What is happiness? Does happiness at work make our employees more productive? Will we be more profitable? Will we have an edge on our competitors? Will this help make a positive impact on the world around us?” What is the criteria for happiness at work? We are going to be talking about the topic of happiness and how it impacts us on a work sense and the concept of Procedural Utility – is happiness reaching the destination where you’ve ticked off the criteria on your list, or the journey getting there?
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Benz, M., & Stutzer, A. (2003). Do Workers Enjoy Procedural Utility. Applied Economics Quarterly, 49(2), 149-172.
Frey, B. S. (2010). Happiness. A Revolution in Economics. Cambridge, MA: MIT Press.
Frey, B. S., Benz, M., & Stutzer, A. (2004). Introducing Procedural Utility: Not Only What but also How Matters. Journal of Institutional and Theoretical Economics, 160(3), 377-401.
Ryan, R. M., & Deci, E. L. (2000). Self-Determination Theory and the Facilitation of Intrinsic Motivation, Social Development, and Well-Being. American Psychologist, 55(1), 68-78.
Schroth, H. A., & Shah, P. P. (2000). Procedures: Do we really want to know them? An examination of the effects of procedural justice on self-esteem. Journal of Applied Psychology, 85(3), 462-71.
Vargus, A. (2014). Procedural Utility in the Workplace, Evidence from Mexico. Theoretical Economic Letters, 4, 821-828.
[00:00:00] The topic of happiness is one I am often questioned about. People are really curious about how they get happiness, and often there is a misconception. This misconception is “once I reach these certain things, I will feel happy”. People decide what success is, whether that is a certain job, a title, a career move, a salary, a house, holiday car, whatever it is you decide success is, people believe that “once I reach the end goal, I will feel happy”. Unfortunately, what often happens is when they reach these goals. They realize that they don’t feel happy. And they’ve often moved the goal posts in the meantime anyway. We think that happiness is a destination, but all of science shows that happiness is part of the journey. It is not the destination. A few years ago, I did a master’s in Positive Leadership and Strategy and one of our subjects was the Economics of Happiness.
[00:00:57] Today’s episode comes from one of the papers I wrote for this Master’s Degree. We are going be talking about the topic of happiness and how it impacts us on a work sense and the concept of Procedural Utility. Procedural utility says that people also value the conditions and processes that lead to an outcome, not just the outcome. Which essentially is saying that people value the journey, not just the destination when it comes to decision making in their work.
[00:01:24] Firstly, let’s talk a little bit about the topic of happiness.
[00:01:28] It’s really important to note there are three innate psychological needs that relate to people’s wellbeing (or happiness) and this is known as Self-determination Theory. I’ll be putting some links and articles in the show notes of references of where this information has come from in case you’re interested in reading more about these topics.
[00:01:47] So in the Self-determination Theory, there’s three things that you need.
[00:01:52] First the sense of Autonomy, which is the need to control the course of your own life. People are happier or have a greater wellbeing if they feel in control of their own life. The second, is Relatedness. And this refers to the need for close relationships with other people. And the third thing in Self-determination Theory, is competency. It’s the need to feel that we are effective in dealing with the environment. Another way to look at that is that we feel competent and are able to do a task or a job.
[00:02:27] So have a think about this for yourself – is there an area where you feel these three things, a sense of Autonomy where you feel in control of the things that you’re doing? Relatedness, so close relationships with others, and you feel Competent, you feel effective with the type of work that you’re doing.
[00:02:42] Some people feel this at work. Some people do not feel this at work. Some people feel this in their personal life or in a hobby. And it’s important to have a look at these three areas and think “am I ticking these three off or is there one that needs a little bit more emphasis?”
[00:02:59] When we are thinking about happiness in a workplace, the concept of Procedural Utility is one I want to speak about.
[00:03:05] As I said earlier, Procedural Utility says that people value the conditions and processes that lead to their outcomes, not just the outcomes. So let’s think about how this could apply in a work setting.
[00:03:18] Consider within your team, how you go about deciding who gets leave when, who gets promoted, how salary reviews are done. All of these things have a definite outcome, and often for reasons of time or reasons of “I’m the leader, I make the decisions” we just share that outcome. What we don’t share the process on how we get to the outcome.
[00:03:42] I’m sure everyone’s had the experience where someone has been promoted. And you completely disagree on that person being promoted. What’s been shown in a lot of the research is. You may disagree with that person being promoted, but if you understand the process on how they got to that decision, you are more likely to be okay with it, because it has gone through procedural utility. So that can look like having a process on how promotions happen. Whether there’s a structure in place the same with salary reviews or how you decide, who gets to take leave when (particularly things like school holidays) where there is a process and a fairness element to it.
