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How Employee Happiness Impacts Business Profitability

StaffConnect
December 8, 2023

No matter the amount of hustle and grind you put into a business when employees are unhappy, reaching your desired profits can be elusive. This is why employee happiness has been recognized as a major contributing factor to a company’s profitability for years. If you want to learn more about the importance of employee happiness in maximizing profitability for businesses, make sure to read on.

How Employee Happiness Impacts Business Profitability

From productivity to retention, employee happiness plays a crucial role that is not to be missed. Below, we get into more detail on the particular ways in which employee happiness impacts business profitability.

Employee Happiness Directly Affects Productivity 

If you are aiming to improve your company’s profitability, you may want to look into your employees’ happiness at work first. According to a study conducted by the University of Warwick, happiness can lead to a 12% increase in the productivity of workers. Another interesting study to look at is the one conducted by Oxford University's Saïd Business School. According to it, happy workers are 13% more productive. 


In general, productivity and profitability are positively correlated. Hence, when productivity increases, the profitability also tends to get higher. This is primarily because a productive company accomplishes more tasks and produces more products, which results in greater potential to earn and grow profit margins. 

Happy Employees Are More Engaged and Customer-Centered

When employees feel happy, they tend to be more active and involved in the company's operations and objectives. According to a survey, employees who are happier at work are more engaged in their workplace, which leads to an increase in productivity. This increased engagement can also result in improved customer service, which is essential in fostering brand loyalty and increasing revenue. 

Employee Happiness Affects Creativity and Innovation

In today’s business landscape, where customer preferences and industry trends are changing rapidly and competition is increasing, creativity and innovation play an important role in determining the success of a business. Hence, if you truly want your business to thrive, you need employees who do not just fulfill their roles accordingly but can also generate new ideas to solve problems or improve business operations. One way to achieve that is by boosting the happiness of your employees. A 2008 study of 171 students and a more recent 2021 study of 722 high school students in Lithuania both found evidence of a link between happiness and idea generation. 

Happy Employees Are More Likely to Show Up and Stay With the Employer Longer

Absenteeism is one of the silent killers of a business. In the U.S. alone, absenteeism costs companies billions of dollars each year because of lost productivity, wages, and management time. To avoid absenteeism, companies can take proactive measures such as enhancing employee happiness. 


Fundamentally, happy, engaged employees are less likely to miss work. When an employee enjoys their workplace, they are more likely to show up and accomplish their tasks. In addition to regular attendance, happy employees also tend to stay longer. This improves the retention rate of a company and saves them from expenses that come with replacements or hiring a new worker. 

How to Improve Employee Happiness

Creating a positive work environment involves ongoing efforts and a commitment to addressing the key factors that influence employee happiness. Here are actionable tips you can take to achieve that.

1. Offer Training and Development Opportunities 

The benefits of employee training and development go beyond employee career growth. Through these programs, employees can develop a sense of value, become more confident in their capabilities, and have increased job satisfaction. This later leads to greater commitment and engagement that can benefit the company in the long run. 

2. Communicate Openly 

One of the most effective ways to maintain a wholesome work environment where employees are truly happy is through open communication. By communicating with employees and giving them a chance to share their thoughts without judgment or retribution, you can foster a sense of trust and transparency and boost your employees’ morale. Additionally, when employees feel valued and heard, they are more likely to be engaged and committed to achieving goals and, more importantly, be satisfied with their roles. 

3. Support Work-Life Balance

As we always emphasize, achieving a healthy work-life balance is crucial for the well-being of employees. When you create a workplace that supports work-life balance, you are also building a healthy work environment. Believe it or not, work-life balance reduces stress levels of employees and boosts job satisfaction by up to 8.3%


For tips on how to achieve work-life balance in your workplace, make sure to check out this post

4. Provide Consistent Feedback and Recognition

Consistent feedback and recognition can provide a much-needed morale boost for your employees. When employees feel seen, appreciated, and valued for their contributions to the workforce, they are more likely to have a sense of fulfillment and become more engaged and productive. They also tend to experience increased motivation for growth and development within your organization. 

5. Offer Better Perks and Benefits 

The lack of perks and benefits in a company is unmistakably one of the factors that affects employee well-being. To address this, you may review and upgrade your compensation packages for your employees. Some of the perks and benefits that you may include are healthcare and retirement plans, flexible work arrangements, and training and development programs. 

6. Promote an Inclusive Workplace 

According to research by BCG, an Equal Opportunity Employer, the level of inclusiveness has a direct impact on employees’ happiness and well-being. This is because employees are more comfortable sharing their perspectives in an inclusive environment, leading to reduced stress and anxiety. The same study also notes that happy employees are twice as likely to have good friendships at work and report a positive work-life balance. Ultimately, by fostering an inclusive culture where employees can be their authentic selves, businesses can cultivate healthier, happier, and more productive workforces.

Support Employee Happiness With StaffConnect

At StaffConnect, we recognize the importance of employee happiness in today's competitive work environment. That's why we've built our app with corporate workers in mind, making sure that our platform can boost their efficiency and lessen their burden and stress at the same time.


StaffConnect helps businesses worldwide in making their operations more efficient and effective. Our business management platform is optimized with functional features and tools that automate routine tasks, streamline processes, and save time. Some of the most practical tools of our app include GPS Check-In and Out, a communications hub, automatic reminders and notifications, calendar integration, emails, and payroll.


Want to try StaffConnect first before committing to our services? No worries. Feel free to schedule your free demo here now.