What the World Happiness Report Teaches Us About Modern Organizations

Like every year,  Gallup and the Oxford Wellbeing Research Centre released their World Happiness Report.

While there is some good news, the levels of unhappiness in some of our major markets are alarming.

The US saw an especially steep drop, going from #15 last year to #23 in 2023 with a 6.7/10 life evaluation. 

While the country is doing well on several measures, it’s now behind 22 countries, including many European nations, such as Israel and Australia, in the list of happiest places. 

Another standout is the UK, which ranked only slightly higher at #20 with a 6.8., behind almost all of its formerly fellow EU countries.

(My home country, the Netherlands, is #6 with a 7.3, and Vietnam, where I live now, is number 54 with a 6 out of 10 in reported life satisfaction.)

The report is too long to go through for most of us, so here are some key insights that will be valuable to you as a leader:

• Youth Happiness Decline: The report highlights a notable decline in happiness among young individuals (aged 15-24) in North America and Western Europe, with the US registering shockingly low at #62 amongst all countries. The young are now the unhappiest group in the country. 

• Happiness Inequality: There has been a large increase in happiness inequality, the gap between the most and least happiest in a given country. This is true in every region except Europe, and it is more so with older people. 

• Rise in Negative Emotions: Negative emotions have increased globally, especially in countries like the US. They were more prevalent for females than males, and almost everywhere, the gender gap was larger at higher ages.

• Generational Differences in Benevolence: I told you there was good news! The significant increase in benevolence, particularly among those born since 1980, points to a generational shift towards valuing social impact and altruism.

• Importance of Social Support: The report finds that feelings of social support are significantly related to happiness, more so than loneliness. 

The Case for Happiness in Organizations 

Most of these findings concern people’s overall perceived happiness, so should we even care about this as leaders? 

Yes, because, as we recently heard from Debbie Lovich and Rosie Sargeant at BCG, joy in the workplace contributes significantly to employee engagement and retention. 

Their new research shows that employees who enjoy their work are 49% less likely to consider quitting. 

This is in addition to the fact that happier employees are 12% more productive, happy salespeople sell 37% more, and companies with happy employees outperform their peers in the stock market by 12%. 

So, how do we create joy and happiness at work?

For one clue, we can look at companies like a society. 

Because while we, as business leaders, may not be able to affect entire countries or societies, we absolutely do impact what it’s like to work in our organizations. 

As workplace guru Josh Bersin points out in his perspective on the report, we can even think about our companies as a society. 

In his eyes, we form businesses to solve a problem together, all feel aligned toward a central mission, and together create a common culture.  

That’s not so different from a society! 

If companies are like societies, then companies should care about the same drivers that make citizens happy (or not):

1. Social Support (number and strength of close relationships) (49% impact on happiness)
2. Freedom of corruption (belief that the “system” is fair) (18%)
3. Freedom to Make Life Choices (your ability to live as you choose) (14%)
4. Wealth (GDP per capita) (10%)
5. Generosity (tendency to give money and time to others) (8%)
6. Life Expectancy (health) (1%)

The Need for Focus on Social Relationships

One driver of happiness stands out: social relationships contribute to 50% of people’s happiness.

This insight aligns with the most extensive study on happiness, the Harvard Study of Adult Development, which finds that people with warm relationships and who feel most connected to others are happier and live longer. 

Like in life, great social relationships drive success at work. According to the Harvard study, those most connected to their work friends feel more engaged. 

Further research finds that positive relationships in the workplace can help you enjoy work more and contribute to better well-being. Recent Gallup data support this notion, showing that having a best friend at work is critical for job satisfaction.

According to Gallup, having a work friend makes work more enjoyable, provides emotional support, and improves job performance through better communication and collaboration.

The Gallup study additionally shows that this has become even more important since the pandemic.

As MIT reports, loneliness (including work-from-home loneliness) is a more significant issue than ever. Companies, especially those practicing hybrid work or remote work, therefore need to assess whether we’re supporting people enough to be connected, argues Josh:

“If your employees are working from home and they’re isolated at the end of Zoom, and they don’t get together with their managers, especially if they’re young, you’ll have some issues. Without getting into a debate about hybrid work, we need to make sure everyone is connected to other people.” – Josh Bersin

This is why I always advocate for building relationships and community at work, even by starting a meeting with a few simple virtual icebreakers.

