Episode Transcript
[00:00:05] Speaker A: Hello, everyone. Today I want to talk about the world Happiness Report and the implications of this really fascinating information on business. So the way this report works, this is a group of academics partnering with Gallup that have been doing this for years, and they ask tens of thousands of people to take a very simple survey of rating their happiness on a scale of one to ten. And if you're seven, 8910, you're happy. If you're four, five, six, you're struggling, and if you're one, two, three, you're in trauma. So it's a range of recommended answers, but basically it's a number and you're everything from I'm in a completely a catastrophe situation, like I might be in the middle of a war and I'm about to get killed, all the way up to I'm completely self fulfilled and I'm a perfectly happy human being. And what the research this year found, I've been looking at this data for a long time, is a steady decline in happiness in the United States. I'm only going to talk about the United States because I live here, because every country's got its own story. Finland always rates number one. We have finnish relatives and I talk to them about this all the time and they say there's all sorts of things about Finland that are very interesting, but they always say to me, well, our expectations aren't that high. We're very happy because we're actually very pleasantly surprised with the way our lives are. And I think in the United States we have very high expectations of everything. And that's a little bit of the pioneering spirit we have here. But anyway, that's a surprise that the number keeps dropping. This year, the United States is the 23rd most happy country. It's gone down a lot. The number is 6.76.7, is in the struggling range. So we're not a generally happy culturally climate in the US the way we have been in the past. So that's number one. I'm not going to make a big deal about why that is. You all know why that is. It's many, many things going on here, but I think the more interesting thing to me is what does this research show you about companies and work? Now, the way they compute the analysis is there are six statistical contributors to these happiness ratings. So for all of the countries, they analyze these analysts, and there's a lot of people who work on this. It's actually a very significant group of academics. They look at a whole bunch of demographic and economic factors in each country that may or may not contribute to happiness.
[00:02:46] Speaker B: And they've essentially concluded after many years.
[00:02:49] Speaker A: That there are six correlated factors. The one that is the most correlated to happiness is your sense of social support in your life. Do you have friends? Do you have people you can talk to? Do you have relationships?
[00:03:03] Speaker B: Do you have family?
The second most correlated driver of happiness.
[00:03:10] Speaker A: Is your perception of corruption. Your perception of is the country or system that I live in corrupt? That is about a third as important relative to happiness as social support.
[00:03:23] Speaker B: But social support is very, very high.
[00:03:26] Speaker A: The third correlated factor is your sense of freedom. Can you make life choices that are relevant to your interests and needs? Can you put your kids to school? Can you buy a house? Can you go to the store you want? Can you wear what you want? Can you behave the way you want? Et cetera? That scores significantly high and pretty close.
[00:03:50] Speaker B: To the perception of corruption.
[00:03:53] Speaker A: The next level of driver is wealth. Wealth is very low. Actually, wealth only contributes around 10% to your level of happiness. And most of you know the reason for that is if you don't have enough money, it's very bad and you're very unhappy. And I had periods of time in my life when I didn't have a lot of money. And I remember how frustrating and difficult life was. But when you reach the saturation level or the hygiene level of wealth, you.
[00:04:24] Speaker B: Don'T get significantly happier.
[00:04:27] Speaker A: Those of you that have a lot of money or have a lot of.
[00:04:29] Speaker B: Assets, you know this.
[00:04:31] Speaker A: And sometimes having more money makes life more complicated. So that only contributes 10%, but it.
[00:04:37] Speaker B: Does have a contribution.
[00:04:38] Speaker A: I mean, for example, in Finland, if you compare the GDP per capita in Finland to the GDP per capita in.
[00:04:44] Speaker B: The United States, it's almost 35% lower.
[00:04:47] Speaker A: Yet they are significantly happier. So you obviously can think about what that means. The next issue is what they call generosity. Do you live in a country or.
[00:05:00] Speaker B: Basically a community where people are generous.
[00:05:04] Speaker A: They help each other, they give each other gifts, they take care of each other. If somebody falls down, you help them.
[00:05:10] Speaker B: Up, et cetera, that contributes 8%, which is almost as much as wealth.
