Why happy employees are your company’s most important asset. (And what to do if they’re not happy.)

When was the last time your company’s executive team considered this simple question: “Are our employees happy?”

If your senior executives and directors don’t know the answer, then it’s a question you should probably start asking, and often.

There are numerous reasons why. Broadly speaking, companies spend a lot of time and money on efforts to attract, hire and train new employees. A 2016 estimate by the risk management firm Willis Towers Watson estimated the financial cost of losing and replacing an employee is typically at least half of the position’s annual compensation and nearly 80 percent in the case of senior positions.

Added to those costs are the inevitable disruptions in business plans and loss of institutional memory that result from employee departures. This makes employee happiness a fundamentally important Key Performance Indicator (KPI) of the health of your business.

At Fond, we’ve spent six years helping companies understand the strategic importance that employee happiness plays on overall results. We started out as AnyPerk, devoted to using perks as a way of rewarding employees, but our mission has always been so much bigger: We’re creating innovative ways to engage and recognize employees in the workplace, and to measure the impact of culture across any company.

Employee happiness may not be a tangible asset that appears on the balance sheet, but its effects are very tangible. A 2013 report by USA Today found that the publicly traded companies who have appeared on Fortune Magazine’s list of the 100 Best Companies to Work For since 1998 (see 2017 list here) had posted average gains of 11 percent over 15 years. They also experienced average employee turnover rates that were less than half that of their industry peers.

So how do you know if your employees are happy? First you have to understand what happiness is and isn’t. Employee Happiness is not the same thing as Employee Engagement. Employees can be happy in their jobs — they like their coworkers and benefits like free snacks — but they may not be productively engaged in their work.

And while it’s rarer, the opposite can also be true: Someone who works hard at their job putting in 14 hours a day is engaged, but not necessarily happy. Research suggests high engagement without positive reinforcement leads to burnout.

So here’s how to find out if your employees are happy: Ask them.

Today alongside the new name, Fond is announcing a free tool called EngagementIQ to help companies measure the health of their workplace culture. You can try it now at www.EngagementIQ.com.

With a six-question survey you can quickly assess how your company stacks up on the core components of employee engagement. These core components include factors like purpose, recognition and motivation that are not easy to measure. Once your survey is complete, you’ll have a measurable baseline of data concerning how your employees are feeling at work.

On top of this, today we also announced a significant expansion of our Fond Rewards platform to create rewards programs that are more consistent and impactful. One big piece of it is something our customers have been asking for: In-the-moment recognition that allows managers and teammates to recognize great work when and where it happens, and to do it directly within common workplace platforms like Gmail, Slack and Salesforce.

It also enables recognition at regular intervals like birthdays and work anniversaries and allows for easy sign-up by part-time employees and contractors.

If there’s one thing we’ve learned about employee happiness it’s this: The solution to unhappy employees is not always money. Once employees are paid in line with competitive market rates, the return on further pay increases tends to diminish.

In fact, our research shows that when employees are surveyed regularly, the biggest single factor they cite for being unhappy is a lack of recognition and appreciation for the work they do.

Obviously, everyone likes to be appreciated and recognized for success at work, but it’s worth noting that millennials — my generation and the one that grew up with Facebook and Snapchat — have since 2015 constituted the single largest demographic in the American work force.

Having come of age in the era of social media, we’re accustomed to daily comments, reactions and encouragement from our peers in our personal lives. When we don’t see their equivalent at work, especially when we hit important milestones, we wonder why.

To be clear, compensation and recognition are just two examples of the tools you have at your disposal to reverse employee unhappiness. In working with customers like Dogeared, Delta Dental, Seamless and Virgin America, we’ve learned that there’s no single solution that works universally because every company is unique.

That’s what makes “Are our employees happy?” one of the most important business questions your executive team can answer.