A study on “Employee Wellbeing, Productivity and Firm Performance” from March 2019 proved it again:

“We find a significant, strong positive correlation between employees’ satisfaction
with their company and employee productivity and customer loyalty,
and a strong negative correlation with staff turnover.
Ultimately, higher wellbeing at work is positively correlated
with more business-unit level profitability.”

 

This study is very interesting as it is a meta-analysis of 339 independent research studies, including the wellbeing of 1,882,131 employees and the performance of 82,248 business units, originating from 230 independent organisations across 49 industries in the Gallup client database.

No need to read the 43 pages; here are the highlights of their summary 🙂 Please note that all the information written in this article are based on this meta-analysis.

This meta-analysis reflects on:

• The relationship between employee wellbeing and productivity at the individual level -> do happier workers work better?
• The relationship between aggregate-level wellbeing and firm performance -> do the insights at the individual-level translate into tangible benefits on the bottom line of business?

WHAT DID THEY FIND?

1. Relationship between Positive Emotions & Creativity

The authors of the study “Affect and Creativity at Work” from Teresa M. Amabile in 2005, found that positive affect has a positive relationship with creativity. One of their experiments was on 2 groups:

Group 1: just before doing their creative tasks, they watched for a few minutes a comedy film or received a small bag of candy

Group 2: just before doing their creative tasks, they watched a documentary film about math as a placebo or did not receive candy

Creativity Tasks included the candle game, which requires participants to affix a candle to a corkboard in such a way that wax does not drip on the floor using various tools, and a Remote Association Test, which requires participants to think of words related to three other words presented to them.

-> RESULTS: They found that “participants in the experimental condition (i.e. those with more positive affect) performed better in creative tasks than participants in the control condition (group 2). Interestingly, negative affect did not produce comparable improvements in creative performance.” (see details page 6)

2. Relationship between Positive Emotions & Productivity at work

Another study “Happiness and Productivity” from Andrew J. Oswald in 2015 proves the link between positive emotions and productivity.

“We provide evidence, for a classic piece rate setting,
that happiness makes people more productive.
In three different styles of experiment, randomly
selected individuals are made happier.
The treated individuals have approximately
12% greater productivity. A fourth experiment studies
major real-world shocks bereavement and family illness.
Lower happiness is systematically associated with lower productivity”

 

They conducted a series of lab experiments where before the effort: 1 group had happiness-enhancing treatment (a ten-minute comedy clip or chocolates, fruits…) and the other group got nothing or watched a normal movie. Then they were asked for exemple to correctly sum up numbers for ten minutes.

-> RESULTS: The group who watched the comedy clip/happiness treatments performed 12% better than the other group who got nothing before the test.

3. Correlation Between Employee Wellbeing and Firm Performance

The meta- analysis of 339 independent research studies found that employee wellbeing is consistently positively correlated with firm performance.

“In sum, aggregating data from 339 independent research studies
that include observations on the wellbeing of 1,882,131 employees
and performance of 82,248 business units, from 230 independent organisations
across 49 industries in 73 countries, we find that employee wellbeing is consistently
positively correlated with firm performance.”

 

-> FIRST: How did they measure Performance Outcomes?

They studied four outcomes based on: (see details on page 12)

• Customer Loyalty (e.g. customer loyalty metrics / measures of customer satisfaction / service excellence / customer evaluation)
• Employee Productivity (mostly financial measures: e.g. revenue or sales per person, growth in revenue or sales over time, enrolments in programs, labour hours, performance ratings…)
• Profitability (e.g. percentage profit of revenue or sales)
• Staff Turnover (voluntary turnover per business unit)

 

-> RESULTS:

“As can be seen, employee satisfaction has a substantial positive correlation with customer loyalty and a substantial negative correlation with staff turnover.
The correlation between employee satisfaction and productivity is positive (0.2).

Importantly, higher customer loyalty and employee productivity, as well as lower staff turnover, are also reflected in higher profitability, as evidenced by a positive correlation between employee satisfaction and profitability (0.16).”

 

They did the same comparison with companies from different industries / from different regions and found the same tendency.

In another study by Bloom et al. (2015) an experiment was conducted on flexible work practices (at a Chinese travel agency with more than 16,000 employees). details page 18

“The authors found that, at the end of the experiment,
call centre agents who were working from home
experienced fewer negative and more positive emotions, less exhaustion,
and reported a higher overall life satisfaction compared to
call centre agents who were working in the office.”

4. Do firms with higher levels of employee wellbeing perform better on the stock market?

Edmans (2011) studied the relationship between employee satisfaction and long-run stock returns using a value-weighted portfolio of the “100 Best Companies to Work for in America” details on page 21.

“The data show that, during the period 1984 to 2009,
the “100 Best Companies to Work for in America” had an annual
four-factor alpha (a measure of excess stock market return) of 3.5%.
Furthermore, they earned 2.1% higher stock returns than the industry average
and had more positive earnings surprises and announcement returns”

 

FYI – The annual ranking is compiled by the Great Places to Work Institute in San Francisco, which rates organisations on four domains, including credibility, respect, fairness, and pride and camaraderie

CONCLUSION

“Overall, the balance of the evidence (..) is very much in favour
that there are measurable, objective benefits to wellbeing
in terms of employee productivity and firm performance.”

see details page 23.

 

 

NOTE from Aurelie Litynski (author of this article):

Of course there are many ways to analyse and measure the impacts and we can argue on that for a long time.
However, what I found very interesting is to see the overall results’ of the meta-analysis based on 339 studies.
No matter if they studied it in a laboratory or in real companies, there seems to be a strong correlation between happiness / creativity / productivity / performance.

Being happy at work has a great impact on our personal and professional life. We often take care of ourself in our private life but it’s not really a priority in our professional life.

Let’s not forget that very often, we spend more awake-time at work than at home and we see our colleagues more than our family.

I believe our happiness in general AND our happiness at work is OUR responsibility.

We cannot wait for our boss / colleague / company to make us happy. Let’s start with ourselves.

HOWEVER, companies also have a crucial role in this topic. We (individuals) can start the work on ourself but we will need to be in a work environment where the employee’s happiness is as well part of the company’s culture.

Happiness at work is a WIN-WIN for employees and companies!