In today’s accelerated pace of business, companies are beginning to realise that employee happiness isn’t just a nice-to-have—it’s a must-have for workplace culture, performance, profitability, employee engagement, and productivity.
But how does workplace culture, specifically the happiness of your employees, impact business outcomes?
The 2024 Gallup State of the Global Workforce Report offers some alarming statistics and key insights that show the importance of focusing on employee well-being and happiness.
The State of Employee Happiness: A Wake-Up Call for Leaders
According to the Gallup 2024 report, global employee engagement stagnated in 2023, and overall employee well-being declined.
While measures of employee happiness were improving in previous years, they’ve now plateaued.
As remote work continues to rise, companies are facing new challenges in keeping their employees engaged and connected.
A concerning statistic from the report highlights that 22% of the world’s employees experience loneliness. This is something that leaders can’t afford to ignore.
With many companies still struggling to adapt to remote and hybrid work models, loneliness and disengagement are becoming more prominent. So, what can we do about it?
Leaders need to take a proactive approach to create a sense of belonging, autonomy, and competence within their teams, values rooted in self-determination theory, which suggests that employees thrive when they have control over their work, feel competent in their roles, and have a sense of connection to the broader team and company.
An Expert’s Approach to Building High-Performing Teams
Richard Clarke, founder of Secret Source, an IT augmentation company, is a pioneer in using behavioural science to create some of the happiest and highest-performing IT teams in the industry.
Since founding the company in 2014, Secret Source has seen remarkable success, including doubling industry retention rates and achieving happiness levels 20% higher than the industry average. Clarke attributes this success to a workplace culture that prioritises happiness as the key to team performance.
Clarke’s approach is built on the principle of happiness—helping employees feel psychologically safe, connected, and valued.
This focus on creating a positive culture has proven results. Research shows that engaged employees are not only more productive but also deliver 21% more profit and 20% more sales.
When employees are happy, they’re more motivated, more engaged, and more productive, which directly impacts a company’s bottom line.
The Loneliness Epidemic: How Remote Work Contributes to Employee Disengagement
One of the most alarming findings in the Gallup report is the rise of loneliness, particularly since the increase in remote work due to the pandemic. Loneliness has been shown to have significant negative effects on both mental and physical health, even more so than smoking 15 cigarettes a day.
Yet, many companies have not fully adapted to the realities of remote work, and employees are feeling disconnected and isolated.
The traditional office environment provides plenty of opportunities for spontaneous interactions, chatting over lunch, walking to meetings together, or having a quick conversation by the refreshments area.
Remote work, however, lacks these micro-moments, and many companies have not found ways to replicate them. This lack of connection contributes significantly to feelings of loneliness and disengagement.
Building Connection in a Remote World
So, how can companies recreate the connections that are often missing in a remote workforce?
One solution is to intentionally create opportunities for social interactions. For example, starting meetings 10 minutes early to allow for casual conversations can help build rapport and psychological safety within teams.
Additionally, virtual teams can use platforms like Slack or Teams to create interest-based groups, from sports and movies to pet lovers, helping employees feel part of a “tribe” and build connections outside of work tasks.
Psychological safety is another essential element of a positive workplace culture. It’s impossible for employees to thrive in a work environment where they feel uncomfortable speaking up, asking questions, or challenging ideas. Companies must ensure that employees feel safe to share their thoughts and opinions without fear of judgement.
A Sense of Belonging: The Secret to Employee Happiness
One of the most important factors for employee happiness is a sense of belonging. According to Maslow’s hierarchy of needs, this is a basic human requirement. It’s not just about salary or perks, employees need to feel that they’re part of something bigger. They want to know that their work matters and that they’re contributing to a larger mission.
At Secret Source, Clarke realised the importance of creating clear career paths for employees to feel a sense of purpose and direction. This was particularly crucial when they found that 50% of their team, despite reporting high levels of happiness, didn’t see a future with the company.
After implementing professional development programmes and clear career ladders, employee satisfaction and retention skyrocketed.
The Link Between Happiness and Business Success
The relationship between employee happiness and business performance is clear. Research consistently shows that happier employees lead to more profitable companies.
According to a 2023 study from Oxford University and Indeed, the happiest companies saw their share performance outpace less happy companies by 10%. Moreover, a 2% increase in employee happiness can result in a 1% increase in revenue.
This highlights the importance of investing in your team’s happiness—not just as a moral obligation, but as a strategic business decision.
How Leaders Can Cultivate Happiness in the Workplace
If you’re a leader looking to improve your team’s happiness and, by extension, your company’s performance, there are several key strategies you should focus on:
- Listen to Your Team: The most important thing you can do is to understand the needs and feelings of your employees. Open, honest communication is key. Your team needs to know that they can approach you with concerns or ideas without fear of retribution.
