"That's the conclusion from Arthur C. Brooks, a Harvard professor who teaches courses on leadership and happiness at both the Harvard Kennedy School and Harvard Business School. Speaking recently at Harvard Business School's Klarman Hall for an episode of the HBR IdeaCast, Brooks said "happier employees are more profitable, more productive employees. That's just the way it is. If you can have a happier workforce, you're going to have a better company. And the results are going to be there.""
"Research from Irrational Capital, a Wall Street investment firm Brooks has advised, shows a clear financial correlation between employee happiness and company performance. The firm analyzed data from 7,500 publicly traded companies, including the entire S&P 500 and Russell 1000. "What they find is, for example, if you're in the top 20% of workplace well-being, you will be, on average, about 520 basis points above the S&P 500 in your stock price over the past year," Brooks said. "This stuff is really performing. It really, really is a good investment.""
Boss mood and behavior influence how others perform at work. Higher leader happiness correlates with higher employee happiness, which raises productivity and profitability. Firms ranking in the top 20% for workplace well-being showed average stock outperformance of about 520 basis points versus the S&P 500. Separate University of Oxford research linked a one-point increase in employee happiness scores to billions of dollars in additional annual profits. Prioritizing leader and workforce well-being functions as a measurable investment that can improve company performance and market returns. Companies can misidentify which changes truly increase employee happiness.
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