Good management, flexible work arrangements and a better focus on employee strengths are the cornerstones to a happy workplace.

A smile can go a long way in a healthy workplace. A recent study from the University of Michigan’s Ross School of Business discovered that happy employees work harder than unhappy ones, call in sick less frequently, go the extra mile when performing a task, stick at a job and attract like-minded people to their cause.

The report, conducted over seven years, concluded that these productive staff members share two character traits: a sense of vitality and a willingness to learn.

As economies contract and margins continue to be squeezed, the emerging discipline of positive psychology is changing the way we work. Organisations the world over are beginning to take workplace happiness seriously.

Clinical psychologist Dr Timothy Sharp is so serious about it that he answers to the name Dr Happy when he’s not at home. And maybe when he is.

As “Chief Happiness Officer” at Sydney’s The Happiness Institute, Sharp is a little bullish about putting smiles on dials. Organisations that have benefited from his company’s expertise include EY (Ernst Young), Westpac, Fairfax Media, AMP and Coca-Cola Amatil.

“If defined properly, happiness at work is associated with engagement and discretionary effort and is also linked to creativity and innovation, which means that positive employees solve problems better and are more resilient,” Sharp explains.

“Those workplaces with positive cultures outperform comparable workplaces on every measure.”

Take the example of the Parnassus Workplace Fund, an American mutual fund that invests exclusively in large firms with outstanding workplaces. The idea grew wings in 2005 after a fruitful investment return analysis was performed on Fortune magazine’s “100 Best Companies To Work For” list.

Since the fund’s inception, it has delivered annual returns of almost 10 per cent, nearly double the SP 500 Index average in the same period.

Those sorts of numbers fuel Andrew Bayly, a positive psychology consultant who has run repeat programs in the strategy implementation, leadership development and engagement areas at seven of the ASX’s Top 20 firms. He believes the potential benefits of a happy workplace justify any initial or ongoing outlay.

“A happy state will lead to creativity and you’ll be able to connect with others more easily, quickly and productively. There is sound evidence that links happy and optimistic states of mind with more productive lives,” says Bayly, who recently graduated with a Master of Applied Positive Psychology from the University of Melbourne’s newly formed Centre for Positive Psychology.

The field of positive psychology has been championed by Martin Seligman, the author of the seminal 1990 bestseller Learned Optimism. Learned optimism is a popular positive psychology concept driven by the capacity to improve a situation through consciously challenging negative thoughts and replacing them with positive ones.

Of course, turning a pessimist into an optimist isn’t as easy as flicking a switch, but Bayly believes that with the correct training and application, whole workplace cultures can be transformed.

“Lots of people are selling the ‘everyone can be happier now’ mantra, and lots of what they’re selling is questionable,” Bayly says.

“That said, everyone can be happier, but it’s a major task and takes time. The great thing is that these sorts of concepts can be translated into a work environment.”

An interesting case study is the American online giant Zappos. The company’s CEO and co-founder Tony Hsieh is evangelical about happiness, titling his self-help book Delivering Happiness.

The company has forged a reputation for a unique culture and unparalleled customer service (a 2009 New Yorker company profile reported that one customer complaint/conversation to Zappos’ US call centre lasted a record 5 hours 25 minutes 31 seconds. Zappos was proud to share that information).

The company gained worldwide attention in 2009 when it offered new employees US$2000 to quit in their first week if they thought they weren’t the right fit for the organisation. The offer now stands at US$4000 as only 2 to 3 per cent of new recruits ever take the generous offer.

Management at Zappos has stated that releasing unhappy staff (with bulging wallets) saves the company money in the long run. Developing and consistently shaping a positive work culture is the foundation of the company’s philosophy. With this in place, customer service and profitability will follow.

It’s obviously working for them and was appealing to Amazon, which bought Zappos for US$1.2 billion in 2009.

“Over the past few decades, a lot of people in very senior positions have been embracing new ways of increasing productivity and a lot of organisations have been exposed to the latest research,” says Bayly.

“Competitive strategy used to work in isolation, but meeting targets today is a game of inches. Increasingly, organisations will try anything to give them an edge.”

So in practical terms, how can we keep employees happy? Is it as simple as assembling a ping-pong table and firing up the PlayStation?

