Global Trend

Science Explores the Roots of Joy and HappinessHappy employees stay with their employers longer, and generally are more productive than unhappy employees. Happy customers stick with their suppliers longer, and typically buy more. So, it follows that the goal of every manager should be to make customers and employees happy. But, until recently, there’s been a lack of hard data about what truly makes people happy. In fact, looking back over history, there’s reason to believe that the main factors involved in making people happy have changed.Research shows that there is a direct relationship between income and happiness in the lowest income brackets. However, as we reported in the July 2004 issue of Trends, once people reach the level of middle-class income, they no longer become happier as their incomes go up.As Gregg Easterbrook explains in his book The Progress Paradox,1 “The trend for happiness has been flat for 50 years.”A 2002 study showed that the percentage of Americans who said they were “very happy” was no greater than it was in the 1950s, even though the average American’s real income went up by more that 200 percent from 1957 to 2002.2Easterbrook points to the work of Edward Diener, a psychologist at the University of Illinois, whose work had led him to conclude that lacking money causes unhappiness, but having money does not cause more happiness. Millionaires as a group are no happier than people of average income.So, researchers are finding that money does not buy happiness, at least among Americans in the middle class and those with higher incomes. So, what does? According to Robert Putnam, professor of public policy at Harvard University, 50 years of research shows that the happiest people are those who have the best relationships. Moreover, having solid relationships seems to help people stay in good health and live longer. This finding indicates that those companies that want happy employees need to encourage good inter-personal relationships within the firms as well as in the employee’s personal life.Happiness research is also yielding other insights into how to keep workers cheerful, which translates into greater productivity and higher profits. This has real-world implications for employee training and development. Consider David’s Bridal, a chain of nearly 300 stores that serves women who are planning their weddings.Most of these customers bring a volatile mix of emotions to the shopping experience: They’re nervous about the wedding ceremony; they have high expectations because they expect everything to be perfect; and yet, as first-time brides, they are bewildered because they haven’t shopped for a wedding dress before. All of this has led to a new phenomenon made popular by a cable television reality show called Bridezillas: Women who are about to be married expect to be treated like queens while trampling on the feelings of their families and salespeople.David’s Bridal discovered that salespeople can muster the strength and patience to handle Bridezillas by relying on work by psychologist Martin Seligman, who proved that people who are trained to be resilient tend to be happier.According to The Wall Street Journal,3 David’s Bridal salespeople are schooled in techniques that make them feel cheerful and upbeat, such as thinking of things that make them happy even when they’re trying to convince a fuming size 8 bride that she can’t fit into a size 4 dress.The company launched a pilot program in four stores. When salespeople were trained to be resilient, sales increased. Now, David’s Bridal is considering rolling out the resilience training to all of its 3,000 employees through an on-line program offered by Adaptiv Learning Systems.In addition to training salespeople, Adaptiv uses Seligman’s research to design training programs for team-building and leadership development. These are all built on the idea that resilience equals happiness, which equals better performance.At the Adaptiv Web site, AdaptivLearning.com, the firm lists the 7 critical factors, or inner strengths, that add up to resilience:1. Emotion Regulation2. Impulse Control3. Causal Analysis4. Self-Efficacy5. Realistic Optimism6. Empathy7. Reaching OutOne of the better-known approaches to making employees happy is giving them small perks that make them “feel special.” An outstanding example of successfully “making people feel better so they’ll work better” is Analytical Graphics, Inc, or AGI.AGI is a software firm that was named the “Best Small Company to Work for in America” by the Great Place to Work Institute. The Great Place to Work Institute produces the “Best Places to Work” list published annually by Fortune magazine.AGI gives its employees free breakfasts, lunches, and dinners prepared by caterers. It also stocks cabinets with free cookies and candy, provides free washers and dryers so employees can do their laundry while they work, and lets them work out for free in the company’s fitness center.These perks cost AGI about $5,000 for each of its 200 employees, for an annual cost of $1 million. This doesn’t include the employees’salaries, health benefits, vacations, profit-sharing plans, and employer-matched 401(k) plans.However, AGI’s CEO, Paul L. Graziani, told the Philadelphia Inquirer4 that the policy of lavishing perks on employees pays off in happier, more productive employees who are less likely to leave the company. This results in a turnover rate of just 3 percent, compared to the industry average of 20 percent. If AGI’s turnover rate equaled the industry average, it would have to replace an additional 37 workers a year.Because in the software industry it costs 150 percent of employees’ salaries to replace them and get them up to speed in the new job, if each salary averaged $40,000, then AGI’s low turnover is saving it $2.2 million in recruiting and training costs each year.But the benefits go beyond the savings in costs. Graziani explains, “If I can make it easier for our employees, they’re happier, they’re more productive, they’re more pleasant to be around. If you can remove a couple of the stresses, especially for people with families here, they can come in and be really productive. You get this snowball effect. They get more productive, and the company gets more productive, and then you have the resources to do more things for them.”While some of the happiness research involves the kind of straightforward business metrics we’ve just discussed at AGI, other research involves physiological measurements to get to the heart of how the brain reacts to stimuli. For example, Brian Knutson, professor of psychology and neuroscience at Stanford University, tracks changes