Raconteur
The Wellbeing Research Centre of the University of Oxford conducted a study in 2019 that analysed data from 230 independent organisations across 49 industries. The findings suggest that employees’ satisfaction with their company strongly correlated with employee productivity.
Fortune
Additionally, hybrid work is the equivalent of an 8% salary increase in terms of employee satisfaction, as Bloom’s findings suggest. An Oxford-Saïd Business School and BT study takes this further, quantifying happiness and its impact on productivity among content workers: a 13% increase in performance.
Investment News
Though companies like Amazon.com Inc. and Walmart Inc. are facing pressure to report their well-being metrics, not many others have fully embraced the practice. But some research organizations, including Gallup and the Wellbeing Research Centre, are already refining methods of evaluating wellness information.
Companies with higher employee wellbeing scores outperform their counterparts in multiple traditional measures of firm performance, new research has found.
Investment in the top 100 US workplaces ranked by employee wellbeing would have returned 20% more than the same investment in the S&P 500 or Dow Jones over the same two-year period.
The findings are published in the most comprehensive study to date linking employee wellbeing to financial and stock market performance, led by researchers from the Wellbeing Research Centre at the University of Oxford and Harvard University.
They worked in partnership with the jobs site Indeed, whose Workplace Wellbeing Score is the largest survey of employee wellbeing anywhere in the world with more than 15 million responses collected since its launch in 2019.
The researchers analysed data from more than 1,600 US listed companies whose employees reported anonymously on four key measures: Job satisfaction; Purpose; Happiness; and Stress1, and compared this against publicly available annual accounting data. They found that, on average, higher levels of employee wellbeing were associated with increased firm value, higher return on assets, and higher profits. Pre-pandemic measures of workplace wellbeing also subsequently predicted higher levels of firm performance following the Covid-19 outbreak.
In a separate analysis, the researchers also ranked the top 100 firms by employee wellbeing scores. Starting on January 1, 2021, they ‘invested’ a hypothetical $1,000 dollars into this new wellbeing-oriented portfolio and saw a greater return than equivalent investments in the main US stock indices.
This higher performance held true in both the so-called bull market of sustained growth through much of 2021 and the bear market of prolonged decline in 2022.
‘Workplace Wellbeing and Firm Performance’ is open access and available as part of the Wellbeing Research Centre’s Working Paper Series.
Financial Times
The analysis showed that the wellbeing index not only correlates with gains in company performance, but is also predictive: investing $1,000 in companies with higher staff wellbeing scores in January 2021 would have generated a return of about $1,300 by the start of March 2023, compared with a return of roughly $1,100 from the S&P 500 stock index.
Fast Company
While most companies say some version of “our people are our most important asset,” they clearly do not prioritize it: only 29% of people are thriving at work, and only one third of managers have any strategy for work wellbeing. This “wellbeing deficit” clearly takes an enormous toll on people, affecting hundreds of millions of lives, but also creates a giant economic loss: companies with higher wellbeing scores generate significantly better profit, command higher valuations, and outperform the stock market.
Fast Company
The Saïd Business School study Does Happiness Improve Worker Productivity? found that happiness can have a significant impact on productivity. Results showed that happier workers were 12% more productive than their unhappy counterparts. This boost in productivity can be attributed to various factors, such as increased motivation, engagement, and creativity.
Researchers have demonstrated a causal link between worker happiness and productivity in the first large-scale field study of its kind.
Their findings, published in the journal Management Science, serve as the clearest real-world evidence of wellbeing’s impact on worker performance to date.
The study of almost 1,800 BT call centre workers shows that a one-point increase in happiness (on a scale of 0 to 10) was was associated with a 12% increase in their productivity, as measured by weekly sales data.
Co-author Jan-Emmanuel De Neve, Director of the Wellbeing Research Centre at the University of Oxford and a Professor of Economics and Behavioural Science at the Saïd Business School, said:
“There is no question that caring for how employees feel at work is the right thing to do. Both the moral and business cases are now settled, especially given our most recent field research showing that employee wellbeing drives productivity as well as recruitment and retention of talent which, in turn, has measurable impact on a company’s overall financial performance.”
