For companies looking for ways to boost their financial health, studies suggest that focusing on employee happiness, often referred to as employee engagement, is essential. Although the idea of employee “happiness” may be seen in the corporate world as fluffy or soft, you cannot argue the connection studies have found between employee engagement and a company’s profit margin. Why does employee engagement or happiness count? Employees have a lot of effort to give at their discretion. If you engage and motivate employees, they have a lot of effort to provide the company, leading to increased profits. Many studies back up this concept as well.
One recent study from Perspectives on Psychological Science, which was done by Gallup, Inc., looked at the impact of employee work perceptions on an organization’s bottom line. According to the abstract, it is already known that employee attitudes affect customer loyalty, company sales, company profits and employee retention, but the study went further to find out that positive employee perspectives can improve a company’s bottom line, while negative perspectives can damage the bottom line of the company. 
Analysis brought up in the report, “Engage Employees and Boost Performance,” from Fortune Magazine showed that pro-employee measures helped to increase stock appreciation significantly. In the same report, a study done at Sheffield University was noted to show that people management practices improved profitability and could be an excellent indicator of overall company performance financially. 
The studies back up the advantage of “happy” employees for companies today. Reports from Hewitt Associates showed that improving employee morale helps to create excitement about the company’s future. Companies that have the highest morale and employee engagement also learn to identify potential problems and address them early.
Employee engagement is not something that companies can afford to ignore, since so many studies back up the idea that engaged employees result in profits. Companies today need to learn the drivers of employee engagement, increasing employee engagement and happiness to enjoy increased profit margins. There is nothing soft about cold, hard cash.