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Do you know that happy employees are the most significant factor when you think about raising work productivity and creating happy, satisfied customers? Not all managers get this simple fact.

When you see a manager scream at their employees, nit-pick over every document, and give performance reviews that bring up errors from eight months earlier, you may think that they believe a miserable employee is the best employee.

Nothing could be further from the truth. When your employees are happy, life is better for everyone—including your customers. Here’s how happy employees make your business more productive.

Happy Employees Mean Happy Customers

No matter how great your product, or how brilliant your idea, if no one is buying it, your business will fail. A study of a pharmaceutical company found that customer’s loyalty increased when employees were happy and engaged

Think about how you feel when you must meet with a person who is unhappy and doesn’t like their job. This attitude makes the meeting tedious and unpleasant. If the salesperson or account manager is genuinely cheerful and pleasant, you may find that you are looking forward to the meeting. When a customer wants to work with your business, you will find that they are more likely to purchase your products

While Seinfeld’s Soup Nazi had a line out the door, that doesn’t happen for most people who treat their customers poorly. If you’re treated poorly, you’re not likely to go back. If employees are unhappy with their job or their workplace, they are more likely to treat your customers poorly. The result certainly won’t be a line of people waiting for you to serve them.

Happy Employees Perform at a Higher Level

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In another study, participants were given “happiness shocks.” While this may sound awful, the happiness shocks were actually ten-minute comedy videos or the receiving of drinks and snacks. The study checked that these methods made the subjects happier (they do) and then went on to show that these individuals had “approximately 12% greater productivity than a control group” who received nothing.

Participants who watched these videos and then completed tasks performed at a higher and more accurate level. Not a bad exchange for watching 10 minutes of comedy or snacking. This demonstrates that having the right, positive frame of mind can affect your work performance. Unhappy employees are more likely to have poor attendance and experience more burnout and stress.

Think about your own life. When you get up late, spill coffee on your blouse, and have to drive around the block for 10 minutes seeking a parking space, you don’t bounce into work ready to do your best. Your employees are human, just as you are, and being in a lousy mood affects their performance. While you can’t control their coffee spills, you can control the work environment they experience.

Happy Employees Mean More Money for the Business

An older study looked at companies that made it onto the Fortune Top 100 Companies to Work list from 1998 to 2005 and found that companies on the list saw a 14% increase in stock price, compared to an average of 6% for companies overall.

That’s a tremendous difference. And, while the data is older, there’s no reason to believe it doesn’t apply today. Unlike many other employee surveys, this one isn’t done by just asking HR to answer a bunch of questions—they survey actual employees. You don’t get on the Top 100 list without having happy employees.

The tremendous difference in stock price indicates the companies actually perform better. “When employees feel that the company takes their interest to heart, then the employees will take company interests to heart,” says Dr. Noelle Nelson, a clinical psychologist and author of “Make More Money by Making Your Employees Happy.”

Changes To Make So Your Employees Are Happy

If you’re the CEO, you can do just about anything the budget allows, but if you are a line manager or an HR manager, you may be bound by the choices of your bosses. That doesn’t mean you can’t make changes. Here are five differences that you can make to increase your employees’ happiness at work:

  • Pay the employees fairly: Sure, you can’t change the company’s pay structure, but you have some control over your department’s budget and what you pay employees. If your employees all sat down and shared their salaries, would some experience hurt feelings? If so, take a look at your compensation and work to fix it.
  • Provide feedback—positive and negative—with constructive advice: Sometimes managers, who want happy employees, are hesitant to say anything negative, but that doesn’t bring employees happiness. That brings frustration. Employees seriously want to know how they are doing. As long as you point out the good and bad performance and give suggestions about how they can do better, your employees will welcome the feedback and will work to become better. No one likes feeling incompetent in their job.
  • Reward good work with promotions: Some managers worry more about their own careers than that of their employees. You want your employees to grow and shine. Helping them obtain promotions can help motivate your current staff and, as a bonus, you gain a positive reputation for training and developing people.
  • Remain courteous, professional and pleasant: This seems basic, but so many managers neglect this. “I’m just surly—it’s my personality.” Fine, but your employees interpret that as you’re being a jerk. Treat people nicely. Solve problems and don’t put up with bad behavior, absolutely, but make sure that your overall personality is nice, pleasant, and approachable.