Happy Employees Seem To Hold Key to Profitable Organizations

20. August 2010 by John Schinnerer.

How do you feel about your employer? A new study in Perspectives on Psychological Science indicates that how happy a company’s employees are is strongly related to how well the company performs in a number of important areas - increased employee retention, improved customer loyalty, and greater profitability.

Such findings may signal a coming downturn for companies such as JetBlue whose former flight attendant recently told a customer over the loudspeaker to take a hike and then jumped out the emergency exit. Assuming more of Jetblue’s workforce is equally unhappy, the company’s profitability is likely to decrease in the short term.

Given the amount of time you spend at work, it seems reasonable that work influences how happy we are. More and more studies are documenting the connection between your attitudes towards work, your mood outside of the workplace and physical outcomes like coronary heart disease.
Come to find out, that may be merely the tip of the iceberg. Gallup scientist James K. Harter reported recently that how you perceive your work conditions also seems to have a significant effect on company profitability.

In Harter’s latest findings, Gallup examined data from over 2,000 business units (e.g., retail stores and sales offices) within 10 firms. Harter and colleagues pored over employee satisfaction surveys, customer loyalty numbers, employee retention rates, and financial performance of the organizations. Harter performed data anayses to determine the strength of relationships between employee job satisfaction and the outcome measures of the firms.

Findings showed that how employees perceive work conditions predict critical organizational outcomes. In other words, when employees hold their company in a positive light, the company was far more likely to have higher employee retention, increased customer loyalty, and improved profitability.

Unexpectedly, the findings indicate that employee perceptions influence these outcomes more than the outcomes affect employee perceptions. It may be that profitability begins with positive employee perceptions of their employer, their job and their overall contribution. Thus, happy employees seem to be key to increased profitability.

Harter suggests that ‘helping employees see the ultimate outcomes the organization is working to achieve and how they play a role in achieving those outcomes’ may be the greatest benefit managers can provide to those they supervise.

By John Schinnerer, Ph.D.
Founder Guide To Self
Award-winning author (Guide to Self: The Beginner’s Guide to Happiness)
Award-winning blogger (Top 3 in positive psychology by PostRank, Top 100 by The Daily Reviewer)
Free 216 page eBook on latest ways to increase happiness from the inside out at http://www.Guidetoself.com

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Journal References:

1.     Manon Mireille LeBlanc, Julian Barling. Workplace Aggression. Current Directions in Psychological Science, 2004; 13 (1): 9 DOI: 10.1111/j.0963-7214.2004.01301003.x

2.     H. R. Bowles, M. Gelfand. Status and the Evaluation of Workplace Deviance. Psychological Science, 2009; 21 (1): 49 DOI: 10.1177/0956797609356509

3.     Paul E. Spector. Employee Control and Occupational Stress. Current Directions in Psychological Science, 2002; 11 (4): 133 DOI: 10.1111/1467-8721.00185

4.     J. K. Harter, F. L. Schmidt, J. W. Asplund, E. A. Killham, S. Agrawal. Causal Impact of Employee Work Perceptions on the Bottom Line of Organizations. Perspectives on Psychological Science, 2010; 5 (4): 378 DOI: 10.1177/1745691610374589

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