Understanding happiness in the workplace

To the more cynical-minded, talking about the importance of happiness in the workplace might come off as a tad wishy-washy. However, creating a happy workplace is more than just a noble goal or a feel-good concept – it’s a much-needed business imperative. In fact, given that UK workers are seeking pay rises shrink, for some happiness is taking precedence over salary.

We’re passionate about designing workspaces that not only look great but also increase happiness, engagement and productivity in line with a healthy work-life balance. That is why we want to look into what happiness in the workplace truly means, by exploring the myriad of benefits it brings and the factors that can enhance it.

Defining happiness in the workplace 

Happiness in the workplace is often discussed but rarely understood in depth. It’s about creating an environment where individuals feel valued, engaged, and satisfied. But how do we break down this seemingly abstract concept? Interaction approaches workplace happiness through four key pillars: basic happiness, belonging, engagement, and wellbeing.

• Basic Happiness: This is the foundational level where employees experience contentment with their job roles, work-life balance, and daily tasks. It’s the sense of satisfaction that comes from doing a job well and feeling appreciated for it.
  
• Belonging: This aspect is about fostering a sense of community within the workplace. Employees who feel like they belong are more likely to collaborate, share ideas and contribute to a positive work culture.
  
• Engagement: This characterises how employees perceive their role in helping an organisation achieve long-term success. In other words, they are invested in the organisation’s mission and are actively contributing to their goals. Find out more in our guide to workplace engagement.
  
• Wellbeing: This covers all aspects, not just happiness at work – physical, emotional, intellectual, spiritual, environmental, social, and occupational wellbeing – that all come together to create a well-balanced life.

What are the benefits of happy employees?

To put it simply, happy employees are what makes for a happy organisation. Research consistently shows that when employees are happy, they are more productive, engaged, and more likely to contribute to a positive workplace culture.

Does employee happiness impact productivity?

Gallup’s 2024 State of the Global Workplace report reveals that happier employees are up to 17% more productive. This increase in productivity actually translates to better profits, with companies that have the most engaged employees seeing 23% higher profits than those with less engaged teams. This has been consolidated by research from Oxford’s Saïd Business School which found a conclusive link between happiness and productivity; overall workers are 13% more productive when happy. 

How does happiness affect employee retention?

Retention rates are significantly higher in companies that prioritise employee happiness. When employees feel valued and satisfied with their work environment, they are less likely to seek opportunities elsewhere. This not only reduces turnover costs but also helps in maintaining continuity and expertise within the team. A happier workforce is also five times more likely to stay with their current employer​. High-engagement teams experience a 21% reduction in turnover for high-turnover organisations and a 51% reduction in turnover for low-turnover organisations​. 

Furthermore, 73% of job seekers won’t apply to a company unless its values align with their own, suggesting that a positive workplace culture and alignment with personal values – both indicators of a happy workplace – are critical to attracting and retaining talent​. TINYpulse also discovered that 24% of employees who felt they did not receive recognition for their work had recently interviewed for another position, compared to just 13% who had received recognition.

Does happiness make workplaces more profitable?

Companies with higher levels of employee happiness tend to see improved financial performance. This is partly due to increased productivity but also because happy employees are more likely to provide exceptional service to clients, leading to higher customer satisfaction and loyalty. Forbes has reported that highly engaged teams are overall 21% more profitable for the company. 

Factors that affect happiness in the workplace

Workplace design

It’s no surprise that how employees feel at work is greatly influenced by their physical environment. For instance, a labyrinth of cubicles and a drab colour scheme is hardly going to get the dopamine rushing, but neither is adding something like a pool table to an otherwise uninspired space. Instead, workplaces need to be functional, aesthetically pleasing and conducive to wellbeing. This means ensuring that everything from the office layout to furniture and lighting helps employees feel productive, comfortable and able to collaborate effectively.

Leadership

Leadership plays a crucial role in shaping workplace happiness. Leaders who are empathetic, communicative, and supportive can create a positive work environment where employees feel empowered and motivated. People flourish with leadership styles that promote open communication, transparency, and a genuine interest in employee wellbeing.

