The mental state of the workers in any given group working toward a common goal (such as increasing sales or customer satisfaction) often measured by happiness, willingness to work, confidence in themselves and administration.
Morale can be improved with positive reinforcement such as a raise, time away from the office, or free stuff like toys, food or beer. The effects of negative reinforcement can have an undetermined effect.
Just for the record, improving morale is a Good Thing.
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