Tuesday, January 22, 2008

Happy Employees Are More Productive, or Are They?

You would think that happy employees are more productive. At least I would. On that premise, companies are spending quite a bit of money to improve the workplace.

While there indeed is a correlation between happiness and productivity, increasing happiness does not necessarily increase productivity. Read what Nathan Bowling has to say about this, as quoted by Freakonomics:

My study shows that a cause and effect relationship does not exist between job satisfaction and performance. Instead, the two are related because both satisfaction and performance are the result of employee personality characteristics, such as self-esteem, emotional stability, extroversion and conscientiousness.
Or said otherwise: both happiness and productivity are causes of other factors, themselves not necessarily well known and easy to identify or quantify. So just increasing happiness independently of those factors does not necessarily influence productivity.

What is the most interesting about all this is to see how easily we mistake a correlation for a causality. Because two factors are correlated does not automatically mean that one is the cause of the other. If there is one lesson to be learned from Freakonomics, it would have to be this one.