Happy employees do make better companies – it’s now proven

1st August 2022
Happy employees make better companies

At the heart of our company we believe that “happy developers write the best code” and that “customer happiness defines success”. We’ve believed that since the day we started Secret Source and it is the foundation onto which we’ve built our culture. We didn’t build the company because we thought happiness was business sense, we just thought it was the right thing to do, however evidence now shows that happiness will actually help the bottom line too, increasing productivity, reducing staff turnover and improving business performance.

When we started Secret Source we knew in our hearts that happiness would be the key to our success. If we could build a culture where our number one priority was our team’s and our clients’ happiness then success would follow. We had a couple of hypotheses …

  • A happy team would stay for longer, there’d be lower staff churn.
  • A happy team would collaborate better, share knowledge and just work better as a team.
  • By measuring customer happiness we would measure what was important to our clients.

These were all gut feelings not based on any evidence at all. Inspired by Patagonia and their book Let My People Go Surfing we wanted to create a great culture, that was our goal, and we knew, if we got it right, it would be a successful business too.

However, evidence now shows that happiness at work isn’t just a “nice to have” it really does benefit the business. In a study by the World Economic Forum in collaboration with Gallup they have concluded that:

Higher employee wellbeing is associated with higher productivity and firm performance

They focused on 4 KPIs and their relationship with staff happiness:

  • Customer loyalty
  • Employee productivity
  • Profitability measures (including the percentage profit of revenue or sales)
  • Staff turnover

The study concluded that:

“We find employee satisfaction to have a substantial positive correlation with customer loyalty and a substantial negative correlation with staff turnover. The correlation with productivity is positive and strong. Importantly, higher customer loyalty and employee productivity, as well as lower staff turnover, are also reflected in higher profitability of business units, as evidenced by a moderately positive correlation between employee satisfaction and profitability.”

A study in 2011 and 2012 also showed that the stock market returns of the 100 best companies to work for in America also had a 2.3-3.8% higher return than the industry average, indicating that happiness and wellbeing not only increases productivity but has an effect on the bottom line.

Whilst our happiness first policy was not set up to maximise profits, it is good to know that the importance of happiness and staff wellbeing is finally being recognised. My hope is that those companies who have put profit and revenue above staff wellbeing will now see that they are not mutually exclusive and by focusing more on employee wellbeing it will help their profits too.
If you’re interested in how we’ve built our happiness first culture please follow us on LinkedIn to get our regular blog updates.