Some six years ago, the restaurant chain Nandos carried out research to find out why sales at some of its restaurants grew faster than at others. After detailed analysis, the company concluded that one factor explained the difference: how happy the staff were, as measured in the firm's annual staff survey. Of course, Nandos still wanted to maximise growth and profits. But the way to achieve this aim, it decided, was not to concentrate directly on those elements but instead to target the underlying factor of employee contentment. It changed the managers' bonus structure so that it was 50% based on their achieving staff engagement. The message for them was: 'Your key focus should be on making your staff happy.'
A similar story is told by David Smith, who as 'people director' was head of personnel management at Asda from 1994 to 2009. At its low point in 1990, Asda had found itself just 10 days away from bankruptcy. But by 2002, it was rated by the Sunday Times as the best place to work in the UK. Today it has 170,000 employees and annual sales of £18bn. How did Asda achieve this? According to Smith, it was by focusing on its people. 'We had 360 separate P&Ls and I have done the calculations,' he explains. 'There is an absolute positive correlation between staff engagement and profitability. If a branch can achieve an engagement level of 94%, I guarantee that the profits will grow exponentially.'
Check out the evidence
The Nandos and Asda examples are backed up by academic evidence. Alex Edmans of the Wharton School of the University of Pennsylvania analysed the results of investing in the companies named in the Great Place to Work listings over the past 25 years. In his paper, 'Does the Stock Market Fully Value Intangibles?', he claims that an investment strategy of changing the portfolio each year in response to the latest list would have delivered 3.5% more per year than a comparable stock market investment from 1984 to 2009.
So, whereas an investment that tracked the stock market produced a fund of £100,000, a strategy based on the best workplaces would have produced a return of £236,000.
The evidence is clear. A happy workplace, where staff feel engaged and valued, is a more productive workplace and leads to greater financial success. So how do you create a happy workplace? Happy, the London-based training business I founded and still run, has been rated in the top 20 workplaces in the UK for five successive years in the Financial Times/Great Place to Work Institute list. We now work with a wide range of organisations to help them create happier and more productive work environments. From our own experience and this work with others, we have come to 10 key principles that we have found can transform an organisation. (See below).
Learn to trust your people and let them get on with the job
Our core belief is that people work best when they feel good about themselves. Most of us agree with that statement. What then should be the main focus of management? If the statement is true, then surely the main focus should be making your people feel good, valued and motivated. I like to ask people how their workplace would be different if that were the main focus of management. Most respond that it would not only be more enjoyable but that it would be easier to get things done, and be more productive. Just think about it. How would your workplace be different?
When are you most productive? I have asked thousands of people to look at their own experience and consider when they worked at their absolute best. They were asked what characterised that time. For a very few, it was at a time when they were particularly well paid. For some, it was a time when communication was strong from management. But for nearly everybody, it was a time when they were challenged but also trusted and given the freedom to do things their way.
In survey after survey, we have found that the biggest complaint people have at work is of micromanagement and not being trusted to do the job. It makes people unhappy and less productive than they could be. A key element of great management is about getting out of the way and letting people get the job done.
Stop approving things
Here is a way you can put this into practice now. It is likely, as a manager, that you ask an individual or group of people to solve problems or come up with new solutions and then bring back proposals for your approval. Instead, try pre-approval. Agree what is to be achieved, what the budget will be and on who needs to be consulted, and then pre-approve the individual or group to put the idea into practice without asking you first.
I received an email from one of our freelance trainers to thank me for three things we'd recently changed that made life easier for her. As I read the examples, a couple of things struck me. First, I had not been aware that these changes had been made. Second, I realised that, if they had gone across my desk for approval, I would have rejected at least two of the three proposals.
I had originally set up most of the systems for training here at Happy. These were all my ways of doing things and, like most managers, I had a natural resistance to changing the methods I had devised. Once a proposal is on my desk it is hard to ignore it and especially difficult to resist the temptation to 'improve' it. Be honest now: how have you felt when one of your ideas or proposals has been 'improved' by your manager?
