The Happiness Factor

Published: Jan 24, 2019
Modified: Mar 26, 2020

By Mark Vickers

Does the happiness of workers represent a strategic advantage for employers? That’s one of the critical questions being raised in new fields of psychology and organizational studies. The answer could help drive management policy for years to come.

Pioneering psychologist Abraham Maslow introduced the term “positive psychology” half a century ago, but only recently has the term begun to flourish. Much of the credit goes to University of Pennsylvania psychologist Martin Seligman, who began his tenure as president of the American Psychological Association by trying to get his colleagues to focus on the mental underpinnings of good feelings (Wallis 2005).

Too long, Seligman argues, have most psychologists focused almost exclusively on mental disorders (Gavin and Mason 2004). Indeed, one search of the psychology literature found that there were about 375,000 articles on “negative” issues such as mental illness, anger, anxiety, and so on but only about 1,000 articles on positive issues. “This constitutes a negative/positive publication ratio of approximately 375 to 1!” notes Prof. Thomas A Wright of the University of Nevada (2003).

In response, more researchers are concentrating on the factors that allow people to achieve exceptionally positive frames of mind, or what most of us call happiness. It turns out that the roots of happiness are multidimensional. Seligman and his colleague Edward Diener of the University of Illinois—who is a major pioneer in the field—compare happiness to “symphonic music necessitating many instruments, without any one being sufficient for the beautiful quality” (Schneider-Mayerson 2002).

But the research does find that some instruments are more or less important. Money, for example, does not seem to play a huge role. Various studies suggest that, although poverty and low pay can cause unhappiness, once a certain level of compensation is reached, there is not a “significant relationship between how much money a person earns and whether he or she feels good about life” (Easterbrook 2005).

Supportive family and friends, on the other hand, appear to be crucial. When Seligman and Diener studied a group of students, they found that the happier ones tended to socialize more. “It is important to work on social skills, close interpersonal ties and social support in order to be happy,” notes Diener (Wallis 2005).

Seligman argues that there are three essential components of happiness. First, there’s the ability to savor life’s pleasures. Second, there’s a true engagement with one’s work, avocations, loved ones, and so on. Third, there’s the sense that one is serving a larger purpose beyond one’s self (“Reflective,” 2005; Wallis 2005).

When we look at happiness in the context of organizations, which is a focus of a new field called positive organizational scholarship, we see it may have significant business implications. The research of Prof. Wright, for example, indicates that happiness may be responsible for 10% to 25% of variations in work performance (Thottan 2005). If that’s true, an organization could suffer an enormous loss of productivity when unhappiness becomes widespread in its workforce.

Some researchers have also looked specifically at engagement, which is associated with happiness in the Seligman model. The Gallup Organization (2001) has estimated that actively disengaged employees—who make up around 19% of the total U.S. workforce—“miss an average of 3.5 more days per year than other workers do, or 86.5 million days in all.”

Managers can influence workers’ sense of engagement by focusing on two major factors, noted Ed Gubman, founding partner at Strategic Talent Solutions, at HRI’s 2005 Issue Management Conference. One factor is “what you do,” especially the closeness of the match between a person’s skills and his or her actual job. The other factor is “where you do it,” meaning the larger work environment. That environment is influenced by culture, leadership, reward systems, and other issues.

Organizations might also influence workers’ sense of meaning, another component of happiness. “When the workplace is designed and managed to create meaning for its workers, workers tend to be more healthy and happy,” write Joanne H. Gavin and Richard O. Mason (2004). They point to the example of The Container Store (TCS), which for years has been on Fortune magazine’s list of “The 100 Best Companies to Work For.” By nurturing a “culture of mutual respect,” TCS has reportedly inspired a sense of meaning in many employees. In fact, 94% of TCS workers reported to Fortune that they “made a difference” by working for the organization.

Are there any business drawbacks to worker happiness? Perhaps. There are scholars who argue, for example, that some employees may be happy as the result of an unrealistically positive self-concept. Such people—though happy—might be viewed as self-centered and deluded about their performance levels. “In the workplace, if the price of getting a positive co-worker is paid in the coin of selfishness and narcissism, it is one most co-workers would be unwilling to bear,” note scholars Timothy A. Judge and Remus Ilies in “Is Positiveness in Organizations Always Desireable?” (2004). 

Another point to make is that a society’s quest for greater happiness could ultimately conflict with desires and world views of many business people. Richard Layard, the British author of the book Happiness, argues that society should “clamp down on such stress-inducing practices as performance-related pay” and “take firmer measures to guarantee job security,” according to the Wall Street Journal (McMahon 2005). In other words, greater happiness among workers may require less happiness among some employers, a dynamic that is bound to leave somebody feeling blue.

HRI is a not-for-profit, academic-based research institute whose mission is to research, develop, and disseminate information and insights on the trends and strategic issues impacting the management of people in organizations today and in the future. For more information contact Jay J. Jamrog at [email protected]

Documents used in the preparation of this TrendWatcher include:

Easterbrook, Gregg. “The Real Truth about MONEY.” Time, ProQuest. January 17, 2005, p. A32.

“Gallup Study Indicates Actively Disengaged Workers Cost U.S. Hundreds of Billions Each Year.” March 19, 2001.

Gavin, Joanne H., and Richard O. Mason. “The Virtuous Organization: The Value of Happiness in the Workplace.” Organizational Dynamics 33, no. 4 ( 2004): 379–392.

Gubman, Ed. “From Engagement to Passion for Work: The Search for the Missing Person.” Human Resource Planning, ABI/INFORM  27, no. 3 (2004): 42–46.

Judge, Timothy A. and Remus Ilies. “Is Positiveness in Organizations Always Desirable?” Academy of Management Executive 18, no. 4 (2004).

McMahon, Darrin M. “Be of Good Cheer – Or Else.” Wall Street Journal, ProQuest. January 26, 2005, p. D11.

Reflective Happiness homepage. Retrieved on February 16, 2005, from

Schneider-Mayerson, Anna. “Building Blocks of Bliss.” Psychology Today (May/June 2002): 20.

Thottam, Jyoti. “Thank God It’s Monday.” Time, January 17, 2005, pp. A58–A61.

Wallis, Claudia. “The New Science of Happiness.” Time, January 17, 2005, pp. A3–A9.

Wright, Thomas A. “Positive Organizational Behavior: An Idea Whose Time Has Truly Come.” Journal of Organizational Behavior. ProQuest  24, no. 4 (June 2003): 437.

About the Author(s)

Mark Vickers is an associate with the Institute for Corporate Productivity.