This informal CPD article ‘What Really Makes People Happy at Work?’ was provided by Hanover Search Group, an organisation with deep functional knowledge of asset and wealth management, banking, fintech, healthcare & wellness, insurance, private equity, technology and professional services.
From free coffee and beanbags to hybrid working and “Summer Fridays,” organisations have long invested in perks to keep employees happy. But while these benefits can add short-term enjoyment, emerging research makes it clear: lasting happiness at work has little to do with surface-level perks and everything to do with deeper human needs.
Happiness at work is not a “soft” extra, it is a strategic business lever. When employees are genuinely happy, they are more engaged, more productive, and more likely to stay. For leaders, understanding the drivers of workplace happiness is no longer optional; it is a leadership responsibility.
The Real Drivers of Happiness
While perks have their place, their impact often fades quickly as people adapt to them. Sustained happiness is tied to internal motivators such as purpose, belonging, recognition, and psychological safety. Research highlights that employees who feel connected to a clear purpose, are recognised for their contributions, and feel valued as individuals are significantly more engaged and motivated 1.
A further recent study 2 notes that 70% of employees say their sense of purpose is defined by their work. Yet many experience a “purpose gap,” where their day-to-day tasks feel disconnected from meaningful outcomes. Leaders can help close this gap by clarifying the “why” behind work, giving people autonomy in how they contribute, and celebrating progress along the way.
Belonging and Psychological Safety
Belonging is a fundamental human need, and its presence in the workplace has powerful effects. Research shows that employees with a strong sense of belonging have a 56% increase in job performance, a 50% reduction in turnover risk, and 75% fewer sick days 3 4.
Closely linked to belonging is psychological safety 5, the belief that it’s safe to speak up, make mistakes, and offer new ideas without fear of negative consequences. Studies consistently identify psychological safety as a critical driver of team performance and innovation6. Leaders who model openness, invite input, and respond constructively to feedback foster an environment where people feel safe and valued7.
Recognition and Well-being
Recognition remains one of the most powerful, and underused, tools for boosting happiness. A well-known six-step model for workplace happiness 8 includes regular recognition, alongside empowering employees, sharing information, supporting well-being, building pride, and ensuring job satisfaction. The emphasis here is on authentic, meaningful recognition, thanking someone for the specific impact they’ve made, rather than offering generic praise.
Investing in well-being is also non-negotiable. This means going beyond resilience training or wellness apps, and instead designing work environments, processes, and cultures that actively support mental and physical health. Leaders play a pivotal role by setting realistic workloads, respecting boundaries, and modelling healthy behaviours themselves.
The Leadership Connection
Workplace happiness is shaped most directly by the behaviour of leaders. Leaders influence how safe people feel, how connected they are to purpose, and whether they receive recognition and respect. Even small changes e.g. a shift in tone, an extra check-in, a public acknowledgment of someone’s effort, can have an outsized impact on happiness.
Some organisations have experimented with formal roles like “Chief Happiness Officer.” While symbolic, these roles are only effective when happiness is woven into the leadership approach at every level, rather than siloed to one person or department.
If you want to lead for happiness, reflect on how you’d answer these questions:
- Which happiness drivers - purpose, belonging, recognition, psychological safety - are strongest in your team? Which need attention?
- How do you currently recognise effort, not just results, in ways that feel authentic?
- What small changes could you make in your daily leadership to increase both happiness and performance?
Happiness at work is not about gimmicks or perks, it’s about creating an environment where people feel they belong, are valued, and can contribute to something meaningful. Leaders who take responsibility for these deeper drivers will likely not only see happier employees, but also stronger performance, higher retention, and a more resilient organisation.
We hope this article was helpful. For more information from Hanover Search Group, please visit their CPD Member Directory page. Alternatively, you can go to the CPD Industry Hubs for more articles, courses and events relevant to your Continuing Professional Development requirements.
References
- Happy Consultancy Group. (2023). The Truth About Happiness at Work. https://www.happy.co.uk
- Moss, J. (2023). Wellness at Work Unleashes Healthier, Long-Term Success. Investor’s Business Daily. https://www.investors.com/news/management/leaders-and-success/wellness-at-work-unleashes-healthier-long-term-success/
- Harvard Business Review. (2019). The Value of Belonging at Work. https://hbr.org/2019/12/the-value-of-belonging-at-work.
- The Diversity Movement. (2022). What Is Workplace Belonging and Why Is It Important? https://thediversitymovement.com/what-is-workplace-belonging-why-is-it-important/
- Harvard Business Review. (2023). Gallo, A. What Is Psychological Safety? (HBR explainer). https://hbr.org/2023/02/what-is-psychological-safety.
- Harvard Business Review. (2022). A Guide to Building Psychological Safety on Your Team. https://hbr.org/2022/12/a-guide-to-building-psychological-safety-on-your-team.
- McKinsey & Company. (2021). What Is Psychological Safety? https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-psychological-safety
- Price, M. (2017). Fairness for All: Unlocking the Power of Employee Engagement. Kogan Page.
