Inspirational leaders instill a spirit of passion throughout their organizations and sincerely value their employees. It has long been assumed that success at work leads to employee satisfaction. But the new fields of positive psychology and positive organizational development – and the rigorous research they’ve inspired – have begun to flip that common knowledge on its head. According the scientific evidence, happy employees:

  • Are more productive
  • Stay with companies longer
  • Have more and stronger relationships with colleagues
  • Are more creative
  • Proactively fix problems rather than complain
  • Learn faster
  • Get sick less often
  • Are more motivated
  • Make better decisions under stress

Engaged workforces show a 20% improvement in employee productivity, a 50% reduction in turnover, and a 23% increase in customer satisfaction. As much as 25% of the variance in employee productivity can be attributed to emotional well-being.

All of these factors play a big role in the bottom line. U.S. companies spend more than $300 billion a year in increased absenteeism, employee turnover, reduced productivity, and medical and legal costs resulting from employee stress alone. This figure grows exponentially once we factor in the costs of replacing employees, fixing mistakes of disengaged workers, and the opportunity costs of lost productivity.

According to a 2008 longitudinal study at the University of California, Riverside, happy employees report greater satisfaction with their jobs and a greater sense of autonomy at work, a key component to sustainable motivation. They also use more cooperative approaches when interacting with coworkers and receive more social support at work. Happy employees produce higher quality work and are more likely to voluntarily take on additional duties, such as helping others in the workplace. They show less withdrawal behaviors, including absenteeism, and cope better when faced with challenging situations.