in the brain to measure happiness. According to The Wall Street Journal,5 he found that the anticipation of a reward often causes greater feelings of happiness than actually receiving it.In one study, Knutson asked test subjects to play a video game. He found that people were actually happier, as measured by oxygen flow in the brain, when they anticipated winning money than when they actually received the cash. We’ll discuss the implications of this research when we present our forecasts.The other side of the happiness research coin is helping employees cope with depression. This is a major productivity issue when you consider that nearly 20 million people suffer from depression. In a recent ABC News report, the network interviewed Dr. Jeffrey Levy, president and CEO of Reflective Learning. At the company’s Web site at reflectivehappiness.com, users can take tests to measure their baseline happiness level, determine whether they are depressed, and discover the greatest strengths of their character.Like Adaptiv Learning, which we discussed earlier, Reflective Learning is based on Martin Seligman’s research into how people can become more optimistic and happier. Once people take the tests, they can learn happiness-building exercises at the site to develop new skills to approach their lives more positively. Among those skills is the ability to use their “character strengths” throughout their lives so they perform at their best.Levy claims that more than 90 percent of people who are severely depressed become happier after using the program, which costs $9.95 per month. He also says that people who are not depressed can also use it to increase their level of happiness.Finally, happiness research is revealing how customers and potential customers really feel about products and marketing messages. The Wall Street Journal6 reports that a company called Sensory Logic uses videotapes of people’s facial expressions to determine whether they are genuinely smiling because they like something or they are just pretending to like something.For example, Sensory Logic found that a person’s “social smile” only moves the muscles around the mouth. A “true smile,” by contrast, involves relaxing the upper eyelids. A “micro-smile” is a quicker version of a true smile that reveals that the person is buying into the message only slightly.Among the marketers using Sensory Logic is Whirlpool Corporation, the maker of household appliances. The company’s goal was for its high-end Duet line of washers and dryers to make people feel happy. When some people saw the innovative designs, they said they didn’t like them, but their facial expressions showed that they were interested and happy.As a result of its Sensory Logic research, Whirlpool changed the colors and patterns it was offering so that it avoided the ones that didn’t elicit “happiness.”Looking ahead, we offer the following four forecasts based on this trend:First, in the coming decade, companies will proactively work to enhance relationships among employees as part of an overall strategy of recruiting, rewarding, and retaining employees. Labor markets will get tighter, especially for high-performance professionals. While salaries and other financial benefits remain important, it will become increasingly necessary to support the development of friendships between co-workers. This will be particularly challenging as millions of employees work from home through telecommuting, or physically commute long distances to the exurbs. However, through on-line communities, annual social events, and company-sponsored community activities, employees can develop the relationships that make them happier, more loyal to their employers, and more productive at work.Second, companies will embrace facial imaging research, such as Sensory Logic, as a way of more accurately testing the potential market for new products and services. This new method avoids the biggest drawback of focus groups: people telling marketers what they want to hear, instead of revealing their true feelings. This will help avoid costly launches of unwanted products, expensive movies nobody wants to see, and television commercials that earn high marks in focus groups but are ineffective in the real world.Third, companies will use the discovery that anticipation makes people happier than actually receiving rewards to optimize their product designs, packaging, Web sites, and marketing campaigns. If customers enjoy the anticipation of using a product more than the actual experience of using it, then marketers should focus on heightening the anticipation by designing exciting store entrances, Web site landing pages, and product packages. Advertising campaigns should focus on the anticipation of using the product or service.One company that is already taking advantage of this insight is The Walt Disney Company. A television ad for Disney World depicts two young children in their beds, unable to sleep because they are excited about their first trip to the theme park. They whisper about what their parents told them to expect during the trip, and in doing so they build anticipation in the viewers.Fourth, a whole new class of consulting firms will emerge to help companies cut costs and boost productivity by making their employees happier. Resilience training, based on research by Dr. Seligman, has already produced positive results for David’s Bridal and appears to be an effective weapon to add to the arsenals of salespeople in other industries. As word spreads about the savings that companies like AGI are realizing through reduced turnover, expect to see more firms rewarding employees with innovative perks in addition to paychecks. And, techniques for measuring the brain’s responses to stimuli and adjusting the stimuli accordingly will develop into a professional specialization all its own. References List :1. The Progress Paradox: How Life Gets Better While People Feel Worse by Gregg Easterbrook is published by Random House. ⓒ Copyright 2003 by Gregg Easterbrook. All rights reserved. 2. To access the Worldwatch Institute’s commentary on income and happiness, visit their website at: www.worldwatch.org 3. The Wall Street Journal, March 21, 2006, “Happiness Inc.: Science Explores Roots of Joy,” by Jeffrey Zaslow. ⓒ Copyright 2006 by Dow Jones & Company. All rights reserved. 4. The Philadelphia Inquirer, July 7, 2004, “Happiness Equals Productivity,” by Jane M. Von Bergen. ⓒ Copyright 2004 by Knight Ridder. All rights reserved. 5. The Wall Street Journal, March 21, 2006, “Happiness Inc.: Science Explores Roots of Joy,” by Jeffrey Zaslow. ⓒ Copyright 2006 by Dow Jones & Company. All rights reserved. 6. ibid.