Discussion Paper - Happy Employees Lead to Better Organizational Results

By: Dr. Adam Stoehr, June 15, 2015

“A merry heart goes all the day, Your sad tires in a mile-a.”—William Shakespeare

Excellence Canada has found a strong, significant relationship between a strategic approach to quality and the happiness of employees (Stoehr, 2012).  At organizations with a higher commitment to strategic quality, employees have higher levels of satisfaction, engagement, and morale (Stoehr, 2014).  This is great news considering that according to a Gallop study, only 13 percent of employees are engaged at work worldwide and 29 percent in the U.S. and Canada (Crabtree, 2013).

This begs the question: Why is happiness not a higher priority? Why do organizations want happier employees?  Why are higher levels of satisfaction, engagement, and morale desirable to organizations? 

Not everyone agrees.  Chun and Davies (2009) say that employee happiness isn’t enough to satisfy customers. Simply being served by a satisfied employee isn’t enough to win customers’ loyalty. Others say that happiness is overrated. Organizations are better off with people who grapple with complexities and contradictions rather than happy people who don’t (Schwartz, 2010). 

In contrast, Amabile and Kramer (2011) say that people perform better when they are happier. People are more productive and creative when they have more positive emotions. Harvard Business Review Analytic Services (2013) found that employee engagement has a considerable impact on customer satisfaction.   Achor (2010) shows that happy employees are more likely to be promoted because they are more productive and are better at sales. Others have found that happier employees make companies more money (Crowley, 2013).

This paper discusses the implications of the findings from the recent Excellence Canada Thought Leaders Round Table (TLRT).  Strategic quality is when quality approaches move beyond incremental operational improvements to those that influence the strategy process for the organization (Stoehr, 2014).  Employee happiness is when employees are working together with positive satisfaction, engagement, and morale at the personal and collective levels (Stoehr, 2014).  Prior research has confirmed the link between a strategic approach to quality and employee happiness (Stoehr, 2012; 2014).  Some clarity of the value of employee happiness to the organization would help in encouraging organizations to implement a strategic approach to quality.  Especially since elements of happiness are so absent in most North American workplaces (Crabtree, 2013). 

Some of the findings from the TLRT discussion around value are found in Table 1.  These benefits confirm why higher levels of satisfaction, engagement, and morale are desirable attributes.  These findings are consistent with other work on this subject that has shown that only 25% of job successes are based on higher intelligence or IQ.  The other 75% of job success is based more on things that flourish in a happy environment like optimism levels, social support, and the ability to see stress as a challenge rather than a threat (Hom and Arbuckle, 1988; Estrada, Isen and Young, 1998; Achor ,  2010).  Organization’s that are dedicated to a strategic approach to quality foster an environment that supports these important drivers of happiness.     

Table 1: Value of a Happy Employee


  • Better retention of talent
  • More resilient and open to change
  • Higher productivity and quality output
  • Reduces and releases stress
  • Reduces distractions
  • Increases creativity and innovation
  • Higher levels of engagement
  • Higher levels of satisfaction
  • Higher levels of morale
  • More revenue
  • Better reputation for the organization
  • Better customer experience
  • Increases customer engagement
  • Positive customer responses and outcome



Since some authors (Chun and Davies, 2009; Schwartz, 2010) argue that employee happiness is overrated, both pros and cons of happy employees were discussed (Table 2). The cons are things that organizations need to be mindful of as they implement a strategic approach to quality. There are always employees who might not see the value of efforts being made to increase their happiness at work.  Achor (2010) suggests that happiness is a choice and we can train ourselves to be happier by practicing gratitude, presence and praising others.  Some of the underpinnings of a strategic approach to quality encourage an organization to implement strategies to facilitate these three things.  Some Canada Award for Excellence organizations for example start meetings with employees sharing things they are grateful for that week and with public displays of praise for their colleagues who have helped them with something that day/week/month.   

Table 2: Pros and Cons of Happy Employees

Possible PROS:


  • Employees say great things about their organization
  • Positive impact on reputation/brand
  • Easier to retain employees
  • Employees go over and above their job descriptions
  • Lower sick leave
  • Less absenteeism
  • Less presenteeism
  • Increased productivity
  • Positive relationships
  • More unified workplace
  • More cooperation and teamwork
  • Increased recruitment potential
  • Environment where employees want to come to work
  • Reduced barriers
  • Greater sense of resilience


Possible CONS:


  • So happy, nothing gets done
  • Lose focus on the bottom line
  • Perception that the organization is not taking their work seriously
  • Cultural differences. Could ostracize employees
  • Difficult, necessary strategy decisions might be avoided to favour the status quo
  • Doesn’t push boundaries
  • Sometimes difference/conflict can lead to positive changes
  • Breaking up the team can effect emotional commitment
  • Other organizations want to “poach” happy employees


The identified pros are consistent with other research on the advantages of happiness that shows how happiness leads to better secure jobs, greater levels of resilience, superior productivity, less burnout, less turnover, and greater sales (Lyubomirsky et al., 2005).  The TLRT focused on practical ways to unleash to power of employee happiness (Table 3).   When it comes down to strategy, leadership is about choices.  Leadership must make the choice to allow these strategies to shine.  The choice can be to facilitate a workplace that promotes employee happiness, or to build road blocks and ignore the benefits. 


