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Many happy returns      01/11/2019 by Sarah Pursey

The world is currently facing a productivity problem. More people may be employed – yet since the 2008 global financial crisis, very little headway has been made in squeezing more value out of each work-hour. While the convergence of smart, interconnected technologies is propelling us into the much-vaunted Fourth Industrial Revolution and suggesting that enormous productivity gains are finally within our grasp, much research actually points towards ‘happy workers’ as a key piece in solving the productivity puzzle.

The connection between employee attitudes and business performance is something that has been observed for many decades, with influential studies as far back as the 1930s revealing the impact of improved workplace conditions on overall factory output. In the 1950s, sociologist-turned-executive James Worthy observed how enhancing the autonomy of employees led to improved morale and productivity. Such assertions were bolstered in 2012 when Gallup conducted one of the most comprehensive studies on the subject of whether – and to what extent – happy workers make successful companies. Spanning 192 companies and 1.4 million workers across 50,000 business units in 49 industries and 34 countries, the research found that businesses scoring in the top half of the rankings in terms of employee engagement attained almost double the performance outcomes of those enterprises dwelling in the bottom half of the list. 


Certainly, amongst its peers, the United Kingdom has stood out as one of the worst productivity performers in recent times. Earlier this year, official government data showed that over the last decade the UK’s labour productivity growth fell to a level lower than at any time in the 20th century, let alone the 21st. And a new study from the CBI and McKinsey suggests that too many businesses in the UK are missing out on a golden opportunity by not investing more into how they engage with workers. “We estimate that by improving the average quality of people management in the UK by just seven per cent against global indicators, £110bn [US$141] could be injected into the economy,” asserts Matthew Fell, UK Chief Policy Director at the CBI. “That would be equivalent to adding the entire construction sector over again.”


In a separate study by The Wharton School at the University of Pennsylvania, researchers took Fortune’s annual list of ‘Best Companies to Work For’ and compared it over the years with how peer companies performed on the stock market. They discovered that those firms deemed the best to work for outperformed the others, while investors also undervalued the intangibles of employee well-being. The significance of the research is that it clearly demonstrates how the potential cost of raising employee engagement is more than matched by productivity and increased performance.


According to Jan-Emmanuel De Neve, a professor at the University of Oxford’s Said Business School, active engagement transcends mere job satisfaction. It involves “being positively absorbed by the work you’re doing, identifying with, and promoting the mission of the company you’re working for.” Creating a flat organisational structure in particular has been shown to help foster such staff contentment – and this is a strategy being adopted by a growing number of companies today, including Danish toy producer Lego, media goliath Netflix, tech giant Google and major US manufacturer WL Gore.


Ultimately, positioning happiness front and centre of business and policy decisions has been shown to generate substantial benefits for the institution implementing such a progressive strategy. In fact, research by Warwick University suggests that raising people’s happiness in turn helps raise their productivity to the impressive tune of 7–12 per cent – thus creating many happy returns for staff, employers and investors alike.

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