Why employee happiness could be a small business’ best investment

Great employees make businesses great. Happy employees are great employees. Ergo, if you want to make a great business, keep your employees happy. Simple as that.
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There is nothing revolutionary about the relationship between happiness and work life. We've known for years that happiness makes people more productive. This is why you always hear about Google's employee satisfaction initiatives (nap pods, three meals a day, and of course, those indoor slides), and boy do they work! Google's employee perks, in part, have helped them rack up nearly $1.3 million in annual revenue per employee. Which might be why they're still doing it.

Not only is employee happiness good for increasing productivity, it is also a great investment because not investing in it has unfortunate consequences.

Like, for example, the disengaged employees who cost the U.S. economy up to $350 billion a year in lost productivity. Again, this is old news. It's been trendy for managers to keep their team members happy, and articles like 'Happiest Companies To Work For in 2015' keep cropping up on social media feeds ever since listicles became popular.

But that $350 billion statistic isn't going down. In fact, Gallup has since updated that statistic to $550 billion. This suggests that maybe it's not (just) because there are sneaky managers going around ruining people's days, but rather, that there is a fundamental misunderstanding as to what motivates and keeps employees happy.

As Teresa Amabile and her team have found after surveying over 600 managers from dozens of companies, managers believe that employees are most motivated to succeed when they receive “recognition for good work (either public or private)”. Now, if you're thinking “I'd rather get that Google-themed slide than some 'well done' email from my manager,” you'd be correct.

Because, having tracked the day-to-day activities and motivation levels of workers in her multiyear study, Amabile and her researchers found that these managers were wrong.

The top motivator of performance is not recognition, but in fact, progress. (To highlight the gravity of this misunderstanding, managers ranked 'progress' as least likely to make their employees happy.) Employees experience more happiness and excitement when they feel that they are making headway in their work, or when they get the support they need to overcome obstacles. These positive emotions then increase their drive to succeed, thus upping productivity. So these slides and nap pods and free shuttles aren't there because Google needs a way to show off their incredible success. They're there because they minimize tangible obstacles to good work.

Clearly, small businesses don't have the funds to be hiring ergonomic experts for their employees, but as the famous adage goes, money doesn't buy happiness. More recent studies suggest that in addition to a sense of progress, a significant contributor to employee happiness and engagement is a feeling of camaraderie with your coworkers. Fostering a positive environment (through affordable means like open work spaces, corporate challenges, community service events etc.) increases the likelihood of forming friendships, which in turn, boosts employee satisfaction by up to 50%. And those with a best friend at work? They are seven times more likely to engage in their work.

This is because having a sense of camaraderie at work promotes group loyalty that results in joint commitment towards the work. Not only that, some small business employees themselves have found that they were less stressed over impending deadlines or the creative process when working with coworkers that they consider friends. This leads to a feeling of empowerment in both creating and participating in new things, allowing for development of the company as a whole.

So all of this talk about how great happy employees are is hopefully convincing, but this barely explains why employee happiness is a good investment. Because really, doesn't all of this just mean that happy employees make businesses better and not necessarily great?

Yep, that's right. But the key is that, for small businesses, better is exactly what we need. Especially when small business employees are likely to be at a greater risk of being overstressed than their friends over at big corporation XYZ.

Because unlike the typical Joe Schmoe, small business employees tend to wear different hats throughout the workday which, understandably, gets pretty tiring. After all, being a sales associate at 9am, customer service rep at 1pm, and the HR manager at 4pm would take its toll on any regular person. Not only that, half of all small businesses fail within their first five years. So on top of a pretty tiring job, your employees are slapped with the risk of potentially losing their jobs before they are ready to leave.

Luckily for us, happy employees, by virtue of being happy and thus, bringing with them all the perks of happiness to the workplace, reduce the risk of both problems. Investing time, effort, and money into making employees happy increases employee productivity by at least 12 percent. This increased productivity translates into higher organizational success, and as you would probably already expect, happy individuals tend to report lower levels of stress. This stress reduction even potentially results in physically healthier employees, and if you top that off with a dash of happiness, it even has protective effects on life-threatening cardiovascular diseases.

So not only is employee happiness easy to come by with or without funds, its impact on employee engagement (and health) ends up literally paying you back in the long run. Good investment? I certainly think so.

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