The ‘New’ Performance Indicator Leaders Need to Focus On in 2024

Key performance indicators serve as crucial benchmarks to help guide strategy and decision-making for business leaders. Traditionally, these metrics include tangible factors like financial performance and productivity, offering a clear and specific view of a company’s success. While clear and specific, these metrics are also a bit one-dimensional, offering little to no insight into the company’s workforce dynamics.

For a truly comprehensive understanding of performance, today’s leaders also need a gauge on less a tangible — though, no less important — metric: employee happiness.

The Undeniable Link Between Employee Happiness and Company Performance

The link between employee happiness and overall company performance is more than just a positive correlation; it’s a driving force of success. Research consistently shows that happy employees are more productive and that they play a crucial role in fostering a positive work environment. In this way, employee happiness is the gift that keeps on giving, driving healthy company culture that drives healthy company performance.

A 2015 study by the University of Warwick found that happy employees are up to 12% more productive than their less satisfied counterparts. This boost in productivity can translate into significant improvements in company performance, including increased profitability and customer satisfaction.

Not only that, the cost of disengagement is incredibly high. In studies by Gallup and others, disengaged workers had significantly more problems and less productivity.

Take a look at these stats associated with disengaged workers:

• 37% higher absenteeism
• 49% more accidents
• 60% more errors and defects
• 18% lower productivity
• 16% lower profitability
• 37% lower job growth
• 65% lower share price over time

Those are compelling numbers!

It’s also important to recognize that perks aren’t culture. While extras like gym memberships and pizza parties are good additions to boost company morale, they can only move the needle so much. And they won’t mask underlying dysfunction. As Harvard Business Review eloquently puts it: “Well-being comes from one place, and one place only — a positive culture.”

Measuring Happiness as a KPI

Measuring happiness calls for a shift from quantitative assessments to more qualitative evaluations, injecting a human-centric approach that puts people at the forefront of analysis. Capturing the nuances of employee sentiment is a simple task in theory, but not necessarily an easy one to execute. Annual surveys, for example, are a common solution many leaders reach for to incorporate this kind of analysis, but there are limitations when it comes to effectiveness. That’s because, while retrospective surveys offer a glimpse into sentiment, they limit leaders’ ability to act on what they learn. By the time leaders analyze survey data, the problem is no longer relevant, and neither is the opportunity to solve it — eliminating leaders’ ability to connect with workers and change minds.

Instead of annual surveys, leaders should seek tools and build processes that facilitate ongoing engagement. With a platform like WorkHound, for example, leaders gain a continuous and real-time stream of feedback, capturing insights into the emotional and psychological state of the workforce. And, with the added layer of anonymity, WorkHound encourages sharing from the entire workforce, not just those who like to speak up anyway.

With workforce insights in hand, leaders can then turn them quantified into actionable data, tracking changes over time, identifying patterns, and making informed decisions.

By treating employee happiness as a KPI, businesses not only acknowledge its importance but also prioritize it in a way that improves company culture from the inside out.

Driving Culture that Cultivates Happiness

Before leaders can focus on happiness, they must take a step back and recognize that culture is an ecosystem. Thought of this way, happiness is the soil where the seeds of productivity, performance, and profitability can flourish and grow.

It’s also important to understand that company culture will naturally develop, whether you set out to “garden” or not. But left unbridled, it can end up being a fusion of the wrong types of influences. The loudest voices in the room will drive conversations. Small problems will begin as kindling, stoking gossip and water cooler talk. But before you know it, those whispers turn into wildfires, sowing seeds of dysfunction and creating toxicity throughout the organization.

Healthy company culture doesn’t happen by accident. It’s the result of intentional actions and policies that acknowledge the workforce and prioritize the well-being of the people who comprise it. It’s about building a space where all workers feel valued — not just for their professional contributions but also as individuals with unique needs and aspirations.

Improving Workforce Resilience with Employee Happiness

By integrating employee happiness as a key metric, leaders unlock a more effective strategy for driving success with a positive workplace culture that resonates through every aspect of the organization. With happiness prioritized, leaders pave the way for a more engaged, resilient, and successful workforce.

Want to learn more about measuring happiness in your workplace? WorkHound can help! Get in touch any time to schedule your free demo.