summary

Are your employees happy? Are you satisfied with the way your organisation is progressing toward its goals?

Consider the options and implement the righteous strategies to infuse more happiness into your organisation. The current trends reveal workers turning down higher-paying jobs for more fulfilling ones. And this is what every company needs to identify and address wisely.

Considering the path to employee happiness to be a straight line can downturn your functions. However, creating a unique employee happiness and wellness plan can make a difference. As the word spreads, more people will want to work with you.


1. Why is employee happiness important?

Happy employees always bring better output because of increased productivity. In other words, employee productivity is directly proportional to how happy the employees are in the organisation. A company that values its employees’ happiness gets employee loyalty in return and, thus, better customer service. A happy workforce exhibits:

  • Higher productivity levels

  • Reduced burnout

  • Less absenteeism

  • Enhanced creativity levels

2. What factors contribute to employee happiness in the workplace?

Factors that contribute to employee happiness in the workplace are:

  • Meaningful work

  • Employee empowerment

  • Feedback, recognition, and growth

  • Coworker relationships

  • Organisational trust

  • Work-life balance