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Employee Happiness: the route to improving the UK's productivity slump

Since 2008 the UK’s productivity has barely risen. People are starting to call it the lost decade. According to the Office for National Statistics if previous trends had been maintained productivity would be 18.5% higher than it is now. That equates to an increase of £5,000 in average market sector wages for every UK employee. Instead, we are in a continuing slump.

Strangely, this has happened at the same time that everyone has been banging on about improving employee engagement and how it is the driver to increasing productivity. I could find only one estimate for how much businesses are spending on engagement surveys and programmes. From the US, it worked out at approx. $720mper year– a figure that commentators expected to double rapidly.

All this expenditure is despite the fact that there is no clear understanding of what engagement precisely is; nor how to measure it. For example, Gallup say that only 34% of US workers are engaged whereas their rivals Qualtrics say that 62% are. This glaring inconsistency troubles me. When I was learning my trade as a statistician, I was always told to beware of “false concreteness”. Essentially, if your input data isn’t robust then the whole model you are building cannot be either as it doesn’t have solid foundations. When it comes to employee engagement, I think it suffers from false concreteness and I would have to question how much return there has been across all that money spent.

Now, a lot of people would say that surely happiness is much less solid than engagement. Engagement sounds so serious and heavy – you can almost hear it hitting the ground with a thud. Whereas happiness seems light and fluffy – it feels like it will just float away like a balloon. However, could you give me a solid answer about how engaged you are at work? I think you would struggle. That is because no one quite knows what engagement is. There are as many definitions as there are consultancies selling solutions! 

Whereas if I ask how happy you are at work, you can easily give me an answer – as we all instinctively know whether we are enjoying our time at work or not. The question itself taps into our internal good-bad signal. This signal helps us to know whether to approach or avoid a situation – whether to do more of an activity or less of it. It is very primal in human beings, and indeed other sentient animals, and a key part of our survival mechanism. When we feel good, we carry on and, indeed, put more effort in – whereas if we feel bad we withdraw or move away. It’s pretty clear that this is fundamental to good work and, somewhat ironically, being positive is almost a pre-cursor to engagement (in the sense that employee engagement is code-word for productivity).

In our research, and with our clients, we offer respondents five possible answers to the question “are you happy at work?”:

  1. “very unhappy”
  2. “unhappy”
  3. “ok”
  4. “happy”
  5. “very happy”

In tests, we have very rarely found anyone who can’t give us an answer and from this solid base of data we can provide lots of insights that we are literally, and statistically, confident of. 


An example would be the findings from our comprehensive survey, conducted in partnership with the global recruitment agency Robert Half, of 22,000 workers globally. We found that that 72% of the US workforce are happy at work, with Hospitality the least happy sector (66%) and Marketing & Design the happiest (75%). In the UK, the picture is similar although a little lower with only 67% happy overall and, while Marketing & Design were still the happiest (76%), it was the legal profession which were the least happy (58%).

As well as reporting absolute levels, we can also identify the key drivers of happiness at work and how these vary across sectors. The top three drivers across all sectors were: being proud of your organization, feeling appreciated, and being treated with fairness and respect. However, this varied sector by sector. For Marketeers & Designers it was having “worthwhile work” whereas for the Hospitality sector it was a sense of “accomplishment”. Clearly, one size doesn’t fit all. This is even more amplified at firm level with large differences due to different company cultures. 

Over the last few years, we have been working with a high number of clients to consistently track their employee happiness levels. Together, we have learned what is driving their happiness levels and how it relates to other business imperatives, such as staff turnover and productivity. We have found that a 0.5pt increase in happiness (on a 5pt scale) leads to 17% lower staff turnover and 7% increase in productivity across the next quarter.  

So, if you want to improve productivity in your team, or across your whole business, then resist the temptation to focus on engagement and start by asking how happy everyone is. You’ll find that not only can they give you a solid answer but that also, somewhat ironically, they will feel a whole lot more like engaging with you.