The Link Between Happy Employees
and a Thriving Organization
Creating a Culture ofCreating a Culture of
Business in the new millennium requires a different
framework for success than what may have worked in the
past. Today, top-performing organizations are also the best
places to work. Instead of being plagued with bad morale,
low productivity, and even strikes, thriving organizations are
full of happy employees who readily defend the employer
and tend to consider their coworkers — including
management — as family.
Recent research confirms that a culture of happiness, by
generating numerous benefits, contributes greatly to the
prosperity of an organization.
The good news is that employee happiness can be enhanced
through targeted wellness programs. Research shows such
improvements can have a significant positive impact on
nearly all aspects of business — even lowering healthcare
costs. Based on the recent literature, this white paper
explores how a culture of happiness can contribute to the
success of your organization.
Does It Matter If Your Employees
Multiple studies have documented that a culture of happiness
matters, and we see proof in the success of companies such as
Zappos and Google.3, 4
Top organizations are recognizing that
happiness among employees predicts beneficial behavior, even
beyond a person’s job description. Compared to their less happy
counterparts, happy employees:
• Are more willing to help out coworkers and customers5, 6
• Describe their jobs in a more positive light6-13
• Perform better on more objective, work-related tasks2
• Tackle a wider range of job tasks14
• Defend their organizations from attack15
• Receive better ratings from supervisors and peers16
• Enjoy higher income levels17
• Get more social support from both colleagues and supervisors18
• Cope better with organizational change11
• Exhibit a greater degree of cooperation6
• Make decisions more efficiently19
• Experience less conflict working in teams20
• Feel more commitment to their organization11-13, 21
• Report greater job satisfaction.6-13
The Link Between Happy Employees and a Thriving Organization
Creating a Culture of Happiness:
Happiness Defined —
Someone Who Experiences …
• Frequent positive emotions such as joy, satisfaction,
contentment, enthusiasm, and interest1
• Slightly to moderately intense positive emotions most of the time.2
Other Traits of Happy People:
• Pursue new goals22
• Have superior interpersonal skills2
• Are considered more popular and likable than unhappy people19, 23
• Seem more likely to enter novel situations22
• Interact more frequently with other people22
• Perform acts of altruism, courtesy, and conscientiousness more often6
• Create success because they are happy (as opposed to being happy
because of success)1
• Acquire greater wealth over their lifetimes17
• Give more to charity and are more likely to donate blood1
• Live longer and with a higher quality of life1
• Are chosen as preferable company, even by unhappy people.23
Creating a Culture of Happiness | 2
Happy Employees Can Help
an Organization Thrive
Success for an individual can be predicted now, and in the
future, simply by measuring a person’s happiness level...
• Even before obtaining a job, happier candidates were more
likely to land a second interview1
• Job satisfaction and financial success for 26-year-olds were
predicted by examining their degree of happiness at age 181
• Employees found to have positive emotions and then
rechecked 5 years later were still receiving superior ratings
compared to their unhappy peers1
• A study of insurance agents with a “positive disposition”
found that they sold more policies than their less positive
• Physicians in a positive mood were able to solve problems
more creatively than neutral controls.24
Strong evidence for individuals. But what happens when an
organization centers its culture on happiness?
SAS, a technology company specializing in statistics, and
#1 on Fortune’s 2010 best places to work list, offers such a
broad array of perks and happiness enticements that Google,
#4 on the list, used them as a model when they updated their
own happiness culture. SAS has made the list consistently
for the past 13 years, but online retailer Zappos, #15 —
recently purchased by Amazon for $1.2 billion — is barely
10 years old; they purposely created a happiness culture
and saw success accelerate to dramatic levels (see box
at right).3, 4, 25
Example of a Happiness Culture
In his recent best-seller, Delivering Happiness, Zappos founder Tony
Hsieh reveals that in 2007 he began to study happiness in the scientific
literature. He realized that much of his success was because his
leadership philosophy already embraced a culture of happiness, and he
expanded this focus to include employees, customers, and even vendors.
The result: Zappos soared past all expectations.3
The High Cost of Unhappiness
Based on a Spring 2001 Gallup Management Journal survey:26
• Lower productivity due to actively disengaged (unhappy) workers costs businesses around $300 billion every year
• The 24.7 million (19%) unhappy workers miss 86.5 million more workdays and take 13.6 million more sick days each year
• 74% of US workers report feeling detached from work
• Each unhappy worker costs a company around $13,000/year.
