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Well-being and organizational performance: An organizational-level test of the happy-productive worker hypothesis

Abstract It is often assumed that happy workers are also productive workers. Although this reasoning has frequently been supported at the individual level, it is still unclear what these findings imply for organizational performance. Controlling for relevant work characteristics, this study presents a large-scale organizational-level test of the happy-productive worker hypothesis, assuming that high individual well-being leads to high individual-level performance, which should translate into high organizational performance (such as high efficiency and productivity). Job-specific employee well-being was measured as job satisfaction and emotional exhaustion. Using data from 66 Dutch home care organizations, the relationships among aggregated levels of demands, control, support, emotional exhaustion and satisfaction on the one hand, and organizational performance on the other, were examined using regression analysis. The hypotheses were partly confirmed, especially high aggregated levels of emotional exhaustion were related to low organizational performance. Although these findings support the reasoning that happy organizations are indeed productive organizations, more theorizing and more longitudinal research on the associations between individual-level well-being and organizational performance is imperative to improve understanding of these relationships. The findings underline the importance of improving worker well-being: this is not only important for individual workers, but may also have positive consequences for organizations and their clients.