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What makes employees happy?

There is a strong business case for employee wellbeing. On the one hand, organisations that take steps to manage the health and wellbeing of staff are likely to be more creative and more productive1, and this can translate into tangible returns on assets2

On the other hand, the Health and Safety Executive (HSE) reported that 12.5 million working days were lost due to work-related stress, depression or anxiety in 2016/173 with 526,000 workers suffering from work-related stress, depression or anxiety (new or long-standing).

The What Works for Wellbeing Centre is funded by the Economic and Social Research Centre, HM Government and a range of other stakeholders. As part of the Centre’s Work, Learning and Wellbeing evidence programme, researchers at UEA have carried out a wealth of research into wellbeing in the workplace and what contributes to employee happiness in collaboration with the Universities of Essex, Sheffield and Reading. 

The evidence programme focuses on protecting and enhancing the wellbeing of workers, adult learning and those seeking work.   

The research aims to find practical answers to questions around whether working practices can be changed in order to increase worker happiness, productivity and reduce absence.  Their research spans incentive payment systems, social environment and good people management as contributors to wellbeing in the workplace. 

“Happier people are more creative, more innovative so that is adding to a sense of continuous improvement in the workplace. 

But also when people are happy with themselves they tend to be more co-operative.”

Prof Kevin Daniels, Norwich Business School

Incentive Pay

Research into how incentive pay affects employee engagement, satisfaction and trust has found that there has been a move away from the relentless drive for efficiency with businesses seeing the value in keeping employees happy. 

Researchers, led by Dr Chidiebere Ogbonnaya from UEA’s Norwich Business School, examined the extent to which different performance related pay schemes are associated with employee experience of wellbeing.4   

Their analysis showed that while performance-related pay was positively associated with job satisfaction, organisational commitment and trust in management, profit-related pay did not have similar positive effects and in some cases resulted in employees trusting management less and affected their commitment to their work. 

This suggests that employees may see increases in pay as a reasonable and positive trade-off for contributing toward organisational success.  However, organisational incentives such as profit-related pay or share ownership may not generate such positive effects due to observed negative relationships with employee wellbeing. 

Research also found that performance-related pay could be seen as a burden that requires intensification of the work process in order to provide extra pay.

 “Our study is the first to show empirical support for claims that the productivity gains of these pay schemes might be associated with employees’ experience of more intense working. Performance-related pay in particular is associated with the feeling that work might be too demanding or that there is insufficient time to get work done."

Dr Chidiebere Ogbonnaya, Norwich Business School

“By tying employees’ performance to financial incentives, employers send signals to employees about their intention to reward extra work effort with more pay. Employees in turn receive these signals and feel obliged to work harder in exchange for more pay. 

“Even though employees may value these earnings as a ‘good thing’, the ultimate beneficiary of their extra effort is the organisation. As a consequence, performance-related pay may be considered exploitative, or a management strategy that increases both earnings and work intensification. 

 “The key thing for managers is to ensure some balance between employee job demands and measurement of rewards offered. Therefore, the nature of the relationships between performance-related pay and employee attitudes may depend on whether there is a perceived imbalance between intensive work effort and the availability of appropriate rewards.”  Dr Chidiebere Ogbonnaya, Norwich Business School.

Commenting on profit-related pay co-author Kevin Daniels, said there was a need to encourage fairness and adequate employee uptake of profit-sharing arrangements. 

“Employers should ensure that mechanisms for distributing organisational profits are administered efficiently so that deserving employees are not missed out," said Prof Daniels. “If profit-related pay is spread across the workplace, employees may show greater acceptance and respond with positive attitudes.” 

Good People Management 

Good people management is also likely to play a role in wellbeing in the workplace.  Providing opportunities for workers to control and influence their own work, cultivating a culture of respect, motivation and feedback, having a good staff development programme and encouraging a supportive environment are all good people management practices6

Ogbonnaya and Daniels produced a report for the What Works Centre for Wellbeing5 which examines whether there is a relationship between good people management and high levels of employee wellbeing and performance by analysis of the National Health Service (NHS).  

They found that in NHS trusts where they had made extensive use of good people management practices they were: 

  • Over twice as likely to have staff with the highest level of job satisfaction compared to NHS Trusts that made least use of these practices 
  • Over three times more likely to have staff with the highest levels of engagement 
  • Over four times more likely to have the most satisfied patients 
  • Over three times more likely to have the lowest levels of sickness absence 

Importantly, they found that the common perception that there has to be a reduction in performance to increase wellbeing was not supported by the evidence – in fact they found mutual gains for both the business and the staff.  This analysis showed that implementing high quality practices not only improves wellbeing but also performance and that these improvements can happen together. 

Social Environment 

The social environment at work is an important driver of employee wellbeing.  In the first specific review of interventions to improve employee wellbeing through improving social environments at work, Kevin Daniels, David Watson and Cigdem Gedikli6 found evidence that shared activities – such as joint workshops, training and social events - can improve employee wellbeing and performance. The picture was not quite as straightforward as organizing an office party or putting in an hour’s training course. For actions to be effective, there had to be a programme of shared activities, positive workers attitudes to the activities and facilitation external to the work group - such as a training workshop led by someone from outside of the workgroup. Even so, the research team things that such programmes of social activities might be a cost effective component of organisational wellbeing programmes. 

About the research

The research is supported by the Economic and Social Research Council (ESRC) funding. 

The Universities of East Anglia, Reading, Sheffield and Essex also lead the evidence programme concerned with Work, Learning and Wellbeing for the What Works Wellbeing Centre - good quality jobs and opportunities to acquire and use skills are not only key factors in the wellbeing of individuals and families, but also the economic and social wellbeing of communities. 

Kevin Daniels is Professor of Organisational Behaviour and leads the Work, Learning and Wellbeing evidence programme for the Economic and Social Research Council funded What Works Wellbeing Centre (collaboration between UEA and the Univerisity of Essex).  

Dr Chidiebere Ogbonnaya  is co-investigator for the Work, Learning and Wellbeing evidence programme, funded by UK’s Economic and Social Research Council. Prior to joining Norwich Business School as a Lecturer, Chidi was UEA's Eastern ARC Research Fellow in Quantitative Social Science. His main responsibility was to build academic and research collaborations across the Universities of East Anglia, Kent and Essex. 

Sources:

1. https://www.whatworkswellbeing.org/product/why-invest-in-employee-wellbeing/

2. Symitsi, E., Stamolampros, P., Daskalakis, G. (2018) Employees’ online reviews and equity rices, in Economics Letters 162 pp. 53–55

3. http://www.hse.gov.uk/statistics/causdis/stress/index.htm

4. ‘Does contingent pay encourage positive employee attitudes and intensify work?’, Chidiebere Ogbonnaya, Kevin Daniels and Karina Nielsen, is published in Human Resource Management Journal.

5. Daniels, K and Ogbonnaya, C (2017) Good Work, wellbeing and performance. What Works Centre for Wellbeing.

6. Daniels, K, Watson, D., Gedikli, C. (2017). Well-being and the social environment of work: A systematic review of intervention studies. International Journal of Environmental Research and Public Health, 14, 918. doi:10.3390/ijerph14080918.

7. Press release: Incentive pay schemes can affect employee well being

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Prof Kevin Daniels

Professor in Organisational Behaviour, Norwich Business School

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Dr Chidiebere Obonnaya

Lecturer in Human Resource Management, Norwich Business School

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