In 2003 JAMA reported that depressed employees: 27
• Represent nearly 10% of the workforce
• Lose 5.6 hours/week in productivity
• Cost $44 billion/year in lost productivity time.
If these companies were simply great places to
work, the list would have less value; but most
are also experiencing job growth and doing
well financially, despite the tough economy.25
Many organizations on this list hire new employees based
on how well they fit into the culture. And most — including
Google, with a high-level staff position titled “happiness czar”
— constantly look to improve the work environment and
support the happiness culture.3, 4, 25
If you take a tour of Zappos, it’s not uncommon to find
employees dressed up as pirates, singing karaoke, bowling
in a makeshift alley, or even taking a nap.3
employees can play Foosball, videogames, pool, ping
pong, and even roller hockey (twice a week in the parking
lot). Google also allows dogs at work and provides 3 free
New and innovative companies are reinventing
corporate culture, and finding that when people have fun,
Contrary to a common misperception that employees
become happy because of success, research shows the
opposite to be true: employees become successful because
they first had a happy disposition.1
When a business creates
a happiness culture, it gains the many benefits enjoyed by
organizations already blessed with a large pool of happy
Researchers break down happiness into 3 main parts to
define its primary influences and understand the origin:
Set Point — Approximately 50% of happiness seems to
be somewhat genetic; a person has a happiness set point
similar to that described for a person’s weight. In other
words, just as people tend to maintain a certain weight and
return to it after a failed diet, a person returns to a certain
level of happiness, despite brief experiences of intense
happiness or tragedy.
Circumstances — Surprisingly, and partly because of the
set point just described, only 10% of a person’s happiness is
determined by their present circumstances (as long as basic
needs are being met).
Intentional Activities — The other 40% is your opportunity
to make a difference: intentional activities can increase
Managers commonly believe that money is the primary
motivator for employee happiness, but research shows that
intangibles — such as manager-employee relationships,
employee control of career path, or work-family balance —
are more important.3,28
And employees have some degree of
control over these factors. For example, they could choose to
spend more time at work at the expense of family in order to
improve their manager relationship and enhance their career.
But when an organization’s culture expects employees to
make choices that don’t support a balanced work-family life,
unhappiness is certain.28
Cultures that promote control over these intangibles instead
will have a greater chance of success, for example:
• Providing flexible work hours can help employees maximize
• Defining a skill-based promotion path gives employees
greater control over their career advancement
• Monitoring the employee-manager relationship can provide
feedback to improve the work environment.
When added to the evidence already presented, these
findings create a compelling case for building a culture of
happiness. Your organization’s happiness level does not have
to remain static — concrete steps can be implemented to
increase collective happiness.
The 14 Fundamentals29
The 14 fundamentals were discovered by studying the habits of happy people.
In a follow-up study, researchers demonstrated that anyone who intentionally
practiced these fundamentals could increase happiness:
• Become more active • Develop positive, optimistic thinking
• Spend more time socializing • Value happiness
• Strengthen closest relationships • Become involved in meaningful work
• Develop an outgoing social personality • Get better organized
• Be a better friend • Become more oriented in the present
• Work on a healthy personality • Reduce negative feelings
• Lower expectations and aspirations • Stop worrying.
Set Point 50%
Primary Factors Influencing Happiness
How to Increase Organizational Happiness: A Practical Guide
In the classic Charles Dickens tale, A Christmas Carol,
Ebenezer Scrooge was able to increase the happiness of
his employee, Bob Cratchit, simply by giving him an extra
lump of coal for the fire and a little time off from work. The
point is this: Increasing happiness doesn’t have to mean
radical or expensive initiatives; small changes can make a big
difference if fully supported by management and perceived
as genuine. Consider these ideas:
• Ask employees for candid answers to questions like these:
– Are you happy? Why or why not?
– What changes would you make to the work environment
to increase happiness, if cost were not a factor?
– What changes can be made right now to create a happier
environment, and still allow our goals to be met?
• Encourage managers to evaluate their current situation:
– Are the employees who report to me happy?
– What makes them unhappy?