“We definitely need more than gimmicks, but it’s amazing how many organisations believe such an overly simple approach will work. Fun and play are important, but so too are finding ways to give employees meaning and purpose in their work,” insists Sharp.

Leadership is crucial. Workplace psychologists often say people don’t quit their jobs, they quit their managers, and finding leaders who manage positively is fundamentally important to productivity. Computer storage and data management group NetApp is a case in point.

NetApp, a mainstay on BRW’s “Best Places To Work” list, has put in place a series of programs to ensure employee happiness, but Kim Nixon, the company’s human resources manager for Australia and New Zealand, believes leadership is the key to the company’s success.

“We have great management, individuals with very high EQs [emotional intelligence] and IQs as well,” says Nixon.

“When there has been a lack of happiness in our workplace, it’s been because of a failed relationship with a manager.”

Bayly agrees. “The best boss is always someone who cares about you. The relationship is concrete and caring and connected at an emotional level. A lot of managers don’t pose this simple question to their staff: ‘How can we make this workplace better for you?’”

Asking the question is one thing; listening and acting on the response is another.

The Hawthorne Studies of the 1920s and 1930s were a good example of this. The original purpose of the sociological experiments in a Chicago factory was to study the effects of physical conditions on productivity. Lighting was rejigged to illicit a response, but the study identified that simply asking workers what was best for them – and including them in the conversation – led to increased productivity.

In many workplaces, inclusion is key, but beyond that, expressing gratitude to employees should be a conscious and regular occurrence.

“Being grateful when things are going well and disciplining yourself to do that works for some people,” Bayly says.

“The act of being thankful to people when needed builds relationships and these things make us feel good.”

“The best organisations focus more on the strengths of their people than on their weaknesses,” Sharp adds.

Our work conversations can also shape our work relationships. Psychologists say that particular conversational techniques allow us to engage more effectively with other people, and create a more caring and positive environment. “Active-Constructive Responding” is about being active (interested and asking questions) and constructive (building on the other person’s good points).

“When people feel like they have a genuine friend in the workplace, it is a key driver of productivity, and studies have backed this up. People tend to stay in the same workplace if they have a friend,” Bayly says.

Although a decent wage can drive an employee’s happiness, Nobel laureate Daniel Kahneman’s 2010 study showed that more money doesn’t necessarily make people happier (on wages above US$75,000 per annum), although it does provide increased choice in life.

More than anything, we are happy when we are making progress and doing meaningful work. We want to be challenged, recognised and rewarded accordingly and, importantly, we can all play a part in making our workplaces happier.

“If there’s one thing I’ve learned from working with many teams and organisations, it’s that the most effective interventions target the organisation from as many directions as possible,” Sharp says. “This means that yes, leaders need to lead, but also that every single employee has a role to play and should be encouraged to get actively involved in generating positivity.”

Winning workplaces

Atlassian
Software provider Atlassian topped BRW’s 2014 “Best Places To Work” list. Its “Open Company, No Bullshit” promise preaches transparency and honesty internally and externally. Devoted to keeping the mood “small” and entrepreneurial, Atlassian staff members are encouraged to work on their own projects and present ideas to their peers every three months.

Optiver
Financial services and insurance outfit Optiver places its employees in work groups of 10 and relies on them to nut out their work-play balance. Staff enjoy extended annual leave benefits and paid maternity and paternity leave. Extra incentives include catered healthy meals, regular massages, free gym membership and access to an extensive games room.

E-Web Marketing
A regular on BRW’s annual “Best Places To Work” lists, Australian start-up E-Web Marketing is committed to core values of happiness, success and fun every working day. Looking beyond the ubiquitous games room and scattered beanbags, E-Web offers its staff flexible work hours, a transparent and flat management structure, weekly learning programs and monthly team-building exercises.

Salesforce
CRM (Customer Relationship Management) and cloud computing company Salesforce, headquartered in San Francisco, focuses on innovation and team building. It motivates staff with healthy incentive and recognition programs. The Salesforce office in Sydney places an emphasis on values as well as performance, and Salesforce globally is a champion of corporate philanthropy.

This article is from the March 2015 issue of INTHEBLACK.