The Financial Value of Happiness


Chris Croft recently sent me this article which we thought has significant value.

Chris Writes…

“I have been reading Happiness at Work by Jessica Pryce-Jones (she did that TV series on Making Slough Happy, you may remember?) and they have measured the effect of happiness on productivity. Clearly it’s going to affect sickness, and employee turnover, but what about when people are at work?

 A good way to measure productivity is Time On Task.
How much of your day are you actually working? I mean really focussing on the task and doing something productive? Partly through no fault of our own we can’t spend 100% of the day working productively, nobody can.
You might like to jot down a figure for yourself before you read the next bit.
And ask your colleagues what percentage of time the actually spend working.
Jess’s research found that the least happy people spend 53% percent of their time on task, and this rises through the levels to the most happy people who spend 78% of the time on task.
I’m surprised that nobody does better than 78%, but then maybe that is true!
(It’s also interesting to note that happy people don’t become complacent and do nothing, which is what some managers might fear).
So if we say it goes from half to three quarters, that means that if your staff are unhappy you are losing a quarter of their output!
The inter quartile range (taking out the extreme cases basically) goes from 63% for the averagely unhappy group to 73% for the averagely happy group. So if you could move the unhappy half of your people up into the happy zone you’d get another 10% from them.
This would require some effort – more communication, more involvement (though that would probably give better decisions etc!), a nice coffee area, flexibility of management style and maybe even working hours, more recognition and thanks, etc – but if you calculate the value it’s probably worth it.
For example – 50 employees x 0.5 (just the unhappy half) x 30k (you have to double wage cost to get real cost if employing someone) x 10% = £75,000
And if you add an effect on labour turnover, let’s say 5 people fewer leave per year that’s 5 x 5k (?) = £25k
And 2 days (?) per person less of sickness: 2/200 x 25 people x 30k = 7k
So even without better decisions, more being done, more sales etc we are gaining at least £100k
If your organisation has 500 employees then it’s a million pounds gained.
A Council that has 5000 employees would save £10 million if most of their unhappy staff could be made reasonably happy.
Maybe it’s time to think about how you could do this? “
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Chris Croft is can be reached at
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