In the words of Nobel laureate Paul Krugman, “Productivity isn’t everything, but in the long run it is almost everything.” At the individual level productivity and at the macro-level economic growth, much like compound interest have generated massive differences between successful firms and economies and those floundering under the yoke of unemployment and low living standards. Moreover, in the middle of a period of intense competition in the private sector and spending cuts in the public sector, now more than ever productivity should take centre-stage. But there is one potential area of labour productivity improvement that is typically underdeveloped in the workplace and yet could be both cheap to introduce and popular with workers: promoting labour productivity through improvements in worker wellbeing.
In a series of experiments with co-authors at the University of Warwick, we explore the powerful interplay of human emotion and worker productivity. Our research, simply put, asks the question: does happiness make people more productive workers, or does it rather promote careless behaviour?
To pre-empt the rest of this article, our findings show that boosting worker wellbeing can generate dramatic increases in productivity. Positive emotions appear to invigorate human beings, while negative emotions have the opposite effect. But more than that, we find that the core transmission mechanism is through effort: happier workers put in extra effort compared to their less happy peers. At the same time, we find that unhappiness stemming from bereavement, or serious illness of family members, reduces productivity to a striking degree.
We conducted randomized trial experiments involving paid piece rate work for over 700 subjects. In one experiment, we boosted happiness in the laboratory. We did this via some extremely simple mood induction procedures common within psychology. The first was through audio-visual stimulus (a form that psychologists consider especially effective, working on more than one sense): a short comedy clip. A second was the simple provision of some water and snacks. In a variation we noted existing real-life shocks, stemming from bereavement and family illness, and checked to see if these more serious life shocks might also generate an effect on productivity many years later.
The subjects of our experiments were Warwick University students who were asked to add a series of five two-digit numbers in 10 minutes. The task is a very simple one, but taxing under time pressure. It might be thought of as a very stylised representation of an iconic white collar job since both intellectual ability and effort are rewarded. The subjects were paid a show-up fee and a performance fee based on the number of correct answers.
The comedy movie clip succeeded in raising the reported happiness levels of those who saw it, as compared with those who did not see a film or who saw a placebo film, a clip depicting patterns of colour sticks. The free water and snacks had the same positive effect. The real life shocks did seem to produce a lasting and negative effect on the reported happiness of our subjects up to 3 years after the event (we asked them about real life shocks at the end of the session so as not to prime them and so as not to confuse the effect of the shocks with the effect of recalling the shocks).
Among the subjects who reported higher happiness levels after seeing the comedy, productivity was significantly higher: 12% higher than the productivity of the other subjects, for both men and women. The subjects who watched the movie but did not report higher levels of happiness did not demonstrate higher levels of productivity. As a result, the increase in productivity seems to be linked to the increase in happiness, not merely to the watching of the comedy movie per se. The story with snacks and water was virtually identical with this group also performing much better at the task. Similarly for those subjects who suffered a “bad life event” in the previous 3 years productivity was 10% lower than those who did not suffer any family bereavement or serious illness in the family. Given the extraordinarily homogeneous sample of our subjects in terms of age, experience and ability, the difference in productivity was unexpectedly striking.
As mentioned earlier, our results indicated that this increase in performance was achieved through an increase in the number of attempted additions, while the probability of being correct when carrying out each addition was unaffected. Hence, we argue that the effect on productivity works through increased effort rather than ability. This distinction is of interest. It might be viewed as one between industry and talent, between the consequences of happiness for pure effort compared to effective skill, although in related work psychologists have shown that boosting happiness can also boost creativity (which they measured as the raw number of ideas).
In terms of applications of this work, most directly we now have some evidence generated through controlled conditions which supports the idea of the “happy-productive worker”. While many managers have known for years that establishing a happy environment can work wonders for productivity, many still see worker wellbeing as an alternative to profitability. Our message is that happiness and profit can move in the same direction. As for how to achieve this, perhaps starting with simple low-cost changes such as better positive feedback, nicer environments (even fresh coats of paint or buying that new coffee machine workers have been asking for). More expensive happiness boosting measures might well be justifiable but this can only reasonably be checked through a process of trial and error, but given the potential gains, it might be worth experimenting with new ideas.
Dr Daniel Sgroi, Associate Professor of Economics, University of Warwick