Do happy managers perform better, or do good performers feel happier? Like the chicken and the egg, it’s hard to say which comes first but it’s possible to hypothesise that the two feed on each other!
Our latest research (Positivity and Performance) found a strong link between managers’ psychological wellbeing and the perceptions of their own performance. The managers who put themselves in the top 10% for performance ranked their personal happiness highly at 96 (out of 100); the bottom 10% scored themselves at only 10.
The positivity-performance cycle
The question about the correlation between positivity and performance is an important one; are people more positive about their psychological wellbeing because they know they are high performers, or does being a high performer make you feel better about yourself? My belief is that it’s not necessarily a simple cause and effect relationship. Rather, it’s a self-reinforcing virtuous – or vicious – cycle. If you think you are doing reasonably well, you feel good. If you feel good in your job you’ll do it better, all things being equal. Doing it better makes you feel better still, and so the virtuous cycle sets in. On the other hand, knowing you are underperforming makes you feel unhappy (people want to do a good job) and being unhappy makes you dispirited, and so the vicious cycle sets in.
What we saw in our research was a snapshot in time, but for many managers it’s really a journey, with some people on the upswing – feeling better and improving – and for others it’s the down swing – feeling negative and failing.
It’s not only a manger’s own happiness that impacts performance. We found if a team is happy and performing well this influences the wellbeing and performance of managers.
Stress and workload
But it’s not as simple as a happy and performing manager equals a happy, performing team. Our research shows a close inter-relationship between managers’ performance, happiness, stress levels and ability to cope with workload.
The two-year itch
Worryingly we also found evidence of a two-year itch – for the first two years in their role, managers’ report higher levels on both happiness and performance but after this period, their happiness and performance scores start to fall. It seems that after two years, as managers adjust to the role, it loses its freshness; their excitement and enthusiasm diminish making them less happy – and less confident about their performance.
Two years is a pivotal time in a manager’s career within an organisation. That means organisations have an opportunity to harness and retain managers’ early enthusiasm and energy by ensuring they receive training and development in those first two years and are clear about their longer term career opportunities within the organisation.
Training and development
Not only can training and development impact on performance, it can also indirectly improve psychological wellbeing. This is important, because those responsible for leadership and management development need to focus on both dimensions – if you don’t do something about how managers are feeling alongside improving their knowledge and skills, the effectiveness of any development will be limited. So next time you hear someone talk about ‘happy sheets’ at a training event, ask them if they are really finding out if managers are truly happy.
Given what we know about employers’ reluctance to train new managers (see our last report, The Leadership and Management Talent Pipeline), and the evidence from this research that managers are far more psychologically positive if they have access to development, the solution to this problem may well be quite simple. Train managers early and their happiness and performance is likely to improve. Simples!
A happy workforce
Coincidently, just as we launched Positivity and Performance, the Office of National Statistics (ONS) launched their own survey results on the nation’s happiness. The ONS says that being happy at work is important because it makes people more productive and improves the economy. So a generally positive workforce should mean that managers will feel more positive, which should encourage them to perform to a higher standard. And, given the state of the UK economy at the moment, we need every bit of help we can get to improve performance.
Some of you may not be aware that Small Business Advice Week took place earlier this year. To mark the occasion I thought I would share my five rules for success (or avoiding failure).
Of course, if we knew the answer to the question, we’d all have our own successful businesses. But there’s a big difference between knowing what to do and doing it. These five rules for success are not so much a guarantee of success, more a guarantee of failure if you don’t do them. So here’s your checklist to avoid failure.
Know when to plan and when not to. Planning is important. Without a plan you’ll struggle to get a bank loan, for a start. A good plan says what you are going to do, when you are going to do it and what resources you need to do it. Most importantly, they say what you hope to achieve by doing it, because the world about you changes, and sometimes plans need to change. If you focus on the end state (where you want to be) rather than the plan (how you get there), then planning works. It means that your plan is outcome focused – what you want to achieve – rather than process focused. There’s a guide to business planning on the Business Link website.
Cash is king. If you have financial decisions to make, just say to yourself, cash is king. More technically, it means that you are better off having cash now than a highly profitable business going bankrupt. Cash flow is the biggest cause of business failure in the UK. This means businesses are operating profitably but run out of cash at the bank (or reach the limit of their overdraft). So how can businesses make a profit and still go bust? Easy. You’re paying bills today but your customers are paying you tomorrow. As you grow, your payments increase and so do your debtors – you have thousands owing and no money in the bank. So you go bust. Retailers (one of the most popular small businesses with the highest failure rate) are particularly prone to this disease. All that stock has to be paid for long before it’s sold. With insufficient capital, they run out of cash. Here is a good guide to cash flow.
And that leads to my next important rule – understand your customers. Who is going to buy what you sell, and why will they buy it? This means understanding the difference between features and benefits. Features are what you build into your offer, but benefits are why people buy. For example, have you ever looked at the shape of an iPad? It has a slightly curved base, so that when it’s lying flat on a table all four edges are raised above the surface – that’s a feature. Now, when you want to pick up an iPad, it’s very easy – you can slip the tips of your fingers under the edge without a problem. That’s a benefit. You are going to be available for customers until 10pm at night. That’s a feature. Your customers can call you when they get home from work. That’s a benefit. Once you know who your customers are, you can find out what they are really looking for (the benefits), and supply that (the features). Peter Merholz has a short but interesting article in the Harvard Business Review on how to get to know your customers.
Now we come to the other side of features and benefits – why you must stop being fixated on features. People tend to start businesses to do things they love doing, and they are totally fixated on the features. The trouble is, their customers are not, all they want are the benefits – they don’t care about how they are delivered. Just because you like doing something doesn’t mean that other people will love to buy it. Once you recognise that your customers aren’t a bit like you, you are on the way to understanding what they are like.
Putting skills at the top of the tree gives you a competitive edge. The better you and your employees are at doing your jobs, the more you will delight your customers and the better you will succeed. Highly skilled employees are more productive, produce better quality goods and services, and are more reliable. Training works, and so the more you invest in developing the skills of your people (within reason) the better the pay back. And if you worry that the people you spend money training might leave, just remember that the ones you don’t train might stay! What’s more, all the evidence is that firms that invest in the skills of their people have lower staff turnover. If you want to find out how higher skills can benefit your business, go to the UKCES website and look at the case studies on high performance working.