Why Companies with Happy Employees outperform their Competition on the Stock Market

Edmans_SatisfactionDo happy employees affect a company´s bottom line (in a positive way)? What seems like no-brainer is actually quite hard to detect in real life. Studies in Positive Organizational Scholarship have been able to show that happy workers tend to be more productive, but this relation has been mostly detected for individuals, not on the “systems level”.

Alex Edmans, finance professor at London Business School, has been busy trying to change that. He created a hypothetic stock portfolio comprised of the “100 Best Companies to Work For in America” (as a proxy for organizations that treat their employees exceptionally well) and tracked this for more than 20 years. His conclusion: after controlling for confounding variables such as company size and industry, employee-centric companies significantly outperform their competitors year after year.

What more, he also seems to able to detect a causal relationship. Over the years, some firms drop out of the “Best Companies” ranking, while others obviously make it for the first time. Edmans finds that corporations begin to outperform their competition – several years after they´ve managed to be listed on that index.

Here are Edmans´ original research papers on this fascinating topic:

Alternatively, you can read a summary in this piece on The Atlantic: Happy Workers, Richer Companies?

Or, you can have him explain it to you personally via his TEDx talk. Share and enjoy!

 

Alex Edmans´s talk will also be posted as No. 48 on my topical list of Positive Psychology-infused TED talks, Michael Norton´s is already there.

Job, Career, or Calling? It´s the Attitude, Stupid!

The other day, for a German news outlet I regularly blog for, I wrote something on Amy Wrzesniewski´s research on our orientations towards work – so why not do it here as well.

Conventional wisdom tells us that there are more meaningful (e.g., nurse) and less meaningful (e.g., cleaner) jobs out there. Yet, Wrzesniewski and her colleagues found that the level of meaning (or purpose) we can derive from our work is only partly dependent on the type of job per se. The way we think (or feel) about what we do seems to have more importance in this matter. The researchers describe three separate (but not mutually exclusive) orientations that people can take on vis-à-vis their occupation: a) job; b) career; c) work.

Work Orientation: Job

People in this category tend to perceive their work as a means to an end. They work for the paycheck/benefits to support their life outside of work. Accordingly, they prefer jobs which do not interfere with their personal lives and typically do not have a strong connection to the workplace or their job duties.

Work Orientation: Career

Individuals displaying a “career” orientation are more likely to focus on job attributes related to prestige and success. They will be foremost interested in opportunites for upward movement, e.g., receiving raises and titles, and the social standing that come along with that.

Work Orientation: Calling

Employees with a “calling” orientation typically describe their work as an integral part of their lives and their identities. Accordingly, they feel that their careers are a form of self-expression and fulfillment.

The crucial point is: Wrzesniewski and her colleagues found that individuals displaying a “calling” orientation are more likely to be highly engaged – and satisfied with their work and their lives in general. And while there are types of jobs that indeed yield a higher percentage of employees displaying this attitude, the researchers were able to show that each orientation frequently appears within all walks of life.

Typically, this involves being able to “see the big picture” (and thus, leadership comes into play). E.g., a cleaner in a hospital setting might say that she helps to “save lives” (instead of, e.g., cleaning the beds) because she knows that she helps to kill off bacteria that otherwise might infect and kill the patients.

Now, I don’t know how the people displayed in the following video view their work – but they´ve surely turned it into something extraordinary – even though most of them seem to work in rather ordinary jobs. Enjoy!

German Workforce is especially stressed out. One more reason to bring Positive Psychology to Deutschland

Stress - Germans - ADPThe European branch of HR consulting firm ADP has surveyed some 11,000 employees across eight countries of the continent (link to press release). One of the striking results:

Despite (Or maybe: Due to?) a distinctly flourishing economy which displays an unemployment level at its lowest since the time before the reunification, Germany’s workforce seems to be utterly stressed out. 50% of workers report they are “frequently stressed” at work. That puts us in second place behind the Polish. On the other end of the continuum, stress levels are the lowest in the Netherlands*. Now what is happening here? Are my fellow countrymen really all that stressed? Or is just more accepted, or even en vogue, to report that one is stressed out?

Because the funny thing is: Several other studies show that Germans work considerably less hours per year compared to almost any other nation. Most of us can take between 24 and 30 days of vacation, there’s countless bank holidays – and working hours are pretty acceptable on average (see some more details here). So, by any means, this should be a workers’ paradise. Still, 50% heavily complain about the status quo.

