Happy man

The pursuit of happiness

Are you happy at work? Well, management reckon you should be.

A growing body of employment advisers reckons it's time for workers to get happy. Does happiness translate to a more productive workforce? Intuitively, you would expect it to, although in many industries fear remains an equally powerful motivator, particularly when recessions hit and the economy joins in.

Recent research suggests that the power of fear is over-stated and the worst thing that companies can do for employee morale long-term. You might get a little uptick from the share price but, let's face it, this is the recession where nobody is much concerned with what the City thinks. Listening to the financial community for the past decade has been tremendously damaging to the average wallet.

At the beginning of the year, as redundancies loomed, the Chartered Institute of Personnel and Development (CIPD) claimed the cost of laying off staff could be more than £16,000 per worker due to falls in productivity, morale and a rise in employee turnover as those who could get other jobs decided to move on.

CIPD chief economist John Philpott claims: "While making people redundant can seem one of the most straightforward ways of cutting costs, redundancy is itself a significant cost to most organisations with a number of direct and indirect or hidden costs.

"This is particularly true if redundancies are an employer's first resort in difficult times and have to be quickly reversed by renewed hiring when economic conditions improve."

Even though fear might be bad, is happiness good? In a 2006 essay commissioned by the CIPD, Nic Marks, head of the Centre for Well-Being at the New Economics Foundation, asked: "How important is it for employers to take the happiness of their employees seriously?"

Using data from the CIPD working life survey, Marks contends that happiness in general is an underrated measure - that too much time is spent on thinking about how to reduce stress. "However, recently there has been a recognition that psychology has neglected to pay enough attention to what makes for a good life - positive feelings and good functioning.

"This has led to the creation of a whole new strand of research into what is often called 'positive psychology' - positive in terms of both outcomes and interventions."

Marks called on an idea introduced by Barbara Fredrickson of the University of North Carolina called the 'broaden and build' theory of positive emotions. The idea is that positive emotions make people more resilient to setbacks and help them find new ways of doing things.

Marks argued: "For organisations, there are some indications that the 'broaden and build' theory also operates at a team or system level. Research into the functioning of teams highlights that a good balance between being supportive and being challenging broadens the creative potential of the whole team. This, in turn, builds their resources, leading directly to increased productivity, profitability and customer satisfaction."

That's the idea, anyway. Marks claimed that survey data showed a relationship between positive emotions and key performance indicators. Other indicators, such as ratings of supervisors and management had a similar relationship with emotions. So, happy employees help their bosses do better too, at least in theory.

Tackling turnover

Another reason for the happiness revolution to start now is the changing nature of employment itself. With fewer and fewer people expecting or even wanting to stay in one company until retirement, managers cannot use traditional methods to encourage them to toe the line.

It's a process that has taken some time to come to the fore and is changing the way that researchers into employment look at the situation. Writing in the British Medical Council's journal Occupational and Environmental Medicine in 2002, Professor Cary Cooper, then at the Manchester School of Management and now at Lancaster University, claimed that traditional models of employment, and measures for determining employee happiness - or, conversely, strain - were not really working anymore.

The idea of the job demands-control model developed in the 1970s at a time of industrial strife and retrenchment. The workplace became a battlefield over control between employer and employee. The response from employment was to focus on security, and more workers moved onto short-term contracts. The psychological contract became the idea of "reasonably permanent employment for work well done". Now, we see a move towards the virtual company, when many of the staff are contractors and are not employed in a traditional sense at all.

Job demands-control model

"The job demands-control model, which is based on organisational environments and structures of the past, is already beginning to break down as we enter the era of flexible and contingency working. Job security may be going but control by the individual over their own destiny is increasing. This will have profound effects on society," Cooper concluded.

With more control over their careers, workers start to put happiness into the equation of whether they stick in a job or move on. An online questionnaire run by the NEF asks a few simple questions about job satisfaction and stress provides scores on five different areas. One of them is just how good the employer is at keeping you happy - the subtext being that you either need to encourage the employer to change their ways or move on. The problem with happiness as a goal in the workplace is that it is hard to quantify and does not necessarily capture all the emotions of whether someone is satisfied in their role.

