Monday, November 17, 2014

Does Increased Employee Happiness Result In Improved Worker Productivity?

There is empirical evidence linking employees’ wellbeing to their individual performance. For example, greater subjective wellbeing feeds through to individuals’ performance in the labour market (Judge et al. 2001, Lyubmirsky et al. 2005). There is also recent evidence of a causal link between increased wellbeing and improved worker productivity, at least in a laboratory experiment setting (Oswald et al. 2014). But the empirical evidence at the organisation level is extremely sparse.

Perhaps the most compelling evidence of a link comes from a survey of manufacturing in Finland, which found that mean workplace job satisfaction was independently associated with subsequent value-added per employee. A one point increase (on a six-point scale) in the average level of job satisfaction among workers at the plant increased the level of value-added per hour worked two years later by 3.6 percentage points, after controlling for other factors. This estimate rose to 9 percentage points in a two-stage estimation approach designed to account for unobserved establishment-level heterogeneity (Bockerman and Ilmakunnas 2012).


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