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The Power of Employee Happiness: Why Companies Should Prioritize It

In today's fast-paced and competitive business world, companies recognize the importance of employee happiness. Prioritizing employee happiness extends beyond being a mere sentiment; it holds tangible benefits for both individuals and organizations.

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In today's fast-paced and competitive business world, companies recognize the importance of employee happiness. Prioritizing employee happiness extends beyond being a mere sentiment; it holds tangible benefits for both individuals and organizations. That’s why more and more organizations include happiness and satisfaction in their HR/people strategy. This blog explores why companies should put a greater emphasis on employee happiness, the benefits it brings, and practical ways to foster a happy work environment. The importance of employee happiness has never been greater, so let's find out why.

Understanding Employee Happiness

Often, when we think of happiness, we think of mood. In the workplace, this is simplistic because mood fluctuates, and nobody's happy all the time. When defining happiness, it is often easier to discuss it indirectly in relation to other mental phenomena like joy, engagement, or motivation. 

The father of positive psychology, Martin Seligman, linked happiness to the following three components:

  • Positive emotions- Pleasure, warmth, comfort, and even rapture, as examples, create a “pleasant” life

  • Engagement- Also known as flow, involves merging with the activity and losing one’s sense of self

  • Meaning- a “meaningful life” consists of belonging to, or serving, something more significant than the self 

On the other hand, neuroscientists identified four key aspects that can lead to happiness: safety, relationships, acknowledgment, and freedom. These drivers play a significant role in creating a happy work environment and fostering employee well-being. We can put these into a pyramid similar to Maslow’s hierarchy of needs. To create workplace happiness we first need to feel safe. Then we need meaningful relationships within the workplace and to feel needed and appreciated. Finally, a sense of freedom is required.

Understanding Employee Happiness
Understanding Employee Happiness

Benefits of happy employees:

1. Increased Productivity and Performance

Happy employees are more engaged, motivated, and committed to their work. Numerous studies have shown that when employees are satisfied and content in their roles, they demonstrate higher levels of productivity, resulting in improved performance and increased organizational success.

2. Enhanced Employee Retention:

A positive work environment that prioritizes employee happiness leads to higher employee retention rates. When employees feel valued, supported, and satisfied, they are more likely to remain with the company long-term, reducing recruitment and training costs while promoting stability and continuity.

3. Increased Innovation and Creativity:

Happy employees are more likely to think creatively and come up with innovative solutions to challenges. When individuals feel valued, respected, and supported, they are empowered to think outside the box and contribute fresh ideas to the organization. By fostering a happy work environment, companies can tap into their employees' creative potential and drive innovation.

4. Positive Company Culture and Reputation:

A company that prioritizes employee happiness cultivates a positive company culture. This, in turn, attracts top talent, as job seekers are increasingly seeking organizations that value their employees' well-being and satisfaction. A strong company culture built on employee happiness contributes to a positive reputation, positioning the company as an employer of choice.

5. Increased Customer Satisfaction:

Happy employees create happy customers. Satisfied employees are more likely to deliver excellent customer service, go the extra mile to meet customer needs and exceed expectations. A positive work environment nurtures a customer-centric mindset, leading to increased customer satisfaction and loyalty.

How To Keep Employees Happy And Productive?
How To Keep Employees Happy And Productive?

How To Keep Employees Happy And Productive?

Raising or promoting employees is just one short-term method of keeping them happy, satisfied, and content in their jobs. It is possible to keep your employees motivated at work in so many ways that are cost-effective. There are several practical ways to foster employee happiness:

1. Allow Flexible Working Schedules

The concept of a flexible working environment goes beyond being a buzzword- it is the direction in which the future of work is heading. Flexibility provides employees with a sense of liberation, allowing them to better balance their professional and personal lives. This enhanced level of comfort ultimately cultivates higher levels of happiness and productivity among employees, as they do not feel confined or restricted in any way. Flexible working schedules allow workers to feel less stressed, more refreshed, and happier overall.

2. Listen To Your Employees

At numerous organizations, decisions are made by leaders without involving employees, resulting in employees being informed about these decisions only after they have been made and finalized. This lack of inclusion in the decision-making process leaves employees feeling excluded and overlooked. Consequently, employees often experience a sense of unhappiness and a lack of motivation when significant decisions that impact their work are made without their input. 

To address this issue, it is advisable to prioritize employees' suggestions and actively involve them in the decision-making process. By doing so, employees will feel valued, engaged, and motivated to contribute to the success of the organization.

3. Create Career Mobility

For employees to feel motivated, productive, and secure, they need the opportunity for growth and career mobility. Career growth and upward mobility are important stepping stones. Creating opportunities for professional growth empower employees to take greater risks, come up with new ideas, ask for support and mentorship, improve their skills, and grow as people and employees.

If a career has no direction, employees often feel no need to try harder because no one will appreciate their work and it will not benefit them in any tangible way. Rather than moving up within your organization, they will look elsewhere. Would you be happy at a job with no career growth?

4. Build A Positive Work Environment

This one is easier to say than to do. However, positive work environments constantly come up as one of the most desirable factors for workers; a Deloitte study found that 94% of executives and 88% of employees believe a positive corporate culture is key to a company’s success.

Transparency and open communication remain crucial to fostering a positive work environment. This prevents issues from being bottled up and negative feelings from flourishing.

‍5. Recognize Employees For Their Hard Work And Reward Them

Recognizing and rewarding employees' achievements is vital for their motivation and job satisfaction. Saying “thank you” can go a long way. Recognition of an employee’s hard work or achievements doesn’t have to be a big, grand gesture. 

Recognition does not just have to come from managers, either. A peer recognition program can be a great way to bond and unite coworkers. This fosters a positive work culture and boosts employee morale.

6. Offer Extensive Benefits

The most effective way to keep employees happy is to provide them with benefits. It’s a no-brainer: when employees feel their company takes care of them, they’re far more likely to feel satisfied and productive.

But benefits can be tricky. Developing a comprehensive benefits package that matches your employees' needs requires communication with them. Demographics will play a major role in determining the workforce needs. Regardless of whether it's granting employees extra maternity or paternity leave or giving them the day off on their birthday, it's important to determine what each employee needs and how you can better support them. That’s why at FatCat we created a comprehensive benefits package designed for wellbeing and growth.

7. Refresh Your Office Space

It may surprise you, but the overall office environment has a much greater impact on employees' happiness than you may think. How an office is laid out can have a significant impact on how workers are able to do their job and how productive they can be.

From office furniture to live plants and ample refrigerator space, the physical office environment should be designed to benefit your workforce. A few tips for designing spaces that spark happiness are provided in this blog.


Investing in employee happiness yields a multitude of benefits for organizations. From increased productivity and performance to enhanced employee retention and customer satisfaction, the advantages are clear. By implementing practical strategies to foster employee happiness, companies can create a positive work environment that nurtures individuals, drives organizational success, and positions themselves as employers of choice. 

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