Success follows happiness — why employee happiness is the founders’ job

Highlights/ Topics

14 min readNov 10, 2020

Your employees are your biggest asset
The science behind employee happiness
What does happiness on the job mean?
Measuring happiness: If you were to measure only one thing, measure NPS
The 9 happiness categories you really need to check

Employees are at the core of any organization which is why the success of any business is based on how well the employees perform. If you look at your P&L then you’ll see that your largest expense is salaries. That’s the case for most tech companies. As a founder, you want to maximize the output of your business which means you need to make sure your investment in your employees returns the highest possible output. It’s an easy equation: Make the employees happy, engaged, and empowered, then they feel motivated to perform at their best, and your organization benefits. Don’t get me wrong — the end goal of an enterprise is not to create a cushy “feel-good place” where no one ever feels pressure to perform. The goal is to build a successful, fast-growing business. But you can never achieve this alone because, without your team, you are nothing. Therefore it is your job as a leader to provide the right vision and to create an environment where your employees are happy because they can personally grow while helping the organization achieve its targets.

In this article, I want to share why it is worth investing in employee happiness, what the concrete benefits are, and what exactly happiness at the workplace means. Additionally, I will talk about how overall employee happiness can be measured with the Net Promoter Score (NPS) and which other categories should definitely be part of your regular employee satisfaction survey.

Your employees are your biggest asset

Employee happiness is a crucial pillar of a business’ long term success as everything grows or falls with the employees. The founder team is only a small part, the employees make up the biggest part of the team. Without its employees, a company is nothing. Hence, investing in employee happiness should be one of the main considerations of any company as emphasized by Richard Branson, the founder of the Virgin Group:

In the pursuit of employee happiness, the responsibility of the leader lies in setting the vision and mission, aligning the employees to strive for a common goal, and continuously empowering employees to aim for the best performance.

With employees working in home office settings during the Corona crisis, even doubtful managers should have realized that their employees can work extremely productively, even without constant supervision.

The science behind employee happiness

Scientific studies show that happy and engaged employees are more productive, stay longer, are more motivated, are more transformational leaders, and experience personal success.

Increased Productivity

Studies like the one from the University of Warwick revealed that employees who are happier with their job and at their workplace, tend to be more productive. Equally, there is evidence that less happy employees show decreased performance which suggests that there is a causal relationship between employee happiness and performance. Consider this logical flow showing why employee happiness is so crucial to any business: a meaningful workplace promotes healthy and happy employees → healthy and happy employees have higher performance potential → healthy, happy, and productive employees lead companies to succeed in reaching their goals. Bestselling author Simon Sinek clearly stresses the right order:

2. Retention

For the success of any organization, it is fundamental to retain key employees. While a healthy turnover rate is important, the costs of losing expertise and having to invest in recruitment and training can add up. Accordingly, ensuring that employees are happy is one way to make them stay longer with the company. A study at the Southeastern Louisiana University has found that satisfied employees are less drawn to leaving their current employer and that the feeling of belonging grows over time.

3. Motivation

When individual employees experience a positive effect, they are more motivated to invest their time and effort into pursuing company-related goals. Additionally, happy employees are more likely to be willing to overcome obstacles to achieve said goals. This is partially led back to the employees’ perception to have more control over attaining their goals according to a study published by the Society for Personality and Social Psychology.

4. Leadership

There is no doubt that exceptional leadership is essential for business success. Transformational leadership is especially important meaning the aspects of role modeling, optimistic future vision, encouragement of employees, and care for employees’ developmental needs. A study published by the London School of Economics investigated the mood states of leaders and concluded that leaders with more positive mood states tend to be more transformational which positively influences employee happiness and results in achieving company goals. In my opinion, leadership does not necessarily only refer to a hierarchical structure as at DiscoEat we notice great leadership behavior at all company levels, starting at the intern level.

5. Individual Work Success

When growing up, people are often told that success at work will make them happy. But what if the equation holds true the other way around? Studies have shown that there is a relationship between employee happiness and career success. Happy employees earn more, perform better and are evaluated better than others which evidences that positive emotions result in better outcomes at work.

