What makes employees happy at work?

What makes employees happy at work? It’s a big question that HR practitioners, leaders, and business owners ponder over. Given that unhappiness at work costs billions a year in lost productivity, the importance of making employees happy at work shouldn’t be underestimated.

Why do organisations want to make employees happy at work?

According to research by Oxford University and BT, happy employees are 13% more productive. So, addressing employee happiness is one of the most effective ways to improve productivity.

Happy employees are:

• Less likely to take time off sick. When people are happy, they’re healthier, both mentally and physically. 
• More engaged with customers. Happy employees lead to satisfied customers, which has a positive impact on long-term profitability of your organisation.
• Demonstrate greater loyalty to their employer. This equates to lower turnover rates and decreased business costs associated with recruiting and training new employees. 
• More motivated. Happy people have more energy. This leads to higher levels of motivation, which facilitates good performance in employees.
• Better at thinking creatively. In contrast, misery and depression impair cognitive ability.
• More resilient. There’s a correlation between happiness and resilience. Resilient employees can adapt to challenges and find solutions to problems more easily.

As outlined by the CIPD, the business benefits of workplace wellbeing are well documented, with these three key benefits for employers that focus on employee wellbeing:

• A stronger and more inclusive culture
• Improved work-life balance
• Increased employee morale and engagement

Which countries have the happiest employees? 

When considering what makes employees happy at work, we can find inspiration from our neighbouring countries. 

According to the World Happiness Report 2022, Finland and Denmark have the happiest people in the world. 

These two Nordic nations have small populations relative to their geographic size, low crime rates, generous social security, and excellent childcare for working parents. 

With such impressive investment into reducing day-to-day challenges, it makes sense that Finnish and Danish people enjoy high levels of happiness. 

Nordic countries prioritise happy employees 

The Global Workforce Happiness Index ranked Finland, Denmark, Norway, and Sweden at the top for employee satisfaction. These countries have a fundamentally caring culture, and they realise that happy employees bring benefits for everyone.

Using language to express happiness related to work 

In Denmark, they have a specific word for happiness at work – arbejdsglæde (pronounced ‘ah-bites-gle-the’). It’s about being happy to get out of bed and go to work each day, no matter what, because a job is energising (rather than draining).

A short swim away from Finland is Estonia, where the term töörõõm translates as ‘work fun’. In essence, it’s about finding satisfaction and enjoyment in everyday tasks.

Ikigai is a Japanese word that means ‘a reason for being’. This word encapsulates employee happiness. Someone’s work must give them a sense of purpose and a reason to get out of bed. 

But here in Britain, how can we recreate this same happiness with a completely different culture around work? Well, many organisations are turning to higher levels of pay and/or employee benefits to boost employee morale. 

Does a high salary create happy employees?

A study by Instantprint found that out of 10 locations in the UK where weekly wages are below the national average, eight had the highest levels of job satisfaction.

For example, in Sunderland, where the mean weekly salary is £513 (16% below the national average), 38% of employees said they were satisfied at work. 

Elsewhere in London, where the average weekly wage is £820, just 26% of employees said they were happy at work.

However, as with all studies, a critical eye is needed. Although people in Sunderland earn less than those in London, the cost of living is 64% higher in London. 

People must earn a fair wage for their work, or they can feel exploited and undervalued by their employer. However, salary is only part of the happiness story and offering employees more money doesn’t necessarily lead to greater job satisfaction.

So if not money, then what does make employees happy at work?

According to Liselotte Jensen, CEO of Great Place to Work, here’s what makes employees happy at work.

1. Work culture and a sense of community

A healthy company culture is built on mutual trust and respect, and a real sense of community. 

Employees trust their managers who:

• Are competent
• Have a clear strategy
• Coordinate resources well
• Are transparent and honest

Managers can show trust in their employees by:

• Involving them in the planning and implementation of strategies
• Involving them in making decisions that are important for the business
• Giving employees the flexibility to do their work when and how they choose

Managers can foster a sense of community by encouraging teams to work together to achieve shared goals. That way, everyone feels the sense of satisfaction of succeeding together.

2. Work-life balance

Studies show that when people have the time and energy to spend with family and friends, they’re happier. Research carried out by Aviva revealed that most employees prioritise work-life balance over salary (41% compared to 36%).

3. Rewarding compensation package

Offering employees thoughtful benefits communicates that your organisation cares about them. 

It’s important to survey employees first to find out what benefits will be truly valuable to them. Some employees might want childcare vouchers, whilst others may want supermarket discounts or gym membership.

The key to making employees happy at work is giving them what they want.

4. Financial wellbeing

A study by SHRM found that 80% of employers believe financial stress decreases productivity at work. That’s because it’s almost impossible for someone to focus on work if they’re losing sleep over their finances. 

With the cost-of-living crisis, supporting employees’ financial wellbeing has never been more important. For this reason, increasing numbers of employers are choosing to offer their employees access to earned wages (also called on-demand pay). 

On-demand pay brings an end to rigid pay cycles and rewards them with the flexibility to access their earnings at any time in the month. It’s a practical way to support employee financial stability. 

So if an urgent bill takes them by surprise, they don’t need to resort to expensive borrowing, which can create financial stress that inhibits their ability to perform at work. 

Openwage can bring substantial benefits to your business too, so it’s win-win.

5. Learning and development opportunities

A survey by the learning platform Udemy revealed that 80% of employees feel happier, more engaged, and more motivated at work when they have learning and development opportunities. 

Making sure employees can advance their careers is vital. According to a poll by Go1, 60% of employees who left their jobs said it was to find better career prospects.

6. A sense of purpose

A happiness poll found that out of 4,000 employees in the UK, most said doing meaningful work that has a real purpose was the most important factor in their happiness. 

To feel a sense of purpose, employees need to see the impact of their work and how they’re helping an organisation to achieve its goals. All employees need to know what the organisation’s goals are and to believe in them.

7. Recognition

When employees receive recognition for their efforts, it boosts morale and motivates them to continue to work hard. However, research by Quantum Workplace revealed that 53% of employees would like more recognition at work.

According to Gallup, recognition should be genuine, authentic, and personalised. It’s about considering what approach will be most meaningful to an individual employee.

Would they most appreciate a personal thank you from the CEO or a real-world reward with monetary value? 

Small steps to help create a happier workforce

Understanding what makes your employees happy is the first step. The challenge is planning and implementing strategies to build a happier workforce–but the effort is worth it. 

You don’t have to do everything all at once. Start by making small changes. 

For instance, if your focus is to improve work-life balance, you could encourage staff to leave on time by asking managers to set an example. Every improvement drives big business gains.

On the stock market, companies with happy, engaged employees continually outperform those with unhappy employees. The Investor Institution even recommends that people looking for the best-performing stocks seek out the happiest companies! 

Since happier employees drive profitability of the companies they work for, it really is worth investing time and energy into making your employees happy.