Recent research by academics at Warwick University and the IZA Research Institute at the University of Bonn, Germany “Happiness and Productivity”  soon to be published in the Journal of Labour Economics, shows that happiness makes people more productive.  The research suggests that happiness can make people between 10 and 12% more productive. The research also concludes that lower happiness is systematically associated with lower productivity. This suggests a causal link between well-being and performance.
The researchers tested the proposition put forward in “HealthyPeople = Healthy Profits”, namely that ”Investment in employee wellbeing yields healthy returns.”. The research is also influenced by a raft of previous studies, all of which suggest a positive relationship between employee productivity and “happiness” and “job satisfaction”.  The research is supportive of the proposition that ‘happier’ workers are intrinsically more productive.
Understandably, from a peer reviewed academic publication, there are caveats. A key one being. that although their work suggests that happier workers are more productive, they were unable to conclude that employers should dedicate more resources to making their employees happier.  Although the study illustrated the existence of a potentially important mechanism, there was no cost benefit analysis, and no proof of a net benefit on an investment in employee happiness.
However, the results do have implications for employers, HR specialists and management academics:
1.     We may need to pay more attention to emotional well-being as a causal force in employee productivity.
2.     Better bridges may be required between currently disparate scholarly disciplines such as economics and psychology
3.     If happiness increases workplace productivity, this could have consequences for a firm’s HR policies
4.     If well-being boosts employee performance at work, this raises the possibility, of “virtuous cycles” between employee productivity and employee well-being.
On a practical level this research, when considered along with research on employee engagement, suggests employees who like life at work, as a result of  being both emotionally engaged and happy, will be more productive.  As such, it makes good business sense for an organisation to encourage both happiness and emotional engagement amongst its employees.  Here are just 3 practical steps an organisation can take if it wants to make the workplace a happier and more engaging environment:
1.     Create an organisational climate that promotes happiness and employee wellbeing.  Organisations that are oppressive, where bullying and intimidation are standard management tools, where constant long hours are needed to deliver the goals that have been set, and where individual creativity is stifled are unlikely to deliver a competitive advantage.
2.     Select wisely. Don’t just ask the question “can they do the job?” ask the question “will they fit our culture?”  An employee who doesn’t share the organisation’s values, who’s attitudes and beliefs are not in accord with the prevailing attitudes and beliefs of the organisation, is unlikely to be either happy or emotionally engaged.  These unhappy, disengaged “square pegs in round holes” as well as being less productive, can develop in to a toxic presence amongst their work team or department.
3.     Appoint emotionally intelligent leaders.  Ensure your leaders have interpersonal savvy. Select people for leadership positions who understand other people, who can adapt their behaviour to meet the needs of a particular situation, and who can be persuasive as well as forceful.

This article has been posted by Sean McCann, the Managing Director of PeopleBased Solutions an HR consultancy specialising in employee engagement, developing emotional intelligence at work, team building, and workplace conflict resolution. If you would like to know more about how we can help you develop an emotionally engaged workforce Contact us at:

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