Here’s a contradiction for you: a happy employee is not necessarily an engaged one.

The two terms are used interchangeably but for me, that’s an instant red flag. Yes, the two can undoubtedly overlap. Happier employees contribute to a more positive workplace culture, which can promote greater levels of engagement. Likewise, engaged employees may report higher levels of happiness than disengaged ones.

Given the similarities, it’s no wonder many business leaders view happiness and engagement as one and the same. The result for many organizations has been to approach employee happiness as a benchmark or objective when looking to improve retention or productivity measures. Happiness becomes the goal, and initiatives to support it follow.

However, focusing solely on happiness of employees as a measure of engagement is counterintuitive – and may come at a significant cost to your business.

What’s the difference between happiness and engagement?

Yes, happiness and engagement share some similarities. You often find the two side by side; the presence of one may increase the likelihood of the other. However, it’s important to recognize that at business level, there are distinct differences – and associated impact – between the two. Here, we explore the gap.

Happy or satisfied employees:

Happiness is, by definition, an abstract feeling. Often, it is only partially impacted by an individual’s perception or experience of work; happiness can be impacted by any number of things outside of the work environment. Engagement, by contrast, is a measurable state that directly impacts on business outcomes.

An employee can be happy at work, but lack engagement. They may, for example, enjoy the companionship and opportunity to talk with work-friends; they may appreciate the thrown-in perks such as the free breakfast or the Friday afternoon drinks. They are happy – but happy to simply be bringing home a paycheck.

In this situation, they can also be unproductive, lazy or simply muddling along – doing the bare minimum, and nothing more.

Engaged employees:

Engagement is something else entirely.

Engaged employees demonstrate an emotional commitment and investment in their work; they care about what they do, the wider business and its overall purpose. They understand their role in contributing to the bigger picture.

Engaged employees are those who give discretionary effort, going above and beyond the bare minimum. They’re the ones stepping up to stay late when a problem arises. The sales person still hammering the phones on Friday afternoon, chasing that deal. The customer service rep, putting in overtime to solve a customer issue. They don’t cut corners: they step up.

This also means that contrary to what many believe, engaged employees aren’t necessarily ‘happy’. They may, in fact, be more stressed than their colleagues – because they care.

The value of engagement

It’s something we reference time and again, but with good reason – engagement in business, quite simply, pays.

Employee engagement crept into the business sphere a few decades ago, but it’s real climb to fame has been in recent years when, thanks to extensive research, the tangible impact on measurable business outcomes has been demonstrated.

There is an irrefutable causality between a culture of engagement and performance. Using data from over a ten-year period, Queen’s University Centre for Business Venturing found that organizations with an engaged culture saw:

employee happiness engaged culture

Each of these means for a direct line between levels of employee engagement and the bottom line, making engagement a crucial business priority. In fact, while estimates vary, it is suggested that disengaged employees cost the US economy $350 billion a year in lost productivity – approximately $3,400 for every $10,000 in annual salary.

However, while 70% of business leaders believe that employee engagement is critical to achieving business objectives, only 20% feel their engagement initiatives are contributing to driving those same business outcomes.

Engaged employees – not always a ‘model’ employee

So, engaged employees are the holy grail, the must-have, the ideal. But actually, they’re not necessarily your ‘model employee’.

It sounds like a contradiction, but bear with me here.

When we care about something and are emotionally invested in it – whether that’s our organization or a personal cause, such as a charity or social issue – we will actively seek to promote it, improve it, and support it to achieve its objectives.

In a business context, this means that your most engaged employees may also, from a management perspective, be the most irritating.

They’re the ones challenging the status quo. They’ll express frustration or agitation when projects don’t go as planned, because they are invested in seeing them successful. They’ll be the ones putting forward new ideas, processes, ways of doing things. They’ll actively seek feedback and opportunities to grow and develop.

In the right culture, these attributes make engaged employees your greatest assets – drivers of innovation who will constantly push your organization forward. They may not be super happy or content – but that’s not the primary objective, and controversially, you don’t necessarily want them to be.

What builds an engaged culture, rather than just happy employees?

At this point, hopefully we’ve made our case for engagement over and above happiness as a business priority. But how do we go about creating it?

First, let’s consider the common efforts made to improve employee satisfaction – essentially, what we may be inappropriately focusing on.

Improving employee happiness

Typically measured through surveys designed to gather opinions about HR-related issues such as compensation, benefits and work-life balance, satisfaction looks at morale levels and ways to improve these.

The focus on happiness levels, alongside the portrayal of the employer brand to the external world, led to a rise in gimmicks in the office and employer offering throughout the 1990s and beyond. From slides to free booze, gym memberships or on-site acupuncture and yoga classes, many organizations jumped onboard to find new, quirky and innovative ways to increase happiness and morale within the workplace.

