the happy employee equation

04/22/2010

by carolyn mathews

It seems simple enough… the equation, that is:

Happy Employees = (> Performance) + (< Attrition) = Improved Bottom Line

This, according to Thomas Wright, a professor of management at Kansas State University, Jon Wefald Leadership Chair in Business Administration, and consultant.

But what does this equation really mean to you as an organizational leader? Why should you care about Happy Employees and, perhaps more importantly, why should you be one? Is Wright wrong? (Sorry, I couldn’t resist!)

What is “happy”? It is important to consider the term “happy.” It conjures up different images for everyone; it’s so subjective and difficult to define. In positive psychology, researchers tend to think about it in terms of psychological or subjective well-being. And well-being includes the presence of positive emotions, like hope or joy – which brings us back to that “happy” place.

Why care? You may wonder why you should care about your employees’ happiness, or why even your personal happiness is of consequence in the workplace. Wright provides an answer that behooves anyone in business to consider the role of well-being in the workplace. He suggests psychologically well employees perform better, and better performance is tied to an organization’s bottom line. Do other factors, such as education level, age, or gender have a greater influence on performance? Wright says not necessarily. Studies have controlled for these factors, yet well-being is still significantly related to performance. In essence, our happiness, or well-being, contributes to the well-being of the organization.

A financial equation: To emphasize further the implications to the organization’s bottom line, Wright has applied a type of utility analysis which determines a cost-savings associated with employee well-being. The example he gives centers on a person who earns $65, 000. Wright states this employee could cost the organization $75/week in lost productivity. Multiply that by 10 employees and it is $750 a week or $39,000 a year. At a time when organizations look to cut costs, investing in employee happiness may be a good place to start.

How to increase employee happiness: Wright provides three suggestions to increase employee happiness. Unfortunately, they were not fully explained in the article I read, so let’s consider this together…

1. Reduce the negative impact of stressful jobs by providing social support to employees. Think about how to provide this in your organization. Perhaps touting the use of the Employee Assistance Program (EAP) would help those who are most stressed. Another idea: Often employees like to hear from organizational leaders, acknowledging the employee’s hard work – especially in tough times. Here’s another: Ask the employees what would help them to feel supported in the organization.

2. Teach optimism to emphasize positive thoughts. Wright doesn’t suggest how this can be done. However, Fred Luthans, who developed an area of study called Positive Organizational Behavior (POB), believes optimism can be learned. He suggests those with an optimistic style consider the causes and consequences of positive and negative events before celebrating success and externalizing failures. Encourage your employees to do this!

3. Assist workers to fit their jobs more closely. Hmmm… This suggestion seems counter-intuitive to increasing well-being. Wouldn’t it make more sense to help workers make their jobs fit them more closely? The difference may seem subtle, but asking someone to change who they are in order to be more closely aligned with the job seems more difficult than sculpting the job to fit the person.

One way to create this alignment is called job crafting. Check out our free assessment on ‘Job or Calling’ on our site. In addition to offering you a powerful overview on how engaged you are in your current role, we will send you a complimentary ‘Tip Sheet’ as to how you can successfully craft your own job and feel more engaged and fulfilled at work…

Source: Science Daily (2/4/2009). Happy Employees Are Critical for an Organization’s Success, Study Shows.

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2 Responses to “the happy employee equation”

  1. John Says:

    Carolyn, Interesting post! All the 3 points make a lot of sense. You might be interested to see this video post “the irrelevant boss” by Vineet Nayar http://www.vineetnayar.com/the-irrelevant-boss/ and http://www.vineetnayar.com/jack-in-the-box/

  2. northofneutral Says:

    Thanks for the reference to Mr. Nayar’s site (www.vineetnayar.com). I urge other readers to take a look. He has innovative views on the role of leaders and how passion for one’s work can drive success. Carolyn


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