Research from the State of the Global Workplace report highlights that managers account for 70% of the variance in team employee engagement. When managers are engaged, employees are more likely to be engaged too. 

Relationships and bonding

Strong relationships among colleagues are a cornerstone of workplace happiness. A sense of camaraderie and mutual respect can make the workplace feel more like a community. A survey from 2021 on friendships in the workplace revealed some interesting insights on workplace happiness:

• 63% say friends make work more enjoyable
  
• 22% of employees in this year’s survey believe they’re equally or more productive when working alongside friends
  
• 12% of people state they’re less likely to leave a company if they have a good friend there

With that in mind, always encourage workplace designs and layouts that encourage sharing and socialising. Much variation can be found between open-plan layouts that facilitate teamwork to breakout areas where employees can connect on a more personal level.

Workplace culture and benefits

A positive workplace culture is one where employees feel aligned with the company’s values and mission. This is reinforced by benefits that cater to their needs, whether it’s flexible working hours, opportunities for professional development, or wellbeing programs.

Work-life balance is a key aspect of employee wellbeing. The PwC Hopes and Fears 2024 report highlights that employees increasingly value flexibility in their work arrangements, including the ability to manage their own schedules and work from home. This flexibility is seen as crucial to maintaining a healthy work-life balance, which is directly linked to job satisfaction and retention. 

Inclusivity and wellbeing

Inclusivity is about more than just diversity; it’s about ensuring that every employee feels valued regardless of their background or role. It also means considering inclusive design – creating workplace environments that are welcoming, respectful and accommodating of all needs, abilities and cultures. This also ties into wellbeing, which encompasses mental, emotional, social and physical health. With inclusive office design, differences help to catalyse innovation and fresh perspectives, resulting in spaces that are better for everyone.

Gallup’s report also highlights that wellbeing among younger employees dropped in 2023, making it crucial for companies to address this demographic’s specific needs​. Inclusive designs ensure that all employees, regardless of age or background, feel supported and valued.

Environmental, Social and Governance (ESG)

Sustainability and corporate responsibility are increasingly important to today’s workforce. Employees want to work for companies that are committed to positive environmental and social impacts. Great importance is placed on integrating ESG principles into designs so that workplaces are not only good for employees but also for the planet.

A focus on ESG factors also helps in attracting talent, with many employees today preferring to work for organisations that align with their values. The commitment to sustainability and social responsibility is not just a trend; it’s a long-term strategy that benefits both the organisation and its employees.

Tips for measuring happiness in the workplace

Creating a happy workplace is an ongoing process, and it’s essential to measure happiness regularly to ensure continuous improvement. Here are some practical tips:

• Conduct regular surveys: Employee satisfaction surveys are a great way to gauge how your employees feel about their work environment. Be sure to include questions about various aspects of their experience, from leadership and culture to physical workspace and benefits.
  
• Encourage open feedback: Foster a culture where employees feel comfortable providing feedback. This can be through regular one-on-one meetings, town hall-style meetings, or anonymous feedback tools.
  
• Monitor key metrics: Look at indicators such as employee turnover rates, absenteeism, and productivity levels. These can provide insights into the overall happiness and engagement of your workforce.
  
• Implement changes and track results: After gathering feedback, make necessary changes to improve the workplace and track the impact of these changes over time. This iterative process ensures that the workplace continues to evolve in a way that supports employee happiness.

Understanding happiness in your workplace

At Interaction, we’re not just about designing offices; we’re about creating spaces where happiness and productivity can flourish. By understanding happiness in the workplace, companies can unlock the full potential of their workforce. Through thoughtful design, empathetic leadership, and a commitment to wellbeing, we help businesses create environments where employees can be their best selves.

Want to find out more about our office design and fit-out services? Say hello by scheduling a chat with Charlie our Relationship Manager, signing up for our newsletter or downloading one of our industry whitepapers.