However, it fails to address the underlying causes of disengagement or dissatisfaction with a workplace environment. “Giving out toys and entitlements is a leadership mistake, and worse, it’s condescending,” writes Gallup Chairman and CEO, Jim Clifton. Engaged employees don’t value free coffee and pool tables – they care about benefits that offer greater flexibility, autonomy and the ability to lead a better life.

employee happiness millennial benefits

(Offering ‘freebies’ is no longer an attractive option to employees, Gallup explores in its latest ‘State of the American Workplace’ report. The focus instead is on benefits aligned with employees’ lives: specifically, those that support family life, flexibility and both personal and professional development.)

Pay also tends to rank highly on the list of initiatives to improve morale, but research shows that the boost to employee satisfaction will typically be a short-lived increase, if it is seen at all; if all other elements of the job remain unchanged, dissatisfaction (and lack of engagement) will return. Money, it seems, really can’t buy you happiness.

This isn’t to say that financial remuneration has no role to play in driving engagement – fair pay and opportunity continue to rank in the top 10 requirements for employees – and the highest-ranking reason for looking elsewhere. However, simply bumping up salaries won’t lead to a positive impact on business outcomes.

Engaged employees are far more likely to become disengaged if employers only think about making them happy. So, take a moment and consider – are your ‘happiness incentives’ actually damaging your organization?

Driving employee engagement

We’ve already explored the fact that engaged employees have a sense of commitment and investment in their work and organization. How do you go about instilling this?

  • Establish your company vision and values – and communicate your purpose. Employees won’t be invested in a business if they don’t understand where it is headed or what it stands for. Establish your identity as a business and an employer – and communicate it.
  • Make training and development a priority. The rise of Millennials in the workplace has seen a shift in priorities; security and satisfaction are no longer the motivator. Employees are pursing personal and professional development, and driven by opportunity. Invest in L&D and ensure clear progression mapping, so your employees know where they’re headed – and how to get there. Just 21% of employees strongly agree that their performance is managed in a way that motivates them to do outstanding work, according to Gallup.
  • Ensure transparent, two-way communication. Emotional investment into a business is driven by access to those at the top. Employees want to hear from their leaders – and to be heard in turn. Facilitating two-way communication and being transparent about success, alongside communicating change, is key to letting employees know where you’re headed. Using social communication tools enables employees to feedback and feel a part of the bigger picture.
  • Focus on the employee experience of the workplace. It’s something we’ve covered before, and growing in importance – shaping a positive employee experience by giving your staff the right tools, technology and information to do their jobs well has a considerable impact on their levels of engagement.

employee experience spheres

(There are three ‘spheres’ of employee experience to consider when designing employee engagement initiatives for your business, according to IBM. Unifying the approach between these and addressing the things that really matter to employees – rather than focusing on quick-win incentives – is vital to improve productivity and engagement.)

Looking for more hints and tips on how to drive levels of employee engagement in your business? Our blog ’15 employee engagement ideas to try in 2017’ offers some inspiration and practical ideas.

Whose responsibility?

Recognition of the value of engagement has increased, it hasn’t gone far enough.

Empowered millennials and an agile workforce are now increasingly confident as the job market continues to recover in their favor. 51% of US employees are actively looking for a new job or watching for openings, Gallup reports – and they are actively seeking out companies who will give them a sense of purpose. Employees are no longer interested in simply clocking in and clocking out: an engaging work environment is now a baseline requirement.

It means that employee engagement has traditionally fallen on the HR function as a key consideration when attracting – and retaining – talent. It’s understandable, therefore, that for those with an interest in talent management and responsibility for employee well-being, the lines between engagement and happiness would blur.

What we’ve shown here, however, is that employee engagement goes above and beyond happiness alone. What’s more, it doesn’t simply impact on candidate attraction or staff retention. It has a measurable and significant impact on productivity and business outcomes – making it a management-wide priority across the boundaries of department or level of seniority. Employee engagement is everyone’s responsibility.

Employee happiness, engagement… or both?

OK, so perhaps the argument I’ve put forward is a touch one-sided. However, let me be clear – you don’t need to sacrifice one for the other. Focusing on engagement needn’t come at the cost of happiness; nor should it.

However, we do need a shift in mindset and attitude. The two are distinct from one another: improving one doesn’t necessarily improve the other. And more importantly, while employee happiness is important and may be beneficial, engagement is crucial.

Employee engagement at work is directly related to better performance. By shifting perspective to focus on the long-term impact on business outcomes, as well as speaking to our employees and taking onboard feedback, we can determine how to shape it in a way that not only benefits our employees, but us as a business.

Happiness is worth striving for. It has a positive impact on business culture and lays the foundation for more engaged and productive employees. It’s only when we prioritize happiness – and the initiatives that promote it – above or instead of engagement, that we risk jeopardizing business success. The answer is a question of balance.