Are happy employees more productive? We tend to assume that it must be the case. Many employers nowadays offer a range of benefits designed to make us happier at work – from at-seat massage to table football and free beer on Friday afternoons. Yet, a scan of employer reviews on the Glassdoor website points to many workplaces being far from happy environments, with complaints ranging from lack of pay and opportunities, through to incompetent and bullying management. If happy employees really are more productive, then good companies surely would have driven the bad ones out of business by now? Moreover, with companies focusing so much on employee happiness, why has productivity growth in the UK stalled?
As with the other organisational myths I address in this blog, the empirical evidence for a link between happiness at work and productivity is far from clear cut, and what evidence there is points in a surprising, and perhaps disturbing, direction.
I will start with some definitions. Although there are many differing interpretations of productivity, at a macroeconomic level, we can view it as a measure of output per unit of input; for example, a ratio of gross domestic product (GDP) to hours worked. At the organisational level, productivity can be calculated by measuring the number of units produced relative to employee labour hours, or by measuring a company’s net sales relative to employee hours.
Happiness, at least in the context of work, is a trickier concept to define. Are we referring to an individual’s overall well-being, or specifically to their happiness with their work – their job satisfaction? Wright et al. (2007) note that scientific approaches to happiness tend to converge around three distinct defining phenomena. First, happiness is considered to be a subjective experience – people are happy to the extent that they believe themselves to be happy. Happiness therefore requires some judgment as to the positives and negatives of one’s own life. Second, happiness includes both the relative presence of positive emotions and the relative absence of negative emotions. Finally, happiness is a global judgment, in that it refers to one’s life as a whole, and exhibits some measure of stability over time, though it is not so stable that it cannot be influenced by environmental events, or is unresponsive to therapeutic interventions. Bringing these three elements together, we can say that happiness refers to a subjective and global judgment where one experiences a good deal of positive and relatively little negative emotion.
Happiness is clearly a highly valuable commodity, but also one that is scarce. Material well-being by itself doesn’t seem to increase happiness greatly. For example, in the US, while incomes at least doubled between 1960 and 1990, the percentage of Americans who reported themselves as ‘very happy’ remained constant at only 30% (Myers, 1993, pp. 41–42). In light of such evidence, governments have begun to move away from a sole focus on GDP as a measure of national well-being to exploring measures that address more affective elements, such as happiness. For example, over the past few years the Office for National Statistics (ONS) in the UK has been developing such measures, as set out in a recent blog:
It’s perhaps human nature that in looking to assess our well-being, many people have a desire to seek out a single number. It’s for that reason that GDP is often treated as an all-encompassing proxy for people’s living standards. However…GDP was not designed for this task and, while it can tell us something useful about economic welfare, it’s certainly not a complete measure of well-being. Indeed, such is the complexity of well-being, covering current economic, social and environmental welfare, arguably no single measure can hope to capture it in its entirety. Instead, what is needed is a series of indicators, covering both overall levels and inequalities in these different areas to give a more complete picture of how we’re all doing. Such a dashboard is one of the main recommendations [of] Nobel Prize winner, Joseph Stiglitz, leading economist Jean-Paul Fitoussi and OECD chief statistician Martine Durand in their 2018 book “Beyond GDP: Measuring What Counts for Economic and Social Performance”.
The blog continues:
In addition to measuring material living standards, it’s also important to understand how people feel about their lives. For this reason, in recent years we’ve also developed our measurement of personal well-being, allowing us to provide measures of life satisfaction, happiness, anxiety as well as how worthwhile people feel their lives are on a quarterly basis. (Tonkin, ONS, 2019)
In organisational research, Wright et al. (2007) identify job satisfaction as by far the most common operationalisation of workplace ‘happiness’. Brief (1998, p. 86) defines job satisfaction as, ‘an internal state that is expressed by affectively and/or cognitively evaluating an experienced job with some degree of favor or disfavor.’
