GDP is the measure of productivity that determines the overall health of the economy. A Nobel laureate economist once said,
“Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”
At the individual company level, productivity determines which companies succeed and which ones fail. In today’s ultra-competitive business environment, every single business that hopes to survive and thrive seeks to improve the productivity of its workforce. Assuming all else (technology, resources, etc.) is equal, what differentiates one competing company from the next? Productivity.
Given that productivity is the holy grail for businesses, more of it is always in demand. But there seems to be two dramatically divergent philosophies and practices in corporate America on how to manufacture that productivity growth. And they can be distilled down to this:
- fear-led productivity
- happiness-led productivity
Fear Led Productivity in the Workplace
The examples on the fear side are plenty. Amazon’s employee practices have recently received a lot of negative publicity because they prescribe to the fear dogma. At Amazon, if you don’t give your entire life to the company, you won’t survive. Employees at Amazon are expected to work 80 hour weeks, never take real unplugged vacations, respond to emails at all hours of the night, work weekends, and sabotage the careers of their co-workers in order to save their own job.
Amazon is on the far left of the managing by fear or happiness spectrum, but fear is the way a majority of companies lead their workforce. If you’re looking for evidence, look no further than the reasons why American’s don’t take 51% of the paid vacation days they are given and 61% are working while on vacation:
- 33%: Afraid no one else at my company can do the work
- 28%: Fear of getting behind
- 22%: Complete dedication to company
- 19%: Want a promotion
- 19%: Feel like they can’t be disconnected
- 18%: Want a pay raise
- 17%: Afraid of not meeting goals
- 17%: Fear of losing job
- 16%: Believe working is better than not working
- 13%: Want to outperform colleagues
- 6%: Afraid of the boss
Only 3 of those 11 reasons are not based in fear. And even the three that aren’t (“complete dedication to company”, “want a promotion”, “want a pay raise”) probably have a deeper root cause that is based in fear (i.e. fear of not having enough money, status perception, or fear of getting fired).
Americans are overworked and stressed out (the most shared article I’ve ever written, by no coincidence) and much of the reason is because we work in constant fear. Employer-manufactured fear is killing us.
Happiness-Led Productivity in the Workplace
What about fear’s alternative – happiness? What is the impact of happiness on productivity? Well, I think if you asked employees of companies that frequently make “best companies to work for” lists, you’ll find very few corporate cultures driven by fear. And these are some of the most successful and productive companies on the planet.
Anecdotally speaking, I’ve worked in both environments (sometimes even within the same company) and I can unequivocally say I have been dramatically more productive under teams and managers that have led by focusing on happiness than those that have led by fear. Ask yourself which environment has made you more productive.
A new worker happiness and productivity study found a huge impact on productivity when workers are happy. The study found that:
- Workers that were given perks that led to happiness, productivity increased by an average of 12%, and reached as high as 20% above the control group.
- Lower happiness is systematically associated with lower productivity.
Dr. Daniel Sgroi, the author of the report, noted that in regards to GDP and economic growth,
“rises of 3% or so are considered very large.”
He concluded,
“Having scientific support for generating happiness-productivity cycles within the workforce should … help managers to justify work-practices aimed at boosting happiness on productivity grounds.”
Score a big one for “team happy”.
But let’s take this exercise step further…
The Long-Term Consequences of Leading by Fear
VW’s dieselgate, Amazon’s expose, Comcast’s awful customer service (commonly rated the worst in America), and well publicized travesties such as Enron, BP, Countrywide Financial, Toyota (software), GM (ignition switch), Bear Sterns, Lehman Brothers, and Tyco led to broke, unhappy, and in extreme cases even dead employees, shareholders, and customers. In every example, had management led with anything other than a culture of fear, each tragic outcome could have been greatly reduced or avoided altogether.
In Amazon’s case, I think it’s fair to question whether Amazon’s success is because they lead by fear or in spite of it. Maybe, just maybe having a massive first-mover advantage in online retail that started with the advent of the internet – and not a fearful workplace – is the ultimate driver of their success.
Employers need to consider that the best employees aren’t going to put up with being led by fear. They can and will go elsewhere, leaving you with nothing but inexperienced, fearful under-performers with limited mobility prospects. Nothing kills productivity like high turnover.
Leading by fear can occasionally lead to positive short-term productivity gains. Over the long-term, it almost never does, and can completely gut a company from the inside out.
Your Impact
If you are part of a management team that leads by fear, you need to realize that there are better, more effective, kinder ways to get the same or better results. When you’re laying on your deathbed, are you going to look back at your career and legacy and think, “You know, I wish I had really installed more fear in my employees”? It’s time to take a stand.
If you are a victim of a company that leads by fear, find a better employer. Nobody deserves that.
Related Posts:
Driving fear from the workplace was one of Deming’s 14 major points:
W. Edwards Deming (1986) Out of the Crisis.
Before i read this article I was thinking about people working in Chinese sweatshops and those who work in Korean factories. Companies like Samsung are very successful and yet are fear-based.
That’s because they pay people peanuts and there is no upward mobility.
It’s funny that just yesterday, people were bragging about how much PTO they had to roll over before the new year.