The No. 1 Most Important Thing for Happy Employees,

• Being the type of leader who makes your employees unhappy makes you an unpleasant person. But it also makes you a bad business person.

Study after study after study shows that happy employees simply work harder. Happiness also makes people functionally smarter, and massive research with the U.S. military shows that happiness leads to higher performance. 

Employee happiness is simply smart business. But while the case for wanting your team to be happy in their jobs is cut and dried, the question of how to actually promote happiness at work can get complicated. 

If you want your employees to be happy, should you pay them more? Focus on perks? Team-building? Culture? Eliminating jerks? Certainly, all of these moves can boost the happiness of teams. Few workers boo when told they're getting a raise or the office bully is being shown the door. 

But according to one Harvard Business School professor who teaches a class on happiness to hard-charging MBA students, none of these is the most important factor for employee happiness, satisfaction, and retention. In a recent interview with HBR, Arthur Brooks insists that, if you want your employees to be happy, work hard, and stick around, the most important thing you can do is offer them a sense of recognized accomplishment. 

The factor that matters more than pay and status

Brooks's comments come in response to an excellent question from interviewer Adi Ignatius: What kind of jobs exactly make employees happy? Brooks starts off his answer by listing all the things you think might matter, but which actually don't. Higher pay and higher status aren't correlated with greater happiness. Blue-collar and white-collar workers report being happy in their jobs at about the same rate. Nonprofit versus for-profit organizations have roughly equal employment satisfaction. 

So if the size of their pay package (at least once it covers basic needs), the impressiveness of their job title, and the presence or absence of a social mission don't matter much at all for employee happiness, what does? The data is indisputable: a clear link between meaningful performance and rewards. 

"The people who have the greatest happiness from work," Brooks explains, "feel like they're earning their success, which is to say that they're creating value with their lives and with their work lives, that their accomplishments are moving the needle and they're being recognized for those accomplishments."

It turns out that the human animal really appreciates a visible and fair link between improved output or performance and praise and pay. And we tend to dislike the funhouse mirrors type of organization where optics, tenure, or who you played golf with last weekend seems to matter more. 

Happiness, in other words, is knowing that your work matters and someone noticed. Satisfied workers "feel like they're serving people so that they're needed," Brooks adds. 

He's not shy about translating that insight into a concrete suggestion for leaders: "The number one thing that you can do for recruitment, for retention, the ultimate rewards that go far beyond money are making sure that you have a system where people are earning their success through their merit and personal accomplishment. They know it, they see it, and so do their friends. And they actually feel like they're serving other people and they can see the faces of the people for whom they're creating value. These are the big things."

Meaning beats money.

You might think that acknowledging impact all comes down to financial rewards. Paying your employees fairly is, of course, an excellent idea. But there are other options besides bonuses to recognize the impact of excellent work, as research by Adam Grant proves. 

The Wharton professor and colleagues once conducted a simple but powerful experiment. They brought a person whose scholarship was paid for by the fundraising work done by call center workers in to talk to those workers about the scholarship's impact. Revenue abruptly jumped 20 percent for those workers who heard how their efforts had changed someone's life. 

This research didn't look at whether these call center employees were happier at work after the visit from the speaker, but I'd be willing to bet they were. As Brooks points out, what matters most for employee satisfaction is feeling that your workers matter and someone notices. 

So next time you're wondering if you should get a Ping-Pong table or smoothie machine for the office, or considering instituting some elaborate new bonus scheme, make sure you have the fundamentals covered first. If your team can't see that their work matters and their performance gets recognized, it's unlikely they'll ever be truly happy in their jobs.