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Employee Happiness Matters More Than You Think

Happy workers will produce more and do their jobs better. Pro or con?

Pro: Bring on the Smiles, Count the Profits

Productivity measures across national economies have captivated the attention of policy makers and executives alike. Ultimately, though, the source of productivity is the individual knowledge workers who get things done every day. And the evidence is clear: People perform better when they’re happier.

Our research over the past decade has focused on creativity, productivity, and the psychology of everyday work life. Whether we looked at entrepreneurial startups or large, established enterprises, the same holds true: People are more productive and creative when they have more positive emotions. In fact, we found that, if happier on a given day, people were not only more likely to come up with a new idea or solve a complex problem that same day but also to do so the next day.

Gallup quantified the link between employee feelings and corporate outcomes, reporting that lost productivity due to employee disengagement costs more than $300 billion in the U.S. annually. A separate Gallup study by researcher James Harter and his colleagues found that business unit sales and profits at one point in time are predicted by employees’ feelings about the organization at earlier points in time.

We can all think of creative geniuses tortured by depression (e.g., Vincent van Gogh, Virginia Woolf), and many managers still believe stress and fear are the best ways to keep workers cracking. But if you pay careful attention to the data, rather than anecdotes and intuition, you’ll find it’s clear that happiness boosts performance.

Teresa Amabile is the Edsel Bryant Ford Professor of Business Administration and a director of research at Harvard Business School, as well as co-author of The Progress Principle. Originally educated as a chemist, Amabile received her doctorate in psychology from Stanford University. She studies how everyday life inside organizations can influence people and their performance. Steven J. Kramer is an independent researcher, consultant, and co-author of The Progress Principle. He received his doctorate in developmental psychology from the University of Virginia and has served as a post-doctoral research associate at Vanderbilt University and a psychology professor at Brandeis University. Kramer’s current research interests include the psychology of everyday work and the fundamental role of work in human experience and history.

Con: Contentment Can Breed Complacency

Sometimes it pays to question the things we take for granted in life. For example, for years we have been telling people to look at problems in a positive way and see the glass as half-full rather than half-empty. Yet research undertaken by Clark Gilbert for his doctoral thesis at Harvard has shown that those who view the glass as half-full do not do better than those who perceive it as half-empty. Instead, it is the people who see it as both half-full and half-empty who do the best. There are many reasons for this, but the point is that even seemingly incontrovertible statements such as “be positive” can be found wanting.

The same principle applies to our firmly entrenched belief that “happy employees are more productive.” Having happy employees has many benefits—but also costs that can sometimes outweigh the benefits.

For example, happy employees tend to enjoy the status quo so much that they might resist changes to it. This is hardly a recipe for success in today’s world, where agility and embracing change are essentials for success.

Another potential cost is that happy employees can feel so satisfied with their work that they refrain from taking on new challenges. As we all know, dissatisfaction with one’s current position leads one to search for alternatives and innovate. But the biggest cost to having happy employees becomes evident when we ask the question: “Why are our employees happy?” One possible reason: We have tried to keep them happy by never saying no to them—an attitude that any parent call tell you all about.

Unfortunately, to succeed in business, organizations need to make difficult choices all the time—what to do and, more important, what not to do. The truth of the matter is that whenever we make a difficult choice, some people will win and some will lose. The winners will be happy and the losers unhappy. It’s impossible to make everybody happy all the time. If everybody in your organization is happy, that may be because you’re failing to lead them.

Costas Markides is professor of strategy and entrepreneurship and holds the Robert P. Bauman Chair of Strategic Leadership at London Business School , whose MBA program was ranked No. 1 by the Financial Times in 2009, 2010, and 2011. A native of Cyprus, he received his B.A. (Distinction) and M.A. in economics from Boston University, and his MBA and DBA from the Harvard Business School. His current research interests include the management of diversified businesses and the use of innovation and creativity to achieve strategic breakthroughs.

Opinions and conclusions expressed in the Debate Room do not necessarily reflect the views of Bloomberg Businessweek,, or Bloomberg LP.

Reader Comments

Pierre Dube

The striking difference between the pro and con POV of employee happiness is the pro makes a claim supported by research. The con view states the claim only and the reader has to push the "I believe" button.

Also, his final point, he presents a false dilemma, where the world is viewed in black and white, as an abstraction and then spreads it around peanut butter fashion. Generalizations, as opposed to data, makes it difficult for the reader to challenge. I wonder if that was his objective.

Mr. Markides credentials are impressive. I would have been more impressed if he had backed up his position with some facts.