Technology plays a huge role here, too.

Software that was originally focused on the logistics of managing a hybrid office, like desk booking and room scheduling software, now often focuses on social aspects. 

Platforms like Tactic (full disclosure, one of our amazing partners) help people find out when colleagues will be in the office and encourage them to join, breaking the isolation. Café even launched communities and highlights social events that make the office worth traveling to. 

Driving Trust

The report also points out trust as another major driver of happiness. 

The researchers found that respondents' thoughts about the trustworthiness and kindness of others were very strong supporters of overall satisfaction with social relations.

Trust has a strong relationship to work.

I recently interviewed Paul J. Zak, the famed neuroscience professor and author of the HBR classic “The Neuroscience of Trust.” Paul shares that trust has an incredible number of benefits:

“In these high-trust organizations, employees enjoy their jobs more, are more productive, and are more innovative. They take fewer sick days, and they are better citizens, better family members, and better partners outside of work because they are not getting beat up and being treated like children at work.” Paul Zak, Neuroscientist 

Another benefit of a high-trust workplace is that managers are freed to focus on their strategic work, not needing to micromanage team members:

“But in the high-trust world, I am giving you the freedom to do your job; presumably, you are trained well, that you've been trained to do, and that you get satisfaction from doing. That means that the supervisor can do his or her job, can focus on strategy, can focus on bigger-picture ideas, and is not on the front lines all the time.” – Paul Zak, Neuroscientist

Sophie Wade, the author of Empathy Works, founder of Flexcel Network, and one of our 55 Remote Work Thought Leaders, shared for this newsletter that she agrees with Paul’s insights but that the reality in most organizations is different.

“The pandemic unmasked the lack of trust that was not revealed when we were all at the office. I suspect that when people had job security, it generated a feeling of trust—“the organization takes care of me”- that was the social contract. I work long hard hours, get paid and get to retire at the end. That has all been up-ended.” – Sophie Wade, author of Empathy Works

She adds that it’s time to focus on people:

“I focus on proposing new approaches which solve the problems. We need to drive more human understanding, more empathy.” – Sophie Wade

Managers and Social Connections

Both cultivating strong relationships and trust needs to be done at all levels. In fact, it most commonly falls to managers, adds Josh. It’s one of the many reasons why managers are so important.

This is why we need strong “Role Model Managers,” as Culture Amp specialist Liliana Kellett shared during last week’s CxO Roundtable about employee retention. 

Based on Culture Amp’s data pool of over 1 billion signals, employees with role model managers are 27% more motivated and way less likely to leave their companies.

Liliana asked us a set of provocative questions: 

“How do you know that you have good managers? How? What systems do you have in place to measure this? And what are you doing to continuously develop your managers? Do they have access to the right tools, one on ones, the ability to know how to be a great leader?” – Liliana Kellett, Culture Amp

I’d argue that the answer to these questions is often a resounding… ‘maybe not quite.’ 

Even something as simple as a one-on-one meeting, which Culture Amp’s data shows entices teams to stay and increases their likelihood of staying at an organization by 67%, often gets moved around and eventually canceled due to managers' high workloads.

This is one area where AI absolutely must be adopted quickly so that managers are freed from the mountain of manual labor and paperwork involved with goal setting, performance management, and answering repetitive questions. Managers must tap into AI productivity tools that reply to emails, attend meetings, and organize calendars.  

‍(Speaking off, register for our free “Lead with AI” webinar, where I and several co-hosts share key insights, tools, and tips on using AI as a busy executive.)

Of course, it’s also a question of ability, as Josh asks: “Do first-line managers understand the value of social relationships? Do they listen to people? Do they bring people together? Do they celebrate, do they reward?”

Management training, as well as spotting and promoting ‘role model managers’, remains crucial for companies.  

The Bottom Line: Learning from the Happiness Report

It’s clear that we need to play our part in making sure people thrive. 

The 50% of the happiness equation that’s driven by social relationships and trust is something we can and should address in the workplace. 

Get people together, even if it’s online, build a culture of trust, and free up managers so they can play an active role in coaching, caring, and community building.

Just look at the happiest country on the list, Finland, which says its “consistent no. 1 position in happiness is explained by high levels of trust and freedom in society.” 

Companies there have extended this trust in their cultures. Framery says trust is the key reason it only had a 10% lifetime employee turnover.