Gallup just released a disturbing new poll that shows that 70% of workers are unhappy and disengaged at work, 18% are actively disengaged, meaning that they deliberately undermine others and that this high level of dysfunction may be costing a half-trillion dollars a year in lost productivity. The problem seems to stem from the top down as bosses and leadership are the most often cited reason for the high and expensive levels of job dissatisfaction.

According to Gallup’s CEO Jim Clifton, “Here’s something they’ll probably never teach you in business school: The single biggest decision you make in your job – bigger than all of the rest- is who you name manager.”

A Maritz poll in 2010, revealed dire worker attitudes about leaders when they determined that only 7% of workers reported that they trusted their leadership and held that same sub-basement level of trust for their co-workers.

At some point, the business community will have to make some changes to strategically include happiness as a goal of a successful organization. With this Gallup research, perhaps they can justify doing it–if not for the most noble reason that it is a moral obligation–but because of the negative effects on profitability. Oh well, however it gets done.

Some leaders I’ve talked to over the years have expressed exasperation that they’ve tried carrots in the form of bonuses and perks but it has made little difference in the morale. It’s not surprising. Gifts are nice, but in a dysfunctional workplace, it may be the equivalent of applying a band-aid when what is needed is surgery and antibiotics.

To reverse attitudes in the workplace, the single best action is hiring joyful, compassionate leaders who are focused on employee strengths. According to the Gallup research, it is estimated that a strengths-focused leader can cut disengagement levels by 50%.

The reason focusing on strengths is so critical? It provides workers with what they crave beyond money, perks, promotions or job security, and that is recognition. Earlier research by Gallup presented in Tom Rath’s book, How Full is Your Bucket? discovered the startling figure of 65% of polled workers reported receiving not a single instance of recognition in the previous 12 months. Wow!

To be clear to those who might think focusing on strengths would be tantamount to making the workplace a giant T-ball game where everyone gets a trophy, being strengths-focused is not the same as being weakness-blind. Problems need to be addressed and workers need to be accountable. It is instead a question of ratios. According to marriage expert, Dr. John Gottman, a 5 to 1 ratio of positive to critical communication exchanges is a good predictor of a long and happy marriage. That same principle has been measured in the workplace and suggests that a minimum 3 to 1 ratio is consistent with a happier and more successful work environment.

Finally, a word about perks, gifts and incentives. They don’t really work very well for very long. There’s nothing wrong with prizes and incentives, and in a healthy workplace, they can add an element of enjoyment, but for a variety of reasons, they do little to remedy morale problems. If you want to change the workplace, change how recognition is given, how workers are included and how individuals are assured that they are cared about. And when resources are spent on a reward, make it an experience rather than a thing. An outing, a talent show or a speaker (hint hint), goes a much longer way to fostering goodwill than a check and it lasts much longer, too.

In a nutshell:

Hire or at least train managers to be joyful, compassionate and strengths-focused

Give recognition! Thanking people for a job well done is as important as paying them to do it.

Include workers in the communication loop. A sense of control and belonging engages people and gives them a sense of being part of something bigger than themselves.

Show that you care. Workers leave bad relationships, not bad jobs. Knowing about their families, inquiring about their quality of life makes them feel connected and that is the basis of loyalty and job happiness.

When you do give a perk, consider the value of a joyful shared experience over cash or a thing.

Dave Caperton is a speaker whose program: 30 Days to a Happier Workplace teaches critical steps that both managers and workers can take to positively transform their culture. He is also the author of Happiness Is a Funny Thing.