– Is it possible to implement one or more of the 14
fundamentals of happiness (see page 3) today?
– If an employee’s concentration begins to drift, can they
take a break? Do they have some brief activity available
to restore alertness?
– Can anything be done to help employees
enjoy their work more?
• Appoint a happiness manager (this could be a full-time
position or an additional job duty)
• Invite wellness managers or vendors — in person or
through webinars — to suggest topics directly related to
happiness and health, then have employees vote on which
topics they would like presented
• Keep in mind that a sense of control contributes to
happiness; work that into decisions where practical,
especially regarding career advancement or the work
• Create opportunities for employees to socialize (at Zappos,
for example, they made every door an emergency exit
except the one through the lobby; with everyone coming
and going through the same door, employees were more
likely to bump into each other3
• Implement wellness programs centered on activities
(especially exercise), socialization, and proper nutrition;
encourage employer-sanctioned after-work clubs, groups,
or team sports (keep participation voluntary, though, to
avoid defeating the purpose)
• Don’t forget to include the employee’s family where
• Communicate — clearly and often — the organization’s
intent and rationale behind these changes.
In the Words of Researchers:
Link Between Exercise and Happiness
“Physical activity may be a tool for mood repair.” 30
“It is clear that physical activity contributes to cognitive functioning.” 31
“Physical activity seems to boost one’s happiness level and is a strong protector against morbidity.” 32
“A change from sedentary to more physical activity was associated with lower stress and higher satisfaction.” 33
“Faithfully engaging in a new exercise program positively boosts people’s mood and vitality and can even maintain
the boosts for as long as 6 months.” 34
Creating a Culture of Happiness | 4
The Impact of Exercise and
Social Interaction on Happiness
Although depression is a serious and costly medical
condition, a simple walking program has been shown to
significantly reduce the symptoms. Because expenditures
for wellness, especially walking programs, usually pale
in comparison to medical costs, the current literature
suggests that employers could reduce healthcare dollars
spent on depression with these efforts.35, 36
to the walking program were also found for running,
weight lifting, and cycling.35-39
The International Society of Sports Psychology (ISSP)
concludes that physical activity is related to reductions
in anxiety, mild to moderate depression, neuroticism, and
stress. All ages and both genders realize an emotional
benefit: people become happier with exercise.40
physical activity may be as effective as alternative
treatments for depression, including prescription
Among the 14 fundamentals found to increase happiness
(see page 3), at least 5 have to do with socialization or
A corporate culture of happiness should
embrace opportunities for employees to interact in
positive, productive ways, even if only during breaks or
while engaging in wellness activities. On the contrary, if
a culture discourages employee interaction or offers no
avenues for positive social experiences, achieving the
benefits of happiness will be difficult.
Although self-motivated individuals can improve their own
happiness, an employer-sponsored wellness program,
amplified through social networks (for example, employees
teaming up to compete in a walking program),
can have a much greater impact.
What’s the Next Step?
Cultivating happiness should be recognized as a serious
organization objective. You can save time and money by
laying the groundwork with a solid plan and executing it with
internal and commercially available resources — there’s no
need to re-invent the wheel:
1. Gather data for insight on the current level of employee
happiness to serve as a baseline for evaluating program
2. Convene a team of stakeholders to identify strategies to
build your culture of happiness.
3. Seek management support with a proposal outlining
the strategies, documenting research on the impact of
employee happiness, and projecting return on investment.
4. Select wellness campaigns with these features:
• Engaging, fun content addressing physical activity, social
support, and nutrition
• Interactive tracking tools with immediate feedback
• Participant recognition for achieving milestones and
• Evidence-based content designed to promote
sustainable behavior change
• Built-in team competitions and networking opportunities
• Options for individual participation and department or
• Ease in launching, monitoring, and maintaining
• Coordinator guide with simple instructions for smooth
implementation and promotion
• Customizing options for co-branding and integration with
a rewards program.
The research is clear — creating a culture of happiness can have a profound impact
on an organization including:
• Greater employee productivity
• Higher job satisfaction rates
• Increased retention rates
• Lower healthcare expenses
With management support, a culture of happiness can be fostered through
comprehensive wellness strategies that emphasize physical activity and social support.
• Better cooperation
• Less absenteeism
• Improved response to change
• More commitment.
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