Are there any indicators of leadership that is related to corporate productivity and profits?
And what do positive psychology, IBM, Google and Disney have in common?
By Dr. Merethe Dronnen, Associate professor, School of Economics and Leadership, University of Tromsø, Norway and author of the book Positive Leadership
The answer is yes, and one indicator is work engagement. Work engagement has through research been found to be a factor that is significantly related to companies’ productivity and profitability. International research shows that companies that score in the top quartile of the engagement scale are 17 percent more productive and 21 percent more profitable than those in the lowest quartile.
Then the next question asks itself: How does a leader increase the work engagement of his/her employees?
Gallup figures based on research from 142 countries and 180 million employees have shown that only 20 percent of employees globally are actively engaged in their job, ie that they are motivated, dedicated, involved and enthusiastic about their work,- and are looking for new and better ways to achieve better results for their companies. These employees are also more innovative. They are the employees who create growth and new customers for the company.
Secondly, as many as 60 per cent of employees work steadily, but are not particularly committed to their jobs. They show up, are not unfriendly or disruptive, but do not care about creating new customers or increase productivity, profits or innovative solutions for the company. They think mostly about lunch, their next break or the holiday they are going to have, and they are on large mentally checked out.
Finally, we have the around 20 percent who are named actively unengaged, and who do about the opposite of those actively engaged. They occupy their managers’ time, have more work-absence, more quality defects at work and spend a lot of their worktime showing their dissatisfaction.
Since leadership is about creating results through employees, it should be a goal for every leader to get more employees into the category of actively engaged.
Successful leaders know that organizations can only achieve increased performance through their employees. Some tips from positive psychology The management of large, reputable companies such as Microsoft, Disney and Google have all understood this and implemented various measures in their organization that are taken from the research-based positive psychology.
Positive psychology is the research-based knowledge of what we humans do when we function optimally, are extra motivated, perform, thrive and achieve results. Leaders who understand the human psychological mechanisms for what creates motivation and commitment, and which criterias get people in creativity mode, get paid for it in dollars and cents. It reappears on the bottom line and gives a high return on investment (ROI). Figures from Gallup say that 80 percent of the entire global workforce produces 31 percent less than they are capable of. Research also shows that companies that introduce strength-based leadership, which is a technique rooted in a form of positive psychology, can virtually eliminate active lack of engagement in the workplace.
Employees that are allowed to use some of their signature strengths (the top five) daily in their jobs have 1.5 percent higher productivity than employees who are not allowed to use them. And leaders who receive strength-based feedback on their own strengths have in research been associated with a full 12.5 percent increase in productivity in their department!
One of the tools a leader can use is therefore to work with strengths, both at the individual level and at the organizational level. At the organizational level, one can implement, for example, an Appreciative Inquiry process, where the goal is to find the organization’s positive core strengths. It is about designing and re-designing the systems in an organization so that one reaches the desired goals. At the individual level, one can map the team’s strengths and use the knowledge in several internal processes. The knowledge can be used both in one’s own life and within the organization.
Other ways to work with techniques from positive psychology are, for example, to build a culture of recognition in the organization. This can be done in several different ways, from shaping the tone of departmental meetings to how one meets customers, to the communication style a leader has. Yet other methods might be to encourage creativity and innovation. Microsoft’s global leader Satya Nadella has introduced a growth and a growth mindset culture in Microsoft globally. He videoblogs monthly about this and how he has established routines in the company that enable them to take care of their creative human capital. Nadella tripled the value of the company from 2014–2018. Google, IBM and Disney are examples of several companies that have used techniques from positive psychology internally to create growth and a good culture. Other research conducted by Cameron, Bright and Casa (2004) has shown that interventions based on positive psychology in the workplace have given higher scores on six important dimensions in the company: profit, productivity, quality, innovation, customer satisfaction and how long you are employed.
Leaders who acquire knowledge about how the human mind works, and how employees react and act, as well as how to promote motivation, job satisfaction and human performance, will gain a lot from it! In addition to stronger work engagement, it can also increase productivity and profitability. And not only that, companies that are in the top quartile of the engagement scale also have 41 percent lower absenteeism and less employee turnover. And last but not least: They have satisfied employees who thrive!
A holistic approach to Leadership Today, there are many articles on leadership that address individual factors in leadership, such as communication, relationships, motivation and leadership qualities. However a more holistic approach to important aspects of leadership is needed. The author of this article has developed a holistic theory of positive leadership that includes a threefold division into a) factors by the manager himself, b) factors in the leadership tasks, and c) results for the employees. Under a) factors by the leader himself, the sub-points are the leader’s own mindset and the leader’s authenticity. These two are about the leader’s own role, something which is essential for leaders to reflect on and be aware of. They shape one’s unconscious way of acting.
Factors in the leadership tasks are about the leader’s tasks related to achieving goals, motivating / inspiring, communicating, creating meaning and building teams and relationships. All of these are important leadership tasks, and a leader should integrate all of these into his leadership, in a holistic perspective. Doing so creates results among employees in the form of increased engagement, changed attitudes and increased performance.
Positive leadership is about how leaders can use research-based positive psychology and motivation theories to create larger engagement and well-being, improve relationships and increase performance and productivity in the workplace. In this way, managers can create win-win situations for both management, employees and company.
The fact that research has also shown connections between interventions of positive psychology in the workplace and results in the form of reduced sick absence, reduced turnover rates as well as a positive impact on health, probably also suggests that we need a paradigm shift in our thinking about leadership. Understanding motivational and psychological factors in the individuals, as well as understanding their own mindsets, are essential for all in leadership roles today.
Dr. Merethe Dronnen, Associate Professor, School of Economics and Leadership, University of Tromsø, Norway and author of the book Positive Leadership