I realised the only way to ensure you don't get in the way of perfectly good proposals - and I recommend it to you - is to make sure new ideas don't have to go across your desk for approval. The first step to increasing innovation in most organisations is to remove the levels of approval needed to do something new. If this sounds challenging, start with small things and work your way up.
Give your team clear guidelines
The idea is not to give people complete freedom. In the organisations we've worked with, the message from staff is clear: 'Give us clear guidelines and then give us freedom to work within them.' We call it job ownership. We agree principles to work within: 'Don't tell when you can ask' is a crucial one for our trainers. Agree the targets to achieve and then step out of the detail. This approach is about expecting the highest standards and holding people absolutely accountable for their achievement.
Our core business, Happy Computers, provides IT training and I believe has the highest standards in the sector. We've been rated in the top two in our industry awards in five of the past six years. It is the freedom we have given our people, within clear guidelines, that has achieved that level of quality.
Promote those who are good at managing people
I often say that our most radical belief about management at Happy is that people should be chosen to manage on the basis of how good they are at it. Too often, people are promoted to be managers on the basis of how good they are at their core job or how long they have been in the post.
Imagine you have a great programmer in your IT department. She has been there for 10 years and does consistently good work. What will happen to her? It is likely she will one day be promoted to programming manager. The fact that she is a great coder will apparently mean that she is great at supporting and coaching people. That wouldn't happen at companies like Microsoft or Google. They make sure their great programmers are well paid. They will involve them in key decisions and make sure they feel valued. But they won't put them in charge of other people unless that is something they are really good at.
If you ask a group of managers whether they enjoy managing people, you will get two sets of responses. Some will say that they love it - it is what motivates them to come to work. But others give a different response. They are good at the core job but they don't feel they are great at managing people, and indeed it often causes them great stress. Play to your employees' strengths, and find a way to get the latter group out of managing people - it will be liberating for them and for those who manage.
Let people choose their managers
Imagine that one of your most valued colleagues comes to you and says: 'I love my job. I love the people I work with. I am even happy with what I am being paid. But I can't stand my manager.' If the problem can't be resolved then it's likely that he or she will leave. A study by the Chartered Management Institute in 2009 found that 47% of respondents left their last role because they were badly managed and that 49% would be prepared to take a pay cut if it meant working with a better manager.
At Happy, we can solve it in about five minutes. We simply ask people who they would like as their manager. Given how important a manager is to getting the most out of others, we let people choose theirs. This isn't common but Happy is not alone in this approach.
WL Gore, the multibillion company behind Gore-Tex, also lets people choose their managers, arguing that 'if you want to be a leader, you'd better find some followers'.
Other key factors to a happy workplace include a no-blame culture, a good work/life balance, transparency and a genuine commitment to the wider community. I like to think about the question I first heard posed by Professor Julian Birkinshaw of the London Business School: 'What would management look like if it were designed by the people who are managed?' I believe it would look something like what I've described here. And we have found that applying these principles across many organisations we have worked with creates happier and more productive workplaces.
TEN STEPS TO A HAPPY WORKPLACE
Guiding principles of the Happy Manifesto
1. Trust your team. Step out of approval. Instead, pre-approve and focus on supporting your people.
2. Make your people feel good. Make this the focus of management.
3. Give freedom within clear guidelines. People want to know what is expected of them. But they want freedom to find the best way to achieve their goals.
4. Be open and transparent. More information means more people can take responsibility.
5. Recruit for attitude, train for skill. Instead of qualifications and experience, recruit on attitude and potential ability.
6. Celebrate mistakes. Create a truly no-blame culture.
7. Community: create mutual benefit. Have a positive impact on the world and build your organisation too.
8. Love work, get a life. The world, and your job, needs you well rested, well nourished and well supported.
9. Select managers who are good at managing. Make sure your people are supported by somebody who is good at doing that, and find other routes for those whose strengths lie elsewhere. Even better, allow people to choose their own managers.
10. Play to your strengths - make sure your people spend most of their time doing what they are best at.
- The Happy Manifesto by Henry Stewart is available from www.amazon.co.uk. Or contact Happy directly on firstname.lastname@example.org for a copy.