[00:05:15] Speaker A: And then the very, very least correlation with happiness is your health, which is very strange, but I kind of understand it. It's only about one to one and a half percent life expectancy. Life expectancy is probably, my guess is more an outcome of happiness than a driver of happiness. If you're happy, you probably do live longer, but it doesn't correlate nearly as much. So again, number one is social support. Number two is the sense of trust.
[00:05:45] Speaker B: And corruption in the system. Number three is your sense of freedom.
[00:05:50] Speaker A: Number four is wealth. Number five is generosity. Number six is life expectancy or physical health. And as I mentioned earlier, they've dropped significantly for the US relative to other countries.
So the second finding of the report is also very significant.
They really spent a lot of time this year talking about the fact that in most of the developed countries, not so much in the underdeveloped countries, there's.
[00:06:18] Speaker B: A significant reduction in happiness for younger people versus older people.
[00:06:24] Speaker A: That is also strange. Everybody thinks youth is the time of joy. It's not.
And I would say in my case, of course, as I've gotten older, actually, I have gotten happier in many ways, but not always. There's things that happen when you get older that aren't so nice, too. So there's social implications and a lot of discussion about why that is in the report. I think it's worth browsing through.
[00:06:48] Speaker B: The report is very dense.
[00:06:50] Speaker A: It has very small type.
They have very long paragraphs. I wish they'd make it easier to read. So you got to really push yourself.
[00:06:58] Speaker B: To get through it.
[00:06:59] Speaker A: But it's definitely worth looking at if you're a social scientist or interested in these cultural issues. But what does it say about work?
[00:07:05] Speaker B: Well, so let me go back to.
[00:07:07] Speaker A: What it means to us, and I've thought about this a lot. So I want to share with you.
[00:07:10] Speaker B: Some things that I've talked about in.
[00:07:12] Speaker A: The past, and this has to do.
[00:07:14] Speaker B: With the book I wrote, too.
[00:07:16] Speaker A: I think you have to think about your company like a society.
People who join your company are joining this group of people. You can call it a family. You can call it a team, you can call it whatever you want. You can make it very sort of rigid and hard edged, or you can make it very soft. But they're all working together. They're spending time together. They're going through stresses. They're going through family issues. They're working on things that succeed. They're working on things that fail. They're looking at people that are great, the people that are not good at their jobs. Right. There's essentially a society within a company that's a little bit analogous to your local community, because in your local community, you all have similar objectives. We all want our streets to be clean.
[00:08:05] Speaker B: We want safety.
[00:08:07] Speaker A: We want the trash to be picked up.
[00:08:09] Speaker B: We want the power lines to work, et cetera.
[00:08:11] Speaker A: So there's a similar kind of effect inside of the society of your company.
[00:08:16] Speaker B: There is a culture.
[00:08:18] Speaker A: The culture comes from the history of your company, why it was founded and what its mission is. And usually that founding mission resides for a long, long time because it is the founding mission and the founding purpose that created the business model itself.
[00:08:37] Speaker B: And it's very hard to move away from it.
[00:08:39] Speaker A: I mean, if you really think about why we come together to form businesses, it's because we're trying to solve a.
[00:08:46] Speaker B: Problem together, and we all feel somewhat.
[00:08:49] Speaker A: Aligned towards that problem.
In our case, it's continuous improvement in.
[00:08:54] Speaker B: The human resources profession, in the mission.
[00:08:57] Speaker A: Of making companies better and perform better and better for people. Others have the mission of connecting people or improving health or creating transparency in.
[00:09:07] Speaker B: Society, whatever it may be.
[00:09:08] Speaker A: That drives the culture a lot. And it is hard to get away from that culture, even though senior leaders come and go. I think it's a really fascinating look at Boeing right now. I know Boeing to some degree, because when I graduated from college, I was recruited at Boeing, and I spent a lot of time interviewing at Boeing. And at that point in time, in the 1970s, Boeing was the most highly esteemed engineering company that I could have ever considered.
[00:09:36] Speaker B: I was a mechanical engineer and an.
[00:09:38] Speaker A: Aerospace oriented type of stuff. They were sending job offers to the top. I was a sort of a straight a student. So they were sending job offers to.
[00:09:46] Speaker B: The straight a students because they were.
[00:09:49] Speaker A: One of the top employers for engineering.
[00:09:52] Speaker B: Since then, 40, 50 years later, they've.
[00:09:56] Speaker A: Lost some of that edge.
[00:09:57] Speaker B: Obviously, you can read more about them.
[00:09:59] Speaker A: So anyway, cultures do change, but that's what brings people together into this society. Now, what we do in HR, of.
[00:10:08] Speaker B: Course, is we're working with the management.
[00:10:11] Speaker A: Team and the leaders and sometimes the line managers, and we're trying to take this culture or this mission that people write down on paper, and we're trying.
[00:10:21] Speaker B: To institutionalize it through practices.
[00:10:25] Speaker A: How are we going to do hiring?
[00:10:26] Speaker B: How are we going to do performance management?
[00:10:28] Speaker A: What are we going to do about growth? How are we going to pay people?
[00:10:32] Speaker B: What are we going to do about low performers?
[00:10:34] Speaker A: Are we going to have an internal mobility culture or an up and out culture? Are we going to be a competitive company or a collaborative company? Are we going to focus on customers, or are we going to focus on profits?
[00:10:44] Speaker B: Are we going to focus on growth.
[00:10:46] Speaker A: Or are we going to focus on.
[00:10:47] Speaker B: Quality, or are we going to focus.
[00:10:49] Speaker A: On all that stuff? Which, by the way, is hard to do. And this gets back to hundreds of decisions that we make in HR, basically with a lot of input on how we're going to implement all these people practices.
[00:11:03] Speaker B: By the way, this is why I.
[00:11:05] Speaker A: Really believe HR is such a hugely important profession. If you're at level one or level two in the systemic HR model, you're not having these conversations. You're talking about transactional efficiency and cost.
[00:11:18] Speaker B: Of HR and service delivery. But as soon as you go up.
[00:11:21] Speaker A: To level three or level four in this systemic HR maturity model, you're focused on bigger things. And by the way, I always get a lot of calls from companies about how should we redesign our performance management process? How should we do succession, how should we redesign the recruiting process to hire.
[00:11:40] Speaker B: More diverse candidates and so forth.
[00:11:42] Speaker A: And I usually go back to them. I say, well, before I give you 17 things to do, I ask them.
[00:11:47] Speaker B: What are you trying to achieve here?
[00:11:49] Speaker A: And sometimes they don't know. So we, as keepers of the society, in a sense, have to keep asking our senior leaders, what are the outcomes we're going to try to achieve here? Sometimes it's very, very clear and the company is very clear on it, but sometimes they're not. Like, if the answer to performance management is we want to make it simpler and take less time, that's fine, definitely a good idea. But still, what goal are you trying to achieve?
[00:12:18] Speaker B: Are you trying to get people to.
[00:12:19] Speaker A: Develop, or are you trying to get people to leave if they're not performing at a high level, or you're trying to improve diversity, et cetera. So going back to the happiness study, I think most of you know, and I don't have to beat this one to death, that if you have happy employees, you have happy customers, you have more innovation, you have lower turnover, you have a better employment brand, it's easier to attract people, et cetera. So not all senior executives think about this all day. Most of them are very aware of.
[00:12:49] Speaker B: It, but they've got other things on their mind.
[00:12:52] Speaker A: So let's assume that happiness is good. Okay, let's just assume that. What does the data tell us? Well, first of all, 50% of the contribution to happiness is social relationships. I mean, if your employees are working.
[00:13:07] Speaker B: From home and they're isolated at the.
[00:13:10] Speaker A: End of Zoom or teams, and they don't get together with their managers, especially if they're young, by the way, because the research shows that it's even a bigger effect on young people, you're going to have some issues. So without getting into massive debates about hybrid work, we got to make sure that all of these people that are working from home or disconnected locations, or they're in stores or they're in retail locations, or they're working in plants and manufacturing, whatever, are being connected to other people. And that usually falls down to management managers. First line managers. Do first line managers understand the value of social relationships? Do they listen to people? Do they bring people together? Do they celebrate? Do they reward people? And by the way, are you promoting those kinds of people into management as leaders? I'm very aware of my personality, and.
[00:14:04] Speaker B: I'm not kind of a happy go lucky person. I'm kind of an engineer.
[00:14:08] Speaker A: Well, I have a management team that's much more into that stuff than I am, and it works great. I love being a part of it, but it's not the first thing that.
[00:14:15] Speaker B: Comes into my mind.
[00:14:16] Speaker A: So social support is huge. Number two, corruption or trust? Trust to me means really three things. It's ethics. Are we ethical? Are we making ethical decisions? It's fairness, not equality. Fairness.
[00:14:32] Speaker B: And it's listening. If you're making decisions or your company's.
[00:14:37] Speaker A: Making decisions and nobody knows why they're making the decisions and who made the decision and what's the justification for the decision?
[00:14:43] Speaker B: There's no communication about the decision, and.
[00:14:45] Speaker A: People feel disaffected by the decision. They're going to question the corruptedness of those decisions. Obviously, if people are stealing or promoting their favorites, that's not going to come off well. But this is the number two driver of happiness. So things like transparency, a lot of listening, employee activation, by the way, read about employee activation. We did some really good research on this. It's a big, big idea. You need to understand it. Making sure that leaders hold themselves accountable, that leaders hold each other accountable. I mean, every couple of days it seems to me there's some story about a sexual harassment or a theft or some terrible behavior that happened at a sea level at some company.
I think that's to some degree human nature. When people have lots of power, they tend to misuse it. But are you trusted within the company? Does the company trust the leadership and the management? And of course, are you trusted by your customers?
If you read the Edelman Trust barometer, which is a really good read, every.
[00:15:49] Speaker B: Year they redo it.
[00:15:51] Speaker A: We're in a period of time around the world where people really don't trust institutions very well at all. They don't trust political institutions much, and they trust businesses more, but actually they trust businesses less than they have in the past.
Your ability to create a trusted relationship with your customers is huge, and you're not going to get that if you don't have a trusted relationship with your employees. So we have a lot of stuff on that. Number three is this idea of freedom.
[00:16:19] Speaker B: That's the third most correlated factor, freedom.
[00:16:22] Speaker A: Doesn'T mean people can do whatever they want and they can not show up for work and come to work in.
[00:16:26] Speaker B: Their shorts or bathing suits or whatever.
[00:16:29] Speaker A: But, you know, companies let employees bring their dogs to work. I originally thought that was silly, but.
[00:16:35] Speaker B: I've gotten over that.
[00:16:36] Speaker A: They give people lots of flexibility on their hours. I think the four day week is going to become a standard practice within.
[00:16:42] Speaker B: The next probably five years.
[00:16:44] Speaker A: They give people flexible hours. They let people do job sharing. You know, one of the companies I admire the most is SAP. SAP is a really big, complicated, older technology company. It's one of the most highly regarded companies in terms of employee satisfaction, if you look at glassdoor, because they do a lot of great things to give people flexibility. So people look for new jobs. Can people try new assignments? Do they have the freedom to learn new things? Do they have the freedom to move around in the company without getting penalized? That's a human desire. That isn't just a business thing, to have mettelmobility.
[00:17:22] Speaker B: That's number three.
[00:17:23] Speaker A: Number four is wealth. Now, because wealth is a lower correlation, it begs the question of how much should we pay people and how should our pay practices work? What our research last year found out was something that's kind of not obvious, that if you look at the issue of pay equity, pay equity means do people understand why they're paid what they're paid, and do they believe it's fair and not biased? And can we statistically validate that women are not making less than men and african Americans are not making less than Caucasians and et cetera? That is seven times more impactful on employee engagement than the level of pay. So as I wrote about a couple of weeks ago, if you're thinking about talent density and quality of skills and ambition and performance, that's great, and you have a really strong performance culture. We want to do that, and we're paying high performers more. That's great, too. And sometimes high performers are going to make a lot more people who aren't performing as well. But is that fair, and do people think it's fair? And are we communicating the criteria for that? That's what really matters, not the aggregate level of pay. Investment banks pay people a lot of money, but investment banks have very high turnover. And I talk to a lot of people that work in investment banks, and they're oftentimes really glad to get out of the industry because it's so brutal. There are jobs and there are companies where people will go as mercenaries to make more money, and they'll just deal.
[00:18:55] Speaker B: With the culture, and they'll help your company a lot, and then they'll leave.
[00:18:59] Speaker A: That's a decision you have to make. But generally speaking, if you're thinking about.
[00:19:03] Speaker B: Happiness, wealth is a relatively small driver.
[00:19:08] Speaker A: In our company. For example, I'll just give you a little bit of insights. We don't pay people what they probably could make in bigger companies, but we give them big bonuses. So people that come to work here are coming because of the mission and the experience in the environment and the customers we have and the kind of work we do. And if they really want a lot of money, we just tell them, sorry, I don't think it's the right fit for you. Go work for a big company, and.
[00:19:29] Speaker B: I think you'll be happier.
[00:19:30] Speaker A: And we end up getting great people. It doesn't hurt our ability to hire. And I think you find that in virtually every industry, as long as you're paying people a fair wage and an adequate wage so that they can maintain their standard of living, this idea of generosity, which is right below wealth, really, to me, reflects the idea that, do we have good benefits?
Are we giving people more than they expected at work? Do we have a recognition program where people can recognize each other? Are we a generous company to our customers? Are we gouging our customers? Listen, if you're gouging your customers, and I know there's a lot of accusations of that right now, not only are the customers pissed off, but the employees are probably getting the brunt of it. So are you generous with the marketplace? Are you generous with your supply chain partners? Or are you squeezing and squeezing and squeezing and squeezing them? I think the reason Apple's just getting sued is not because they're that monopolistic, but I think they've gotten pretty greedy. And when I have to pay $50 for a charging cable because they decided to change the plug, I'll tell you, my admiration for Apple goes down a lot. There's something going on over there that's not as altruistic as maybe it used to be. So generosity gets into all of those kinds of things, and then the lower level ones of life expectancy and health are contributors. And just one more thing on that topic. I was at the transform conference last.
[00:20:54] Speaker B: Week, and it's an interesting conference, but.
[00:20:57] Speaker A: The thing that I took away the most I talked about this last week was the fact that there are so many new benefits programs for people that have different issues with their lives trying to buy their first house, fertility benefits, mental health benefits people that need help with physical disabilities and so forth, we are going to be asked to take care of a lot of that at work. If you kind of think through this idea that the people in their 30s are less happy than the people in.
[00:21:25] Speaker B: The their seventy s, the bulk of our workforce are people in their thirty.
[00:21:29] Speaker A: S and forty s, sometimes 20s. They just went through the pandemic. They're living through all of the issues with social media and political change and the inflation and other things we're struggling with right now as a global citizenship. And so they're kind of hoping that the company takes care of them more. So the percentage of wages allocated to benefits went up. It's a really interesting statistic from the.
[00:21:55] Speaker B: Bureau of Labor Statistics.
[00:21:56] Speaker A: It's a little over 30% now.
It was only 29% a few years ago. And then in the highly information intensive and human capital intensive industries like consulting, management consulting and information companies, it's 35%. So I think the investments we've been making in benefits and well being and all these complex programs that we offer.
[00:22:21] Speaker B: Employees are going to have to continue if you want your employees to be happy.
[00:22:26] Speaker A: So I don't know if this helps you in any of your thinking, but read through the article. It's not very long. I think that report is worth browsing through if you've got the time for it. It always teaches me something. And the final thing I'll say is this, if you compare the United States.
[00:22:42] Speaker B: To Finland, and I've been to Finland.
[00:22:44] Speaker A: A couple of times, I know some people there and where we are number 23 on the list, and they are number one. And our standard of living is significantly higher from theirs financially. What do they have that we don't have? Social cohesion, enormous trust. By the way, they trust their government 300% higher than we do. They have a focus on family and reasonable expectations for their lives. And I think that's a little bit of a lesson for us in our companies. If you think about your company as a society, take care of it. Take care of the society, take care of the culture, because as I talk about in the article and in my book, if you take care of the culture of the company, the company and the people will take care of the shareholders and the stakeholders and the customers and the executives. So that's kind of my little message for this week. We'll get back to tech and learning and development and irresistible and AI and all that stuff in the next podcast. Thanks everybody. Have a good weekend.
