Harvard professor says leaders have a responsibility to be happy at work because it can affect your stock price 

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Your boss’s mood and behavior can affect how everyone else around them performs at work. But the happier your boss is, the happier their employees are—and that tends to have a positive impact on both the company’s bottom line, and its market performance.

That’s the conclusion from Arthur C. Brooks, a Harvard professor who teaches courses on leadership and happiness at both the Harvard Kennedy School and Harvard Business School. Speaking recently at Harvard Business School’s Klarman Hall for an episode of the HBR IdeaCast, Brooks said “happier employees are more profitable, more productive employees. That’s just the way it is. If you can have a happier workforce, you’re going to have a better company. And the results are going to be there.”

Brooks, a bestselling author whose recent book Build the Life You Want was co-written with Oprah Winfrey, said leaders who know how to prioritize their happiness will learn it “really, really is a good investment.”

The business case for happiness at work

Research from Irrational Capital, a Wall Street investment firm Brooks has advised, shows a clear financial correlation between employee happiness and company performance. The firm analyzed data from 7,500 publicly traded companies, including the entire S&P 500 and Russell 1000.​

“What they find is, for example, if you’re in the top 20% of workplace well-being, you will be, on average, about 520 basis points above the S&P 500 in your stock price over the past year,” Brooks said. “This stuff is really performing. It really, really is a good investment.”​

Separate research from the University of Oxford has reinforced this connection, finding that a one-point increase in employee happiness scores correlated with billions of dollars in additional annual profits.​

What workers want

The problem, Brooks argued, is that companies often misunderstand what makes employees happy. When Silicon Valley firms ask workers what would improve their satisfaction, “the employees don’t know. They just know they’re not happy. And so they’ll say stuff like, I don’t know, a ping pong table. How about avocado toast?”

​Brooks attributed this gap between what companies offer and what employees need to a deeper issue: leadership disconnection. When a boss is stressed, isolated, or unhappy—conditions he noted are nearly universal for new CEOs—they struggle to create the psychological safety and attentiveness that employees crave.

“The number one predictor of somebody hating their job is a bad boss,” Brooks said. “And it has a lot to do with the character, personality, and leadership style of the boss. If you’re the boss, you can ruin the workplace very, very quickly.”

This influence operates through what psychologists call emotional contagion, meaning an employee’s satisfaction and engagement are directly shaped by their manager’s emotional state and presence. A leader working on their own well-being is better equipped to listen, empower their team, and create the conditions where genuine workplace relationships flourish.

According to Brooks, employees want four specific things: genuine friendships at work, feeling empowered and improving at their jobs, management that listens to their suggestions, and efficiency (not having their time wasted in unnecessary meetings).​

The leadership trap

It’s natural to want to climb the corporate ladder—to seek challenge, and all the various perks that come with greater responsibility. But Brooks said the top two emotions CEOs experience during their first 24 months on the job aren’t joy or contentment. Instead, they’re loneliness and anger.

This aligns with broader research showing that roughly half of CEOs report feelings of isolation, with 70% of first-time executives saying loneliness negatively affects their performance.​

“A lot of them are really caught by surprise because once again, your ancient limbic system says, climb, man, the brass ring,” Brooks said. “That’s where it’s at. It’s going to be so great. And they get there, and they don’t like it.”​

For Brooks, his main goal is training managers with a specific goal: “to be happy people.”

“That’s the number one predictor of being a good boss is working on your own happiness,” he said.​

He drew a parallel to parenting, dismissing the common advice that parents are “never happier than your unhappiest child” as fundamentally misguided. “That’s just bad parenting, straight up, because nobody wants to have an unhappy mother or father. And nobody wants to have an unhappy boss.”​

“If you’re in any position of leadership, you have an ethical responsibility to be working on your happiness because it’s your gift to the people over whom you’re a steward,” he said.

​You can watch the full talk with Brooks and Harvard Business Review’s Adi Ignatius below.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.

This story was originally featured on Fortune.com