CHROs: Treat Employment as a Relationship, Not a Transaction

Employees aren’t getting their emotional needs met at work, and it’s costing both businesses and the workforce alike. 

As a result, a clear disconnect has emerged between what organisations can deliver and what actually makes employees feel happy and engaged at work. 

This is according to new research from The Happiness Index’s recently released The Global Workplace Happiness Report, which collected responses from more than 80,000 employees across 115 countries. 

The report’s analysis also draws on more than 1.9 million individual data points and nearly 90,000 written comments.

What are the key drivers of happiness in the workplace?

The study found that the strongest driver of overall workplace happiness is whether employees feel inspired and experience a genuine sense of belonging. These are emotional, cultural qualities that reflect how people feel about their organisation and their place within it.

Yet despite their importance, employees ranked inspiration near the bottom of all measured dimensions, revealing a significant gap between what matters most and what organisations are currently delivering.

Additionally, where employees work was found to have the most consistent impact on happiness and engagement compared to any other variable in the study.

The study states: “Remote workers report the highest scores across nearly every dimension, with hybrid workers close behind. Field-based employees score lowest, particularly on belonging and work-life balance, with office workers sitting in between.” 

Younger employees are also giving important signals about the future of work: hybrid models offer career advantages that fully remote setups can’t quite match.

While remote work still edges out hybrid arrangements on most overall measures, workers aged 19-29 report meaningfully better experiences in two areas that matter most early in a career: learning opportunities and the chance to progress.

In other words, hybrid working is not seen as a compromise for young professionals, but rather as a catalyst for growth. The blend of flexibility and in‑person exposure appears to give them access to mentorship, visibility and informal learning that remote work alone struggles to replicate.

What are the key drivers for unhappiness in the workplace?

Employees who have spent more than five years at the same company were found to be unhappier than those who have shorter tenures. 

The happiest employees were those in their first two years at a company, with rates declining between years five and 10. However, after the decade milestone, scores “stabilise or recover modestly.”

Members of the older generation expressed the greatest dissatisfaction with the level of feedback they receive. As a result, they were the generation least willing to advocate for the business. 

“The youngest workers are the happiest with the amount of feedback they receive, before scores steadily decline to their lowest point for those between 50-59, with a partial recovery at 60+,” the report highlights. 

“Employers aren’t necessarily aware that some older workers want more formal interaction; 50-year-olds are less likely to flag the absence of feedback than younger workers.”

In the mid-market, happiness scores were also found to dip, with the relationship between company size and workplace happiness following a J-shaped curve. 

Micro‑businesses were shown to be much more successful when it comes to culture. Teams of 10 employees or fewer consistently outperform on belonging and collaboration, benefiting from the intimacy and immediacy that small groups naturally create. 

Larger organisations – those with more than 1,000 employees – fell at the other end of the spectrum, as they reported the strongest scores across almost every dimension, buoyed by mature systems, resources, and well‑established structures.

Mid‑size firms with 51-250 employees were caught between the two. These businesses had workforces that had outgrown the closeness of a small team, but they hadn’t yet built the organisational scaffolding of a large enterprise. 

Sharing his concluding advice, Matt Phelan, Co-Founder, The Happiness Index told HR Magazine: "While systems, processes, and technology are undeniably vital to organisational success, the Global Workplace Happiness Report reveals a deeper truth: employees view employment as a relationship. 

“To get the best from their people, CHROs must begin by viewing employment through a relationship lens."