My guess: it’s a question of mindsets, of attention, and focus. I’ve already written several posts on how German culture has an inclination towards “loving the negative”, and how we are overly anxious on average (e.g., how German lacks some positive words; or how studying Positive Psychology to me seemed like a course in being Un-German). Feeling overly stressed at work when we really live in a sort of land of milk and honey seems like a relative of “German Angst” or “Weltschmerz”.

But beware, my fellow countrymen: Positive Psychology will definitely come to a place somewhere near you. Even if I have to do it all by myself…

 

*According to the cliché, that must be because of all that dope they smoke over there…

Should you really “Follow your Passion“? Yes, but…

StinkefingerOne of the most common pieces of self-help advice is to “follow your passion”. Countless authors propagate this is the surefire way to lasting success and happiness at work (please also read Following your Bliss vs. following your Blisters).

Research suggests that, on the one hand, this may be good advice, but that things are not as simple as they seem, on the other hand. According to Robert J. Vallerand and his colleagues, there is a distinction between what they call harmonious vs. obsessive passion. In general, they define passion as

a strong inclination toward an activity that people like, that they find important, and in which they invest time and energy. Thus, for an activity to represent a passion for people, it has to be significant in their lives, something that they like, and something at which they spend time on a regular basis.

They further propose that

there are two types of passion, obsessive and harmonious, that can be distinguished in terms of how the passionate activity is internalized into one’s core self or identity.

In detail:

Harmonious passion results from an autonomous internalization of the activity into the person’s identity. An autonomous internalization occurs when individuals have freely accepted the activity as important for them without any contingencies attached to it. This type of internalization produces a motivational force to engage in the activity willingly and engenders a sense of volition and personal endorsement about pursuing the activity. Individuals are not compelled to do the activity but rather they freely choose to do so. With this type of passion, the activity occupies a significant but not overpowering space in the person’s identity and is in harmony with other aspects of the person’s life.

Whereas:

Obsessive passion results from a controlled internalization of the activity into one’s identity. Such an internalization originates from intrapersonal and/or interpersonal pressure either because certain contingencies are attached to the activity such as feelings of social acceptance or self-esteem, or because the sense of excitement derived from activity engagement becomes uncontrollable. Thus, although individuals like the activity, they feel compelled to engage in it because of these internal contingencies that come to control them. They cannot help but to engage in the passionate activity. The passion must run its course as it controls the person. Because activity engagement is out of the person’s control, it eventually takes disproportionate space in the person’s identity and causes conflict with other activities in the person’s life.

Vallerand as his coworkers have developed a scale to assess whether a certain aspect in our lives is a harmonious or an obsessive passion, e.g., for harmonious passion:

  • This activity allows me to live memorable experiences.
  • This activity reflects the qualities I like about myself.

And for obsessive passion:

  • I have difficulty imagining my life without this activity.
  • I am emotionally dependent on this activity.

After having developed and validated the scale, they evaluated some of the consequences of having harmonious vs. obsessive passion in our lives. Here’s their synopsis:

Harmonious passion was positively related to positive affective and cognitive (concentration and flow) experiences and to the absence of negative affect during and after activity engagement. In addition, harmonious passion was unrelated to negative affect and cognition when people were prevented from participating in the passionate activity. Conversely, obsessive passion was unrelated to positive affect and cognition during task engagement but positively associated with negative affect during and after activity engagement, as well as when prevented from engaging in the passionate activity.

Additionally, there were able to show that

the positive affect experienced during task engagement seems to spill over onto how the person feels in general in his or her life. More specifically, it appears that harmonious for the activity leads to increases in general positive affect over time even when the person is not directly engaged in the activity.

So, in the future you might want to be a little more careful when giving someone the advice to follow their passion. Only those that are intrinsically motivated and really fit it with the “overall system” of that person will lead to growing satisfaction and a fulfilled live.

Research: Linking “Positive Practices” to Organizational Effectiveness

Stones - GrowthThere are tons of books out there explaining how to use Positive Psychology for boosting the performance of organizations. But the truth is: from a scientific point of view, we really do not know very much about this link. There’s abundant research on the connection of positivity and individual performance – but it remains by and large unclear if this influence on the micro-level yields any outcomes on the macro-level. Of course, it seems to make a lot of sense to infer this relationship – but where’s the research?

