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The Business Case for Happiness

Businesses depend on human performance, and human performance is driven by well-being. Maximizing business performance requires that companies care about the "whole being," not about the “employee.”

There is overwhelming scientific evidence that happiness is good for the bottom line. Happiness makes employees more creative1. Happier employees have better job performance and are more productive. Happier employees create happier customers. In a study, the performance of 272 employees was measured throughout an 18-month period, and researchers found that those who were happier at the start of the study ended up having better evaluations and better pay increases. In total, 10-25 percent of the variance in job performance is associated with differences in individual well-being2. Companies listed in Fortune’s “100 Best Companies to Work for in America” had equity returns that were 3.5 percent higher than those of their peers.

We tend to believe that success at work creates happiness, but scientific evidence points in the opposite direction. Happiness at work creates success4. No wonder that according to linked, more than 4,000 companies have added a Chief Happiness Officer to their C level, and it is today one of the fastest growing jobs in America.

If happiness at work is so crucial, here are three practical things that will increase employee well-being according to science.

Purpose - Doing good makes people happy. When doing good is the organization's core business (not only on paper but in reality), employees are happier (and, according to studies, even willing to receive lower pay!). Workplaces that encourage and facilitate philanthropy and voluntary work experience higher employee happiness.

Mastery and Autonomy - Give employees a chance to work on their strengths and help employees develop their abilities. Give them some control over their careers (ability to grow) and autonomy on decisions that can create impact. Sense of achievement and self-esteem are crucial to well-being. Focus development plans on strengths, not on weaknesses. Develop career plans based on employees' natural abilities and ambitions.

Relationships - Having meaningful relationships at work matters. Not having it is one of the strongest predictors of turnover. According to Better-Up, the turnover probability declines by 5% for every "good friend" you have at work (flattens out at seven friends). Relationships create a social support network and a sense of belonging, provide psychological safety and allow employees to bring their whole selves to work. At Zappos, managers are encouraged to spend 10-20% of their time with their teams outside work.

But more than anything, If companies want to deliver performance, they need to care about the human, not the employee.

Happy Life,


  1. Kansas State University, “Happy Employees Are Critical for an Organization's Success, Study Shows,” ScienceDaily, February 4, 2009 (May 21, 2011).

  2. Sonja Lyubomirsky, Laura King and Ed Deiner, “The Benefits of Frequent Positive Affect: Does Happiness Lead to Success?” Psychological Bulletin. 2005, Vol. 131, No. 6, 803–855.



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