We’re hearing a lot about the productivity puzzle right now – the UK’s labour productivity has remained weak since the start of the financial crisis, and shows little sign of picking up despite the other signs of our economic recovery.  Academics, pundits, politicians and business leaders are all puzzling about the causes of this lag in productivity, but one thing they’re all taking seriously is the economics of happiness. 

As Richard Branson once said:  “Happiness is the secret ingredient for successful businesses.  If you have a happy company, it will become invincible.”  So could a happier workforce help Britain close its productivity gap?  A feature in today’s Daily Telegraph looks at how forward-thinking companies like Pret A Manger have taken this theory to heart.

Pret A Manger takes the wellbeing of its employees very seriously and, says The Telegraph’s report, believes there is a direct link between the happiness of the people serving its customers and the company’s turnover.  This thinking is nothing new for Pret, whose chief executive, Clive Schlee, told The Daily Telegraph two years ago that when touring outlets he could “… almost predict sales on body language alone.”  Strong stuff indeed.

Keeping employees happy, then, is a key priority for forward-thinking companies, as a slew of big names from Google to Innocent Smoothies roll out employee-friendly perks and ask their people how they want to change the way they work – from shorter hours to hot-desking. 

Another article, in today’s Times, says that more companies are embracing flexible working, and quotes a study by recruitment company Robert Half which shows ‘remote’ working has gone up by 37% in the past three years in the UK, with 60% of HR directors believing greater employee autonomy would boost productivity.

As with all trends though, there are the nay-sayers, and some thinkers are asking how you measure happiness (it’s all relative, and once you get what you think you want – the ability to work from home or base yourself at the café next door to the office – you become used to it).  Others are questioning whether employee happiness can be shown directly to affect the bottom line (studies suggest that it can). 

But whether you remain cynical about the theory, there’s no denying personal experience.  We remember our time at companies where the colleagues and the work were inspiring and fun.  We talk about exceptional team experiences and great bosses, we perform best when we feel we’re valued and listened to.

At theblueballroom, much of our work centres around employee engagement – how firms can touch the hearts and minds of their people to create a company culture in which individuals and teams can thrive, and where customers are the ultimate beneficiaries (just like Pret A Manger’s customers, who randomly receive free coffees at the discretion of the happy staff in-store). 

Sometimes all it takes is a better understanding of the company’s story, so that employees can better relate to the company values.  Sometimes it’s about addressing the issues that rapid-growth firms can face and ensuring employees know the importance of their contribution.  Often it is about recognising and rewarding people who go the extra mile. 

From speaking to senior managers at two of our client companies recently, I know that more and more organisations recognise that to a great extent, ‘your employees are your brand’.  I also know that people remember their experience as an employee by whether or not they were ‘happy’ at a particular organisation – and this is what they take with them when talking about their previous employer to colleagues and business contacts in their future career.

Happiness at work matters.  It makes you proud of the company you work for, it creates brand advocates and it can be the defining factor in making a good company great.