A very worthwhile attempt is offered via an article named Effects of positive practices on organizational effectiveness by Kim Cameron and his colleagues. Based on prior research, they developed an inventory of what they call “positives practices”. According to the authors, these can be described as

behaviors, techniques, routines […] that represent positively deviant (i.e., unusual) practices, practices with an affirmative bias, and practices that connote virtuousness and eudemonism in organizations.

In order to do so, they administered a large number of questionnaire items to diverse groups of people. Afterwards, they clustered the answers in order to find common themes and pattern in the data. They found that all positives practices could be categorized into six distinct subgroups:

Caring

People care for, are interested in, and maintain responsibility for one another as friends.

Compassionate Support

People provide support for one another including kindness and compassion when others are struggling.

Forgiveness

People avoid blame and forgive mistakes.

Inspiration

People inspire one another at work.

Meaning

The meaningfulness of the work is emphasized, and people are elevated and renewed by the work.

Respect, Integrity, and Gratitude

People treat one another with respect and express appreciation for one another. They trust one another and maintain integrity.

Having found that structure, they gathered data from several divisions of a financial services company and one operating in the healthcare industry. They asked employees to assess their respective business unit (= the organization as a whole, not individuals) with regard to being a place that possesses the aforementioned attributes. Additionally, they obtained data on several objective and subjective key performance indicators of those business units – and finally looked at the connection of the presence of positive practices and organizational effectiveness measures. Here´s what they´ve Cameron and his colleagues found (in their own words):

In Study 1, positive practices in financial service business units were significantly associated with financial performance, work climate, turnover, and senior executive evaluations of effectiveness. In an industry in which positive practices might be assumed to carry little importance, organizational performance was substantially affected by the implementation of positive practices.

In Study 2, improvement in positive practices over a two year period in health care units predicted improvements in turnover, patient satisfaction, organizational climate, employee participation in the organization, quality of care, managerial support, and resource adequacy.

 In the course of arguing why positive practices should have a performance-boosting effect, the authors conclude that

cognitively, emotionally, behaviorally, physiologically, and socially, evidence suggests that human systems naturally prefer exposure to the positive, so it is expected that organizational performance would be enhanced by positive practices.

Of course, Cameron et al. urge us to be careful not to make strong inferences from their results:

The results of these two investigations, of course, are suggestive and not conclusive.

Still, their work is one of the first and still very rare pieces of research that links positive organizational behavior to organizational effectiveness. I am very much looking forward to scholars who pick up on these findings and expand our knowledge on the positivity-performance link.

22 Positive Psychology-infused Articles every (HR) Leader should know

Positive Organizational ScholarshipPositive Psychology has a lot to offer for leaders, especially those people taking on a leadership role in human resources and people management. In this post, I´ve gathered 22 research articles infused by Positive Psychology (more specifically: Positive Organizational Scholarship) that, in my opinion, have tremendous value for aspiring as well as established managers and entrepreneurs.

The topics comprise desirable attributes and personality variables such as grit, character strengths, and core self-evaluations, how to create positive relationships at work, how employee motivation is created and sustained, how to find meaning and purpose in work, and several review articles, e.g., on the connection of positive emotions and job performance. Enjoy!

P.S.
This is my 300. post since I’ve started Mappalicious about two years ago. Giving myself a slight pat on the back right now…

7 more essential Books on Positive Psychology for 2015/16

After publishing a list of 5 essential upcoming books on Positive Psychology a couple of days ago, several friendly people approached me (Thank you!) to point me towards further noteworthy books that have just been published or are already appearing on the publishing horizon (a.k.a. on Amazon for pre-order). So, if you´re looking for further entertainment, enlightenment, or just plain Positive Psychology science, here you go. There´s books on women´s careers, rising strong after setbacks, good work and great organizations, world-changing individuals, and much more (click to enlarge the image). Enjoy – and share the good news!

Positive Psychology Books 2015 & 2016

Positive Psychology books that have already been published

Brené Brown: Rising Strong. Brené Brown is a professor at the University of Houston Graduate College of Social Work and author of the No. 1 New York Times bestseller “The Gifts of Imperfection”. About the book:

“It is the rise from falling that Brown takes as her subject in Rising Strong. As a grounded theory researcher, Brown has listened as a range of people — from leaders in Fortune 500 companies and the military to artists, couples in long-term relationships, teachers, and parents — shared their stories of being brave, falling, and getting back up. She asked herself, What do these people with strong and loving relationships, leaders nurturing creativity, artists pushing innovation, and clergy walking with people through faith and mystery have in common? The answer was clear: They recognize the power of emotion and they’re not afraid to lean in to discomfort.” 

