Is Everybody Happy? Your Earnings Report Might Tell You.

If company leaders want to know whether their employees like their jobs and enjoy their work, one of the best places to find the answer is in the earnings report.

Research continues to show that employees who enjoy doing what they’re doing and where they’re doing it are more engaged, more productive, and less likely to quit (or even look for another job) than employees who dislike, or are ambivalent about, their work. And for some companies, this shows up in company earnings.

According to a Pew Research Center survey, released in mid-December, half of all U.S. workers told Pew researchers “they are extremely or very satisfied with their job.” An additional 38% said they are only somewhat satisfied.

Of course, survey data only provides a point-in-time snapshot of what’s going on in the respondent’s world. The answers people give depends on what they’re asked and many other factors, ranging from, but not limited to, the time of day (Have they had their first cup of coffee yet?) or, in this case, perhaps, their boss’s mood that day (grouchy, with a side of passive-aggression?).

Happy-Productive Worker Hypothesis

The relationship between employee job satisfaction and performance is called the “happy-productive worker hypothesis.”

This hypothesis, as described in Psychology Today by Professor Llewellyn E. Van Zyl of the Netherlands’ Eindhoven University of Technology, is a sort-of reinforcing feedback loop. In short, it holds that “there exists a symbiotic, reciprocal relationship between an employee’s level of happiness and their work performance.”

It works like this, he says: “When employees feel content and fulfilled, they are more likely to engage enthusiastically in their work, exhibit creativity, and maintain high levels of motivation and resilience, all of which contribute to enhanced performance. And when these employees experience the positive outcomes associated with their increased productivity, such as recognition, advancement opportunities, and a sense of accomplishment, their overall happiness and job satisfaction are further bolstered.” The one feeds on the other.

But the happy-productive worker hypothesis has its limits. Even Prof. Van Zyl is one of those who doesn’t fully buy into the happy-productive worker theory. Van-Zyl legitimately points out that our personal and working lives are complicated, and that a variety of external factors can disrupt how we feel about our work, and how we perform our roles. In particular, he’s referring to personal matters such as emotional stability and home, caregiving and health issues, organizational matters such as “culture, policies, and management practices,” and such contextual factors as the company’s and the economy’s financial health and stability.

Enjoyment in action

Leaders cannot control or influence every element of their teams’ lives, nor should they try to. But they should shift their attention towards enjoyment at work. As my colleague Rosie Sargeant suggested in a recent TED talk: “Instead of asking ‘How can we boost productivity?’ leaders should be asking ‘How can we boost [employee]

enjoyment?’—[because] productivity (and profit) will follow.”

Sargeant points to research by Alex Edmans, professor of finance at London Business School, who found that companies on the list of the 100 Best Companies to Work For in America delivered stock returns that beat their peers by 2.3%-3.8% per year over a 28 year period. (Cumulatively, if a company could stay on the list that long, it would mean total returns that exceed its peers’ by more than 100%.)

Edmans was not the first to notice the relationship between employee satisfaction and company performance. For example, in 2019 a team of academics at the London School of Economics (LSE) statistically combined the findings of 339 studies that had examined “Happy employees and their impact on firm performance.” All told, some 1.9 million employees and 82,248 business units at 230 different companies, spanning 49 industries and 73 countries, were involved.

The LSE meta-analysis found:

1. a “substantial positive correlation” between employee satisfaction and customer loyalty—meaning happy employees are probably nicer to customers than “Grumpy Gus” employees;
2. “a substantial negative correlation with staff turnover”;
3. a “positive and strong” correlation between employee satisfaction and productivity; and
4. that “higher customer loyalty and employee productivity” coupled with the lower staff turnover were “reflected in higher profitability.”

Prioritize Employee Satisfaction

Former Forbes contributor Debbie Lovich, who works with executives on boosting productivity and enjoyment at the same time, has a playbook for leaders:

• First, she says, “actively prioritize employee satisfaction alongside shareholder returns and customer delight.” After all, they’re all related. So don’t view employee-focused initiatives “as an extra expense, but rather as a driver of value for customers and shareholders.”
• Second, treat your employees like you do your best customers. “Yes, companies need to obsess about their customers,” she wrote in these pages three years ago. “But it may be even more important to obsess about their workers.”
• Third, “focus on the day-to-day work experience. How employees feel about work often boils down to the interactions and tasks they do each day.” Managers, therefore, “need to start taking ownership of the employee experience.” With this in mind, leaders need to see that they’re prepared for the expanded new role, so they can confidently address both day-to-work issues and, through such techniques as active listening and coaching, the emotional needs of employees.
• Finally, make employees a leadership priority. “Culture is driven from the top.”