Luke Roney

While an employer can take steps to make employees happy, it's primarily the employees themselves who need to take responsibility for their happiness at work.

Innovating and seeking new challenges is a way that that dissatisfied employees become happy in their job.

Also, in regard, to employees being happy because the employer never says no: Employee happiness is based more on a culture in which employees are able to have their ideas heard -- that they feel they are part of whatever is going on.

Whether or not an idea is ultimately accepted has less of an effect on happiness than the fact that employees are able to, and even encouraged, to contribute.

Sure, it's impossible to make everyone happy all the time. And some employees are, by nature, negative and resist happiness.

But it's in the employer's best interest to create a fair, collaborative,open, innovative culture that allows employees to make the choice to be happy, and that supports that choice.

Luke Roney,


Are we confusing happiness and work engagement? Pool tables and picnics never made sense to me. All those mean naught, if you give someone a string of boring assignments. Equally, cracking the proverbial whip along with regular tongue lashings, is probably not going to be as effective as giving someone work that interests them.

Teresa Amabile

Luke Roney's comment raises several important issues. In the research that Steve and I refer to in our "Pro" argument, we discovered that people do vary in their baseline levels of happiness, even in the same company and team. However, actions of managers and colleagues could and did affect happiness above or below people's baseline levels. Some of the most important actions are precisely those Mr. Roney describes: creating a "fair, collaborative, open, innovative culture." True, all ideas cannot be accepted; but all ideas should be respected and given a fair hearing.

-- Teresa Amabile

Henry Stewart

Pierre, you absolutely hit it right. The Pro case is backed by solid research. And here's some more. Alex Edmans at Wharton Univ looked at investing in the companeis in the Best Workplace lists every year for the last 25 years. Result: 3.5% extra return each year. Creating happy workplaces makes financial sense.

Steve smith

People are more productive and creative when they have more positive emotions. In fact, if happier on a given day, people are not only more likely to come up with a new idea or solve a complex problem that same day but also to do so the next day.
Treat all with respect, you will reflect.
One of the facts of life.
Steve Smith
V.P Service/Training Development
Atlanta, GA

Pauline Rooney

The same contention as in the ‘pro’ article has been backed up by studies here in Australia. The cost to Australian companies is around $1638 per person annually, in absenteeism, and does not include the reduced productivity once employees return to work. As promoters of both mental and physical wellbeing in the workplace, we have found in practice - as we have created a programme in order to combat problems in the workplace such as this - that once workers have completed this programme, they are found to be more productive, more vibrant and less susceptible to injury.

Patrick Smith

I am on the pro side, however, their is a line between Mission Happy vs. Candy. Like a parent tough love is always part of the equation, and thinking candy is the answer is always bad management. Productivity+happy employee+clear goal attainment+accountability=success

Hector Villares

Count my vote on the Pro side. I have been in Hr Management for over 20 years . I am not implying that my experience makes me an expert, but throughout that time it has been evident that a happy employee is more productive just because he/she is simply more ENGAGED. This point needs to be stressed, since an engaged employee will be easier to coach and more willing to listen. This invalidates the argument that the ee will be less open to change. I believe it will be the opposite because you will have built more trust.


The "Con" argument is an example of how being excessively intellectual can lead you astray.

Fatmanur Erdogan

This article also encourages us to think what makes employees happy and what makes their work challenging so they can flourish and the businesses thrive

Kevin Fuller

"Employee Happiness Matters More Than You Think."
"Happy workers will produce more and do their jobs better."
Only true if youy are not thinking. If your employees dread Mondays then - you've lost it.

Larry Thomas

No matter how one describes, or attempts to describe the employer/employee relationship, it all comes down to leadership style. The age-old methods of 'do as I say - not as I do' are long outdated and no longer apply. From the 52nd Floor, all the way down to the warehouse production area, today's employee has developed his or her own half full/half empty attributes. Today's worker must be told "No", however this must also be equally matched with a balanced distribution of positive reinforcement. An employee, who knows his leader possesses the ability to point out deficiencies as well as walk through fire for his team, will follow you anywhere. Lead by example!

Larry Thomas,

HR Cindy

Employers can't "make" an employee happy - they can only create the environment where an employee is challenged and has opportunities for growth so they can find happiness themselves.


Well, if I had a choice between working for one or the other, It wouild be pretty easy.

Sorry Teresa....

Joe Fierro, M.S, (QSM), CTP

Nicely done, Teresa & Stephen.

Is it "happy" or "satisfied" that leads to better organizational (and employee) performance?

My experience and study indicate the latter is the optimal state. A viable and occupational state of the former, happy, comes when employee "satisfaction" is achieved.

