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Employers should focus on recognition and reward, including benefits, as well as career development to boost workplace happiness of staff
It is perceived HR wisdom that happy employees are likely to be more motivated, engaged, committed, and loyal to their employers. They also tend to go the extra mile for customers and are favourable about their organisation, becoming external advocates for their employer. A happy employer should therefore have a positive effect on productivity.
If this theory is borne out, then keeping employees happy while they are at work is an important challenge for employers.
However, British employers still have a long way to go to create high happiness levels among their workforces. Only one-in-two employees are happy with both their current role and their current employer, according to research conducted for the Employee Benefits Exhibition and Conference this summer by YouGov. Employers are therefore faced with a stiff, uphill struggle to create true enjoyment in employment.
In fact, British employers should be actively concerned about the significant minority of employees who are neither happy with their current job role nor their current employer, namely one in four.
Staff who are unhappy both with their role and their employer are likely to fall short in terms of levels of commitment, motivation, engagement, advocacy, loyalty and customer focus. So bosses need to act to avoid an unhappy spiral of poor performance.
The research findings show that employers should be focusing on critical improvement areas such as recognition and reward (including benefits provision) as well as creating career development opportunities for employees in order to improve happiness levels within the workplace.
With regard to benefits, specifically providing employees with the right package seems to be the key to promoting workplace happiness. Our research has found that the combination of a bonus system, private medical insurance and flexible working are the most likely combination to create happier workers in Britain.
Five happiness categories
Turning to specifics, the survey found that 59% of employees are happy in their current job role, and 54% are happy with their employer. By examining the combination of how happy an employee is with their job role and with their employer, a ‘happiness index’ has been constructed, which puts employees into one of five categories: Total Happy, Desk Happy, Corporate Happy, Misery Guts and Fence Sitters. Total Happys are super-happy employees, who are content with both their job role and their employer. Half (50%) of the British workforce are Total Happys.
At the other end of the scale are Misery Guts, who are neither happy with their job role nor their employer. A quarter of British employees are Misery Guts.
Those who are generally happy in their actual job role, but not so cheerful about working for their employer are Desk Happys and just under one-in-ten (9%) fall into this category. Those who are happy with their employer, but when it comes to their current job role are less so fall into the category of Corporate Happys. These account for 6% of the British workforce.
And finally, there are the fence sitters who are neither happy nor decidedly unhappy. One-in-ten sit on the fence.
The business case
The best organisations work hard to create a happy workforce and reap the benefits. The data shows there are startling extremes in the different working behaviours between the Total Happys and the Misery Guts.
The vast majority (87%) of Total Happys are committed to their organisations compared with just 10% of the Misery Guts; a staggering 77% gap. The Total Happys are much more motivated to perform, feel more engaged by their organisation and will go the extra mile for customers or clients.
Furthermore, happy employees are more likely to be favourable about their organisation and be advocates of it both in terms of its role as an employer, but also as a provider of products and services. Such employee advocacy can be an important driver in attracting talent and retaining customers.
Happy employees are also the key to staff retention; among the Total Happys, 90% say they would want to remain within their organisation in one year’s time – 78% say they plan to be there in three years’ time.
In comparison, just 11% of the Misery Guts plan to be in the same job in a year’s time, and a mere 7% plan to be there in three years. This clearly demonstrates both the short and longer-term effects of an unhappy workplace. With the ever increasing war for talent and the costs involved in recruitment, it makes sense for employers to keep hold of their best people by keeping the smile on their face as they come to work.
Benefits’ role in happiness
Benefits are a key part of the recognition and reward strategy to drive engagement. However, only 48% of British employees are happy with their benefits package. Out of a possible list of 24 benefits, people receive an average of 3.6. But the happiest employees tend to get more – an average of 4.3, compared with just 2.8 among the Misery Guts.
Key to satisfaction
The important thing to note here is it’s not just about throwing more and more benefits at employees. The key to satisfaction with benefits, and subsequently employee happiness, is offering the right set of benefits. Analysis identified that the benefits which result in employees being most satisfied with their benefits package are: a bonus, private medical insurance and flexible working. In fact, the survey showed that 85% of employees who receive all three of these benefits are satisfied with their benefits package, 37 points above the average. Other specific benefits which have a big impact on satisfaction are discounts on their own or other company’s products and a pension (final salary or other occupational pension such as stakeholder or group personal pension).
Other benefits, such as free car parking, access to free counselling, employee share schemes, sports club membership and season ticket loans, are all ‘nice to haves’ but it is really the five high-impact benefits which lead to the most satisfied employees. Furthermore, there is a whole ream of employee benefits which, in overall comparison, have little effect on benefits package satisfaction (although they may meet other HR objectives).
Impact of annual leave
Interestingly, from our data, the annual holiday entitlement does not appear to be a driver of happiness, and indeed, little difference in the actual number of holidays was observed between the happiest and most miserable. Respondents show that the average British employee currently gets 24 days per year (excluding bank holidays). The average for Misery Guts is the same, while for the Total Happys it is just one more day (25 days).
The situation will become even more uniform with the increase of statutory leave in the UK to 24 days a year (including bank holidays), after 1 October 2007.
This report was compiled by Andy Brown, Matt Roddan, Louise Nilsson, all at YouGov, and Debi O’Donovan, editorial director of Employee Benefits.
The survey asked employees to rate how satisfied they are with specific aspects of their job; from benefits and communications to line management and work-life balance.
Drivers of employer happiness: Strategic priority analysis
Impact on benefits satisfaction
High impact benefits
- Personal medical insurance*
- Flexible working*
- Discounts on own or other companies’ products
- Pension (final salary or other occupational)
‘Nice to have’ benefits
- Free car parking
- Access to free counselling
- Fuel for private use
- Employee share scheme
- Season ticket loan
- Sports/social club membership
Low impact benefits
- Life assurance cover
- Retail vouchers
- Healthcare cash plan
- Critical illness insurance
- Car allowance, company/lease/hire car
- Personal accident insurance
- Optical care/vouchers
- Luncheon vouchers
- Income protection
- CrËche/payment for childcare
* These three combined lead to an 85% satisfaction of benefits
This survey has been conducted using an online interview on members of the YouGov Plc GB panel of individuals who have agreed to take part in surveys.
The figures have been weighted and are representative of the working population in terms of industry (aged 18 ).
Total sample size was 4,134 respondents. Fieldwork was undertaken between 31 July- 7 August 2007.
YouGov identified which out of the 12 factors (see list, far left) have the biggest impact on happiness with the employer and then divided these into key strength areas and critical improvement areas for British business.
Key strength areas:
1. Line management
These are the factors which were rated favourably by over 50% of employees and have a strong impact upon happiness.
Happy employees work in nice surroundings, under a supportive manager and feel that communication is effective. British organisations should focus on maintaining strong performance in these areas to ensure their employees remain happy with them as an employer.
Critical improvement areas:
3. Career development
These four critical improvement areas, identified because all have particular relevance to the HR community, have a strong impact upon happiness, but received low scores in the research. The study showed that the majority of British employees did not believe their employers were doing enough in these areas.
Therefore, improvements of practice towards recognition, reward, career development and benefits is likely to result in large increases in staff happiness. Employees want to feel as if they have somewhere to go in terms of their career within their current organisation, and that they will be rewarded and recognised for their good work along the way.
Those employers which deliver will find they have a much happier, motivated and committed workforce on their hands and are more likely to reap productivity gains.
Copyright. 2007 YouGov and Centaur Media Plc, publishers of Employee Benefits. No copies or part copies of this document shall be made without joint permission of YouGov and Employee Benefits.