But what does happiness on the job really mean?

Knowing that employee happiness has such positive effects on an organization, what does happiness on the job actually mean? And how can employee happiness be measured and enhanced? What can leadership contribute to employee happiness?

Happiness can be described as psychological well-being as a combination of life satisfaction, the presence of positive emotions, and the absence of negative emotions. Although happiness is subjective and differs across countries and cultures, the striving for happiness is ubiquitous. Part of being happy overall is to be happy at the workplace. Organizations that show a range of meta-values including camaraderie, leadership credibility, open communication, learning and development opportunities, and fairness, allow employees to develop a feeling of purpose, impact, competence, self-determination, commitment, and enjoyment. Such feelings in turn have implications for employees’ health and psychological well-being. Fortune’s “100 Best Companies to work for” ranking, for instance, considers exactly such factors to be the source of a good workplace enabling employee happiness.

When looking for ways to enhance employee happiness at the workplace, the concept of “context” versus “control” regarding the relationship between the employees and managers becomes essential. Employees who are given the context through transparent information, understand the environment that they operate in, are empowered to make decisions that support the achievement of company objectives, and can achieve more than in a top-down control-driven management model. In the frame of context, employees should be informed about the situational background thus they are empowered and inspired to effectively make decisions. This includes open communication about company goals, task priorities, and key success measures. If employees make bad decisions, it likely comes down to management not setting the right context. Oppositely, control and micro-management do make sense in emergency situations, skill acquisition processes, sales management, and other highly structured or rule-based tasks. Hence, extensive hierarchical approvals and decisions should be avoided and it should be focused on outcomes rather than lengthy procedures. Such emphasis on context instead of control leads employees to perform better with more company understanding.

Management can boost happiness, for instance, by actively listening to their employees through regularly scheduled 1on1 meetings. Ben Horowitz outlined why they are so crucial and how such meetings can be the most effective in his book “The Hard Thing About Hard Things”: 1on1 meetings are a great way to have information and ideas flow up the organization. To ensure a successful meeting, it should focus on what the employee has to say rather than the manager, thus the manager should do only 10% of the talking and 90% of the listening. The task of the manager should be to draw the key issues out of the conversation. Some key questions he points out which we also use at DiscoEat are:

If we could improve in any way, how would we do it?
What’s the №1 problem with our organization? Why?
What’s not fun about working here?
Who is really kicking ass in the company? Who do you admire?
If you were me, what changes would you make?
What don’t you like about the product?
What’s the biggest opportunity that we’re missing out on?
What are we not doing that we should be doing?
Have you seen any incidences where we did not act according to our company values?
Are you happy working here?

A strong fit between organizational culture and employees can spur employee happiness. Taking the example of Netflix which very openly communicates nine core values of judgment, communication, impact, curiosity, innovation, courage, passion, honesty, and selflessness attracts a certain kind of performance-oriented employees who are likely to be happy with the prevailing culture.

Measuring happiness: If you were to measure only one thing, measure NPS

To understand the benefits and meaning of employee happiness, it is important to measure it anonymously and in a structured way, e.g. once a quarter. For a broader picture of employee satisfaction, the survey should include many detailed questions that refer to different categories. But in order to find out overall how a company is doing, have a look at the Net Promoter Score, short NPS.

NPS is a key customer satisfaction and loyalty benchmark, developed by my former employer Bain & Company, measuring how likely customers are to recommend a certain business to a friend. Recommendations to friends and family are powerful as they are perceived as credible and trustworthy. Happy customers are likely to recommend the business while unhappy customers may share negative reviews impacting future potential business.