Researchers from Erasmus University Rotterdam, the University of Oxford, and MIT, observed workers from 11 UK call centres over six months in 2017 and 2018.
They used a well-established mechanism for measuring subjective wellbeing in the form of a weekly one-question survey emailed to workers, asking them to rate their happiness for the last week on a five-point scale1.
These scores were then anonymously mapped to workers’ individual performance for the same period, which showed a positive correlation between happiness and productivity. The results build on previous research showing mood effects in laboratory settings2, and demonstrate that happiness has an impact on productivity when it comes to workers, tasks, and jobs in the real world.
The effect of happiness differed across tasks. Simple ‘order taking’ calls were less impacted by a worker’s mood, whereas more complex tasks – like negotiating, selling bundles of products, and re-contracting – saw productivity increases closer to 20%, on average, per one-point improvement in happiness.
Co-author George Ward, a Research Fellow in Economics at the University of Oxford and recent graduate of the MIT Sloan School of Management, added:
“The findings suggest that the relationship between mood and productivity is not a always straightforward one, and can depend on the types of jobs people are doing. Mood seems to be a particularly strong driver of performance in tasks that require human interaction and where social and emotional skills play a large role in how productive someone is. These types of jobs make up a growing share of the economy, suggesting that the importance of worker happiness is likely to increase over time.”
The researchers went a step further to test the robustness of their findings, by using data on the amount of windows across the call centres combined with weather conditions – to use differential visual exposure to weather across workers as a form of natural experiment.
They were able to identify trends in mood that correlated with visual weather conditions – with workers reporting lower happiness on gloomy days, particularly in call centres with lots of windows where workers are visually exposed to the changeable patterns of British weather.3
Co-author Clément Bellet, an Assistant Professor at the Erasmus University Rotterdam, explained:
“We made an important contribution to the field by not only directly measuring employee happiness but also isolating the effect of weather exposure on mood using the diverse architecture of BT office buildings. This was a challenging task as past research on weather and mood often assumed the impact of visual exposure without measuring mood directly. By isolating these weather-induced mood shocks, we were able to gain deeper insights into the causal impact of mood on performance in a real-world setting.”
‘Does employee happiness have an impact on productivity?’ is published in Management Science.
This paper provides evidence from a natural experiment on the relationship between positive affect and productivity. We link highly detailed administrative data on the behaviors and performance of all telesales workers at a large telecommunications company with survey reports of employee happiness that we collected on a weekly basis. We use variation in worker mood arising from visual exposure to weather—the interaction between call center architecture and outdoor weather conditions—to provide a quasi-experimental test of the effect of happiness on productivity. We find evidence of a positive impact on sales performance, which is driven by changes in labor productivity—largely through workers converting more calls into sales and to a lesser extent by making more calls per hour and adhering more closely to their schedule. We find no evidence in our setting of effects on measures of high-frequency labor supply such as attendance and break-taking.
Dr. George Ward is the Persol Research Fellow at the Wellbeing Research Centre and a Junior Research Fellow at Somerville College, University of Oxford. His research focuses on various markers of employee wellbeing such as happiness, satisfaction, stress, and purpose. He studies how these aspects of workplace wellbeing are influenced, for better or worse, by different management and organizational practices – as well as how they ultimately affect outcomes for firms like productivity, turnover, and recruitment. George is particularly interested in the future of work and in how we might design jobs that work for people’s wellbeing.
George’s work has been accepted or published in various academic journals including Management Science, the Review of Economics and Statistics, Journal of Personality and Social Psychology, and American Journal of Political Science. He is also passionate about science communication and public engagement, and have written about his research for various outlets including Harvard Business Review, VoxEU, The Conversation, SPSP Character & Context, The Hill, and UN World Happiness Report. His research has also been featured by news outlets including The Economist, Financial Times, BBC, CNN, The Atlantic, Business Insider, Newsweek, and The Guardian.
The Persol Research Fellowship is supported by Persol Holdings Co, Ltd.