The relationship between money and well-being is unusual. The common wisdom is that the more we have the happier we become. However, consider this analogy. Over the Christmas period, it is tradition to stuff our faces with turkey and chocolates until we feel satisfied and happy (and probably sick). Come January though, I for one will be glad to see the back of it and will avoid probably avoid eating the stuff for several months...alright, maybe not the chocolates, but you get my point. As humans, we tend to consume something to the point where our needs are met and then we take a break.
Not so, it seems, with money. To quote Adam Smith, the founder of modern economics, "the desire for food is limited in every man by the narrow capacity of his stomach. But the desire of [money] seems to have no limit or certain boundary."
Economists and psychologists have been wrestling with the relationship between money and happiness for decades. Humans devote much of their time and energy to earning it, seemingly motivated by the belief that money will have a substantial impact on their overall life satisfaction. However, given the current economic crisis is leading most organisations to freeze pay increases and withdraw bonus packages, this is undoubtedly going to lead to feelings of frustration and anxiety.
Research shows that people tend to drastically overestimate the impact that income has on well-being. For example, recent research in the Journal of Positive Psychology, found that people are notoriously bad at predicting the levels of happiness associated with differing levels of income. It is true that individuals who live on or below the poverty line tend to display lower levels of well-being - i.e. it hurts to be cold, hungry and tired. However, once people have achieved a threshold level of income to buy their way out of hardship, then our prediction that money and happiness grow together breaks down. Studies actually show that increases in income have increasingly less of an impact on actual levels of happiness.
So, why do we hold on to the erroneous belief that more money means more happiness? Why do we continue to stuff our pockets when we would not continue to stuff our faces?
The answer to these questions will be a continuing topic of debate amongst economists, psychologists, philosophers and...well, everyone for many years to come. However, what I do know is that people tend to attribute too much emphasis to this one variable, and overlook the plethora of other variables that positively impact global life satisfaction (love, friendship, esteem, variety, achievement, challenge, recognition...the list goes on). Perhaps the festive period is a chance for all of us to take stock and consider what really matters (in between mouthfuls of turkey).
"In these tough times there is not much space for mister nice guy, mister cuddly cuddly kissy kissy..."
With his usual eloquence and poetic use of language, Sir Alan again revealed his contempt for the role of softer, people skills in the "cruel hard world of business" in last week's episode of The Apprentice. He went on to state that, especially during a recession, "being a nice fellow...may not be enough".
Granted, leaders during a time of recession do need a certain set of qualities that are perhaps less prevalent during more prosperous times. For example, the ability to envision a promising future and demonstrate the drive and resilience to forge a path through the crisis will be critical to survival. However, if that leader fails to inspire, motivate, empower and mobilise those around him/her then the whole exercise will prove fruitless.
Leaders must focus on more than just the task. Leaders have to focus on the people around them, on inclusivity and engagement, and on the vision of the future. Leaders have the opportunity to shape the activity of followers and, in essence, have a direct influence upon the quality of work life, the degree of well-being and the levels of engagement that their followers experience.
Organisational research going back over two decades makes it clear that the world of work, especially as it relates to leading and managing, clusters into three key areas of skill. Firstly, the task leader drives towards achievement of ambitious goals through a combination of determination, resilience and clarity of focus. They take ultimate responsibility for the quality and delivery of results. Secondly, the thought leader constantly looks to new opportunities and the future. They quickly evaluate complex and ambiguous situations and are ready to analyse and challenge tough decisions. The thought leader initiates changes and improvements, and is imaginative and open to taking entrepreneurial risk. Finally, the people leader inspires others towards achievement of ambitious goals through a combination of communication, influencing and engagement skills. They are openly passionate about what they aim to achieve, yet caring and considerate in the way that they approach others. They know that people are their most valuable resource and will do their utmost to secure and retain the commitment of their teams.
Sir Alan seems to have fallen into a common trap when selecting new leaders - he is recruiting others in his own image. It is clear that Sir Alan values and looks for high levels of entrepreneurial spirit, dogged levels of drive and determination and an almost pathological level of self confidence. All of which are traits common to the man himself. However, it is important not to underestimate the importance of people leadership, especially during a recession.
Without a healthy balance of all three types of leadership, then a leader, and by extension an organisation, is doomed to failure. In these current economic times, the ability to envision a new future and show the drive and persistence to get there is critical. However, it is also important to ensure you bring people along with you. During a recession, employees are far more likely to feel stressed, demotivated, directionless, fearful of the future and heavily focused on the woes of the present. Effective people leaders, or "mister cuddly cuddly kissy kissy" as Sir Alan might call him/her, are crucial for ensuring the business's most critical asset - its people - are inspired to succeed.
Given last week's comments about James said through gritted teeth ("nice guy"; "nice fellow"; "mister nice guy"), I suspect Sir Alan might again fall into the same trap and miss out on the truly inspiring and motivating leader. Time will tell.
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