What is the ROI of Employee Happiness?

With all your business endeavors, you no doubt expect a good return on investment (ROI). Perhaps you’ve invested in employee training, better equipment, or other assets. But have you ever considered investing in employee happiness?

Mounting research suggests that employee happiness is one of the sounded business decisions you can make. “But,” you might wonder, “how much will it cost?” Happiness-boosting initiatives indeed come with a financial and temporal investment. Solid benefits packages come at a cost to the company, as does stocking a snack station or providing additional paid time off, child care, ongoing education, and team-building retreats.

But the rewards can be well worth the expense. A happy workforce can translate to tangible benefits for your organization. Consider the following areas where you can observe these happiness boons.

1.   Employee Retention

Happy employees are more likely to stay with your company for the long term. They won’t be tempted to go looking for a resume coach to help them secure a new job.

Check with your HR department to monitor employee retention and turnover rates. Better retention will also be visible in your bottom line, since recruitment requires an investment of time and resources, as does onboarding and additional training.

2.   Increased Productivity, Creativity, and Innovation

A study by the University of Warwick found that happy employees actually work harder—they are about 12 percent more productive than unhappy ones. When employees feel that they are valued, they are likely to put their heart into their work, so to speak. This, in turn, can foster innovative and creative solutions.

For example, Google popularized a “20% Project” in the early 2000s. This policy allowed employees to work on a project of their choice during 20 percent of their working hours. Gmail and Google Maps are reportedly some of the innovations resulting from giving employees time to “play.”

3.   Fewer Doctor Visits

The American Psychological Association (APA) reports that stress can increase the likelihood of workplace accidents by 20 percent. The World Health Organization (WHO) cites stress, anxiety, and mental health conditions as the cause of 12 billion lost working days each year.

Positive emotions, in turn, combat this outcome. Happiness also generates resilience, both in terms of physical and mental health. The Journal of Occupational and Environmental Medicine noted that employees with good mental health bounced back from injuries (and returned to work) 20 percent faster than those reporting poor mental health.

Companies will see a return on investment in the form of reduced absentee rates and potential reductions to health insurance costs. Additionally, employers have observed reductions in on-the-job accidents and injuries.

4.   Happy Customers

Happy customers are more likely to be return customers. They’re more likely to leave good reviews and refer their friends. But you might be surprised to learn that happy employees often equal happy customers. Why?

Happiness can be contagious—content employees are more likely to go above and beyond to provide the best customer service. But negative emotions also spread easily. An unhappy employee may ignore customers, make less eye contact, or speak unkindly. If the customer does not feel valued, they are less likely to return and will likely share the negative experience with others.

So, again, look to the metric of your bottom line. According to the Harvard Business Review, employee happiness can increase sales by as much as 37 percent.

5.   A Workplace You’ll Want to Be In

Company culture can contribute to or detract from employee happiness. A stressful, disorganized, or critical culture can make employees unhappy, for example.

But culture and happiness have a cyclical relationship. Culture affects employees, but employee happiness can also influence the workplace culture for the better. An office or floor full of contented people is much more pleasant than one filled with strife, contention, and anger.

If you promote a happy company culture, people will notice. Job seekers will desire to work there; you will receive more applications which, in turn, will provide a greater talent pool for you to choose from. You may also notice positive effects on retention and morale.

If the office has turned into a place you actually like to be, odds are your employees are feeling the same level of happiness.

Key Takeaways

Some businesses—including Google and other tech companies—have become famous for their over-the-top employee initiatives. From a laid-back culture with on-site gyms and tennis courts to perks such as kombucha on tap or excellent benefits, they understand that employee happiness is important. It’s not just about branding or a feel-good initiative. It’s a sound business decision.

When you make efforts to make your employees happy, you will see a return on your investment. Research proves that happy employees are more productive, creative, and innovative. They are less likely to require sick leave or look for another job. The end result is a supportive, positive culture where you and your team can thrive.