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Why Happy Employees Determine Your Success

Happy? Don't dismiss the sentiment as soft. Experience shows that happy employees equal happy customers. That means everybody else-including the boss and the shareholders-will be happy, too.

Sometimes happiness takes the form of a goldfish. When a travel-weary family of four checked into Chicago’s Hotel Allegro in the middle of the night, the two boys, both under 10, asked hopefully at the front desk about the possibility of a goldfish for their room. It wasn’t as odd a request as it sounds—the Allegro is a part of the Kimpton chain, which makes goldfish available during a guest’s stay at some locations. But unfortunately for the parents, the Allegro is not one of them.

Linton Murphy, a bellman at the property, overheard the crestfallen kids. He set out immediately on a 10-minute walk to the chain’s Hotel Monaco, which does have goldfish for guests, and talked the night manager into loaning one out. Not long after, Murphy appeared at the door of the beleaguered family, pet in hand—along with a note from the fish that gave it a name and a backstory.

The family was thrilled, and the father took time to send a note to Niki Leondakis, COO of Kimpton Hotels & Restaurants. Shortly thereafter, she ran into Murphy and asked him why he had gone to the trouble. His response? “When my kids are unhappy, my wife is unhappy. When my wife is unhappy, I am unhappy. I just imagined that poor guy stuck in that hotel room and those kids not letting up about the fish,” he explained, adding, “I love my job. I get to do anything I want to make someone happy.”

Stories like that abound at Kimpton properties, which are well known for their high level of customer service, as well as for being great places to work. Leondakis says that’s no coincidence. “Taking care of our employees comes before taking care of our guests,” she says. “There’s no way the guests are going to have a great experience if our employees are unhappy.”

Employee happiness may not be at the top of many executives’ lists, especially these days, but it should be. Compare Fortune magazine’s annual list of best places to work with the Fortune 500, and you’ll find a lot of crossover. Experts say that happy employees—especially in customer service—are more engaged with their jobs and therefore more likely to go the extra mile.

Happy is as happy does

“Happy employees make the customers happy,” says Alexander Kjerulf, a self-proclaimed chief happiness officer, lecturer and consultant on happiness at work, as well as the author of Happy Hour Is 9 to 5. “Studies show very clearly that when employees like their jobs, customers get better service and are more satisfied.”

Indeed, aggregate studies have found that between 40 and 80 percent of customer satisfaction and loyalty is determined by the customer-employee relationship, according to a white paper by the Corporate Leadership Council. Companies from Sears to PNC Bank to Nortel have found that when they address employee happiness issues, they see their customer satisfaction and loyalty figures jump. Just how much is a matter of some debate, but there are clear signs of a correlation. Sears analyzed data from 800 stores and found that a 5 percent increase in employee satisfaction drove a 1.3 percent increase in customer satisfaction, in turn bringing a 0.5 percent increase in revenue growth, according to a study published in the Harvard Business Review.

Online shoe retailer Zappos.com puts so much stock in keeping its employees happy that it even offers them $2,000 to quit after one month on the job. Those who bypass the cash clearly want to work there—a commitment that isn’t necessarily a hallmark of people in customer service. “Our number one priority is employee culture, not customer service,” says Aaron Magness, who works in business development for the Las Vegas–based company, which posted sales of $1 billion in 2008.

“The fact is that customer service people are usually not as career-oriented as professionals, so they may be less interested in whether they are representing customer service for a lending institution or a car dealership or health insurance,” says Dr. Andrew Shatte, co–managing director of Adaptiv Learning Systems, a consultancy focused on resilience and success programs at work. But Shatte says that if you want happy customer service representatives, commitment is critical. “Ask why they want a job in your organization in particular,” he advises.

What is happiness, anyway?

In a workplace setting, many experts say that engagement or connection to work may be what ultimately leads to happiness. “Make someone connected to their job, and happiness will follow,” says Shatte.

“Trying to directly impact an employee’s happiness is going to be an extremely tricky thing to do. The crucial thing is to have people who are truly connected to their jobs—they can’t think of a better place to be for those 8 to 10 hours a day.” But, adds Jim Harter, chief scientist of workplace and well being at the Gallup Organization, just hiring happy people may not lead to great customer service. “An employee can be happy in a box and not engage anyone else,” he says.

Ensuring that your customer service representatives care about your company requires first defining your corporate culture—and making sure its tenets are concrete enough to be hired and fired for, says Zappos.com’s Magness.

The shoe retailer’s culture is defined by 10 core values, which range from “Deliver WOW through service” to “Create fun and a little weirdness.” To that end, the company encourages “random parades.” (Recently, the finance department came through the building offering free hugs.) During the Beijing Olympics, 20 people dressed in short-shorts and other athletic attire strutted through Zappos.com’s offices.

If weirdness and random parades aren’t part of your company culture, that doesn’t mean you’re doomed to have gloomy employees. At Kimpton, the positive culture involves celebrating diversity, individuality and caring for yourself, others and the environment. Those are different criteria than at Zappos.com, but fitting them still means finding happy people.

Hiring happy DNA

“One hundred percent of our employees have to be people who make you smile,” Leondakis says. “We hire for a ‘Kimpton Spirit.’ It’s not a particular type of personality so much as a happy, optimistic, genuinely caring human being. It doesn’t matter what their résumé says, it doesn’t matter if their credentials are the best you’ve ever seen. The technical side is less important to us than who this person is as a human being.” That focus works: In an industry where turnover can reach nearly 65 percent, Kimpton sees almost 20 percent fewer employees leave annually—a big savings in recruitment and training.

“We have employees who say, ‘I am happy in my job because I have the power to make someone’s day,” says Leondakis. “They really want to do something nice for someone, and that’s because their managers do that for them.”

Nowhere is maintaining that culture harder than on the front lines of customer interaction. “Customer service people really take a beating,” says Adaptiv’s Shatte. Offering an example of work he did with Sprint, where some customers were on hold for more than an hour before reaching a live person, he says that “[employees] who really weathered this the best felt that they were helping people.”

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