12 Reasons Why Happy Employees are the Most Productive

While some employers may not think it, keeping their employees happy is one of the best ways to ensure that good work is getting done. An unhappy employee will do the bare minimum to get by, with one foot out the door, ready to leave as soon as a new position arises. Here are 12 reasons why happy employees are the most productive.

1. Higher Levels of Engagement
Happy employees are more engaged in the workplace. When employees show high levels of engagement they will be able to bring more energy, passion, and innovation to their jobs. Employees that are highly engaged take more ownership of their own growth because they have a passion for excelling at what they do. Employers should make the work environment interesting for employees, and once an employee is engaged it will become easier to communicate with that employee. If employees feel comfortable at work they will freely engage in conversations with teammates and customers, which leads to better results for the company.

2. Increased Retention Rates
High retention rates mean that employees are happy with their jobs. Happy workers know their jobs extremely well, and they are likely to stay at their company for years. Over time employees should be given the chance to gradually increase their responsibilities and learn the best ways to carry out their line of work. Happy employees can eventually train and coach others who are just getting started in the company, which maximizes their value. Employees that prove to be “clock-changers”, people willing to go the extra mile to accomplish a task everyone else is ignoring, help the company maintain continuity.

3. Better Creativity
A creative company based on new ideas will obviously be looking for creative employees. Research conducted by Alice Isen suggests that being happy helps creativity since it frees up space in the brain and helps raise the mental flexibility in people, therefore increasing the chance of them combining unrelated elements in order to create something new. Happy employees are usually more creative thinkers and are more likely to contribute something to the overall success of the company. Happy employees are more willing to brainstorm with the rest of the team and work with the long term goals of the organization.

4. Happy Employees are Healthier
According to the Occupational Safety and Health Administration, long work hours and extended or irregular shifts can lead to stress and fatigue. Workers that experience fatigue have an increased risk of illness and injury. Studies show that fatigue is linked to health problems like heart disease, depression, and sleep disorders. Happy employees tend to feel better physically and mentally, and they are more likely to take fewer sick days. They have more energy and mental clarity, allowing them to work more efficiently. Happy employees are also not afraid to take breaks, whether it be lunch breaks or scheduled vacations.

5. Better Decision-Making Skills
Unhappy employees work in a constant state of tension, which reduces their focus, and they tend to make quick and often wrong decisions. Happy employees make better decisions because they are well informed and make a genuine effort to learn more about the ultimate goal of their work. For example, according to Shawn Achor’s research, doctors who are in a happy mood make diagnoses much more accurately, and 19% faster than doctors who were neutral or unhappy. Happy employees are not overwhelmed when they need to make important business decisions, but rather they embrace the responsibility because of their optimism.

6. Better Customer Service
It is one thing for employees to interact well with each other and grow together on a team, but it is equally important for employees to have positive interactions with customers. People like happy people, and when it comes to customer service, businesses need to have a cheerful attitude. When morale levels in employees are high, their interactions with customers will most likely reflect that. A Gallup poll in 2008 found that retail stores with happy employees reported $21 million more earnings per square foot than other workplaces, which led to additional profits of $32 million for the entire chain.

7. Happy Employees Stay Honest
While happy employees are known to please people, there are also times when they have to be honest. Happy employees are not afraid to express their opinions, whether they agree or disagree with an idea their boss has proposed. When an employee voices concerns, the boss will either reconsider the idea or not. Regardless of the outcome, the fact that the employee shared his or her own opinion gives them satisfaction. Staying honest, open and transparent as often as possible keeps everything at the workplace in perspective. Honesty is the best policy when interacting with both customers and teammates alike.

8. Better Equipped to Handle Adversity
All employees will go through some form of adversity in the workplace, and that includes happy employees. People learn from mistakes, and happy employees will not worry when they make one. Joshua Margolis, Professor of Business Administration and head of the Organizational Behavior unit at Harvard Business School, states that most employees go with their guts when something bad happens, and they can feel like heroes after experiencing enough successes in the business world. According to multiple studies, people’s reactions to stressful situations depend on the amount of control people believe they can exercise. Some things are simply beyond control.

9. Happy Employees Can Boost Sales
If a team consists of happy employees, their company will be more likely to receive boosts in sales. Gallup reports that teams of unhappy employees cost American businesses more than $300 billion every year. British sandwich chain Pret a Manger reported that sales went up 16%, and the belief is that the main reason behind the positive results is their positive staff. CEO Clive Schlee says the first thing he looks at is whether the staff are smiling, happy and engaged. His employees will be paid a bonus if weekly secret shoppers report they are faced with smiling staff.

10. More Opportunistic
Happier employees believe in themselves and they feel supported along the way. When new opportunities present themselves they tend to step forward. Their optimistic outlook leads them to spot developing opportunities at the workplace rather than ignoring them, and their self-confidence keeps them motivated. Their willingness to be bold at work pushes them to reach new heights in their careers, which in turn increases their satisfaction in their jobs and their overall happiness. Especially if a company promotes creativity, transparency, and diversity, happier employees will see such work environments as very beneficial, allowing them to have a more opportunistic mindset.

11. Happiness Inspires Others
Happiness can spread throughout an entire team if they are in the right work environment. The more happy employees a company has means there will be more happy bosses, and new employees will see the positive effects of the environment and they will also become happy. Employees who find joy in their work easily become role models for others and encourage them to find that same joy. Happy employees can see the big picture and they treat their co-workers the way they would want to be treated. Because of their respect for the job they become good examples to imitate.

12. Better Overall Performance
When happy employees have to perform their jobs, they have tremendous success. A University of Warwick study showed that after people were exposed to happiness-inducing things such as comedy clips or little treats, their productivity in tasks had a 12% increase. In four different experiments, it was confirmed that happier participants are more productive. Alex Edmans of the London Business School notes that companies listed in the “100 Best Companies to Work For in America” generated 2.3-3.8% per year higher stock returns than their peers from 1984 to 2011. Happier workers use the time they have more effectively, increasing the pace at which they can work without having to sacrifice quality.


With all of the positive outcomes, it is easy to see why it is beneficial to everyone in a company when employees are happy. Bosses who invest in their employees’ happiness will have employees who feel fulfilled, and in turn, will experience increased productivity in their business. It is a win-win for everyone, and as the saying goes, “Happy Employee, Happy Business,” or something like that.

Author Biography
Keith Miller has over 25 years of experience as a CEO and serial entrepreneur. As an entrepreneur, he has founded several multi-million dollar companies. As a writer, Keith's work has been mentioned in CIO Magazine, Workable, BizTech, and The Charlotte Observer. If you have any questions about the content of this blog post, then please send our content editing team a message here.