Disengagement, as you point out, costs the U.S. over $300 BILLION a year.

In the white paper, The Perfect Storm: The Future of Retention and Engagement, the author makes the distinction between a happy employee and one that is satisfied. Satisfaction is the optimal state with the best potential for organizational and individual success.

Good leaders ensure a workplace climate that permits individual engagement. The workforce has internalized the organization's intent and direction, the goals, and hardwired their daily activity to the overarching strategy of the enterprise. The engagement will foster a satisfied workforce. Then, most should be "happy" at the end of the day

As you point out in your work, focusing on the goal of making an employee happy can create problems. The problems, resistance to change, will eventually cost the company, cause it to go out of business and then make the employee .... unhappy.

Snap! "What happened!" says the manager who was only trying to make everyone happy. Frustrated, confused, depressed, now the manager AND the manager's boss is unhappy. You know what happens next.

Mission: Maximize workforce engagement.

Satisfaction and genuine happiness will follow.

Kind regards,


Productivity = Employee / bull sh!t

Uday Nazare

With all the respect given to the research and studies, the element of "Happiness" still remains the debated subject of any given situation.

A Team may not have all the members of similar kind. All the team mates are different and unique in their own way, making happiness very subjective.

Engaging team members in a given task, giving them the Tools of the trade, supervising it sometimes and appreciating it, will definately boost their moral. A break from the mundane is always appriciated by the employees too.

The problem with the Managers that they are so engaged in their routine job that they actually fail to pat the back of the employees, on the contrary, the employees are reprimanded for their faults.

A similar kind of research and studies for the Manager Lot will also be very helpfull.

Jon Pielak

Disagree with Luke completely on this. Each person has strengths and weaknesses. A profitable company is run by smart leaders who find ways to leverage someones strengths and challenge their weakneses - allowing them to fail, and giving them accountability.

Bad leaders instead have a tendency to say "this is what you must be, do, and say" and require conformity. This is what our damn education system has done to us frankly. And when each unique individual doesn't conform, they become unhappy, and look for a fit elsewhere.

Be open minded. Give your employees the room to find out what makes them tick, and allow them to shine.

One of my Sr. Interactive Designers is considering becoming a Project Manager...because she really enjoyed the challenges given to her that were outside her comfort zone. She was unhappy forcing the other role as defined. If as a leader I never gave her those challenges, she'd probably be moving on.

Granted, some people are unhappy. But those should be the rare ones. Why lower the bar for them?

Rob T

I think much of the problem in this discussion revolves around what we really mean by "happiness". It's easy to confuse happiness with contentment or complacence, when in a workplace context they are not at all the same things. Success in a company hinges on matching people's strengths and personalities with business needs where they can be used in a way to maximize both personal and organizational "happiness". This is never an easy task, and does not lend itself to cookbook solutions you can apply indiscriminately in any business, geographic location, or function.

Sadly, too many people in management think in absolutes, sure that they can come up with a perfect solution or process that they can apply company wide. When people are involved, trial and error, conflict and compromise, and constant change are the norm that must be accepted and dealt with. Any solution brings new challenges, and any challenge offers new opportunities.

Dave D'Silva, Intelligent Market Solutions Group

Mr. Markides likely knows better, however his business model prays on the win-lose, not win-win, and therefore likely feels he must spread doom and gloom to make money. I came to this conclusion after an hour researching his work, easily available on the internet.

I encourage Mr. Markides to upgrade his stand with a win-win proposition, where his advice may have more impact. As an example of how happiness leads to profit, please see see This was an experiment in the half-full / half-empty, encouraging half-full, resulting in $900 B in assets under analysis and record breaking profit for participant brokerage firms, including the world's largest. I encourage your audit of this claim. My role is the consultant hired to start the firm. I am no longer with that firm.

David Smelson

I agree with Pierre regarding the gut vs. data assessment. Unfortunately some companies are so entrenched in their culture of no that they deny resources and ideas because they never approved them before, and think they shouldn't start now.
In the quickly changing business landscape we all live and work in today agility is a required attribute to succeed, and that requires the ability to say yes when something good is brought to the table.

Dave D'Silva, Intelligent Market Solutions Group,

Dr. Markides is an accomplished, respected individual who likely knows better. My explanation of his statement is his business model, which classically prays on the win-lose model to make money. I came to this conclusion after two hours researching his lectures, easily available on the internet.
I encourage Dr. Markides to upgrade to a win-win model, where his advice may have more impact. As an example of how a win-win model may have more impact where happiness leads to profit, please see This was an experiment encouraging "half-full mentality", resulting in $900 B in investment assets under analysis producing record breaking profit for participant brokerage firms, including the world's largest. I encourage your audit of this claim, using the techniques Dr. Markides suggests: Google. My role is the consultant hired to start the firm and develop the methodology and software. I am no longer with that firm.

