Employee happiness is at a three-year low: Can HR do anything about it?

Bad news for HR pros: Employees are unhappier than ever, with employee happiness at a three-year low, according to BambooHR’s Employee Happiness Index. 

Why is that such a problem? Employee happiness can be the key to unlocking engagement, morale, productivity and more. On the flip side, when employees are unhappy, they’re less likely to be engaged and productive, and more likely to quiet quit or quit altogether. 

Employee happiness is tricky because it hinges on so many things, including things that aren’t even tied to work. But that doesn’t mean that it should be ignored. By understanding what’s leading to the decline in employee happiness, HR can work to change it.  

Data deep dive

First, it’s important to understand the data. The index looked at Employee Net Promoter Scores (eNPS), which is used to measure employee satisfaction and loyalty, and used data from over 1,600 companies.

Since June of 2020, average eNPS decreased by 16%. But within the past year, employee happiness has taken a nosedive, with eNPS declining at a rate nearly 15 times faster from 2022 to 2023 than the previous two years combined. 

And, in 2023, there’s been a decrease of 9% since January, declining at a rate 10 times faster than the previous three years.

Some of the unhappiest industries include:

• Education, with a 5% decrease in happiness from 2022 to 2023
• Tech, with a 14% decrease, and
• Healthcare, with a 16% decrease.

Construction is the happiest industry, with an average eNPS of 49 in 2023. Despite ranking low in overall happiness, both nonprofit and travel & hospitality have increased slightly since 2020. 

What can HR do about employee happiness?

It’s not hard to imagine why happiness is declining so fast. From return-to-office wars to sky-high inflation, employees have a lot to be stressed about.

“The new norm of ‘unprecedented times’ is causing enormous stress,” Brad Rencher, BambooHR CEO said. “Today’s complex problems will require leaders to be proactive, adaptive, and data-informed to beat back the Great Gloom. To succeed in a rapidly evolving world, businesses will need to prioritize employee experience in real, meaningful ways like never before.”

Employee happiness is inextricably linked with engagement, satisfaction and productivity. That means unhappy employees can be costly, too. In fact, disengaged employees can cost the global economy upwards of $8.8 trillion, according to Gallup. So what can be done?

The hard truth is that there are a lot of outside factors HR can’t control, like compensation rates and stable job opportunities. But there are some ways HR can help boost employee happiness regardless of your industry or eNPS. 

Here are three focus areas for HR to help improve employee happiness:

• Workforce data: Industry-wide data about employee happiness might not reflect your individual workforce, so it’s important to survey employees and get feedback about their satisfaction at work to get a benchmark for employee happiness and get a pulse check on your people regularly
• Day-to-day operations: Some of the most impactful elements of employee satisfaction come from the little day-to-day interactions between workers and leaders, so it’s important to hone in on how your workforce experiences their day-to-day operations, and
• Organizational culture: Culture can help dictate employee behavior and, ultimately, employee satisfaction. Being proactive about prioritizing a healthy culture and taking actions that reflect your culture can help improve employee happiness.