How employee happiness drives performance

uploaded on 13 August 2021

How employee happiness drives performance

How employee happiness drives performance

Introducing this new metric into your organisation could provide you with better insight into employee engagement and motivation.

The disruption caused by Covid may be more harmful to business performance than you think. The impact on revenues, profits and growth is obvious for any leader to see. But what is less visible is the heavy toll that the altered working patterns and uncertainty caused by the pandemic have had on employee wellbeing, productivity and their overall ability to perform. A key question for any organisation that wants to thrive in the year ahead is how to best work out the impact that the lockdowns, shutdowns and curtailment of business as usual has had on their employees. So how should employers go about measuring this?


For most organisations, the option of choice for taking the temperature of their employees will be a survey which looks at employee engagement. By asking employees questions such as how well-supported they are by their manger, whether they would recommend the company and if they plan to move jobs in the next year, they can get a measure of what they think about the organisation and their role. Without doubt, these are the kind of things that employers need to know. Fail to gather this insight and you’ll struggle to work out where you have barriers to employee performance and - when you do change things up - whether they are working. But while we’re big advocates of the role that employee engagement plays in improving commercial performance, we think that there’s another powerful metric that employers should use to gauge whether their people really are in a position to perform: employee happiness.


Measuring happiness at work is important because, unlike an employee engagement survey, it establishes how employees feel rather than what they think about the organisation. This matters because workplace happiness and business performance are directly linked. Research by Shawn Anchor, a renowned workplace happiness expert and author of The Happiness Advantage, found that in a happy workforce, sales will increase by 37%, productivity will increase by 31% and accuracy on tasks improves by 19%. Separately, research company Psychological Technologies (PSYT) produced an app-based study of UK employees to quantify the potential value of happiness. In layman’s terms, they wanted to work out if happiness affects a business’s balance sheet. Their findings revealed that if every employee in the country was 1% happier it could add an extra £24 billion to the UK economy per year, boosting the profits of a company with 10,000 staff by an extra £7.38 million.


Putting the numbers to one side, happiness is a much more meaningful measure from an employee perspective. An employer who wants to create a happy workplace and understand what might get in the way talks to something which matters to every employee, in the language of people not managers, whose sole perceived interest might be to squeeze out every last drop of performance from their teams. Happiness cuts through to how people feel in a way that employee engagement doesn’t. We have data on an organisation which scored an average of 90% for engagement but a happiness score of 6.4 and a net promoter score (measuring loyalty and satisfaction) of -20. Though many individuals were engaged, they were also ready to walk out the door, a position which isn’t sustainable for the business or the employees. Happiness can drive employee engagement –particularly when it comes to loyalty and discretionary effort – but the reverse is not true. One final reason why happiness at work is a powerful measurement is because, unlike lengthy satisfaction surveys with multiple data points and long lead times, it provides a timely insight into the state of your organisation.


Using happiness at work as the canary in the cage for organisational performance will allow you to take action when you see the readings falter. Over the course of the pandemic, we’ve done extensive research among thousands of employees to benchmark happiness with our tool Employee Voice 24/7, a listening and feedback tool for employers. We do this by asking employees “How are you feeling today?”. They then simply score 1-10 (from ‘pretty terrible’ to ‘life’s great’) and then tell us why – providing both quantitative and qualitative data. The tens of thousands of responses we have received showed a worrying – but unsurprising - trend. Since March 2020, happiness levels have remained well below our pre-Covid-19 average of 7.6, but the resurgence of cases saw a further fall. The average happiness index score for September was 5.8 (down from 6.3 in August), with a record low of 5.2 in the final week. From September to the present day, the survey average is 5.7 – with a predicted drop due to further lockdown extensions.


In the fast-moving environment of the past year, the data from our benchmarking tool allowed employers to understand how changes in working arrangements and government guidance have impacted them. For example, our data from May 2020 told us that many employees were not willing to use public transport to travel to work and they didn’t feel safe returning to the office. This resulted in some of our customers deciding to continue with working from home policies well after lockdown restrictions were lifted. Other insight provided further actionable priorities for employers who want to improve employee happiness. This included listening to their people via regular check-ins, signposting of support to deal with wellbeing and mental health issues, finding new ways to sustain and nurture culture remotely and ensuring employees who work remotely have the equipment and support they need. While there is a lot to be said for using managers to listen and gather qualitative insight around employee needs, measuring happiness in this way provides organisations with a light-touch and a robust people indicator which gathers data in a consistent way at a time when it is critical for them to go the extra mile to show you are listening to and respond to employee concerns.


It’s not just the pandemic and the adjustment to new models of working that demands employers think again about how they measure and listen to staff feedback. The Financial Reporting Council (FRC) recently came out saying it was unhappy with “box-ticking” engagement reports. The FRC’s view is that using an annual employee survey is not sufficient to comply with the code and they expect companies to explain why their method of employee engagement is effective. This isn’t just relevant for the 10,000 or so employers who will have to detail in the board reports how they engage with their people in order to comply with the UK Corporate Governance Code. The bigger picture is clear: any company which wants to understand employee engagement and workplace culture in a meaningful way needs to change the way they do things.

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