[January 02, 2014] There has been a long-standing debate whether there is a link between employee happiness, their pay at work, and workplace productivity. While few would deny that these are related, the key argument is whether better worker pay leads directly to improved performance.
A recent article in Inc Magazine by Scott Leibs1, entitled You Can Buy Employee Happiness. But Should You?, has made some excellent points about this issue. The challenge is how to figure out the right amount of compensation in pay, benefits, etc. and should it be paid.
Leaders intuitively know that a happier employee, at least in most businesses, makes for a better and more productive employee. What makes for a happy employee, however, is a complex issue.
There is no straight-line, causal relationship from money, to happiness, to productivity. And, herein lies the problem. None of this is simple because it is difficult to measure happiness and productivity, and because humans are complex and ever changing.
Increased worker pay (in the absence of a positive workplace environment or great leadership), certainly will not necessarily lead to a happier worker or to better productivity. Too many factors affect worker happiness to risk such a general statement and this is one of the main points of Leibs’ Inc article.
It is the responsibility of leaders to ensure that employees are taken care of (e.g., pay, health, technical training) and that the organization’s mission is accomplished through worker productivity. The difficulty in being a leader is that there is no one simple solution to better productivity.
Can you buy employee happiness? This is a great question because if it were that simple, making money in business would be easy. The questiont begs for a “yes” or “no” answer and implies that employee happiness means better productivity.
A good answer to is say “yes,” that employee happiness can be improved with better pay and improved productivity will result from better paid employees. However, it also requires good leadership to provide the conditions that make it happen.
“Action may not always bring happiness; but there is no happiness without action.” – Benjamin Disraeli, British conservative politician, writer, and aristocrat
Leaders, you have the privilege of taking the action to set those conditions.