In this difficult economic environment, businesses are challenged to increase profits without additional outlays of cash. Investing in additional training or upgrading your systems can boost profits in the long term, but are expensive and do not always give you a good return on your investment. If people are the most important asset of your business, the best investment you can make is in increasing employee happiness.
If you think happiness is too soft to impact profitability, consider these facts. Studies show that happiness is tied to profit by more than 93 percent. Employee stress costs U.S. businesses more than $300 billion a year in increased absenteeism, employee turnover, diminished productivity, medical, and legal costs. We also know employee stress leads to poor and sometimes unethical decision making that can cost a company millions of dollars. Emotions are contagious, and leaders are the emotional thermostat for their team.
The most cost effective way to increase profitability is to create a "happy" environment for your employees. The term "employee happiness" encompasses employee engagement, a strengths based management approach, and an environment in which people flourish. Research has shown when people are engaged, and working to their strengths in a safe and positive environment, they are more productive, more creative, and make better, more ethical decisions.
Employee engagement is the emotional connection people feel to their work. It comes down to "Say," "Stay," and "Strive." Do employees say good things about the company, do they intend to stay for one to five years, and are they motivated to do their best? Engagement makes a huge difference in the bottom line. According to studies done by the Corporate Leadership Council, Towers Perrin, and Development Dimensions International, a highly engaged workforce results in a 20 percent improvement in employee productivity, a 50 percent reduction in unplanned attrition, and a 23 percent increase in customer satisfaction.
Strengths based management is a powerful tool for unleashing the best in your employees. Developed by Don Clifton of the Gallup Organization, and further enhanced by Marcus Buckingham, the approach allows managers to tap into the full potential of each employee. It begins by asking employees to identify the activities at work that most energize them and those activities that drain them. Then, working with their manager and team, they gradually increase the number of minutes they spend on the activities that energize them and decrease the minutes spent on activities that drain them. The impact is to enhance the performance of each individual and to create high performing teams. When people are energized by their work, they bring their best to work every day.
Creating a safe and positive environment allows employees to flourish. Human flourishing refers to the state when people are at their best. According to Barbara Fredrickson of the University of North Carolina, Chapel Hill, there must be an average of five positive messages for every negative message to create a work environment in which people flourish. That means a great deal of positive feedback needs to accompany negative feedback. To build trust, this approach should start at the top and trickle down. If mistakes are treated as learning opportunities, and feedback always is constructive, people will feel safe to take risks to improve their performance.
Happiness is not a soft skill, it is a profit driver. If you invest your leadership time and energy in creating a positive work environment and adopting a strengths based management approach, you will increase employee engagement and happiness. An investment in happiness will yield a high return and will translate into higher profitability.
Cathy L. Greenberg, Ph.D., and Barrett S. Avigdor, J.D., are the
authors of "What Happy Working Mothers Know: How New Findings in Positive Psychology Can Lead to a Healthy and Happy Work/Life Balance."