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How Happiness Grows Profits & the Dangers of Relying on Profits for Happiness

A 2019 study from the University of Oxford found that happy workers are more productive workers, 13% more productive in fact. More productive workforces tend to be more engaged, have better customer satisfaction, and are more profitable.

While this knowledge is out there and well-known by many in research fields, often owners and managers of companies forget that happy workers are good for business. Instead, they rely on profits and their bottom line, not just for happiness among workers but as a way to boost morale.

More and more we’re seeing profits be the number one goal of companies everywhere, and while profits are obviously important, a focus solely on them can actually be detrimental.

In this article, we’re going to look at employee happiness, its impact on company culture and performance, and how relying on profits for employee happiness doesn’t work. Learn more below.


How Employee Happiness Affects Company Performance 📈

Happy workers are known to be more productive, and engaged teams show reduced rates of turnover and absenteeism. This means that not only are happy employees going to produce more work of a higher quality, but they’re also less likely to be absent from work and leave the job altogether.

Studies show time and time again that happy employees are engaged employees and engaged employees are more likely to:

  • Be more creative and innovative 🎨
  • Offer better customer service 🗣️
  • Contribute to a positive company culture 👍
  • Adapt to change more easily 💪
  • And perform better overall 🥇

If your staff are performing better, then the company overall is going to perform better.

Happiness Creates Profit & Resolves Problems - Relying on Profits To Create Happiness Creates Problems 💰

So, if happiness can improve your profit margins, as happiness research suggests, then what are the dangers of relying on profits for happiness, over other things like good mental health and work-life balance?

  • Neglecting the emotional state of employees: Focusing only on your operating profit and ignoring whether you have happy people working for you tends to make employees feel undervalued. By rejecting their well-being as something that is not important, you are suggesting they are only there to make a profit.
  • Unsustainability of the practice: If your sole focus is on profit growth, then you’re likely overworking your employees, cutting corners, compromising on the quality of goods sold, and may even be neglecting ethical and legal standards. This kind of work can have an impact on the long-term success of the company.
  • Poor employee engagement: Employees who perceive a company to have a sole fixation on financial outcomes are much less likely to be engaged. If employees don’t feel a sense of connection to the company’s values or goals then they will lack creativity, motivation, and any commitment to meeting the company’s goals.
  • Increased turnover rates: If employees have no sense of happiness at work then this will play a role in a higher staff turnover rate. This can have multiple effects on your company. To begin with, higher turnover means you’re constantly spending money looking for, interviewing, and training new staff. In addition, a higher turnover rate may make it more difficult to find staff to replace those leaving as rumor gets around that your staff doesn’t feel happy. The level of happiness among current employees can have an impact on whether people actually want to work for you.
  • Customer relationships and satisfaction: Prioritizing profits over anything else will more than likely have an impact on your customer satisfaction levels. Poor customer experiences can lead to a lack of loyalty and may even tarnish your brand image.
  • Limited room for innovation: Employees working in profit-focused companies are unlikely to take a risk on new ideas lest they reap less than profitable results. While you may make good profits, a lack of innovation can mean you slowly lose status within your industry. Competitors that foster innovation will encroach on your market share and take over your leadership status quickly.

There are so many negative outcomes for prioritizing profits over employee happiness, and as we have seen, happy people with good life satisfaction are more likely to want to try new things, are motivated to meet goals, and will go above and beyond for their company.

A Checklist for Managers in Maintaining Employee Happiness for Better Profits ✅

 So, if you’ve decided it’s time to stop focusing on your net profit or gross profit goals and focus instead on greater happiness for your employees, where should you start?

Encourage a Good Work-Life Balance ⚖️

work-life balance

Source: Lorman

For many workers entering or currently in the workforce, having a solid balance between life and work is of the utmost importance. As a manager, you should be encouraging a work-life balance by ensuring employees leave on time and considering things like hybrid working or 4-day work weeks.

Managers can also implement better work-life balance in their own lives to lead by example. If employees always see you at work well into the evening, they may feel obliged to stay late too. Set an example and foster balance in your own life first.

Invest in Employee Development and Training 📚

Giving your employees the opportunity to develop their careers and learn can have a huge impact on their happiness and how they see their company. By giving them this opportunity, you are essentially telling them that you care not just about the work they do for you, but their career in the future too.

Utilize performance reviews or 1-2-1s to get an idea of where your employees would like to develop. You could come up with ideas together to foster development among your workforce.

Recognize Good Work 🏆


Source: The Retail Bulletin

Recognition is key to giving your employees purpose and boosting their happiness. Think about how you feel when someone publicly tells you you’ve done a good job. It feels good, right?

If you want to show your employees that you don’t just think they’re cogs in the company’s machine, then you need to show them that you not only recognize the work they do but that you’re proud of their achievements.

Consider ways to implement recognition into your company. Could you utilize an app or company messaging system to recognize employees in a centralized place?

Encourage Collaboration 🤝

Collaboration is a really great way to foster more creativity and socialization among your team. Not only can employees bounce ideas off of one another and possibly develop new ways of thinking, but they also get a chance to meet new employees and develop bonds.

Make Good Communication the Norm ☎️

Good communication is key to happiness among employees. Firstly, if you’re communicating your expectations clearly, then your employees know where they stand. They can deliver the work you ask for on time and to the standard you expect. By giving them clear instructions, they can also manage their own time more effectively and have more time for work-life balance.

On top of work expectations, communicating about the company, new ideas, and more can make employees feel included and part of the company, rather than simply its employees.

Offer Flexibility 🤸

Flexibility is another aspect of employee happiness, and in today’s society, it is expected by most employees. If you can change a mother’s working hours by half an hour, giving her time to pick her kids up from school, then she’s likely to be happier in her role than she would be were she missing out on time with her little ones.

Additionally, if you can work out a system for hybrid work for those with accessibility issues or even reduce your entire company down to a four-day work week (which has been shown to have a brilliant effect on happiness), your employees are likely to be happier.

Implement Wellness Programs 🧘

Lastly, implementing a wellness program that gives your employees the tools they need to manage their mental health can have a profound effect on happiness. If things do get too much, employees feel stressed, or they’re dealing with burnout, having a program to hand can make all the difference.

Final Thoughts

Employee happiness can have a positive impact on your profits, but profits alone won’t make your employees happy. In fact, a focus on profits can have a negative impact on employee happiness. Keeping your employees happy will make your company more innovative, will attract better talent, and will boost your bottom line, even if you’re not focusing on the financials.

Consider ways to improve happiness in your staff and see your profits grow.