2. Happy employees provide free marketing.

We've all heard friends complain about boring jobs, lousy hours and incompetent bosses. Most business owners obviously prefer to limit unpleasant critiques. If provided with a positive work environment, employees will likely reflect that attitude when talking about the company. Every time employees explain the perks of their job to their family members, friends and colleagues, the company receives free word-of-mouth advertising.

3. Happy employees are loyal.

When employees are happy with their careers, turnover rates are much lower. This can save business owners a great deal of the time, money and headaches that generally come along with new employee searches. Furthermore, by retaining happy employees, business owners can build an army of industry experts that the competition will envy.

Three cost-effective ways to improve employee morale

Now that you know why happy employees are so valuable, you might be wondering what business owners can do to ensure their happiness. Of course business owners can't improve every aspect of their lives, but there's something to be said for a boss who makes the effort to make their professional lives easier to manage. 1. Recognize employees for a job well done. This should go without saying, but business owners should always recognize employees for their hard work. Running a business under the theory that employees are already being compensated for their performance is no way to respect them. Business owners don't have to show their appreciation by spending money on extravagant prizes, but they should take the time to write a personal note, or at least send an encouraging e-mail, whenever an employee exceeds expectations. 2. Provide lunch at least once each month. The surety bond company I work for sponsors a "Lunch & Learn" event on the first Thursday of every month. The marketing, sales and processing departments all come together with management to discuss relevant changes in the market over lunch. Catering lunches for large companies can be expensive, but a few cost-effective options include deli sandwiches, pizza or buffet-style Mexican options. Furthermore, local restaurants will usually give you a pretty good deal as a way to attract a recurring catering client. Just make sure you don't exclude the health considerations of any employees when planning a catered meal. 3. Plan social events outside of work. Business owners should encourage employees to get to know each other on a more personal level outside of work. Bonding with fellow coworkers can improve their overall experience at work because they'll feel more comfortable working with people they know. This doesn't mean business owners have to pay for a huge dinner outing or pick up an entire bar tab. Planning an office outing could be as simple as e-mailing employees about an impromptu office happy hour after a long week of work. Given the fledgling economy, far too many people are working jobs they hate for employers they don't much care for. If business owners want to attract, and then keep, hard-working employees, they must take steps to improve the work environment. Managing happy employees is much easier than managing those who feel unsatisfied, and companies with happier employees can better serve their customers. Investing time and money into employee happiness now will be well worth the return later on.