Beth Cabrera: Beyond happy: Women, Work, and Well-Being. Beth Cabrera is a senior scholar at the Center for the Advancement of Well-Being at George Mason University and works with companies to help them create positive work environments. About the book:

“Over the course of a decade, Beth Cabrera has surveyed and interviewed more than a thousand women to gather insight into how to effectively balance career and family responsibilities. Beyond Happy: Women, Work, and Well-Being gathers essential findings and offers women proven strategies for living more authentic, meaningful lives. Through the lens of shared experience, Cabrera thoughtfully examines the challenges women face and presents a simple yet powerful model for enhancing well-being that can both improve and transform lives.”

Tom Rath: Are you fully charged? Tom Rath is a Penn MAPP alum, now a regular guest lecturer in that program, and otherwise, regularly to be found at No. 1 spots on the New York Times bestseller lists with his heavily Positive Psychology-infused masterpieces. About the book:

The book “reveals the three keys that matter most for our daily well-being, as well as our engagement in our work. Drawing on the latest and most practical research from business, psychology, and economics, this book focuses on changes we can make to create better days for ourselves and others. Are You Fully Charged? will challenge you to stop pursuing happiness and start creating meaning instead, lead you to rethink your daily interactions with the people who matter most, and show you how to put your own health first in order to be your best every day.”

Barry Schwartz: Why we work. Barry Schwartz is a professor at Swarthmore College, author of the highly-acclaimed The Paradox of Choice and a regular New York Times contributor, and a regular guest lecturer in the Penn MAPP program. About the book:

“We’ve long been taught that the reason we work is primarily for a paycheck. In fact, we’ve shaped much of the infrastructure of our society to accommodate this belief. Then why are so many people dissatisfied with their work, despite healthy compensation? And why do so many people find immense fulfillment and satisfaction through “menial” jobs? Schwartz explores why so many believe that the goal for working should be to earn money, how we arrived to believe that paying workers more leads to better work, and why this has made our society confused, unhappy, and has established a dangerously misguided system.”

Robert E. Quinn: The Positive Organization: Breaking Free from Conventional Cultures, Constraints, and Beliefs. Robert E. Quinn is a professor at University of Michigan´s School of Business and author of “Deep Change”. About the book:

“Beholden to accepted assumptions about people and organizations, too many enterprises waste human potential. Robert Quinn shows how to defy convention and create organizations where people feel fully engaged and continually rewarded, where both individually and collectively they flourish and exceed expectations.”

Upcoming books on Positive Psychology

Amy CuddyPresence: Bringing Your Boldest Self to Your Biggest Challenges. Amy Cuddy is a professor at Harvard and best known for her research on body language and “power-posing” (watch her TED Talk here). About the book:

The book “shows us we need to stop worrying about the impression we’re making on others, and instead change the impression we’re making on ourselves. Cutting-edge science reveals that if we adopt behaviors reflecting power and strength, we liberate ourselves from the fears and doubts that obstruct us. By redirecting our thoughts, actions, and even physiology, we free ourselves to be our best.”

Adam M. Grant: Originals: How Non-Conformists Move the World. Adam Grant is a professor at Wharton Business School, author of the immensely successful book Give and Take, and regular guest lecturer in the Penn MAPP program. About the book:

“Using surprising studies and stories spanning business, politics, sports, and entertainment, Grant explores how to recognize a good idea, speak up without getting silenced, build a coalition of allies, choose the right time to act, and manage fear and doubt; how parents and teachers can nurture originality in children; and how leaders can fight groupthink to build cultures that welcome dissent.”

Want to be the Boss? Be Happy, Science says, and you´ll be a Good Leader

Happy BossFor a moment, think about a leadership person (a.k.a. boss) in your life that you really liked working for. How could that person be described, what kind of personality did he/she convey? Was he/she more the grumpy moaner – or rather an upbeat “Sunday´s child”?

Turns out that this question is not only about likeability but also about leadership effectiveness. In a recent meta-analysis* published in The Leadership Quarterly titled Is a happy leader a good leader? A meta-analytic investigation of leader trait affect and leadership, Dana L. Joseph and her colleagues found that – broadly speaking – happier leaders also tend to be more effective leaders. In the words of Joseph and her colleagues:

Our analyses show that leader trait affectivity, particularly leader trait positive affect, plays a significant role in predicting leadership criteria.

