For decades, a small cohort of companies openly prioritized employee wellbeing. Richard Branson, founder of the sprawling Virgin Group, famously claimed: “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” For much of that time, the link—happy employees creating satisfied customers—remained casual. It was a management belief, rather than an iron-clad best practice. Until very recently, at least.
A pair of economists at Glassdoor recently interrogated their immense dataset, searching for the elusive correlation. “Overall, there is a strong connection between better customer and employee satisfaction,” they wrote. “Each 1-star improvement in an employer’s Glassdoor company rating out of 5 is associated with a statistically significant 1.3-point increase in customer satisfaction out of 100.” Intuitively, the effect is more than twice as large in “high customer contact” sectors like retail, food services, and tourism.
What is it about happy employees that makes them better able to deliver an exceptional experience to customers and clients? The answer is surprisingly simple.
“Happy people are better workers,” according to Annie McKee, a senior fellow at the University of Pennsylvania Graduate School of Education. “Those who are engaged with their jobs and colleagues work harder—and smarter.”
Negative emotions like frustration and anger are like “blinders.” They focus our attention on the source of the pain—work frustrations, financial stress, relationship troubles, whatever—leaving little mental energy for work. Meanwhile, happiness frees our brains to focus on the task at hand. It empowers us to think creatively and make good decisions, too. Quantitatively, happy employees are 12% more productive.
But creating a happy workforce is a complex challenge. You cannot instruct employees to be happy. It is a multifaceted emotional state, not a rigid business process.
Climbing the pyramid of happiness
As ephemeral as happiness may be, American psychologist Abraham Maslow believed he could reduce human fulfillment to five essential needs: physiological, safety, belonging, esteem, and self-actualization. Maslow believed these needs existed as a hierarchy with the most basic (food, sleep, security) at the bottom and the most aspirational (prestige, achievement, achieving one’s potential) at the top. Those who fulfill more needs will be happier than those who fulfill fewer—or so Maslow’s theory went.
Researchers at the University of Illinois finally sought to test Maslow’s assertion. They surveyed participants in 155 countries, tracking happiness and the attainment of different needs over a five-year time period.
“Our findings suggest that Maslow’s theory is largely correct,” said University of Illinois professor emeritus of psychology Ed Diener, who led the study. “In cultures all over the world, the fulfillment of his proposed needs correlates with happiness.”
With a proven model for happiness, organizations can begin to consider their role in need fulfillment. In other words, how ought companies support their employees in order to increase their happiness?
For Clinton Cohen, CEO of South Africa-based customer service outsourcing firm iContact BPO, it starts at the very base of Maslow’s pyramid.
“If you are worried about keeping a roof over your head, how are you gonna get on the phone and be the best version of yourself?” he says. “How are you going to be empathetic? How are you going to give a great customer experience?”
Cohen argues that employees are destined to fail when they are constantly worried about Maslow’s lower-order needs. The solution: Pay adequate wages. iContact pays around two to three times the local salary—far in excess of the local living wage. While contact center leaders may balk at the idea of tripling staff costs, Cohen suggests aggressive cost-cutting is short-sighted.
Treating contact centers as cost centers and dogmatically driving down wages will inevitably drive up attrition. The worst-affected businesses are already recording attrition rates above 40%. While Cohen’s staffing costs are higher than other contact centers, he’s not paying for a team of recruiters to constantly refill seats. Neither is he pouring money into never-ending onboarding programs. But most importantly, his workforce is engaged, happy, and productive. And all for a minor net increase in costs.
As we climb up Maslow’s pyramid, the needs shift from physical to affective and cognitive requirements, specifically belonging and esteem. Here, community and purpose are key. Employees must feel part of the team and understand how their work contributes to larger aims.
At the very tip of the pyramid is self-actualization—or the development of one’s abilities and appreciation of their life. At iContact BPO they have successfully operationalized this aim. The company offers all employees formal qualifications. If someone’s passion is management, they can study university-accredited management courses. After a few years, they can step up into a team lead or management role. This isn’t just theory, either. Cohen has seen countless people grow through the company from frontline agents to team leaders and even contact center managers. Sometimes, an employee’s development will take them away from iContact. That’s okay, too.
“Not all retention is good retention,” Cohen says. “If someone’s personal goal is to become an accountant and they’re working part-time to fund their studies, it’s wonderful for them to eventually leave. Are they moving on to bigger, better things? Then they leave with a hug.”
To make such affordances is, admittedly, daunting. It is especially difficult for frontline business units where the default management approach has been cut, reduce, and streamline. Faced with a necessary and radical transformation, organizations may search for shortcuts, but this is a fool’s errand.
Happiness can be neither feigned nor forced
Cultivating employee happiness is a long and intricate undertaking. Organizations may feel tempted to shortcut the process, asking—or demanding—that their people appear happy. Indeed, that’s precisely what happened at the United Kingdom-based sandwich chain Pret a Manger. The chain became famous for its bustling in-cafe experience dubbed the Pret Buzz. But around 2012, it emerged that this atmosphere was demanded, not cultivated.
“Among the 17 things they ‘Don’t Want to See’ is that someone is ‘moody or bad-tempered’, ‘annoys people’, ‘overcomplicates ideas’ or ‘is just here for the money,’ wrote London Review of Books editor Paul Myerscough. “The sorts of things they ‘Do Want to See’ are that you can ‘work at pace’, ‘create a sense of fun’, and are ‘genuinely friendly’.”
The performative quality of this outward happiness is called emotional labor. That’s suppressing one’s feelings to fulfill the requirements of a job. Its partner is affective labor—or work carried to produce or modify an emotional experience in people. In this context, it’s suppressing one’s real emotions to act happy and acting happy to make a customer satisfied, respectively.
The difference between performative happiness and genuine happiness may be indiscernible from the customer’s perspective. After all, under its radical approach to service, Pret a Manger grew through the Great Recession—and grew aggressively. But such demands can leave employees hollowed out and empty.
“Results indicate that both forms of emotional labor have uniformly negative effects on workers, net of work complexity, control, and demands,” explained Karen Pugliesi, then chair and professor of the department of sociology and social work at Northern Arizona University. “Emotional labor increases perceptions of job stress, decreases satisfaction, and increases distress.”
Managers and leaders must break away from outcomes and focus instead on purpose and operations. Instead of demanding happiness, they must map happiness to explicit behaviors that are guided by OKRs and goals. Then, they must analyze feelings towards these behaviors using devices like the Positive and Negative Affect Schedule (PANAS) to ascertain the authenticity of an employee’s performance and yield a measure of happiness. Indeed, only by addressing the inputs can companies create environments where employees will actually be happy.
Operationally, this aligns with self-determination theory, a macro theory of human motivation. It states that people require three things in order to grow and feel happy: competence, connections, and autonomy. Building employee initiatives and programs around those elements will create authentically engaged and happy employees.
The mistakes of the past prove that there are no shortcuts. Happiness can be neither feigned nor forced. Cultivating genuine employee happiness requires careful thought and tireless execution. Happiness is a multifaceted emotional state and it requires a multi-dimensional solution. The challenge is significant, but for organizations willing to take up the challenge, the potential payoffs are immense: greater productivity, improved customer satisfaction, and even increased revenues.