Economics of Happiness

People spend 50% or more of their waking hours at work. If they are not doing well at work, that will spread into all of their life. Historically, there has been a kind of command and control orientation in workplaces the objective being to get as many hours and effort as possible. But it is known today that people are working harder nowadays than they did a generation ago and that the work they do is much more complex and implying a massive source of stress.

The data suggests that this kind of orientation is a disservice to the company, to its bottom line. Shifting that ethos towards prioritizing happiness and the various qualities, characteristics and experiences of a person is important for happiness and that might actually make businesses work better.

Happier workplaces report:

  • less turnover
  • lower health care costs
  • fewer mistakes and accidents
  • more efficiency
  • greater shareholder value
  • quicker rebounds in the wake of adverse events or failures
  • they also earn higher customer loyalty and satisfaction
  • business growth via word-of-mouth endorsement.

The Gallup report called The Economics of Wellbeing shows that increasing employee happiness can reduce turnover costs by as much as 52%. Researchers Thomas Wright and Douglas Bonnet state that just a 1-point increase in an employee’s happiness actually doubles their probability of remaining at their job. That’s huge for reducing all the costs associated with employee turnover.

And happy organizations don’t only earn loyalty from their employees. They also earn the loyalty and satisfaction of their customers and clients. According to a 2017 article in Business Journal by Jim Harter, the chief scientist at the Gallup organization, happier business units achieve a 10% increase in customer ratings. Service departments with happy leaders are more likely to receive high ratings from customers. And taking a happier tone with customers predicts greater customer satisfaction.

A study published in Industrial and Labor Relations Review in 2012 reported that increasing happiness increased value added per hours worked in manufacturing by 6.6%.

Health care costs are also lower in happier organizations again, according to the Gallup’s research, by as much as 62%.

According to a Alex Edmans, professor of finance at London Business School, the 100 best companies to work for in America beat their peers by 2% to 3% per year over a 26-year period.

Together, all this evidence strongly suggests that prioritizing happiness gives companies significant and worthwhile advantages.

Key figures by country

United Kingdom

Employers across the UK are acting to support the well being of their people and create mentally healthy businesses. Stress, anxiety and depression are the biggest cause of sickness absence in the society. Mental ill health is responsible for 91 million working days lost every year.

The Center for Mental Health has found that mental ill health costs UK employers an estimated £34.9 billion each year – the equivalent of £1,300 for every employee in the UK workforce. Broken down:

  • £10.6 billion in sickness absence
  • £21.2 billion in reduced productivity
  • £3.1 billion in replacing staff who leave their jobs for mental health-related reasons.

According to the Center for Mental Health, simple steps to improve the management of mental health in the workplace will allow employers to save 30% or more of these costs – at least £10 billion a year.


The IBET© study done by Mozart Consulting, reveal a cost of unhappiness at work of 13.340 euros per employee per year. This study is based on the private sector and its 18,3 million of employees.

23 % of the cost is due to absenteeism (work accidents, professional illness, absence), 35 % are costs related to the will of the company to stop the collaboration with certain employees and 42% are linked to the employee disengagement (resignations, exit negotiations). It is also to note that the number of requests to recognize a mental illness has been multiplied by 5 in 5 years.

Furthermore, Thomas Perrin, Deputy General Manager of APICIL, says that a French employee creates in average 60,000€ of value per year (and 90,000€ for the biggest companies) while the measurable loss for a company in case of a disengaged employee is of 12,000€ every year.

United States of America

In 2010, a Gallup Panel study of 5,271 full-time employees across the U.S. studied overall health-related costs including those linked to chronic disease burden. Associated costs to employers include direct medical costs, missed workdays, short-term disability, and lost productivity. Compared with employees who are struggling, thriving employees have 41% lower health-related costs to the employer, a difference of $2,993 per person. For every 10,000 employees, this represents a difference of nearly $30 million.

As part of the longitudinal study, they were also able to track employee turnover. They also found that thriving employees have lower turnover rates and associated costs — $1,948 less per person employed — compared with those who are suffering. For every 10,000 employees, this represents $19.5 million.

Beyond figures

Indicators like physical, mental and social health should be integrated in any company. Happiness and well being of people at work directly impacts the company’s performance. It should be systematically measured and action plans should be put in place.

On the other hand, this should be consistent with the company’s values and part of a real shared vision among the leading management. We don’t treat people well in order for them to only have a better productivity. We treat them well because we value them and we want to contribute to a better global life satisfaction.

Let’s all build together and make people happier!


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