The connection between workplace happiness and productivity has long been a concern of economists and organisational theorists, often referred to as the happy-productive worker hypothesis – the proposition that happy workers are productive workers. Taris and Schreurs (2009) note that the hypothesis dates from the Human Relations Movement of the 1930s, where Theory Y approaches to management suggest that happier people will be more productive. Wright et al. (2007) argue that although it has forcefully captured the imagination of management scholars for decades, efforts to test the hypothesis have generally been inconclusive.
Judge et al. (2001) undertook a comprehensive meta-analysis of the relationship between happiness and productivity. They found a correlation of job satisfaction and job performance with an association of roughly +.30, on the border of weak and moderate. However, they did observe some significant moderators. For example, they reported considerable differences across occupations, with the job satisfaction/job performance correlation more robust in high-complexity jobs.
The positive associations obtained by Judge et al. (2001), however, did not address the issue of causality, where there are three possible primary causal relations between job satisfaction and job performance:
(a) Job satisfaction may cause job performance
(b) Job performance may cause job satisfaction
(c) Both job performance and job satisfaction may be caused by other variables
Wright et al. (2007) argue that empirical research has found minimal evidence for each of these causal explanations. Taris and Schreurs (2009) also find that the evidence for the hypothesis is mixed, highlighting a limitation of previous research regarding the measurement of ‘performance’, where it may refer to very different concepts. Wright et al. (2007) propose that we should instead focus on worker happiness using the measure of psychological well-being (PWB). PWB is primarily an affective or emotional experience, typically operationalised as capturing both positive and negative emotional states on a single axis, where to be high on well-being is to be simultaneously low on negative emotion and high on positive emotion. Unlike job satisfaction, which centres on the work context, PWB is a broader construct which is not tied to any particular situation.
In the UK, the ONS defines wellbeing across ten dimensions:
- The natural environment
- Personal well-being
- Our relationships
- Health
- What we do
- Where we live
- Personal finance
- The economy
- Education and skills
- Governance
Wright et al. (2007) cite research that they claim shows that PWB moderates the relationships between both job satisfaction and job performance and between job satisfaction and employee retention, where job performance is highest when employees report high scores on both PWB and job satisfaction. Job satisfaction does predict performance, but only if the employee also has a high level of PWB. Job satisfaction is therefore not a good predictor of job performance for employees with low levels of PWB. Wright et al. see this as potentially useful for HR practice, where recruiters can seek to maximise employee performance through the selection of ‘psychologically well’ job applicants. However, they recognise that focusing on PWB as a selection criterion raises potentially serious ethical considerations.
If we accept the assumption that employee happiness leads to improved productivity, we might also assume that unhappiness will result in lower productivity. Again, the evidence is inconclusive, where some evidence even points to the opposite conclusion. Zelenski et al. (2008) cite research demonstrating that unpleasant emotions may lead to behaviour that could be useful under some circumstances. For example, negative moods seem to bias people’s attention towards details rather than global meaning (Gasper and Clore, 2002), improving task performance when a detailed level of analysis is required. Wright et al. (2007) point to evidence that negative moods can enhance creativity (George & Zhou, 2002).
Zelenski et al. (2008) conclude that particular sets of emotions, motivations, personalities and tasks combine in very complex ways to predict performance. Nevertheless, they contend that happiness will, on balance, benefit overall productivity. Although they note that unhappiness is a disposition that is resistant to change, they found that people were more productive when they were in good moods. Therefore, they conclude, organisations do benefit by creating work environments that promote better moods, even for dispositionally unhappy members. However, they suggest that efforts should be directed at increasing the experience of positive emotions, as their research showed them to be consistently the strongest predictors of productivity. For example, a pay increase could increase job satisfaction, but if this pay increase does not also lead to positive affect, the impact on productivity may be minimal.
There are two diametrically opposed schools of thought on the nature of work: one viewing it as a positive and enriching experience, and the other focusing on the potentially dangerous impact of work on the individual. Questions of happiness and work are, unsurprisingly, key concerns for organisational theorists, reflected in the titles of journals such as ‘Work and Stress’, and the ‘Journal of Happiness Studies’. Empirical research shows that, both on an individual and on an aggregate level, the relationship between happiness and productivity is both complex and resistant to simple explanations. It is also, clearly, an area where questions of correlation and causation are vital. The correlation between job satisfaction and productivity appears weak, and evidence of any causal relationships is weaker still, but the relationship between overall happiness and productivity seems to be stronger. Even this, though, is not necessary a simple relationship, for example where unhappiness may not lead to a decline in productivity to the same extent that happiness might increase it. Perhaps then, it is not work that makes us happy, but happiness that makes us work.
