One of the key impacts of happiness on the bottom line is through a reduction in staff turnover. Unsurprisingly, happier employees stay on the job for longer. Analysing data from our largest client, we have found that the 20% least happy employees are twice as likely to leave their job in the next quarter than the 20% happiest employees. This data comes from a client operating in a sector where job satisfaction has typically been found to only moderately predict turnover, suggesting that other sectors would see even bigger effects. And this big effect converts to huge cost savings – given the cost associated with recruiting new staff and getting them up to speed in a new role.

There is a huge amount of literature demonstrating the relationship between how employees feel at work and their productivity. A 2010 analysis of 73 studies found a significant correlation between average job satisfaction in a team and team productivity of 0.34. What does that mean in terms of the bottom-line? Based on data from our largest client, the happiest teams are 28% more productive than the least happy teams. Just increasing average happiness in a team by half a point on our 1 to 5 point scale is associated with an increase in productivity of over 7%.

A review of the literature on workplace happiness by the UK Department for Business, Innovation and Skills identifies increased creativity as one of the key pathways between happier employees and increased productivity. One study found that 59% of happy employees said their job brings out their most creative ideas, compared to only 3% of unhappy employees. This ties into the vast literature on positive psychology. People in positive moods are better at lateral thinking, process complex information more speedily, and have a wider attention span – all things we need to be creative. In one study students were shown short films that either put them in a positive mood or were neutral. The students were then asked to solve a challenge: they were asked to fix a candle to a corkboard and arrange it so that it would not drip wax on the floor, and were given a candle, a box of drawing pins and a book of matches. 75% of the students who had watched the film that put them in a positive mood solved the task. In contrast only 13% of students in the control group did. In case you are wondering, the trick is to use the box the drawing pins comes in as a platform to put the candle on!