I look forward to follow-up comments.


Happiness of employee does matter but it doesn't mean that they will take it for granted and get settled with the status quo and that they won't be ready for any challenges whatsoever.
On the contrary,a happy employee will be more energetic and look forward to more of challenges.Employers who can just lend a ear to hear all the ideas that the employee has is more than enough for the employee.

Sonny Melendrez

While employers can make the workplace an enjoyable environment, the employee is ultimately responsible for her success and happiness.

Moreover, it is a sense purpose that will ultimately give the employee the satisfaction we all desire.

When partners at companies like Disney and Southwest Airlines are empowered to deliver outrageous service, it is the customer that bestows the ultimate reward: appreciation.

Stay happy.

Sonny Melendrez,


Employees need to feel that they matter; that they are not JUST a cog in the machine even they are obviously part of the machine.

When you have employees that do good work, are creative in that work and excel, you MUST allow them to fail without getting beat up over it. You MUST allow people to grow and the only way to do that is to allow significant trial and error phases without the chopping block hanging over their head(s).

This describes a functional TEAM. In contrast, a dysfunctional team does just enough to make sure they don't get fired and competes internally to make sure that one doesn't get let go. Much of the time, that breeds rivalry where rivalry should actually be mutual respect and admiration with the understanding that people can grow together and actually share ideas.

I've had enough of companies USING people as a means to an end and which are unwilling to allow people to work together. They take competition too far and internalize it instead of establishing an environment where team work can thrive and ideas flourish.

STOP micromanaging.

STOP firing people for failures when their successes far outweigh their failures. Remember, this is a symbiotic relationship.

STOP promoting internal rivalry that generates animosity.

STOP using us as a means to an end.

STOP creating inhuman/unrealistic project time-lines.

DO praise us when we perform well.

DO guide us when we don't.

Disclosure: Software Developer

Kevin Quinn

The con: argument makes more sense if you replace "happy" with "comfortable".

Paul Boos


I think if I were going to present what you are saying, I'd turn it around a bit and not start off with the fact it is the employee's responsibility as it is a joint responsibility of both employer abd employee.

As a systems thinker, management's primary responsibility is for the "system" and culture of work that accentuates innovation and empowerment. (Your later statements acknowledge this.)

For knowledge work this is essential for productivity and even for more 'mechanical' jobs allowing this freedom has pay-offs. While the employee ultimately has to "decide" if they are happy, only the management of the organization can create an organization that sustains this by valuing the employees.

I think your last statement hits the nail on the head, I'm afraid though your opening two statements make it sound as if it is the employee's responsibility for the 'system' of work.

Just my 2 cents...


Eric Bauer

The problem with this debate is, what constitutes an unhappy employee? At some point the employee will leave, but every job has challenges so it gets down to levels of satisfaction. These days its a sellers market and employeers have not not been receptive to employee concerns. I can't imagine that anyone really believes that unhappy workers make for a productive company, its really pretty simple.

Joe Harder

Very interesting article.

I love Professor Amabile's work on unleashing creativity, and think the essay she co-authored is easiest for me to buy, given the work of people like Jeffrey Pfeffer on putting people first, Ryan Quinn and others on positive organizations, and Mihaly Csikszentmihalyi on flow.

Professor Markides's points about not being too optimistic are intriguing as well.

There is some evidence that people in better moods make less good decisions (Darryl Roberts' dissertation at Stanford using Carter Racing), which could tie in with the complacency argument, and the work of Warren Bennis in Organizing Genius points out that a number of breakthroughs came in not very nice conditions.

And of course how much organizations can do to ensure happiness (given the research on happiness set points) is probably a good question.

Shaun Mallonee

Mr. Markides, let me see if I follow your logic: a happy, and, therefore, complacent workforce leads to inefficient operations. Conversely, a unhappy, and therefore, discontented workforce leads to efficient operations. If this were true then all my dealings with government agencies would be swift, prompt and well organized.

I too like my work environment to a be positive experience. I am at my happiest when I am part of a team collaborating design, build and implement new systems and functionality. These activities give us a sense of accomplishment and enriches our lives (and careers). I guess I am one of the individuals who does not state that the glass is half full or empty... it mearly has 8oz(236.6mL) of fluid in it.

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