IDEAS home Printed from https://ideas.repec.org/p/cep/cepdps/dp1605.html
   My bibliography  Save this paper

Employee wellbeing, productivity and firm performance

Author

Listed:
  • Jan-Emmanuel De Neve
  • Christian Krekel
  • George Ward

Abstract

Does higher employee wellbeing lead to higher productivity, and, ultimately, to tangible benefits to the bottom line of businesses? We survey the evidence and study this question in a meta-analysis of 339 independent research studies, including the wellbeing of 1,882,131 employees and the performance of 82,248 business units, originating from 230 independent organisations across 49 industries in the Gallup client database. We find a significant, strong positive correlation between employees' satisfaction with their company and employee productivity and customer loyalty, and a strong negative correlation with staff turnover. Ultimately, higher wellbeing at work is positively correlated with more business-unit level profitability.

Suggested Citation

  • Jan-Emmanuel De Neve & Christian Krekel & George Ward, 2019. "Employee wellbeing, productivity and firm performance," CEP Discussion Papers dp1605, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1605
    as

    Download full text from publisher

    File URL: http://cep.lse.ac.uk/pubs/download/dp1605.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Andrew E. Clark & Yannis Georgellis, 2013. "Back to Baseline in Britain: Adaptation in the British Household Panel Survey," Economica, London School of Economics and Political Science, vol. 80(319), pages 496-512, July.
    2. Andrew E. Clark, 2003. "Unemployment as a Social Norm: Psychological Evidence from Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 289-322, April.
    3. Petri Böckerman & Pekka Ilmakunnas, 2012. "The Job Satisfaction-Productivity Nexus: A Study Using Matched Survey and Register Data," ILR Review, Cornell University, ILR School, vol. 65(2), pages 244-262, April.
    4. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    5. Kunze, Lars & Suppa, Nicolai, 2017. "Bowling alone or bowling at all? The effect of unemployment on social participation," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 213-235.
    6. Mark Wooden & Diana Warren & Robert Drago, 2009. "Working Time Mismatch and Subjective Well‐being," British Journal of Industrial Relations, London School of Economics, vol. 47(1), pages 147-179, March.
    7. Armando N. Meier, 2019. "Emotions, Risk Attitudes, and Patience," SOEPpapers on Multidisciplinary Panel Data Research 1041, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. De Neve, Jan-Emmanuel & Oswald, Andrew J., 2012. "Estimating the influence of life satisfaction and positive affect on later income using sibling fixed-effects," LSE Research Online Documents on Economics 51523, London School of Economics and Political Science, LSE Library.
    9. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-659, May.
    10. Nicholas Bloom & James Liang & John Roberts & Zhichun Jenny Ying, 2015. "Does Working from Home Work? Evidence from a Chinese Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 130(1), pages 165-218.
    11. Andrew E. Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2008. "Lags And Leads in Life Satisfaction: a Test of the Baseline Hypothesis," Economic Journal, Royal Economic Society, vol. 118(529), pages 222-243, June.
    12. Damon Jones & David Molitor & Julian Reif, 2019. "What do Workplace Wellness Programs do? Evidence from the Illinois Workplace Wellness Study," The Quarterly Journal of Economics, Oxford University Press, vol. 134(4), pages 1747-1791.
    13. Andrew E. Clark & Sarah Flèche & Richard Layard & Powdthavee Nattavudh, 2018. "The Origins of Happiness: The Science of Well-Being over the Life Course," PSE-Ecole d'économie de Paris (Postprint) halshs-01631510, HAL.
    14. De Neve, Jan-Emmanuel & Ward, George, 2017. "Happiness at work," LSE Research Online Documents on Economics 83604, London School of Economics and Political Science, LSE Library.
    15. Wunder, Christoph & Heineck, Guido, 2013. "Working time preferences, hours mismatch and well-being of couples: Are there spillovers?," Labour Economics, Elsevier, vol. 24(C), pages 244-252.
    16. Edmans, Alex, 2011. "Does the stock market fully value intangibles? Employee satisfaction and equity prices," Journal of Financial Economics, Elsevier, vol. 101(3), pages 621-640, September.
    17. Levy-Garboua, Louis & Montmarquette, Claude & Simonnet, Veronique, 2007. "Job satisfaction and quits," Labour Economics, Elsevier, vol. 14(2), pages 251-268, April.
    18. Andrew J. Oswald & Eugenio Proto & Daniel Sgroi, 2015. "Happiness and Productivity," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 789-822.
    19. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
    20. George A. Akerlof & Andrew K. Rose & Janet L. Yellen, 1988. "Job Switching and Job Satisfaction in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 495-594.
    21. Harter, James K. & Schmidt, Frank L., 2008. "Conceptual Versus Empirical Distinctions Among Constructs: Implications for Discriminant Validity," Industrial and Organizational Psychology, Cambridge University Press, vol. 1(1), pages 36-39, March.
    22. Green, Francis, 2010. "Well-being, job satisfaction and labour mobility," Labour Economics, Elsevier, vol. 17(6), pages 897-903, December.
    23. Anne C. Gielen & Jan C. Ours, 2014. "Unhappiness and Job Finding," Economica, London School of Economics and Political Science, vol. 81(323), pages 544-565, July.
