How Employee Happiness Impacts Organisational Performance

The question of whether happy workers are more productive than unhappy ones has spawned decades of research exploring every kind of happiness and possible variation in job performance. There are many reasons for perennial popularity of what has bee called the happy productive-worker thesis (making workers happy cause them to be more productive): it allows labour negotiators to claim that happier workers will be more productive (so deserving higher pay), it allows human resources professionals and researchers to be supportive of both labour and management, and it is common sense that happy employees would be better performers.

If this popular opinion were true, everybody would win. Unfortunately, this thesis is either somewhat true or utterly false depending on the definitions used of both “happy workers” and “productive workers”.

I here present to you the concluding part of our discourse on understanding feelings and their relationship and impact in the workplace, which we started in the last edition of People Digest. That first part sought to establish that there is a place for feelings in the workplace and that an understanding of it helps to foster better and potentially more productive work relationships. Excerpted entirely from the article “Making Sense of Feelings at Work”, in the book, Organisational Behaviour Real Research for Real Managers by Jone L. Pearce. This concluding part seeks to answer the question, “Does employee happiness Impact organisational performance”?

Contextual Performance vs Task Performance

Simple productivity or task performance does not capture all of the job performance that organisations need from employees. Contextual performance is the contribution people make in support of direct task performance. It includes any voluntary act that facilitates organisational goal attainment. Examples include efforts such as working hard to meet deadlines, helping coworkers, taking the initiative to solve unexpected problems, making constructive suggestions, developing oneself and spreading good will.

Contextual performance is important to most jobs, and is critical to professional and managerial job performance. Organisational performance requires more than a narrow focus on doing as instructed; it requires employees who pitch in, help others, and use their best judgment to solve whatever problems they confront.

There is no evidence that happy employees are more productive workers

Using narrow measures of task performance or productivity that excludes contextual performance, literally hundreds of studies have established a very weak relationship between this part of job performance and all the different ways of looking at employee happiness. There is no evidence at all that making employees happy will lead them to become more productive on their tasks.

So there is no ambiguity here: none of the many ways we know to make employees happy – by paying them more, treating them with consideration, creating a just workplace – will lead individuals to produce more, no matter what we all want to believe. Employee happiness does matter to organisational performance in other ways, but it does not – and this is probably the strongest, best established empirical fact in the field of organisational behavior – lead to greater worker task productivity.

Most organisations have worked hard to encourage task productivity through training, having the necessary supplies available, and performance measurement and incentives. When all of those systems function as they should, employees’ feelings matter little to narrow task performance. However, their happiness is important to employees’ contextual performance.

Positive Moods and Performance

When job performance is defined more broadly to include the various aspect of contextual performance, the connection is more promising, but it varies somewhat based on the kind of worker happiness studied.

First when happiness is defined as a positive mood, the result is mixed. Although negative moods, such as fatigue, interfere with the performance of critical tasks in the military, negative moods also lead to greater care and attention to details and so to better performance on problem solving tasks.

In contrast, those in a positive mood will generate more ideas in a creativity task but seem less concerned about the quality of those ideas than those in negative moods. It seems that positive moods signal that everything is fine, and so we pay less attention to the quality of arguments in persuasive appeals and are more likely to rely on stereotypes and other simplifying strategies rather than paying careful attention.

For the kinds of organisational work requiring attention to detail and care to avoid errors, negative moods spur better performance. Good moods are relaxing; they signal that everything is fine just the way it is, but they help with creative tasks.

Positive Dispositions and Performance

On the other hand, positive dispositions do seem to lead to superior job performance among some professionals and managers. Interestingly, positive affectivity is more important for better job performance for those employees with longer tenure, whereas negative affectivity leads to poor performance only among newer employees.

This doesn’t seem to make sense. We know that those with positive dispositions have more positive moods and vice versa for negative dispositions, so why would negative moods lead to more care and attention, but positive dispositions lead to better overall job performance? Don’t care and attention matter to job performance?

It seems likely that the distinction between narrow task performance and contextual performance might account for these conflicting reports. Negative moods signal us to be alert to dangers and difficulties, so we are more attentive to the task at hand. Thus, we set deadlines for ourselves at least partly to create a self induced mood of anxious attentiveness.

However, for overall job performance, especially for managers with their pressing time demands and the need to collaborate and gather information, positive affectivity is beneficial because it leads others to view them more positively and sympathetically. It could be that others are more willing to share information and in other ways collaborate with those who have positive disposition because they are pleasant company. The support and cooperation of others aids in performance of the managerial job of information exchange and influence.

Job Satisfaction and Performance

Although the study of employee emotions, moods and dispositions is relatively new, there has been a great deal of research on an earlier understanding of employee happiness called job satisfaction. Job satisfaction is a pleasurable feeling resulting from an evaluation of one’s job and job experiences. Alert readers will have noticed that this older concept is really a combination of feeling (pleasurable) and rational analysis (evaluation).

It combines both the outcome (feeling) and a possible cause of that feeling (appraisal of what this job offers compared to other alternatives). You don’t have to be a trained social scientist to guess that such a complex definition can create confusion. Fortunately, most employees who have been asked about their job satisfaction do not pay much attention to fine points, and so pretty reliably report themselves as satisfied, dissatisfied or something in between.

The attitude of job satisfaction leads to better contextual job performance

Job satisfaction is an attitude that is a feeling, positive or negative, about something. Just as employees can have positive or negative attitudes about their jobs, they can have a range of positive and negative attitudes about any other aspect of work: their pay, their boss, their coworkers, top management, and so on. For this reason, the study of job satisfaction also involves the study of how employees’ attitudes might influence their actions at work.

The attitude of job satisfaction does lead to better contextual job performance as reflected in more altruism, more consideration of others, and more helping behavior, as well as fewer dysfunctional behaviors, such as reluctant, perfunctory efforts or problem drinking. Those who have positive feelings about their jobs help out and are more supportive coworkers. Job satisfaction is not however very strongly correlated with narrow task performance.

Similar results are found for the other workplace attitudes. As with mood and dispositions, workplace attitudes such as job satisfaction do seem to lead to higher employee contextual performance of the task itself, whether that task is number of patients seen, arrests made, deadline met, or instruction manuals written. Why should worker happiness be more strongly associated with contextual performance than task performance?