Why employee happiness is so important

Most U.S. employees are unhappy at work, according to a recent study from BambooHR , which showed a decline in employee satisfaction in over the past three years.

As an employer, should that concern you?

Yes! And here’s why…

An increasing body of research shows that a positive work environment fosters employee friendships, enhances personal well-being and ultimately benefits the organization’s bottom line.

Positive and virtuous workplaces lead to higher performance

To begin, the latest research from the University of Warwick says happiness made employees 12 percent more productive.

“The driving force seems to be that happier workers use the time they have more effectively, increasing the pace at which they can work without sacrificing quality,” said an economist who was part the team that conducted the study.

Beyond the increased productivity, there are other benefits of a happy workforce, including the employee motivation of peers, loyalty to the organization and enhanced creativity on the job.

Meanwhile, the post-pandemic work environment has forced employers to be more imaginative with fostering employee happiness. It’s not simply a matter of letting employees work from home.

Harvard Business Review in the fall of 2023 spoke with Adam Grant — psychologist, best-selling author, and chair of BetterUp’s Center for Purpose and Performance — in a piece about the importance of employee happiness. Creating a flexible work environment can take many forms, he said.

“Make a list of things workers want to be free of and things they want to have the freedom to do. And then you can play each of those out alongside choices about where we work, when we work, and how much we work,” Grant said in the article .

Still, as more employees work from home, employers should look to create an environment where employees feel connected. By encouraging certain behaviors in the workplace – among both front-line employees and leadership teams – employers can help workers feel happier.

A 2023 article from Nectar , an employee recognition software company, outlines some of the basics for employers:

  • Enriching employee friendships
  • Having managers measure progress by productivity, not time in the office
  • Being open to feedback at all levels of the organization
  • Learning about their employees likes and crafting office events based on those preferences

Also of note, data from Great Place to Work says employees are three times more likely to have a sense of well-being if they work in a fun environment.

Close friendships generate employee satisfaction

Friendships in the workplace are a big part of employee happiness.

Here is where the impacts of COVID-19 have had a residual effect. People in general have fewer close friends than they did before the pandemic, according to the American Survey Center .

And a 2022 piece from Gallup says having good friends at work is pivotal for employee engagement and career success. According to the article , employees who have a best friend at work are more likely to:

  • Support a safe workplace with fewer accidents and reliability concerns
  • Engage customers and internal partners
  • Get more done in less time
  • Innovate and share ideas
  • Have fun while at work

Job satisfaction directly correlates to having a best friend at work, according to the Gallup study.

Employee happiness keeps workers safer and aids recovery

So, what does all this have to do with workers’ compensation?

Creating a positive work environment can help your employees stay safer and have a smoother recovery if they do become injured. Some of the reasons for this include:

  • Workplace injuries are more common among new hires, so low employee turnover can help prevent injuries.
  • In a positive environment, employees are comfortable reporting workplace safety issues and taking the time necessary to perform their jobs safely.
  • When employees know their employers care about them, there’s less chance the claim process will become contentious if an injury does occur.
  • Workplace friendships create an added incentive for employees to return to work as soon as medically possible after an injury.

The numerous benefits to creating a positive workplace make a compelling case for building a supportive, affirming work environment.


Originally published May 2017

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