    24. Barry M. Staw & Robert I. Sutton & Lisa H. Pelled, 1994. "Employee Positive Emotion and Favorable Outcomes at the Workplace," Organization Science, INFORMS, vol. 5(1), pages 51-71, February.
    25. John Zelenski & Steven Murphy & David Jenkins, 2008. "The Happy-Productive Worker Thesis Revisited," Journal of Happiness Studies, Springer, vol. 9(4), pages 521-537, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kampkötter, Patrick & Maier, Patrick, 2020. "The effect of appraisal interviews and target agreements on employee effort - New evidence using representative data," University of Tübingen Working Papers in Business and Economics 136, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    2. Fabio Berton & Stefano Dughera & Andrea Ricci, 2019. "Unions and Firms' Investments. A Unified View," LABORatorio R. Revelli Working Papers Series 168, LABORatorio R. Revelli, Centre for Employment Studies.
    3. Michiel Slag & Martijn J. Burger & Ruut Veenhoven, 2019. "Did the Easterlin Paradox apply in South Korea between 1980 and 2015? A case study," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 66(4), pages 325-351, December.
    4. Bellet, Clément S. & De Neve, Jan-Emmanuel & Ward, George, 2019. "Does Employee Happiness Have an Impact on Productivity?," CEPREMAP Working Papers (Docweb) 1905, CEPREMAP.
    5. Petri, Böckerman & Pekka, Ilmakunnas, 2020. "Työhyvinvointi kannattaa. Työolot, työtyytyväisyys ja tuottavuus [Working conditions, job satisfaction and productivity]," MPRA Paper 103484, University Library of Munich, Germany.
    6. Miller, Keaton, 2020. "Sharing the sacrifice, minimizing the pain: Optimal wage reductions," Economics Letters, Elsevier, vol. 196(C).
    7. Stefano Dughera, 2020. "Skills, preferences and rights: evolutionary complementarities in labor organization," Journal of Evolutionary Economics, Springer, vol. 30(3), pages 843-866, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.
    2. Anne C. Gielen & Jan C. Ours, 2014. "Unhappiness and Job Finding," Economica, London School of Economics and Political Science, vol. 81(323), pages 544-565, July.
    3. Adrian Chadi & Clemens Hetschko, 2015. "How Job Changes Affect People's Lives - Evidence from Subjective Well-being Data," IAAEU Discussion Papers 201502, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    4. Krause-Pilatus, Annabelle, 2014. "Happiness and Work," IZA Discussion Papers 8435, Institute of Labor Economics (IZA).
    5. Andrew E. Clark, 2018. "Four Decades of the Economics of Happiness: Where Next?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(2), pages 245-269, June.
    6. Rose, Damaris & Stavrova, Olga, 2019. "Does life satisfaction predict reemployment? Evidence form German panel data," Journal of Economic Psychology, Elsevier, vol. 72(C), pages 1-11.
    7. Andrew E. Clark, 2015. "SWB as a Measure of Individual Well-Being," Working Papers halshs-01134483, HAL.
    8. Clemens Hetschko, 2016. "On the misery of losing self-employment," Small Business Economics, Springer, vol. 47(2), pages 461-478, August.
    9. Andrew J. Oswald & Eugenio Proto & Daniel Sgroi, 2015. "Happiness and Productivity," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 789-822.
    10. van der Meer, Peter H. & Wielers, Rudi, 2016. "Happiness, unemployment and self-esteem," Research Report 16016-HRM&OB, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    11. De Neve, Jan-Emmanuel & Ward, George, 2017. "Happiness at work," LSE Research Online Documents on Economics 83604, London School of Economics and Political Science, LSE Library.
    12. Adrian Chadi & Clemens Hetschko, 2018. "The magic of the new: How job changes affect job satisfaction," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(1), pages 23-39, March.
    13. Adrian Chadi & Clemens Hetschko, 2017. "Income or Leisure? On the Hidden Benefits of (Un-) Employment," IAAEU Discussion Papers 201706, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    14. Lídia Farré & Francesco Fasani & Hannes Mueller, 2018. "Feeling useless: the effect of unemployment on mental health in the Great Recession," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-34, December.
    15. Antje Mertens & Miriam Beblo, 2016. "Self-Reported Satisfaction and the Economic Crisis of 2007–2010: Or How People in the UK and Germany Perceive a Severe Cyclical Downturn," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(2), pages 537-565, January.
    16. Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2019. "Looking Back in Anger? Retirement and Unemployment Scarring," Demography, Springer;Population Association of America (PAA), vol. 56(3), pages 1105-1129, June.
    17. Milena Nikolova & Sinem H. Ayhan, 2019. "Your spouse is fired! How much do you care?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(3), pages 799-844, July.
    18. Powdthavee, Nattavudh, 2014. "What childhood characteristics predict psychological resilience to economic shocks in adulthood?," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 84-101.
    19. Christian Scheve & Frederike Esche & Jürgen Schupp, 2017. "The Emotional Timeline of Unemployment: Anticipation, Reaction, and Adaptation," Journal of Happiness Studies, Springer, vol. 18(4), pages 1231-1254, August.
    20. Norton, Edward C. & Nizalova, Olena & Murtazashvili, Irina, 2018. "Does past unemployment experience explain the transition happiness gap?," Journal of Comparative Economics, Elsevier, vol. 46(3), pages 736-753.

    More about this item

    Keywords

    employee satisfaction; engagement; employee productivity; firm performance; wellbeing; meta-analysis;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp1605. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.