“We should be more like Bhutan” is not the most common refrain heard in Western boardrooms.

Yet the tiny Himalayan kingdom shares a worldview with an increasingly popular school of business management theory – that success should be measured not by financial output but by collective happiness.

While no major company has yet released the corporate equivalent of Bhutan’s Gross National Happiness measure, Chief Happiness Officers (job description: make employees happier) have been introduced in offices from Google to Zappos, while happiness-boosting measures such as compulsory mediation classes are ever-more in vogue.

But is targeted happiness actually good policy? The answer is more complex than it seems.

There is money in the madness

Of course it’s nice to be nice, but hardnosed managers will want to know the business case for happiness. Do resource-sucking happiness policies actually increase the bottom line?

According to several studies, yes. Psychologist Shawn Author has concluded that happiness improves brain power, so the most successful workers are those who are happy. Another study suggests this result can be manufactured through business policies – by giving people happiness boosters, such as free food or a funny video, they improved productivity by an average 12%.

Considering the negligible cost to a business of buying a packet of biscuits or sending around an amusing YouTube link, at first glance the astronomical ROI of happiness boosters should make them highly desirable business policy.

Everything in moderation

Based on the above evidence, a logical businessperson could conclude that even-greater happiness boosters would result in even-higher productivity. Oddly, however, they would be mistaken.

On the assumption that salary is fair representation of a worker’s value to a business, it is disappointing for happiness-advocates to note that achievement and happiness are not correlated. While unhappy people do earn less than moderately happy people, those same moderately happy workers out-earn their excessively happy peers.

On reflection, this make sense. Contentment in your current position negates the desire to strive for a promotion or other change in circumstances. And because the happiest people already hold themselves in high esteem, they are less likely to seek validation or praise from a manager by working harder.

For bosses therefore, it seems most productive to limit their happiness policies to minimising unhappiness and encouraging low-level happiness boosters, rather than attempting to raise workers to a state of delirium.

Work makes people unhappy

When it comes to workplace unhappiness, there is certainly plenty for managers to tackle. Unhappiness at work is endemic (47% of UK workers want to switch jobs) and extensively damaging (the more you hate your boss, the more likely you are to have a heart attack). Alleviating unhappiness would not only boost productivity, but is also likely to reduce the costs associated with staff turnover, and improve the company’s brand – after all, employees talk, both to their friends and social media.

Generally, improving workplace happiness requires a culture change, rather than increased resources or salaries. One study examining the factors that improve employee motivation and loyalty found that 83% want recognition for their contributions, 90% want a fun work environment and 76% want opportunities for growth. Managers who put in meaningful face time with employees and encourage a flexible work-life balance, therefore, are likely to reap strong productivity gains.

Forced happiness = unhappiness

It appears that in general, attempts to decrease unhappiness and moderately boost happiness generate positive business outcomes. However, managers should be cautious about over-quantifying their happiness goals. When happiness is seen as a target to achieve, the attempt to forcibly increase their happiness causes people’s actual happiness levels to drop.

It seems paradoxical, but it is created by the stress of worrying about meeting expectations. Workplaces should consequently be careful not to make ‘happiness’ an overt or expect policy for employees to adhere to. Subtlety is key.

Happiness vs engagement

Part of the problem with happiness policies is that the emotion of happiness is such a difficult thing to measure or categorise. A study by Gallup suggests a more effective method for employees – to substitute attempts to increase employee happiness with attempts to increase employee engagement.

What’s the difference between employee happiness and engagement? Happiness is a positive commitment to oneself, whereas engagement is a positive commitment to your job and your company. According to Gallup, 70% of the American workforce are not fully engaged, and this disengagement costs the economy $500 billion every year in lost productivity.

Methods to improve employee engagement are often very similar to methods to improve employee happiness, but with a stronger focus on binding the generated emotion to the workplace. Rather than simply offering free food, for example, a company could schedule a break where colleagues enjoy the refreshments together. The happiness provided by the food is enmeshed with interdepartmental networking, which allows workers to build new connections and bounce ideas of each other.

The results? Higher productivity, higher profits, and higher customer ratings – with higher happiness as a very pleasant side-product.

By Beth Leslie, graduate jobs content writer for Inspiring Interns