Want happier employees and the benefits that come with them? Forget foosball and free snacks… Here’s how to REALLY make your people happy
Let’s get this straight. Employee happiness isn’t about staff being in a constant state of giddy delight at the honor of working for you.
Nor is it about Xboxes and beanbags in the break room. It isn’t about getting Barbara in Accounts to smile more, or achieving more sign-ups for the mandatory summer barbeque.
Employee happiness is part of the move towards positive psychology in the workplace and is much more nuanced than you might think.
Whimsical neon wall art and snacks on tap might make you smile at home. But at work, you’re more likely to want flexible work policies, professional development, and a discrimination-free work environment.
So what is employee happiness, why should you prioritize it, and how can you encourage it? We’ve got answers and actionable strategies below, backed by stats from industry experts.
Employee happiness refers to the overall emotional and psychological well-being of the people who work for you and with you. It’s about more than just whether people come to work smiling.
It’s about how satisfied, fulfilled, engaged, resilient, optimistic, and positive your employees feel.
Employee happiness falls under the banner of ‘positive psychology’, a topic of growing interest in business circles, thanks to the evidence linking employee happiness to business performance.
In a Korn Ferry report into happiness and productivity, Martin Seligman – a positive psychology professor at the University of Pennsylvania – is quoted as saying happiness is a term that ‘under explains’ the concept, bringing to mind ‘buoyant mood, merriment, good cheer and smiling’.
But this isn’t the case at work.
Seligman says the word ‘flourishing’ is more appropriate terminology. Flourishing reflects the subtleties of well-being and meaning that are fundamental to human happiness.
Even among experts willing to use the word ‘happiness’ in relation to work, it doesn’t mean the same as the happiness we feel at home and rest.
Shawn Achor, author of The Happiness Advantage, trains organizations in employee happiness. But even he concedes:
Happiness is not mere pleasure, but rather the joy we feel striving toward our potential."
In this context, it’s clear to see that organizations that pay lip service to employee happiness with perk packages and ping-pong tables are somewhat missing the point.
According to BambooHR's 2024 Employee Happiness Index employee happiness cautiously increased by 1.6% in Q1 2024 compared to Q4 2023, marking the first positive trend in Q1 since 2020.
Smaller businesses – with fewer than 25 employees – fare better than big businesses on the employee happiness scale. They have 41% higher average employee happiness compared to small-to-medium businesses (SMBs) and above.
The survey also found employees with a tenure of less than 3 years continue to be happier. Perhaps still in the honeymoon phase of their work relationship.
But it's bad news for finance and tech firms – whose happiness hit a four-year low in 2024 – and healthcare, which continues to have the most unhappy employees.
Employee happiness and employee satisfaction are related but distinct concepts.
While employee satisfaction is an important aspect of employee happiness, it doesn’t capture the broader emotional connotations that define happiness at work.
Think about it in terms of a meal – is being satisfied the same as being happy with the experience? Would you recommend a restaurant if you’re merely satisfied? Would you keep going back?
Employee happiness is increasingly linked to positive business outcomes – from recruitment and retention benefits, to increased productivity and innovation. For businesses seeking a competitive advantage, employee happiness could be it.
Obviously, to improve employee happiness, you need to measure it. Taking the pulse of your people now will provide a benchmark for your happiness KPIs.
Here are some qualitative and quantitative approaches to understanding your employees’ happiness and satisfaction at work.
Issue a regular employee happiness survey to understand how your people are feeling. Anonymous surveys are the most effective as they encourage candid responses and can capture honest employee concerns.
The eNPS measures how likely employees are to recommend your company as a great place to work. Ask employees to rate – on a scale from 0 to 10 – how likely they are to recommend the organization to others. Based on their responses, employees are categorized into three groups:
Calculate the percentage of promoters versus detractors. A positive eNPS indicates overall employee satisfaction and loyalty are high, while a negative eNPS suggests you have issues to address.
