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Happy Employees Don’t Lead to Successful Companies – Here’s Why

Presented by: Jeff Butler

Go ahead and search ‘happy employees lead to successful companies and you will be bombarded with consistent uplifting messages about employees and happiness (LinkedIn, Fast Company, Business Insider, Fortune). Just about every content piece promotes employee happiness benefiting organizations at large. That is why, contrary to consistent media, I couldn’t believe that Phil Rosenzweig in The Halo Effect completely disagreed.

With the article title being controversial at first glance, there were many people who work in successful organizations (speaking from a strict revenue standpoint) where employees aren’t happy. Just look at sweat factories, crop fields, certain nursing homes, finance boiler rooms, or pyramid builders (wait those were aliens). With such well-known examples, why do business readers almost mindlessly follow common business slogans without questioning them?

About once or twice a year, I read a book that nearly knocks me off my chair changing the way I see the business world- the most recent book being The Halo Effect. This book highlights the unfortunate reality where our perception of an organization is positively influenced by our opinions of that organization’s other related traits. For instance, if a company is financially successful, we assume the organization’s leaders are great, but when the company’s losing money, we often think the leaders are bad, rather than looking at economic changes. Rosenzweig, a professor at Lausanne, Switzerland, and Warton Ph.D., encourages readers to question common notations and beliefs to understand what really works contributes to high business performance. For this short article, I hope to explain in greater detail why this business slogan is in fact a myth [happy employees create successful companies] so that you can spot your potential cognitive bias in other areas of business.

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