A happy boss is a good boss.

They also find that the relationship between leader happiness and effectiveness may not be a direct one. Rather, it seems that happy bosses predominantly engage in a special leadership style that has been coined transformational leadership. As opposed to more traditional leadership styles (telling people what to do and controlling them; management by objectives etc.), transformational leadership, according to Joseph et al., consists of the following dimensions:

  • idealized influence, or the extent to which a leader displays conviction and behaves in a way that causes followers to identify with him/her;
  • inspirational motivation, which involves communicating optimism and challenging followers to meet high standards;
  • intellectual stimulation, or the extent to which a leader takes risks, challenges assumptions, and encourages follower creativity;
  • and individualized consideration, which is characterized by follower mentoring, attending to follower needs, and listening to follower concerns.

Now, does that sound like the behavior of a boss we´d all like to work for? My answer is a clear yes. And it predominantly starts with that person´s happiness.

* A special type of study that statistically aggregates previous study results to provide an overview of a specific branch of research.

Want to stay on top of Positive Psychology in Organizations? Here are 3 Reviews for you (PDF)

Happy ManagersBeing a manager in my day job, I am foremost interested in the application of Positive Psychology in organizations – and the science exploring these issues, Positive Organizational Scholarship. While there are a couple of good trade books on the subject, I also like to read original research papers which is always a great source for new ideas to blog about. As there are so many articles out there, the question is: Where should we start?

The (or at least my) answer is: Always start with review articles, and, if there are any, meta-analyses. Both are tremendously valuable in order to get an overview of a discipline in the shortest amount of time – as the authors first scan the extant data-bases for relevant articles, and then organize and summarize the current body of research. It´s a lot of hard work which is usually rewarded by receiving frequent citations over time. So, thanks to all those diligent, hard-working review writers out there!

Here´s a list of three reviews on Positive Psychology in organizations for you – the links will lead you to the respective PDFs. Enjoy!

Do you want to find more Meaning in your Work? Here´s where you should look for it – according to Science

Feeling that your work has a deeper meaning or purpose has many positive consequences, for yourself as well as your organization: For instance, higher levels of engagement, job satisfaction, and (individual) performance. Therefore, researchers as well as practitioners have tried to find the antecedents of meaning in work for quite some time. Yet, it turns out that it´s a pretty complicated issue. A job that yields a lot of meaning for one person might feel totally meaningless for another individual.

Where should we look for the source of meaning in work? Is it something that can be found within ourselves? Does it depend on the type of job? Or is it determined by some characteristics of the organization? The answer is: very likely, all of those factors do play their role – and in part, meaning depends on the interaction between the characteristics of the person and those of the job.

In an empirical study published in the Journal of Positive Psychology, Tatjana Schnell and her colleagues surveyed some 200 people from different occupational backgrounds. In short, here´s what they´ve found:

When looking at all factors in a single model…

  • the strongest predictor of meaning in work is job significance (= the perceived implications one’s deeds have on an organizational, societal or even global level);
  • the runner-up is the organization´s socio-moral climate (= a culture that fosters a) open confrontation with social conflicts and problems; b) reliable appreciation, care, and support; and  c) participative collaboration);
  • third place goes to the organizations´s self-transcendent orientation (= commitment to a higher purpose, combined with a concern for ethics and integrity);
  • and the last (but not least) impact comes in the form of work-role fit (= a perceived match between personal identity and actual job activities).

All in all, those attributes are able to predict almost 50% of the variance pertaining to participants´ level of perceived in meaning in work (that´s quite a lot in the context of psychological research). To put in everyday language:

We find meaning in our work when we frequently have the opportunity to perceive the (positive) outcome of our individual contribution, when our organization promotes a culture of fairness, trust, support – and authentically commits to some “greater good”, and when we feel that our job provides us with lots of opportunities to use our unique talents and matches our personal values.

In another fascinating article, Brent D. Rosso et al. try to provide an integrative model that compasses (more or less) all known factors that influence perceived meaning in work. Personally, I think it´s a very insightful (and: beautiful…) piece of research – and I will reread it frequently. I think, it is pretty self-explanatory, so I´ll leave it up to you to make the most of it.