As the old social-contract model broke down, employment psychologists started to analyse the unwritten agreement between employer and employee. According to the CIPD: "The psychological contract... looks at the reality of the situation as perceived by parties, and may be more influential than the formal contract in affecting how employees behave from day to day... It may not - indeed in general it will not - be strictly enforceable."

Professor David Guest of King's College, London argues that the contract revolves around employees' sense of fairness and that the employer is honouring a deal between them.

But, perhaps more important to the employer, if the psychological contract is 'positive', then the commitment and satisfaction it engenders among staff will have a positive impact on business performance.

The positive feeling typically gets summed up into the term engagement: it's not a direct synonym for happiness but perhaps does a better job of capturing what employers want to know: how focused are staff on the work?

By using engagement as the measure, it's possible to introduce other elements, such as social exchange theory, which is a way of describing how engagement may work in teams. Social exchange theory works on the notion of obliged reciprocity - you can look upon it as a jargonesque way of saying manus manum lavat or "you scratch my back...".

It works on the idea that people are good at recording social scores and are inclined to return favours. Over time, reciprocal interaction can build into trusting and loyal commitments, although it tends to imply that these commitments are little more than the sum of all favours.

Measuring employee engagement

As with its fluffier cousin, happiness, quantitative research into employee engagement is fairly rare, although organisations such as the CIPD as well as researchers have conducted surveys in recent years.

In 2004, International Survey Research (ISR) conducted a survey across industries internationally. Perhaps not surprisingly, engagement varied from nation to nation with developing countries typically scoring higher. However, a 2004 Gallup survey found engagement in Thailand, for example, to be very low. Just 12 per cent of the workforce was considered to be 'engaged'. The UK is also reported to have a largely unhappy workforce, although employees do seem more engaged than the Thais, with 35 per cent of people engaged overall according to a survey conducted by Catherine Truss and colleagues from Kingston University for the CIPD.

The CIPD commissioned follow-on research that included case studies of various types of company. The first phase finished in late 2008 - the second phase to be completed this year will lead to a set of recommendations for organisations.

One of the first-phase case studies looked at PlasticCo, a manufacturer that wanted to move from top-down management styles to more participative approaches. Early surveys suggested the company already had a high level of engagement: with 60 per cent sitting in that category. But there was concern that only 7 per cent sat in the very engaged category and 3 per cent felt they had a low level of engagement.

Managers identified one issue quickly. Problem-solving tended to be reactive - things were dealt with only once they had become problems. Control and responsibility tended to be concentrated with a few managers who changes on an ad hoc basis with very little encouragement from managers for shift workers to become involved.

With little influence, workers tended to ignore issues until they were told by managers about them. Despite this, the survey found that employees did care about their work and wanted to do a good job.

It was found that engagement and productivity at PlasticCo did not necessarily correlate. A factory with comparatively low engagement performed very well - the researchers felt that this may be due to the installation of new production equipment, which workers felt disenfranchised them.

The company also promoted from within. One manager said: "I started 15 years ago driving a forklift. I can see that it's a very encouraging business for developing people and I'm a prime example. I've obviously gone through various roles within our business to get to a senior management position."

Among the companies to survey engagement is Gallup, which since 1997 has used its Q12 list of questions to look at the engagement of millions of workers. The company claims that high scores on the Q12 lead to lower turnover of employees, better productivity and even greater customer loyalty.

From its own WorkTrends surveys on employee attitudes, the US-based Kenexa Research Institute has derived a formula for engagement.

"Through analysis of the WorkTrends data, we've identified four primary and universal drivers of employee engagement. Employees are engaged by leaders who inspire confidence in the future; managers who respect and appreciate their employees; exciting work that employees know how to do; and employers who display a genuine responsibility to employees and communities," claims Jack Wiley, executive director at Kenexa.

"Organisations can make changes to align with these critical drivers. Doing so makes good business sense because it not only improves employee engagement but also drives higher quality and customer satisfaction, revenue growth, and the company's profitability. Time and time again we see that an engaged workforce delivers superior business results," Wiley concludes.

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