Fun is transformational. You see it in the best team building outings: A corporate group shows up for a team building event after a long day of meetings, and they are tired, grumpy, and deflated. They grouse, “What are we doing here? I could be back at the office working.”

Then, a stimulating team-building activity exposes them to an unusual situation and encourages them to interact in new way. The change is noticeable at the finish line. They’re excited, they’re laughing and they’re teasing each other. You can now see the transformational power of fun and the power of happiness.

And that happiness can return dividends back at the office. “By and large, happy people are more creative and more productive,” says Daniel Gilbert, author of “Stumbling on Happiness,” in an interview with the Harvard Business Review.

Happiness boosts the bottom line. Harvard Business School professor David H. Maister studied 29 companies around the world to determine whether employee attitudes correlated with financial success. He found that the greater a firm’s morale, the more profitable it is. In his book “Practice What You Preach: What Managers Must Do to Create a High Achievement Culture,” Maister reports that successful companies have “superstar managers” who create fun through activities such as:

• Arranging group days out of the office.
• Doing things that surprise people.
• Offering free exercise classes, book clubs, language lessons, surprise ice cream sundaes, pinball machines and so on.
• Funding client entertainment liberally.
• Working hard and playing hard with their people.

“People like and need a release.” By regularly providing fun for employees, Maister concludes, you can “retain people and increase billability by 15 percent.”

What Drives Happiness?

So, what is the key factor driving happiness? “Happiness is the sum of hundreds of small things,” says Gilbert. The frequency of positive experiences matter more than the intensity. That’s why “the small stuff matters.”

The daily, routine interactions with your colleagues are part of that “small stuff.” Gilbert says that if he were to predict your happiness, the No. 1 thing he would want to know about is your social network.

“Happiness on the job,” notes Gilbert’s associate Matthew Killingsworth, “may depend more on moment-to-moment experiences—our routine interactions with colleagues, the projects we’re involved in, our daily contributions—than on the stable conditions thought to promote happiness, such as a high salary or a prestigious title.”

How can a team-building activity increase happiness? By fostering better relationships among employees. By creating out-of-the-office opportunities for colleagues to get to know each other better, in a setting where the stakes are low and titles are irrelevant.

Sharing a fun experience has a ripple effect: When people are having fun and laughing together, they get to know each other beyond their workplace roles. They relate to each other in different ways. They let their hair down. That bonding can build at a gathering immediately after the team-building activity, as well, when the participants have they opportunity to have conversations that aren’t about work. In this way, team-building activities spur new conversations and relatedness over drinks or dinner – and they continue at the coffee maker the next day. The connections people make go back with them to the office.

But wait! Is happiness at work overrated? What about history’s famously creative grumps, like Beethoven and Van Gogh? “I know of no data showing that anxious, fearful employees are more creative or productive,” says Gilbert. The bottom line: Leaders should invest in happiness. Just think of how happy that will make them, too.