Happy Employees… What the Research Shows

Earlier I promised to share some of the research emerging on the topic of happy employees and productivity. There are a surprisingly large number of studies in this area, but one of the more intriguing ones to cross my radar screen is highlighted in the current issue of Harvard Business Review in the article, “Creating Sustainable Performance.” Professors Gretchen Spreitzer (University of Michigan’s Ross School of Business) and Christine Porath (Georgetown University’s McDonough School of Business) describe how they spent seven years researching “the nature of thriving in the workplace and the factors that enhance or inhibit it.”

Their number one conclusion validated the importance of training and professional development. “If you give your employees the chance to learn and grow, they’ll thrive—and so will your organization,” write Spreitzer and Porath. They also note, “Happy employees produce more than unhappy ones over the long term. They routinely show up at work, they’re less likely to quit, they go above and beyond the call of duty, and they attract people who are just as committed to the job. Moreover, they’re not sprinters; they’re more like marathoner runners, in it for the long haul.”

In seeking to understand what makes certain workforces sustainable, or profitably growing well into the future, the word “thriving” was chosen by the professors to capture the essence of this elusive concept. In their words, “We think of a thriving workforce as one in which employees are not just satisfied and productive but also engaged in creating the future—the company’s and their own. Thriving employees have a bit of an edge—they are highly energized—but they know how to avoid burnout.

“Across all industries and job types, we found that people who fit our description of thriving demonstrated 16% better overall performance (as reported by their managers) than their peers. They were 32% more committed to the organization and 46% more satisfied with their jobs. They also missed less work and reported significantly fewer doctor visits, which meant health care savings and less lost time for the company.”

This is all very interesting, but what leads employees to truly thrive?

The researchers identified two key components: vitality–or a sense of passion for their work–and learning; the growth that comes from gaining new knowledge and skills. The two qualities work in concert according to the study. “One without the other is unlikely to be sustainable and may even damage performance. Learning, for instance, creates momentum for a time, but without passion it can lead to burnout.”

Spreitzer and Porath interviewed more than 1,200 white- and blue-collar workers in an array of industries and found that management can do four things to promote a culture of vitality and learning: (1) provide decision-making discretion, (2) share information, (3) minimize incivility and (4) offer performance feed back. I’ll take a closer look at each of these factors in my remaining posts in this series on employee happiness.

Next post: If you do nothing, you’ll make no mistakes!

Giving Employees a Stake

People who have a stake in the outcome tend to be more engaged and productive at work. They’re also happier. I’m sure there’s research out there to back me up on this belief, but I can tell you from personal experience that it’s definitely true.

At Intertech, we have long offered such benefits as equity participation to all employees, bonuses tied to performance, paid overtime and annual dividend payments on equity shares (even though we are a privately held company). These benefits allow all of our employees to share in the rewards when we do well. It also creates a culture where everyone – has a stake in our success or failure. (For me and the rest of the leadership team, we take significant hits to our personal compensation if Intertech isn’t hitting targets.)

Beyond compensating people competitively and making sure they have a stake in our success, I believe it’s also important to create a culture that values the contribution of everyone. That’s not just lip service. We invest in a process to make sure all of our employees have a chance to speak their minds. It’s called our annual town hall and it is held without the presence of any senior managers present to encourage candor.

The feedback from this half-day session, which costs us about $15,000 to host each year since billable employees are “idle” for those hours  — is formally presented to the senior leadership team as part of our annual company planning retreat. Many ideas from employees have been incorporated over the years. When we can’t use employee recommendations, we make a point of letting them know why not.

Creating a work environment that values the contributions of every employee also can mean deflating the egos of senior management. After years of toiling in the spare bedroom of my first apartment and then moving to a serviceable retail strip mall location as we built this company, we have finally moved to a first class building of our own. As the plans were worked out for our fine new space, we had to make choices about those two coveted “corner offices.” It wasn’t tough to decide that the people handling our finances and hiring should have them because of their need for confidentiality and filing space.

You’ve probably guessed by now that even though I’m the founder and CEO, I won’t be putting my feet up on a desk in a swanky corner office. That’s ok by me! I know that my people appreciate working in a company that makes decisions based on fairness and logic, not ego.

Next Post: What the research shows.

Don’t Worry. Be Happy.

The Gallup-Healthways Well-Being Index, which has been polling more than 1,000 adults every day since January 2008, shows that Americans now feel worse about their jobs – and work environments – than ever before. People of all ages, and across all income levels, are unhappy with their supervisors, apathetic about their organizations and detached from what they do.

Could it be that companies have forgotten about the importance of keeping employees engaged and productive at work? While the tough economy may be distracting managers, those that have invested in employee engagement are most likely to retain star performers even as the economy continues to improve and employees start exploring their career options.

Still not convinced that employee happiness should matter, particularly during challenging recessionary times? Consider the results of a 2010 study by James K. Harter that found that lower job satisfaction foreshadowed poorer bottom-line performance. And Gallup estimates that a staggering $300 billion is lost annually due to “employee disengagement.”

In my next several posts I will share some of the current research on the topic of employee happiness and its impact on business culture, productivity and profit. I’ll also share some of the strategies we employ at Intertech, which contribute to our high level of employee satisfaction, employee retention and increasing profitability.

Happy reading!