There are lots of reasons people might leave your business – so turnover rates aren’t a direct reflection of employee happiness. But high turnover rates may signal dissatisfaction. Use exit interviews, stay interviews, and surveys to understand why employees choose to leave or stay, and what can be done to improve happiness.
High levels of absenteeism may indicate issues with job satisfaction or disengagement. By tracking these rates and investigating potential causes, you can identify and address underlying problems.
Focus groups are when you gather a representative sample of employees to discuss their employee experience via a guided session. They let you explore specific topics – such as workplace culture or new policies – in depth. Focus groups help you understand different perspectives and make informed decisions about workplace changes.
1-2-1s are a good way to get to the real heart of employee happiness – where employees can discuss their feelings about work in depth and detail. Provide managers with a framework to talk about happiness, so they can address individual and team concerns effectively.
By combining these approaches, you can build a detailed view of employee engagement, satisfaction, and happiness. For example, by conducting an employee survey, following it up with focus groups to identify key issues, and then exploring these at an individual level in 121s.
Act on employee feedback and reassure employees that you take their concerns – and welfare – seriously. Follow up with a ‘you said, we did’ message. And if you can’t tackle problems straight away, be transparent about why, with a timeframe for taking it forward.
We’ve scoured business and academic sources to bring you meaningful, actionable, expert advice on positive psychology in the workplace.
Here are our top strategies to increase employee happiness that don’t involve pizza parties and dress-down Fridays (though we like those too!)
While perks and reward schemes can be nice, they shouldn’t replace meaningful initiatives that genuinely improve employee happiness.
Focus on substantial policies that meet employee needs and preferences like career development opportunities, flexible working schedules, mental health resources, wellbeing initiatives, and an inclusive culture.
241 cinema tickets are great – but not when they’re at the expense of a genuinely rewarding work experience.
One of the core human needs is ‘self-actualization’ – achieving your full potential and feeling the glow of being your best self. Sadly, many employees don’t experience this at work. They’re micromanaged and have no autonomy to apply their intellect and experience.
Autonomy at work is about giving employees more freedom, accountability, control, and choice in their working lives so that they - and you - can unlock their full productivity and potential. Giving people more control over when, where, how, and what they work on can significantly boost satisfaction, productivity, and happiness.
There’s an HR adage that ‘Money is a poor motivator,’ meaning people respond better to non-financial incentives at work. In fact, one 2024 Employee Happiness survey found 36% of employees would give up $5,000 a year in salary to be happier at work.
However, salary remains a crucial factor in employment decisions, particularly for younger workers. In 2024, 70% of Gen Z workers prioritize pay as a top aspect they want from their next job. This is bad news for employers, with Major Players finding 53% of workers feel undervalued and underpaid, and an additional 20% are uncertain about their pay adequacy.
Despite the increased focus on non-monetary benefits and flexibility, money still matters when you don’t have enough of it. If people are paid poorly, their attention will be divided – 'will I be able to pay my bills this month, should I look for a new job, why doesn’t my employer value me?'
If you want people to be happy at work, offer competitive compensation that’s in line with industry standards and genuinely beneficial benefits package including adequate annual leave and wellbeing support.
For some individuals, work is not just about earning a paycheck but also about pursuing passions and contributing to something meaningful. These employees often experience a high level of job satisfaction and happiness. Their fulfillment comes from finding purpose in their roles and aligning their work with their values.
Ensure every employee understands how their individual contributions impact the organization's overall success.
Regularly discuss career aspirations and provide opportunities for employees to engage in meaningful work that resonates with them personally.
One way to do this is to record people’s career aspirations and interests in your resource management platform – alongside their skills and availability – so you can match them with perfect projects.
Creating an inclusive company culture is essential for both employee happiness and business success. Research by BCG found a strong correlation between inclusiveness and job happiness, with 81% of employees in inclusive cultures reporting job satisfaction.
For individuals from marginalized groups, the workplace can present unique challenges. For example, research reported by Axios, for example, found women of color are more likely to prefer working from home than men, in part to avoid discriminatory work cultures. While 90% of non-binary individuals report harassment, mistreatment or discrimination on the job, or hiding who they are to avoid it.
