Stress and risk – the secret of happiness

November 13, 2009

Very interesting article on the Financial Times online by Luke Johns, the chairman of Channel 4 and who also runs Risk Capital Partners, a private equity firm.  A recent debate took place on what society wants post recession. Some panelists emphasised the importance of promoting happiness rather than material wealth as a true measure of human progress.  One view put forward was that public policy should demotivate wealth creators with higher taxation because they exacerbate the race for status.

Johns raises the view that entrepreneurs are the principal engine that can create jobs.  To deny them the opportunity to create wealth denies society the opportunity to combat unemployment.  This article raises an interesting debate about the balance between protecting against rampant excess (as the financial industry is perceived to have succumbed to) and the need to allow individuals reap the reward for risk.

Johns end with a quote from Teddy Roosevelt, the former US president: “Far better it is to dare mighty things, to win glorious triumphs, even though chequered by failure, than to rank with those poor spirits who neither enjoy much nor suffer much, because they live in a grey twilight that knows not victory nor defeat.”

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What comes first – Satisfaction or Performance?

October 11, 2009

A very interesting article was published  recently on the TheStreet.com –  “Satisfaction Does Not Boost Performance”.  The article outlines the outcomes from a number of studies that overwhelmingly show that satisfaction programs will not only help business performance, they may not even improve satisfaction.  Some key points from the article:

  • In 1976, “The Handbook of Industrial/Organizational Psychology,” summarized 3,300 job satisfaction studies dating back to 1955 and found, “… negligible relationships between satisfaction and level of performance or productivity.
  • In 2009, Ed Lawler of the University of Southern California and author of “Talent,” said definitively: “Satisfaction does not lead to performance; it is caused by it.”
  • In a 2009 CFO Magazine article, Richard Beatty of Rutgers University, stated that “HR people try to perpetuate the idea that job satisfaction is critical, but there is no evidence that engaging employees impacts financial returns.”

Many companies see satisfaction as an input to performance not recognizing that it is an output. By aiming to seek performance from satisfied employees (rather than realizing that high performing employees tend to be satisfied) most such programmes leave performance to chance.  It is based on flawed logic seeking the simple solution.  Organisations that try to create one size fits all engagement programmes often end up with very happy employees that may have no desire to perform.

The final line from the article sums it up. “Find the right people, put them in roles that use their talents and give them support to be successful. Happiness will take care of itself.”


Employee Engagement; improving the bottom line

September 29, 2009

A common (and often correct) criticism of the Human Resources (HR) function and HR initiatives is that they are not business minded.  Other functions (such as Finance or Operations) criticise that HR gets in the way of running the business.  While this is not always correct, HR needs to ensure that it presents these initiatives in a business manner with a view to how they will impact upon the ability of the organisation to achieve their strategic objectives.

There are opportunities for HR to improve organisational performance through focussing on systems and interventions that improve employee engagement.  Research by Gallup has shown that, in world-class companies, the ratio of engaged employees to disengaged employees is 8:1.  In average organisations, the ratio is only 1.5:1.  The research also shows that engaged organizations have 2.6 times the earnings per share (EPS) growth rate compared to organizations with lower engagement in their same industry. (Note 1)

Similar research shows from Watson Wyatt determined that companies with the most effective employee communications programs had an average total shareholder return of 29.5 percent while those with least effective programs had a negative 15 percent return. (Note 2)

Engagement programmes are not an end in themselves.  However, they are a starting point where HR can make a direct impact in the business.  Talking in the language of the rest of the business will improve how HR is viewed and will lead to an increase in support for other HR intiatives.

Note 1: Employee Engagement: What is your engagement ratio? Gallup Consulting, 2008

Note 2: Watson Wyatt, Effective Communication: A Leading Indicator of Financial Performance – 2005/2006 Communication ROI Study