THE BLOG
09/03/2015 10:54 am ET Updated Sep 03, 2016

The Happiness Index: Why It Matters for Today's Organizations

With frequent travels to many different types of organizations, there's one thing I notice first when walking the hallways, presenting at meetings, or being greeted by the receptionist. That's the level of employee happiness and general satisfaction. I refer to this internal corporate barometer as an organization's "Happiness Index."

The Happiness Index is directly linked to employee engagement, which sits center stage in the world of work right now -- and for good reason. Research has repeatedly shown that engaged employees are not only better producers, but they're also more committed to the organization, achieve better business outcomes, and deliver superior levels of customer satisfaction. Since the top reason that people join or leave an organization is the relationship they have with their direct manager, leadership has a significant opportunity to impact not only employee engagement and satisfaction, but also the company's bottom-line performance. That's why I consider the Happiness Index to be an indirect path to an organization's profitability, reputation, and long-term success.

Some industries stand out as being lower on the Happiness Index than others. A recent article in Fortune noted that tech workers are less happy than workers in other sectors in nearly every category surveyed. The findings were based on a new study from Tiny Pulse, which found that the reasons behind this malaise include lack of opportunities for professional growth, lack of recognition for their work, and lack of high-quality relationships with their coworkers. While the technology industry was called out, it is not alone in encountering this challenge. In fact, other research has shown a growing trend of disengaged and dissatisfied workers across many business sectors.

With this problem so pervasive, when I see someone who is visibly engaged--or who says they love working at their company and feel that they are part of its mission--I stop and ask them why. Much of the feedback I receive points back to the following five basic leadership tenets, which are important for every leader and manager to practice in their day-to-day interactions with their teams:

  • Offer opportunities for continuous growth. What truly motivates most employees is to continue learning through cross-functional experiences, observing others outside their division and having opportunities beyond their day-to-day job or office. Such experiences give people a chance to learn from others, while broadening their perspective on how to expand their skills or improve the business. A great example of how to provide growth opportunities is through sponsorship. Expose your top talent to projects that are visible to senior leaders, have them present information at your next board meeting, or let them connect with your network to gain a broader understanding of the business. In short, give them tools to help them succeed at their specialties, and offer a less rigid work environment that facilitates stretch opportunities and new experiences.
  • Clarity. When SHAMBAUGH surveyed the leadership capacity and culture of our client organizations, the area of "clarity" emerged as one of the biggest gaps in many companies. Throughout the organization, all employees need not only a solid understanding of their personal goals and work preferences, but also must know how their role contributes to the overall success of the company. Be intentional and transparent about openly communicating how each person's role plays into the bigger picture of organizational goals. Communicate progressive steps to reach larger goals on a regular basis.
  • Demonstrate commitment and fairness. Engaged employees aren't just motivated by money, status, or power--they care about shared values, trust, mission, and purpose. They want to learn and grow with people they respect, and who respect them in return. A healthy paycheck, raise, or bonus may make people happy initially, but research has shown that when employees are rewarded with more money, it doesn't pay off in the long run. In fact, after a short honeymoon period, many leave the company just a few years after receiving a financial incentive. A more effective strategy to encourage internal motivation is to create fair hiring practices, an evolved and compelling culture, and HR systems that demonstrate the commitment to all employees' growth, well-being, and professional advancement.
  • Give feedback. Whether working with our clients at SHAMBAUGH or gaining feedback from employees, one of the top frustrations heard is lack of feedback. It's easy to let people know when they have done a good job; however, we tend to shy away from the difficult conversation: constructive criticism. When provided with comprehensive feedback on growth opportunities as well as areas of mastery, employees will not only gain more confidence but will have a better chance to learn and grow. I always had greater respect for those who provided feedback--whether positive or constructively negative. Feedback lets employees know that someone is invested in their success, which drives up employee happiness and leads to greater productivity.
  • Recognize the "wow" factor. Many employees work hard to impress their organizations with their initiative and strategic thinking, yet go largely unrecognized for their efforts. If someone has gone above and beyond, take time to acknowledge the "wow" factor reflected by hard efforts and good work. One client organization has a formalized venue for acknowledging employees' unique accomplishments and ideas. By supporting your teams in this way, you'll cultivate a culture of appreciation, which will facilitate higher levels of engagement.

Do you know your team's or organization's Happiness Index? If not, walk the hallways and ask people, "Do you love working here? If so, why -- and if not, why not?" Following the five tenets above may help boost a languishing Happiness Index -- and make you a better leader in the process.