Why Happiness Is Good for Business

Why should employers take steps to help make their employees happy? Two reasons.

First, because it’s the right thing to do. A 2001 study showed that Americans spend more than twice as much time at work as in leisure, and for many people, their work dominates their life. So happiness at work is critically important for people’s general happiness.



Second, employee happiness is good for business. Research shows many ways in which happy employees out-perform their less happy peers.

A note of caution: this research is pretty strong stuff. It seems very harsh toward the less-happy people. As I read it, I kept thinking, “Life isn’t fair. The folks who are already feeling great are getting all the benefits, while the less-happy people are getting sick more often, getting worse work evaluations, and making fewer friends.”

Another note of caution: remember that correlation is not causation. It might be that happy people perform better because qualities that tend to make a person happier (such as extraversion, emotional stability, and energy) make a person perform better at work. So it’s not the happiness per se that makes a person perform better, but other factors of personality.

Also, there’s an issue of feedback. For example, people generally like happier people more than less-happy people. So do managers rate employees more highly just because they like them, even if less-happy people might be performing just as well? Could be.

That said, why do happy people do better at work?

Better Teamwork
Happy people are good for teams. People like being around happier people much more than less-happy people. Happy people are perceived to be more friendly, warm, and even more physically attractive.

Also, research shows that happy people tend to be more cooperative, less self-absorbed, and able to offer the empathy needed in close relationships. They’re more willing to help other people, say, by sharing information or pitching in to help a colleague. Then, because they’ve helped others, others tend to help them.


Stronger Leadership
Happier people are viewed as more assertive and self-confident than less-happy people are, and better at public speaking. They perform better on managerial tasks, like leadership and mastery of information.


Heightened Creativity and Problem-Solving Skills
Positive moods improve problem solving and creativity by making it easier for people to think with flexibility and complexity. Laughter, too, helps people think expansively. Studies show that when people are in a good mood, they choose higher goals, do better, and persist longer.

Studies also show that happy people will search for new answers to problems, while depressed people are more concerned with avoiding errors. (Of course, for certain jobs, this could be an advantage.)

Contagious Positive Energy
Emotional contagion is a strong psychological effect in which we “catch” the happy, sad, or angry moods of others.

An employee in a happy, energetic mood will help boost the moods of others—particularly important, obviously, when that person is engaged with customers, clients, patients, or a work team.

Unfortunately, negative moods are more contagious than positive moods, and one crabby employee can trigger a wave of bad feelings. And because people try to steer clear of negative people, unhappy people find it harder to be effective.

Fewer Cases of Absenteeism and Turnover
Just as happy people are more likely to show superior performance, they’re also less likely to show counterproductive behaviors like burnout, absenteeism, counter and non-productive work, work disputes, or retaliatory behavior.

Lower Health-Care Costs
Happy people tend to be healthier than unhappy people. They have a stronger immune function. They have more tolerance for pain. They act in healthier ways than unhappy people do—e.g., by exercising more and eating more healthfully.

But here’s a question. If all this is true, how do you explain, for example, Hollywood and Wall Street? These folks are being paid a ton of money to be creative, to take educated risks, to work with large numbers of other people, and to perform at a very high level. But are their workplaces models of happiness, support, and encouragement? Nope.

So the question is—why? Do those employers know something we don’t about getting the best work out of people through stress, competition, and fear? Or does it take so much more discipline and effort to sustain happy workplaces that these industries can’t be bothered? Or is happiness so individual that looking at a particular industry doesn’t tell us much about the individuals and group working within it? Or are the people in those jobs happy despite (or because of) the nature of their workplaces?