In the context of employee happiness, NPS can be applied to measure employee satisfaction by determining how likely employees are to recommend working at a business to friends. Simply survey all employees anonymously asking them “On a scale of zero to ten, how likely is it you would recommend (company name) as a place to work?” with 0 meaning very unlikely to recommend and 10 meaning extremely likely to recommend. Then the answers are categorized according to the score: 0–6 are Detractors, 7–8 are Passives and 9–10 are Promoters. Detractors are unhappy employees who may leave the company or damage the business by sharing unfavorable information. Passives are indifferent and may become Promoters or Detractors. Promoters are happy employees who care about the business and tell friends and family about the great workplace. Disregarding the Passives, the Detractor percentage is subtracted from the percentage of Promoters which reveals the NPS which can range between -100 and +100. The Passives are disregarded as they cannot be added to either the positive nor negative side. Crucial to achieving a high NPS is a higher number of Promoters than Detractors. As an example, having asked 100 employees of which 50% are Promoters and 40% are Detractors, reaches a NPS of 10 (50%-40%=10). Decreasing the percentage of Detractors to 20% yields an NPS of 30 (50%-20%=30), meaning that there is a 20% greater chance that employees will recommend the business.

While NPS tells you whether you are doing a good job overall, it does not give any insight regarding why or why not you are doing a good job. Nevertheless, regularly measuring NPS helps to identify risks, opportunities, and shows areas for improvement.

The 9 happiness categories you really need to check

It is essential to also get qualitative feedback to determine areas of improvement and to ultimately find out why employees are Promotors, Passives, or Detractors. At DiscoEat, we use nine different categories in the employee satisfaction survey to assess employee happiness and areas of improvement (you can find the complete list of questions that we use at DiscoEat at the end of the article):

Overall Happiness

This is the NPS question explained above.

2. Managers / Leadership

For employees to be happy at the workplace, the perception of management plays a vital role. This category refers to the provision of constructive feedback, recognition of effort, fairness of the evaluation process and the management’s interest in the employee’s progress.

3. Teamwork

Teamwork is crucial for the overall success of an organization. This category assesses teamwork in reference to the recognition of ideas, encouragement to perform tasks, provision of timely feedback from peers, feeling of teamwork, reception of suggestions, and the perception of interpersonal respect.

4. Growth Opportunities

Employees are happier and more motivated to perform well if opportunities for growth are given. Hence, this category aims to investigate the perception of opportunities for personal development, provision of training, consideration of future employment at said company and the hypothetical consideration of the reason for quitting the job tomorrow.

5. Life Balance

Employees are more satisfied with their workplace if they have a healthy “life balance”. Why am I not saying “Work-Life Balance”? Because I think this term is bullshit. Work is an important part of life. It’s not opposed to life. There are no sharp borders between the two. Borders become even more blurry with the recent “work from home” trend. You cannot be a happy person if either your private or your work life is bad. You need to be content in all aspects of your life. This category determines the employees’ perception of workload appropriateness, presence of unwanted tensions in life, and the time availability with family and friends.

6. Behavioral Fairness

Employees are happier when they perceive everyone to be treated fairly and equally. Accordingly, this category examines the employees’ perception of favoritism and politics as an issue and equal treatment of employees by the organizational leadership. We fired people in the past that played political games.

7. Effective Communication

Effective communication is a key pillar in any business for operations to run smoothly making sure that each employee is provided with the information necessary to perform tasks properly. This category explores the effectiveness of the communication regarding policy changes and altered processes, degree of two-way communication process, clarity of information and transparency of communication from management.

8. Culture & Vision

Organizational culture and the vision of the management build the basis for employee happiness. This category evaluates the perception of the communication of a motivating vision, lets the employees describe the culture, determines the authenticity of the organizational values, and the degree to which employees have fun at work.

9. Everything else

This category gives the employees room to express what is on their mind — what goes well, their concerns, and issues. Asking employees openly may uncover otherwise undetected problems. It’s a free text field where employees can put down everything else they got on their minds.

Actively listening to employees, in the frame of 1on1 meetings, for instance, is crucial to explore what is going well and what needs improvement. Empowering and encouraging employees and leading with context rather than control leads employees to perform at their best which in turn benefits the business. The best you can do is to make sure to measure employee satisfaction regularly to stay on top of things. Invest in your employees’ happiness and therewith your business’ success!

The DiscoEat Quarterly Employee Happiness Questionnaire

Overall — NPS

On a scale of zero to ten, how likely is it you would recommend DiscoEat as a place to work?

(0 — very unlikely to recommend, 10 — extremely likely to recommend)

Managers/ Leadership

I receive constructive feedback from my manager