Employee Happiness: How Much Does Unhappiness Cost?

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How Much Does Unhappiness Cost?

Lost productivity due to the poor state of employee happiness costs American enterprises billions of dollars: Three hundred billion, to be exact, according to the Gallup-Healthways Well-Being Index. That study details how increasingly unhappy people are with their jobs, managers, coworkers, and work environments. It also reveals that employee unhappiness results in absenteeism, presenteeism (at work, but mentally elsewhere), lower productivity, and lower-quality work.

Productivity loss isn't the only place where employers are feeling the pinch of unhappiness. They're also feeling it in the form of turnover. When you lose employees, you lose revenue. The cost of that, according to the Society for Human Resource Management (SHRM), can be as high as 100 to 300 percent of the recently departed employees' base salary.

What Should Your Enterprise Do?

Is your workforce happy? Does it really matter?

The answer to both questions is definitely yes. According to a 2014 study on employee happiness by the University of Warwick, emotionally healthy and supported employees are more productive. Happy employees are 12 percent more productive than the average worker, and unhappy employees are 10 percent less productive.

Take a page or two from Intuitive Research and Technology Corporation's (IRT) playbook. They have been named, for the second year running, the number one place to work for medium-sized organizations by Great Place to Work.

This enterprise, which provides engineering and analytical services, focuses on five main areas:

  1. Bonus and Profit-Sharing: The bonus and profit-sharing program is special, because it's robust. It includes significant OTS (On-the-Spot) bonuses throughout the year along with an organization-wide bonus in November that's based first on organization level performance, then group, then individual. IRT also shares profits with everyone in March, and the cash goes into 401k accounts.
  2. Certification Boot Camps: To promote employees' professional development, IRT provides "boot camps" in-house to assist employees who need to prepare for specific certification courses, e.g. Certified Systems Engineer Professional (CESP). The organization brings in instructors, provides materials, and also pays for the exam (once passed).
  3. CARE Day: For the quarterly CARE Day program, IRT brings in a clinician, physical therapist, nutritionist, health food store representative and massage therapist. IRT pays for treatments, tests and consultations, and blood work and other test results are sent to employees' homes.
  4. VIP Leave: The Veterans Information Program (VIP) Leave is a special program to assist veterans prior-to-hire, post-hire and throughout the year through Lunch 'n' Learn programs on veteran-related topics. VIP Leave provides up to three days off each year, with pay, for VA hospital visits and mid-tour return visits for active duty spouses.
  5. Benefits Allowance: IRT provides a general annual allowance to full-time employees to help pay for voluntary benefits. If the allowance is not used for benefits, it becomes additional income.
What's a CHRO to Do?

As you help your enterprise find ways to create a happier work environment, HR can support the process by paying closer attention to the screening process to ensure new hires fit into the culture. A Globoforce "work mood tracker" report adds that it's important to also ensure employees feel appreciated. Sixty-nine percent of employees, according to their survey, say they will work harder when they feel recognized for their achievements, no matter how small.

Savvy CHROs also help employers attend to employees' personal needs. A Net Impact-Rutgers University study shows that 88 percent of employees believe it's not just important, but crucial, to have a healthy work-life balance along with a positive atmosphere in the workplace.

A big part of that balance doesn't cost a dime: It can be as simple as fostering workplace friendships. A Jobsite UK study shows that 70 percent of participants say cultivating friendships while at work creates a positive influence on both their productivity and happiness.

Finally, CHROs should help managers and supervisors understand the importance of focusing on their employees' individual strengths. This, ultimately, could double the number of happy employees, according to research from Gallup.

The Bottom Line

Statistics have plenty to say about employee happiness and its effect on productivity and the bottom line. That's why clever HR leaders pay more attention to the concept of creating a workplace climate conducive to overall satisfaction, not just job satisfaction. Yes, implementing changes may cost more in time and money, but if research results are to be believed, the payoff is invaluable - in employee retention, productivity, and earnings.