 Table 3 – Ways to Unleash the Power of Employee Happiness

  • Become more involved in leading your organization towards a strategic approach to quality
  • Have an optimistic guiding light in terms of mission/vision values
  • Practice gratitude – telling and reminding them daily. Invites gratitude and promotes happiness
  • Praise great work regularly
  • Notice and share organizational strengths
  • Celebrate success often
  • Share employee experiences (best practices)
  • Include employees in the marketing campaign and in discussions involving marketing plans
  • Share authentic quotes from real employees
  • Lead authentically and the benefits will resonate with clients, suppliers and anyone you deal with.
  • Foster collaboration and teamwork
  • Move beyond using quality for incremental operational improvements only
  • Use quality to influence the strategy process for the organization


It is very difficult to be happy in a toxic environment. Both happiness and grumpiness are contagious in the workplace.  Most organizations want an outbreak of happiness rather than grumpiness (Stoehr, 2013).  Grumpiness prevails in an organization where employees scan for and notice weaknesses, threats, hassles, and complaints first.  Happiness can flourish when we are more optimistic and search for and notice strengths, opportunities, and what we are grateful for first. The strategy ideas in Table 3 can be helpful in moving towards happiness and unleashing the many benefits. 

In summary, employee happiness can bring great value to an organization.  There are also some very simple ways that organizations can unleash the power of a happy employee. Many people are looking for the bottom line on employee happiness and which organizational results are impacted the most by happier employee. Prior research has suggested that employee happiness can increase productivity by 30%, promotions are 40% more likely, and sales can increase by 30% (Achor, 2010).   A summary of the bottom line from the TLRT discussion is provided in Table 4.

Table 4 - Organizational Results Impacted the Most by Happier Employee

  • Greater retention of employees
  • Stronger brand recognition
  • Better financial performance
  • Improved reputation in the public sector environment
  • Less risk of fragility
  • Higher levels of customer loyalty
  • Greater customer experience (An emotional reaction could impact the decision making)
  • Increased resilience - Even with poor financial results, happy employees raise the bar and follow you wherever you go. Translates in both public and private sector





Achor, S. (2010)The Happiness Advantage. NewYork: Random House.

Amabile, T.M. & Kramer, S.J. (2011). The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work. Boston: Harvard Business Review Press.

Chun, R. & Davies, G. (2009), Employee Happiness Isn't Enough to Satisfy Customers, Harvard Business Review, Boston.

Crabtree, S. (2013) Worldwide, 13% of Employees Are Engaged at Work, Gallop Study, http://www.gallup.com/poll/165269/worldwide-employees-engaged-work.aspx

Crowley, M. (2013) The Proof is in the Profits: America’s Happiest Companies Make More Money, http://www.fastcompany.com/3006150/proof-profits-americas-happiest-companies-also-fare-best-financially

Estrada, C. A., Isen, A. M., & Young, M. J. (1997). Positive affect facilitates integration of information and decreases anchoring in reasoning among physicians. Organizational Behavior and Human Decision Processes, 72, 117-135.

Harvard Business Review Analytic Services (2013) The Impact of Employee Engagement on Performance https://hbr.org/resources/pdfs/comm/achievers/hbr_achievers_report_sep13.pdf

Hom, H., & Arbuckle, B. (1988). Mood induction effects upon goal setting and performance. Motivation and Emotion, 12, pp. 113-122.

Lyubomirsky, S. King, L. and Diener, E. (2005) The benefits of frequent positive affect: Does Happiness Lead to Success? Psychological Bulletin, 131(6), pp. 803-855.

Schwartz, T. (2010), Happiness Is Overrated, Harvard Business Review Online, https://hbr.org/2010/10/happiness-is-overrated/.

Stoehr, A. (2012) The Link Between Excellence and Happiness at Work. www.excellence.ca

Stoehr, A. (2013) The Walking Dead and The Blade Through the Zombie Skull Solution. www.excellence.ca

Stoehr, A. (2014) The Relationship Between a Strategic Approach to Quality and Employee Happiness, The University of the West of England, PHD Thesis



Author Information

Adam  Stoehr, PhD

Adam Stoehr, PhD