How Employee Happiness Impacts Organisational Performance (2)

Employee Happiness

 This is the second part of this article, you can read the first part here.

Acting on Feelings – Strong settings vs Weak settings

Although all of us have feelings and attitudes about many aspects of our organisational work, we do not always act on them. Whether we do, or do not, act on our feelings and attitudes in a particular situation can be clarified by distinguishing between strong and weak settings. Strong settings are those with powerful normative expectations and incentives to behave in certain constrained ways. Weak settings are ones in which the participants do not have a clear expectations about how to behave.

For example, when students walk into a college classroom, they know to sit in one of the audience chairs (not the chair facing the audience next to the podium), to speak quietly until the instructor begins speaking, and then to sit in a pose of calm, attentive listening (whether or not they feel calm or are actually listening). College classrooms are strong settings. Most task performances take place in strong settings.

After all, organisations go to a great deal of expense and trouble to make sure that employees know what is expected of them on the job and to establish elaborate and sophisticated accountability systems to manage employee performance. If an organisation’s performance management and incentive systems are working properly, we should not find that emotions, moods, dispositions, or attitudes would have powerful effects on employee task performance.

Contextual performance is more voluntary and cannot be mandated

However, contextual performance is more voluntary and cannot be mandated and controlled in advance. This means that contextual performance takes place in relatively weak settings, and that is why attitudes and feelings are better at predicting employee contextual performance. Thus, workers who are dissatisfied with their jobs might not make the effort to alert the manager when a coworker is making false promises to customers.

The unhappy might not go out of their way to help colleagues from another division, but instead dismiss them by telling them to go ask a manager. In weak settings, people have more choice about what to do and so their feelings and attitudes will have a bigger impact on whether they choose to make the effort that is high contextual performance.

Employee Absenteeism and Turnover      

Employees cannot perform if they do not show up to work. This is another way in which employees’ feelings and attitudes can affect team, departmental or organisational performance: whether or not employees come to work ready and willing to do their jobs. Absenteeism is when employees do not do their work at the scheduled time, whether they have called in sick or taken an unauthorized leave. Turnover is the voluntary departure of employees from their jobs.

Certainly, high levels of absenteeism and turnover are costly to organisations: harassed co-worker must take on their absent colleague’s work, substitutes must be hired, and new employees must be trained. Unhappy workers are much more likely to quit, to be absent, or in other ways withdraw from organisations that make them unhappy. Happier employees find that their organisation is congenial to them. Because the organisation is congenial to happy employees, they are more likely to show up and less likely to leave.

This is important because organisations with chronic absenteeism must pay for overstaffing to be sure that productivity and performance qualities do not suffer. Replacing employees who quit can entail heavy search and training cost (and I don’t have to tell experienced managers about their own workload as they must pick up the slack until those positions are filled). There is strong evidence that divisions with higher managerial, and especially employee, turnover have lower profits. It is not the case that employees are necessarily more productive on their tasks, narrowly defined, but happier employees are more likely to go that extra mile and less likely to be absent and to leave. All of these actions directly contribute to organisational performance.

Affective commitment vs Continuance commitment

Although any number of different workplace attitudes can lead to employee withdrawal, the one we know the most about is organisational commitment, or the extent to which employees are committed to the organisation. Organisational commitment consists of both affective commitments (commitment to the organisational goals and values) and continuance commitment (a commitment to stay with the organisation because there are no attractive alternatives).

Whereas employees low in both forms of commitment are more likely to be absent or to quit, only the more emotion-focused affective commitment is a good predicator of contextual performance behaviour like helping and other citizenship actions. Particularly noteworthy is evidence that affective commitment can counteract the problematic behaviours that are encouraged by the pay-for-performance systems. The sales associates in a large nationwide company were less likely to engage in misleading potential customers and front loading sales if they felt an affective commitment to their organisation.

Committed employees are better employees

The positive consequences of employee affective commitment have been found in numerous countries and for many diverse occupations, even for temporary workers. Employees have many potential commitments, not just to their organisation.

For example, employees who are committed to their work group or coworkers are also less likely to be absent or quit. For many employees, a pleasant work environment is more important than advancement. Good managers will be sure to have an accurate diagnosis of the feelings, attitudes and commitments of everyone they come into contact with at work.

Just as employees may have positive or negative attitudes about many different aspects of work, so employees may be committed to the organisation, or to their coworkers, or to the new product, or to their absenteeism, and whether or not they will leave.


Higher team’s average positive mood leads to better team’s performance.

Employee emotions, moods, disposition and attitudes affect organisational performance in two additional ways. First, contextual performance is often helping others at work with their own performance, providing useful suggestions and the like, and so should result in higher levels of team, departmental, divisional, or organisational performance.

Research does show that the higher a team’s average positive mood, the better the team’s performance. Additional evidence that employee feelings matter for organisational performance comes from a study finding that the average job satisfaction of factory workers in different factories predicted those factories’ performance: the higher the employees satisfaction, the higher the factories’ output and efficiency.

So, although job satisfaction does not lead employees to perform better on their job tasks, which are driven by the organisations’ performance management and incentive systems, organisational performance is more than the sum of  individual employees’ narrow task performances. Happier workers are more likely to show up at work, to stay, and to be willing to invest in contextual job performance: help coworkers, take the initiative to solve unexpected problems, and in many other ways engage in consummate effort. These actions apparently improve aggregate group and organisational performance.

Employee feelings influence what others at work feel

The second reason employee emotions affect organisational performance is because emotions are contagious. Employee emotions, moods, dispositions and attitudes influence what others at work feel. The positive feelings reflected in helping co-workers can create a circle of support and assistance that has been reflected in team and organisational performance.

Of course, such positive employee actions do not guarantee high organisational performance. Organisations staffed by enthusiastic and committed employees may fail because markets have shifted or technology has become obsolete. Contextual performance may not be enough to save every organisation, but it never hurts.

What Makes Employees Happy?

What do we know about what leads employees to have positive feelings about their organisation, jobs bosses and co-workers? First, as is not surprising, employees with more positive dispositions are more likely to have positive attitudes about their jobs, supervisors and organisations.

In addition, those employees who see a good fit between what they want from a job and what the job provides are more satisfied. Those who believe that their workplace is fair and just feel more positively about it than those who do not, and employees are happier with jobs that provide more autonomy and variety.

Interestingly, those who take jobs they do not expect to hold for long report more negative attitudes about the job than those who expect to work at their jobs for an indefinite time. So, expecting to be working temporarily reduces happiness with a job. Although those who are paid more are more satisfied with their jobs, women are not less satisfied than men, despite their lower relative pay.

In conclusion, just as there are many things that employees may feel good (or bad) about at work and may be more (or less) committed to, so there are any numbers of things that can cause such feelings. Pay is only one among many. What is dangerous is that high pay is very effective at inducing employees to stay in their well-paid jobs.

 So, those well-paid employees who are unhappy – because of injustice or because they hate their jobs or because they received insulting treatment – may stay for the money, and damage organisational performance. Such employees may act on their unhappiness in any way they can get away with – perfunctory effort, undermining others or anything else, limited only by their imaginations. Unhappy employees who do not leave because they have no attractive alternatives spread their negative feelings and attitudes throughout the organisation. The choice is left to each of us.



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