Do We Need a Business Happiness Index?

If there were an Olympic event for happiness, America wouldn’t even make the highlight reel. The annual World Happiness Report recently ranked the U.S. in 19th place —the country’s worst-ever rating. And this was before the pandemic. Before the nationwide protests and collective moral outrage stemming from the murder of George Floyd on May 25th.

It's been a tough year by any measure, and one wouldn't expect the U.S. to be at the top of any happiness chart. But again, these findings were pre-pandemic, pre-George Floyd. So how is it that the richest and most powerful country on earth was ranked the 19th happiest?

For businesses looking for ways to keep their employees engaged, productive and incentivized, it's worth taking a deeper look. The report also reveals some fascinating insights about what motivates people on both a personal and economic level.

According to researchers, a person’s happiness (or well-being) can be traced back to six major factors: GDP per capita (as a measure of one’s standard of living), the extent of one’s social support, freedom, generosity, healthy life expectancy, and perceptions of corruption.

While the GDP in the U.S. continues to rise, overall happiness continues to fall. What does this trend tell us about human nature, and how can businesses learn from the results to better improve employee engagement, satisfaction, and retention?

Money ≠ Happiness

The old adage that “money can’t buy happiness” turns out to be a little more complicated. Researchers from Purdue University and the University of Virginia analyzed data from 1.7 million people across 164 countries and found that the ideal income for individuals is $95,000 a year for life satisfaction and $60,000 to $75,000 a year for emotional well-being.

Once those thresholds are reached, further increases in income actually reduce happiness. Put simply, the more you have, the more you want, and the more unhappy you become.

Beyond base levels paid which are high enough to meet physical needs and to be perceived as fair and equitable, the power of money to increase satisfaction or motivate performance falls precipitously. At best, money just isn’t that important to employees. In fact, one massive survey (n = 200,000+) conducted by TINYpulse, asked respondents which factors were most important in inspiring committed performance (see chart below) and “money” came in seventh.

The most popular employee benefits and perks are usually financial, like salary and health coverage. Now, knowing the inherent limitations of these types of incentives, companies need to explore more diverse offerings to ensure their employees have a positive experience.

The Value of Happy Employees

While money might not lead to happiness, happy employees do lead to better earnings for companies. As GDP per capita increases and unemployment plummets, there is a growing trend to shift the responsibility of happiness and human well-being to the private sector. Although this might sound like a burden, businesses can easily frame it as a direct investment in their future success.

The happiness of a company's people is vital to its success. Companies with happier employees outperform their competitors and their workers take fewer sick days, are more engaged, more creative, more productive, and better at working collaboratively. It’s a truly win-win scenario.

As the world continues to battle the raging Coronavirus pandemic, businesses would also be wise to pay particular attention to their employees' mental well-being and offer them outlets, tools and opportunities to reduce stress, anxiety and fear.

Social Support

Speaking of mental well-being, humans are social creatures who derive self-worth from meaningful interactions with peers. (In the TINYpulse survey, camaraderie and peer influence were cited as the number one source of motivation.)

Is your company offering classes for meditation? Are they offering Summer Fridays or encouraging employees to use their vacatiion time? Are they convenining more frequent All-Hands and Town Halls? Are they spending time (and hopefully money) promoting diversity, inclusion and racial equity?

These are just some of the ways companies and leaders can provide social support to their employees as we collectively navigate one of the most uncertain and turbulent stretches in modern history.


Unsurprisingly, people want to be in control of their own lives, and offering flexibility in multiple forms is a great way to support employee independence. Here at Knotel, we're big fans of flexibility.

Fortunately, the rest of the country is quickly realizing the benefits of flexibility in an unpredictable world. Think flexible workspaces: multiple locations, potentially near rural areas closer to employee homes. Or flexible working hours: it seems the 3-day weekend is quickly gaining traction in various corporate circles. Flexible vacation policy, flexible schedules and meetings. You get the point.


People truly believe it’s better to give than to receive, and it’s easier than ever to make charitable donations in the digital age. In recent weeks and months, we've seen Corporate America spring to action, pledging millions of dollars in contributions to organizations dedicating to fightig societal inequities and systemic racism. Many others are volunteering their time to help, technology and services.

Companies like The Epic Foundation allow employees to opt-in for donations to be withdrawn directly from their paychecks, and the more people in the company who sign up, the bigger the rewards. Of course, partnering with the specific charities that mean most to your employees is also a great option.

Perceptions of Corruption

Apart from enforcing strict internal guidelines against corruption and nepotism, committing to increased transparency throughout an organization is critical to developing a positive corporate reputation and culture.

Despite a growing economy, happiness in the U.S. is decreasing at an alarming rate. That means the non-economic factors outlined above play a critical role in individual satisfaction, so businesses looking to improve employee experience, and find better ways to attract and retain top talent, should start reevaluating their own efforts to motivate workers. Is your company ready to create a happiness index of its own?