THE BLOG

Want a Successful Company? Make Your Staff Happy

20/03/2013 15:41 GMT | Updated 20/05/2013 10:12 BST

What is the secret of business success? Some will focus on creating a truly innovative product, others on strong leadership, some on a great sales team, on negotiating great deals or on in-depth knowledge of finance. But there is increasing evidence that you can get the most effect by simply focusing on making your people happy. With today being the first UN International Day of Happiness, it is a good time to take a closer look at this.

Some years ago the restaurant chain Nandos carried out a study to work out why some of their branches were more successful than others. What was it, they wanted to know, that made the difference? After extensive research they found that one factor correlated most closely with growth and profits. That factor was simply how happy staff said they were in their annual staff survey. For a while Nandos even changed their bonus systems to reward their managers primarily on how happy the staff in the branch said they were.

This is backed up by research by Alex Edmans at Wharton Business School in Pennsylvania. He compared the result of investing in the standard stock market with investing each year, over 25 years, in the companies in the Fortune US list of the Best Companies to Work For. He found they did 3.5% better per year. That means that an investment that would have reached £100,000 over the 25 years if invested in the stock market, would have reached £238,000 if invested in the companies that focus on creating great workplaces. That is hard financial evidence of the benefits of creating a great working environment that makes your people feel valued, motivated and happy.

At conferences I like to ask people to raise their hand if they work for an organisation where the main focus of management is in fact making their people feel good. Normally about one in a hundred put their hands up. But one of those to raise their hand at a recent event was Charlie Mayfield, the Chair of John Lewis. This 80,000 strong retail chain, one of the most respected in the UK, has enshrined in its founding principles: "Our ultimate purpose is the happiness of partners through their worthwhile and satisfying employment in successful business".

"At the last Board meeting, out of five hours only 20 minutes was spent on the numbers", explains Charlie. "The rest was spent discussing leadership and people development."

Think about it. How would your organisation be different if the focus of managers was on making your people happy?

How to get started? The best first step, if you are a manager, is simply to ask your people what would make them happier. Listen carefully to the response and implement as much as possible. Check out my list of 80 ideas for a happy workplace. Smile! Be positive. Write an email now, and first thing each day, to appreciate somebody. Even better, thank at least two people in person each day. Give everybody £25 (or even just £10) to improve the office in some way.

What people really don't like is being micro-managed. Agree clear guidelines but then get out of the way. Give your people the trust and freedom, and also the support, to do the job their way. Start with "pre-approval": You may have a task to give to an individual or group, to come up with a solution and report back to you for approval. instead approve the idea before they've come up with it! Agree a clear framework but pre-approve them to implement whatever proposal they come up with. It may sound scary but I promise you it will lead to more innovation.

If you like these ideas, join the movement for happy workplaces and come to an event during this week's Day of Happiness.