When analysing two apparently related variables, we tend to make a working assumption that other factors are stable. So, for example, we might assume that the organisation is a closed system, with a fixed pool of employees. Of course, in the real world, this is not the case, and employers and employees always have some degree of agency. In times of higher employment, disaffected employees are generally better able to find alternative employment, and employers that can afford to pay higher wages can be more selective in their recruitment. In practice, I believe that such factors can be crucial. For example, more productive, and therefore one assumes more profitable, organisations, may well be able to attract more positive staff to work for them, therefore increasing the happiness of the overall workforce through recruitment.
If, from the evidence we have, we accept that happy workers are more productive but that there is little that employers can do to make unhappy workers happier, and we accept that there will always be a fairly constant proportion of the population who are intrinsically unhappy, then we are drawn to some rather depressing conclusions. Work in itself appears to contribute little to our general well-being, with extrinsic factors much more important. If there is a largely fixed proportion of happy people in the working age population, then individual firms may be better able to attract them, but only to the detriment of other firms. This results in a form of organisational apartheid, with a minority of productive companies attracting the happiest workers, and the rest stubbornly unproductive, populated with unhappy (or less happy) workers. The intrinsically unhappy may even be forced out of the workforce entirely, where their economic and social marginalisation will hardly help to improve their general happiness.
Yet, we have also seen some evidence that less happy people may be better at some tasks. Perhaps employers should, rather than launching ineffective initiatives to make their employees happier, accept that their workforce will occupy a range of positions on the well-being scale, and try to tailor work more to the disposition of their employees? Perhaps, in an age where many organisations increasingly embrace diversity in many forms, often with the justification that different types of people can make an organisation more creative, dynamic, and relevant to its customers, this should now be extended to diversity of personal well-being, with a recognition that individuals at different ends of this axis should be valued, where marginalising the unhappy is neither socially, ethically or economically acceptable?
Bibliography
Brief, A. P., 1998. Attitudes in and around organizations. Thousand Oaks, CA: Sage.
Gasper, K. and Clore, G.L., 2002. Attending to the big picture: Mood and global versus local processing of visual information. Psychological science, 13(1), pp.34-40.
George, J.M. and Zhou, J., 2002. Understanding when bad moods foster creativity and good ones don’t: the role of context and clarity of feelings. Journal of applied psychology, 87(4), p.687.
Judge, T.A., Thoresen, C.J., Bono, J.E. and Patton, G.K., 2001. The job satisfaction–job performance relationship: A qualitative and quantitative review. Psychological bulletin, 127(3), p.376.
Myers, D. G., 1993. The pursuit of happiness. New York: Avon Books.
Taris, T.W. and Schreurs, P.J., 2009. Well-being and organizational performance: An organizational-level test of the happy-productive worker hypothesis. Work & Stress, 23(2), pp.120-136.
Tonkin, R., February 4, 2019. Beyond GDP: How ONS is developing wider measures of well-being. ONS, https://blog.ons.gov.uk/2019/02/04/beyond-gdp-how-ons-is-developing-wider-measures-of-well-being/
Wright, T.A. and Cropanzano, R., 2004. The role of psychological well-being in job performance:: a fresh look at an age-old quest. Organizational Dynamics, 33(4), pp.338-351.
Wright, T. A., & Cropanzano, R., 2007. The happy/productive worker thesis revisited. In J. J. Martocchio (Ed.), Research in personnel and human resources management: Vol. 26. Research in personnel and human resources management, Vol. 26 (p. 269–307). Elsevier Science/JAI Press.
Zelenski, J.M., Murphy, S.A. and Jenkins, D.A., 2008. The happy-productive worker thesis revisited. Journal of Happiness Studies, 9(4), pp.521-537.