Discrimination (both overt and unintended), lack of representation, and the need to suppress one's true self can lead to chronic stress, disengagement, and higher turnover for marginalized groups.
To create a more inclusive workplace, consider the following.
Creating an inclusive company culture isn’t just the right thing to do. It’s also good for business. Deloitte found a 10% increase in the perception of inclusion can reduce absenteeism, adding nearly one extra day of work attendance per employee annually. And Gartner found that inclusive teams improve performance by 30%.
If you’ve ever felt scared to make a suggestion at work – or feared ridicule for bringing a new idea to a team meeting – you’ve probably worked somewhere without psychological safety.
Psychological safety means employees feel safe to be creative, open, and collaborative at work – which means they’re happier too. They’re not scared to try new things or make mistakes.
Leaders can create psychological safety by modeling respectful behavior, positive feedback, and constructive criticism. Encourage open dialogue and ensure that all team members feel heard and respected. (According to Forbes, employees who feel heard are 4.6 times more likely to perform their best.)
Within reason, mistakes should be framed as learning opportunities rather than failures. You should encourage the development of a no blame culture, where the emphasis is on resolving what went wrong and how it went wrong, rather than going on a witch hunt for the people responsible.
And managers should recognize employees for the effort they put into problem-solving, not just the outcomes.
Good work life balance plays a significant role in employee happiness. Research by WorldMetrics indicates that workers who report being happiest in their jobs cite work life balance more than salary as a key reason.
Promote policies that support better work life balance, such as flexible working hours, remote work options, and adequate paid time off. Avoid overburdening employees with heavy workloads that require excess overtime, and give time off in lieu – at a time of their choosing – if they do need to work beyond their designated hours.
Help employees disconnect from work during their downtime by having a 'right to disconnect' policy at evenings and weekends (something about to be enshrined in law in the UK).
The last five years in work have shown that people value the flexibility to choose when, where, and how to work. Giving people more flexibility has been shown to increase productivity, benefit marginalized groups, and enhance job satisfaction.
Implement flexible working policies and support employees in finding the work arrangements that best suit their needs. Remember that employee preferences are oh-so important for business success.
While having the choice to work from home is generally perceived as positive – with the ability to work remotely increasing employee happiness by as much as 20% – default remote work can lead to feelings of isolation.
For happier remote workers, organizations need to put in extra effort around onboarding, support, inclusion, and interpersonal relationships.
Foster a stronger virtual community with regular video check-ins, virtual social events and team-building activities, and extra support to integrate remote workers at in-person events like your annual conference.
Take a look at How the Runn Team Makes the Most of Remote Work ➡️
Research shows that poor management is one of the leading causes of employee unhappiness, dissatisfaction, and turnover. As the saying goes, ‘People don’t leave bad jobs, they leave bad managers’.
However, research also finds that managers are stressed, depressed, and lonely. It’s clear that managers need support to be happier themselves, and training to support their reports better too.
Management skills and leadership skills are very different – and many managers don’t get the support they need to be great leaders. Provide leadership training to help your managers learn emotional intelligence, effective communication, team building, and coaching skills – and hopefully, happiness will follow.
According to Forbes, 61% of employees feel burned out at work. This is bad news for employers aiming for a happy workforce. Employee burnout is associated with unhappiness, reduced productivity and mental acuity, and higher turnover intent.
To protect against burnout in the workplace, keep a close eye on people’s workload and take steps to even out any imbalances. Resource management tools like Runn can provide at-a-glance insights into resource utilization, making it easy to spot the signs of potential burnout.
According to employee happiness expert Shawn Achor, ‘Happiness should be linked with growth, because stagnation prevents us from sustaining happiness.’ To achieve this,
By fostering a work environment where employees are continuously challenged and supported, you can prevent boredom, boost staff engagement and satisfaction, and benefit from more confident and capable staff. Win-win-win!
Runn resource management software has powerful tools to:
