CHAPTER ONE
The Coffee Klatch
and Research
(There Is Science Involved)
There is a preponderance of research on how increased productivity improves results in an organization and, more importantly, improves results in the lives of its employees. So, there is a way to actually have your cake and eat it, too.
Throughout this book, I will show you documented research I have gathered from a myriad of sources. This supports everything Iâve learned through my experience.
You may look only at the âsound bitesâ and move on, and thereâs nothing wrong with that. I wanted to show you the amount of research because itâs indisputableâhuman nature does not change. Our great philosophers (who I refer to as the first HR professionals) Plato, Aristotle, Nietzsche, and many more, are long gone, but the principles they established regarding human behavior are the same. As I publish further editions of this book, I will only add to this research list.
Another thing to note about research: follow the money. Some research is driven by self-interest. Some of what you will see is essentially hidden behind sophisticated advertising and promotion. For example, a wellness company doing its own survey on wellness is not credible. After all, would you publish findings that donât implicitly back up the product that is your livelihood, or would you ensure that the results make your product necessary? This same principle holds true with insurance companies, recruiters, consultants, and others. Even research by academic institutions is often funded by self-interest groups. With that in mind, Iâve tried to include the most credible sources possible. Itâs not an exhaustive collection, but as I said, collectively itâs indisputable.
The Financial Impact
Duke University conducted a study that lasted about five years. The study observed and analyzed the impact of work on the health and wellness of 6,700 employees who came from a range of corporations in unrelated fields. Research showed that 60 percent of people were stressed or overwhelmed by financial obligations even though they worked for a living wage. Furthermore, only half of those companies offered financial education programs to help alleviate these concerns. The Federal Reserve Board estimates that financial stress among employees costs the employeesâ companies $5,000 per employee per year in lost productivity (higher turnover, absenteeism, presenteeism). If you have 1,000 employees, thatâs $5,000,000 off the bottom line.
The fact that this book must be written is somewhat beyond me. The thought that the lack of productivity has been lurking in corporationsâ backyards for decades and has not been addressed appropriately is astonishing because fixing the issue is really one of the easiest ways to make money. I think this has not come to light earlier only because of the lack of creativity in many CEOs. Itâs easier to follow prescriptive business school formulas to make moneyâpressure people to work harder, cut costs, and risk forcing sales on products that are inferior for your customersâbut it makes more business sense to encourage compassionate productivity. Empower employees to do better. All the research supports the wisdom of this approach.
Great workplaces have 65 percent less turnover and five times higher stock market returns than industry peers. They also have higher earnings per share, outperforming those peers by 202 percent.*
At my first job, I learned a hard lesson on how business works. I always gave to charities, and I saw that companies do so, too. When I was in my early 20s, I approached the CEO of the company I was working for and asked if we could donate to a special homeless organization. He asked me who was on the board of directors of the organization. I said I didnât know, but that it was an important organization that helped a lot of people. He leaned toward me and said (Iâm paraphrasing), âRichard, we are a business. Weâre happy to give to charities if it will further our business interests. For example, if you knew someone on the board that we do business with or could potentially do business with, we could justify a contribution. Otherwise, the business cannot support it.â This was eye-opening to me . . . and very sad. On the other hand, it taught me an important lesson about business. I needed to find creative ways to give to society under the aegis of being âgood for business.â What I did for one firm in Germany, a giant multinational where the executive team did not want to provide a pension plan for its German employees, was to show that the profits would increase due to the boost in productivity by employees receiving a pension plan. In addition, if they looked at the benchmarking data of what the companyâs competitors were doing, a pension plan for the employees was essential to attracting and retaining talent. This combination presented the business case for a pension plan for the employees in Germany. It all worked out fine, and to this day these German employees are able to retire with dignity after a 35-year career with the company.
There must be an âin-betweenâ state that exists to separate dispassionate business growth with an eye on overworked employees suffering from burnout. The result of burnout is a drop in morale from unreasonable expectations resulting in a loss of productivity. The answer to balancing âgood business practicesââthose that generally result in increased profits and lower costsâwith human needs and emotions is compassionate productivity, and it can be an absolute game changer.
What Is Compassionate Productivity?
Compassionate productivity is the idea that recognizing employees as human beings with their own struggles, triumphs, goals, and motivations results in better overall work. This isnât something that should be new to business, and to be fair, itâs not completely unused in certain industries. In general, however, organizational decision makers tend to favor a more hard-edged approach that emphasizes strictly separating the human from their work. This is a mistake for a few different reasons, all of which weâll examine in sections that follow.
Before we move on, however, it should be noted that compassionate productivity isnât an extreme. We arenât looking at a situation where one end of the spectrum is the concept that employees must be extrinsically motivatedâbe it by stress or by other meansâin order to work as well as they can and where the other end is compassionate productivity. The idea of compassionate productivity is actually a happy medium between two extremes: the aforementioned perspective that sees employees as a means to an end to be âmotivatedâ in whatever manner necessary, and one that allows employees to work however and whenever they want.
It is possible to give employees the space they need to thrive without also compromising on the business processes that you know work for your organization. And when you get that balance just right, you might be surprised at how much the productivity of your workforce improves as your workers show what they can achieve when they are happy and passionate about their jobs.
In the following chapters for the CEO and management, we will take a look at some of the components that are vital to boosting productivity and helping employees reach their full potential. For the employee, in reading this, it will inform you on how to excel in the organization. But before we move forward, I want to talk about building a workplace culture that promotes compassion and understanding over fears and threats to lower performance reviews before we get there. This is a fundamental idea that should serve as the foundation for the rest of the tips and lessons in this bookâa strong base upon which you can create the environment that is perfect for your business and the workforce.
Compassionate Productivity Versus Traditional Performance Incentives
Traditionally, improving workplace performance has been accomplished by setting goals and pushing employees to meet them by whatever means necessary. According to Emma Seppala, associate director of the Stanford University Center for Compassion and Altruism Research and Education, the most common motivator in the past was a reprimandâ part of a checks-and-balances system that served to remind employees that their jobs were entirely dependent upon their performance and that any deviation from an upward trajectory might cost them their career.* This had the added âbenefitâ of projecting the potential consequences of underperforming or mistakes to the rest of the department or team, too. Keeping everyone âon their toesâ was the preferred way to drive productivity and performanceâin other words, by instilling fear and stress into the workforce.
Whereas this method has long been the go-to method in many industries, todayâs research shows that it is not the best way to go about motivating employees to do better. In one study published in the Journal of Management, for example, researchers found that the focus on achievements above all else only leads to workaholism and increased stress levels, both of which actually serve to hinder productivity and diminish work quality, rather than improve it.* And while pushing employees to work harder and longer hours in order to meet a specific goal or deadline might not result in âtrueâ workaholismâthat is, the compulsion to work as much as possible despite negative consequences in personal relationships or other out-of-work experiences and connectionsâ it results in very similar behavior. Instead of being internally motivated to work despite an overall decrease in quality of life, focusing on achievements and meeting quotas tends to result in âworkaholismâ born from the fear of losing an income or damaging a career. Despite the difference in motivators, the end results are much the same.
As the study notes, workaholism is tied to negative outcomes. These include job stress, burnout, poorer mental and physical health, and work/life conflict. In later chapters, weâll see exactly how each of these factors negatively impacts productivity, but suffice to say that they do nothing to improve the long-term productivity of employees. Eventually, constant fear and stress will cause almost everyone to experience burnout and apathy. That might manifest directly in the workplace itself, or it might be something that occurs mostly in the employeeâs personal life. But, regardless, the negative impact of these factors on motivation and productivity are the same.
More specifically, Seppala notesâand I agreeâthat traditional approaches to incentivizing performance boosts in the workplace result in high stress levels that often disrupt an organizationâs culture. This is a problem. First, and perhaps most practically in the short term, individuals operating from fear and stress are less able to reason and think clearly, something that naturally results in a drop in work performance. In the long term, a disruption in corporate culture can cause many cracks to form and widen in an organizationâs overall mission as well as in the unity of its workforce as a whole. The goal is to create an organization with employees who believe in their work and the companyâs overall vision. That unity helps boost worker morale as well as productivity. When the workforce is highly stressed and is more concerned about getting work done than about completing quality work with the well-bei...