Organization Size and How it Impacts Employee Happiness

The size of an organization is often overlooked when it comes to building (or rebuilding) happy teams. While the principles of employee happiness and engagement apply whether you have 10 or 10,000 employees, the specific dynamics and challenges can vary significantly based on organizational size. Our research has found that larger organizations have less happy people.

Organization Size and How it Impacts Employee Happiness

What is organizational size?

Organizational size refers to the scale or magnitude of an organization, typically measured by the number of employees, revenue, market reach, or other relevant metrics. It represents the scope and scale of operations within the organization.

Classifying company size by employees

Companies are often classified into different categories based on the number of employees they have. These categories can vary depending on the specific definitions used, but here is a commonly used classification based on the number of employees:

  • Micro-enterprise: Usually defined as a company with 1 to 9 employees. These are typically small businesses or startups with a very limited workforce. Low morale can be both more destructive and easier to shift in organizations of this size.
  • Small enterprise: Generally refers to a company with 10 to 49 employees. Small enterprises are often characterized by a close-knit team and a relatively small operational scale.
  • Medium-sized enterprise (SME): Typically considered as a company with 50 to 249 employees. SMEs are larger than small enterprises but are still smaller in scale compared to large corporations.
  • Large enterprise: Generally denotes a company with 250 or more employees. Large enterprises often have significant resources, broader market reach, and more complex organizational structures.

Different organizations and institutions may use slightly different ranges or criteria to classify company size based on employees.

Why is the size of an organization important for happiness at work?

Organizational size and happiness tracked

Our data is based on a pool of 22,000 people and shows that larger organizations have less happy people. The chart above is free from the influence of income and job roles, so we see that the happiest organizations are the smaller ones, with people that are inspired about a cause.

The reasons why large organizations are unhappy are many. The size can be dehumanising.  People may feel unrecognised and unappreciated. Hierarchy limits variety, so the size of organizations means that not everyone knows each other.

The Five Ways to Happiness at Work and Organizational Size

Graph tracking 5 Ways to Happiness at Work and organizational size

The Five Ways to Happiness at Work are the drivers of positive culture and happiness within the workplace. They are:

  1. Connect
  2. Be Fair
  3. Empower
  4. Challenge
  5. Inspire.

Each of these factors has a direct impact on the happiness levels within a company. Interestingly enough, The Five Ways to Happiness at Work are impacted by organization size too.

In the graph above, Empower — sharing responsibility which can unleash innovation and collaboration — shows the most dramatic drop from being the second-highest to the second-lowest scoring metric. The sharp drop makes sense because autonomy gets lost within larger organizations. Employees don’t usually get to shape what happens within large companies.

What the data boils down to is this: your company may have an inherent flaw in its structure due to its size, which prevents employees from being truly happy with their experience of work.

To drill down into these factors on a personal basis, take our free (anonymous) happiness at work test.

How to improve your organizational structure

You can’t cut up a large organization without serious problems, but how do you change your organizational structure to be happier?

In a sense, the task is creating a village in a city — a group with tight connections — to mitigate the problems of size. Remember, people’s work experience is proximal. Appreciation from your teammates and how you get along with your boss affects you more than what you think of the CEO.

Here are our recommendations on how you can improve your organization’s structure.

1. Empower your people

Because empowerment is something large organizations struggle with, give your people more control. Large organizations tend to have more tightly defined roles and outputs. As a result, people don’t get to shape, impact or influence their roles.

As a team leader, it’s your job to make roles more interesting for your people. The easiest way to do this is to play to their strengths. Identify the strengths of your team and match them to the areas where people can add the most value.

2. Break the silo and hierarchy

With so many organizations now remote, one of the biggest threats is that everyone will get siloed in some way. Typically, innovation in a hierarchy has to go up and down the structure, leading to siloed teams.

In teams made up of members across functions, teams can work on problems not only in their function but gain insight from other departments as well. Hierarchies should make way for a structure that functions as a network of teams rather than the traditional organizational chart.

With fewer middle managers, there are more people to do the work and make crucial decisions. The added space also means that teams are not only more creative in coming up with solutions, but they’re happier as well.

3. Learn from other innovative organizations

In recent times, many companies have completely redefined the way they do business. Some aren’t returning to traditional office structures, and some are implementing four-day work weeks to mitigate burnout. What works for your organization is something only you can determine, but here are some that stand out to us:

  • McKinsey shared a great piece on organizations who used the pandemic to adapt their processes.
  • Zappos has adopted a system that’s a hybrid between their much praised holocracy and self-organization — a marketplace system where teams operate like small business and manage their own profit and loss statements. It’s a fascinating way to drive success.
  • If there is a place that is synonymous with hierarchy, it’s the military. That’s what makes AFWERX unique. They are a community of US Air Force innovators that use academic and non-traditional contributors to bring innovation to the Air Force. Watch our Founder and CEO’s keynote speech at an AFWERX Fusion virtual event. 

How we can help

Friday Pulse’s strength is that it provides focused action points at both team and individual level - so managers can act quickly, while senior leaders get real-time micro and macro insights on organizational sentiment. Starting with the team means that the results are scalable and effective no matter the organization size.

If you’d like to know more, please contact our Relationship Manager, Megan, on

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