The most important success factor for a modern workplace is strategy or planning or business processes – it’s happiness!

Happy employees are not simply in a better mood, they also do a much better job. Studies from psychology and neurology have shown that people who experience positive emotions experience a number of benefits at work, including these:

• They are more productive and work faster and more efficiently
• They get sick less often and have  much lower absenteeism rates
• They are more creative and have more and better ideas
• They stay at the company longer saving huge efforts in recruiting new people
• They sell more when in sales roles
• They make the customers happy and more loyal to the company

All of this means that happy companies are more profitable and have higher growth rates and stock prices than the market average.

Why should this be? There are three main reasons why happy companies are more successful.

1: Happy organizations are more innovative

Harvard Professor Teresa M. Amabile’s research into how the work environment influences the motivation, creativity, and performance of individuals and teams shows that happy people are more creative:

If people are in a good mood on a given day, they’re more likely to have creative ideas that day, as well as the next day, even if we take into account their mood that next day.

There seems to be a cognitive process that gets set up when people are feeling good that leads to more flexible, fluent, and original thinking, and there’s actually a carryover, an incubation effect, to the next day.

The Gallup Management Journal agrees, and finds that,

59% of happy employees strongly agreed with the statement that their current job “brings out their most creative ideas,” compared with only 3% of unhappy employees.

So if innovation and creativity matter to your business, you need happy employees.

2: Happy people are more motivated

Every leader wants motivated employees. Every employee wants to be motivated. And yet we often see managers complaining that their employees are impossible to get going, and workers complaining that their managers don’t motivate them and don’t know what makes them tick.

It’s not the job of the manager to motivate employees. That is impossible. It’s a manager’s job to create a happy work environment in which employees are naturally motivated.

Think about it: How difficult must it be to motivate people who are dissatisfied, disappointed, distrustful, disengaged and unhappy at work. It’s an uphill battle all the way.

An article from Harvard Business School put it like this:

Most companies have it all wrong. They don’t have to motivate their employees. They have to stop demotivating them.

Happy employees need no external motivation—they motivate themselves and each other, and this internal motivation is both more efficient and more sustainable than the external motivation (such as rewards) that managers of unhappy employees must resort to.

If you want true motivation in the workplace, you must create a happy workplace. It’s that simple!

3: Happy employees deliver better customer service

A recent Harvard Business Review article entitled “Putting the Service-Profit Chain to Work” concluded that:

When companies put employees… first, their employees are satisfied, their customers are loyal, their profits increase, and their continued success is sustained.^[1]

Good, genuine customer service comes only from happy employees. Unhappy employees can try to fake it, but it’ll be just that: Fake service.

The math is a little strange on this one: One happy employee can give ten customers a good experience. Ten unhappy employees can’t give one customer a good experience—what they can do is give 100 customers a bad experience.

So research clearly shows that companies should embrace happiness because it’s good for business. But there is one other, even more fundamental reason: Making people happy is good, making them unhappy is just plain wrong!

There are workplaces out there that run their people down, make them stressed and ill, destroy their sense of worth, are havens for bullies, and allow all kinds of harassment. Though it is rarely intentional, these workplaces still make their people unhappy, and mentally and physically ill.

I have no idea how leaders and managers of these businesses can live with themselves. They may hide behind the old argument that companies should only care about money—or, as Milton Friedman said it, “The business of business is business.” However, I hope I’ve convinced you that this is a false argument because happy businesses make more money.

There is no longer any excuse for tolerating an unhappy work environment, when it’s more profitable to create one that is inspiring, uplifting, healthy and happy—one that is good for people and good for business.

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^[1]   Source: http://hbr.org/2008/07/putting-the-service-profit-chain-to-work