- Recognise and Appreciate Efforts: Recognition is a simple but powerful tool for boosting happiness. Taking the time to thank your team for their hard work and to compliment them on their achievements can go a long way in creating a positive work environment.
- Provide Clear Purpose: Employees, especially younger generations, need to feel that their work has meaning. Help them understand how their contributions align with the company’s goals and mission. This sense of purpose drives engagement and commitment.
- Adapt to Changing Needs: People’s needs and motivations evolve over time. Regularly assess how your employees are feeling and adapt your strategies accordingly. Whether it’s offering more flexibility, career development opportunities, or better work-life balance, staying attuned to your team’s needs will help sustain long-term happiness.
Conclusion: Investing in Happiness Pays Off
Workplace culture has a profound impact on business outcomes. When employees are happy, they’re not only more productive but also more likely to stay with the company and contribute to its success.
Creating a positive, supportive environment where employees feel connected, competent, and valued is essential.
As the research shows, investing in happiness isn’t just about making your team feel good, and whilst that’s highly important, it’s also a powerful driver of performance, growth, and profitability.
Leaders who prioritise their teams’ well-being are ultimately building a foundation for long-term business success.
Frequently Asked Questions
Q1: Why is workplace culture considered a foundation for business success?
A: Workplace culture is the collective personality of an organisation, shaping how people behave, interact, and make decisions. A strong, positive culture creates alignment between employees and organisational goals, making work more meaningful and motivating. When culture is neglected, people often disengage, productivity suffers, and turnover increases. In contrast, a healthy culture encourages collaboration, innovation, and loyalty, which directly impacts both performance and long-term sustainability.
Q2: What are the dangers of leaving workplace culture to evolve on its own?
A: When culture develops passively, it often reflects bad habits, outdated practices, or even toxic behaviours. For example, if leadership does not address poor communication, cliques or silos may form, eroding trust. Similarly, if recognition is absent, employees may feel undervalued and less inclined to contribute their best work. Without intentional leadership, workplace culture can drift in a direction that harms morale, undermines performance, and damages the company’s reputation.
Q3: How can leaders intentionally shape a positive workplace culture?
A: Leaders shape culture by consistently modelling the values they want to see in their teams. This involves setting clear expectations, rewarding behaviours that align with company values, and communicating transparently. Practical steps might include regular team check-ins, celebrating achievements, and creating an environment where employees feel safe to voice ideas and concerns. Importantly, leaders should act as role models. If they demonstrate integrity, collaboration, and resilience, employees are far more likely to follow suit.
Q4: What role do employees play in sustaining a strong workplace culture?
A: While leaders set the tone, employees collectively bring culture to life. Each person contributes to the environment through their behaviours, attitudes, and interactions. For example, a team member who goes out of their way to help a colleague reinforces a culture of support. Sustaining culture requires employees to not only buy into the organisation’s values but also hold one another accountable. Peer reinforcement ensures the culture remains authentic rather than being seen as a “top-down” initiative.
Q5: How does workplace culture influence recruitment and retention?
A: Culture is a powerful differentiator in attracting and keeping talent.
Today’s workforce, especially younger generations, places a high value on purpose-driven organisations and positive work environments. If candidates sense a toxic or misaligned culture, they are less likely to join, regardless of salary and benefits. Similarly, employees are more likely to stay when they feel supported, recognised, and connected to the company’s mission. In competitive industries, a strong culture often becomes a decisive factor in reducing turnover and securing long-term loyalty.
Q6: What practical steps can businesses take to evaluate their existing culture?
A: Businesses can start by gathering honest feedback from employees at all levels, through surveys, focus groups, or informal conversations. They should assess whether written company values match day-to-day practices. Metrics such as employee engagement, turnover rates, and even client satisfaction can provide valuable clues about cultural health. Once gaps are identified, leaders can design targeted initiatives, such as training programmes, mentorship opportunities, or revised policies, to align the culture with the organisation’s goals.
References
https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx
Next Steps
Click on the points below to access the content.
- Sign up to receive my V.I.T.A.L. insights newsletter for revenue growth
- Register for notification of future free live events about securing, sustaining, and scaling new business
- Connect with me on LinkedIn
- Watch my LinkedIn Live with Richard Clarke
- Leading a team requires developed emotional intelligence skills, read this article to find out more
About The Author
Rebecca Jenkins has extensive leadership and revenue growth experience. This includes securing, retaining, and growing multiple profitable client accounts in her previous business.
Rebecca is a specialist consultant in B2B revenue growth and the author of Winning Big In Sales
Her award-winning V.I.T.A.L. method delivers results for businesses wanting a proven way to secure, scale and sustain profitable revenue growth. You can watch and read client case studies here on the RJEN website.