[00:04:21] People might still not like the outcome, but if they understand the process that it’s gone through, they’re more likely to still be engaged.
[00:04:29] You can also consider procedural utility for things like salary cuts or redundancies. During a time of the pandemic there was a lot of companies that were in the position of not being able to retain all of their staff.
[00:04:40] Companies that were able to engage their staff in what was happening were able to have a conversations about what some options that were being considered and get their feedback on it. These companies were able to factor in at two of the Self-determination Theory points. One Autonomy and two Relatedness.
[00:05:01] It made it improve the outcome of the salary cuts or redundancies. But if the method is fair, people are more likely to experience Procedural Utility. It also helps with this idea of Survivor Syndrome. Often when we reduce staff, those that are remaining feel guilty for still having a job. And if there’s a fair process, it reduces that impact.
[00:05:22] There’s a couple of trade offs that we need to consider when having Procedural Utility. So every time you go through this process, It slows the pace of work. So it’s a lot faster just to make people redundant or it’s a lot faster just to say, this is who got promoted or this is who got the salary change.
[00:05:43] But the impact of that is you can disengage your whole workplace in one, go. And not have procedural utility. So going through a process where you are engaging people through procedural utility, and also this Self-determination Theory can take time. It can slow the pace of work.
[00:06:02] So what are a few notes that you can take from this podcast today and apply directly into your work life? First of all, happiness. Happiness is subjective. Sometimes we think happiness is the destination, but I guarantee you, it is the journey.
[00:06:19] If you think you’ll reach happiness only once you’ve done certain things on your goal list. What happens is we reach those things and we move the goal posts and we never reach this idea of happiness. Happiness is about the journey, not about the destination. There will be more in this topic on our future podcast episode.
[00:06:39] So on the topic of happiness, there’s also something called Procedural Utility. Procedural Utility says that people value the conditions and processes that lead to the outcomes, not just the outcomes. Which means having a fair process and engaging people along the way, means even if they don’t like the answer or the outcome, they will still be engaged and relatively happy.
[00:07:02] The third thing is the idea of Self-determination Theory. This has a big play in how happy we feel in life and in work. And it relates to three different things. Autonomy to the need to feel in control of your life. Relatedness the need for relationships with others. And Competency feeling good at what we are doing.
[00:07:22] If you’re wanting to apply this theory directly in your workplace, have a look at your team and have a look at yourself and think ” do I feel in control of the work that I’m doing?”. Often people that are micromanaged do not feel their Self-determination Theory. And are less likely to feel happy in their work because they don’t have a sense of Autonomy.
[00:07:42] Think of how you can give your team a sense of control and what they’re doing. Whether that’s giving them the outcome you want and then getting them to decide how they’re going to go about it and present their plan. That can be one way you can give them Autonomy. Without feeling out of control as their leader.
[00:07:57] The second area, Relatedness, the need for close relationships with others. Do they feel connected with people that they work with? Is there something you can do to help build the bonds and relationships with your team at work?
[00:08:08] It can be as simple as a lunch together or at the beginning of each team meeting, sharing something that you might not know about each other. All these small things help improve Relatedness or our close relationships with others.
[00:08:20] The third is feeling Competent in your work. I often talk about having two thirds of your job in this genius zone, the things that you’re really good at, and one third of your job, that’s a stretch outside that.
[00:08:31] If you have too much of your job, that is a stretch that you feel like you are sinking, this “Competency” is not very likely to be ticked. So you need to have part of your job in an area that you feel like you can excel in. But it also important that you are stretching outside that.
[00:08:47] And the final point for today’s episode is, the process is more important than the destination. Having the answer sometimes is the fastest way and just telling people what’s happening. But if you can involve your team in how you came up with that decision and share this Procedural Utility. You’re more likely to have an engaged team.
[00:09:08] Yes, it takes a little bit longer in the short term. But long term, you will have a team that is more likely to respect your decisions, and more likely to want to be there and part of your team and want to work for you as a leader.
[00:09:21] If today’s episode has been helpful for you, make sure you go to your podcast app and subscribe to the episodes that come out every week. You’ll then get a notification pop up when the next one drops. Also feel free to share this with one other person. If we can make leadership better by 1% every day, we are making each other better people to work for and the workplaces better places to be. Thanks for listening.
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