January 16, 2012
The Institute of Economic Affairs (IEA), has today released a report containing research which, they claim, shows that the leading indicator of happiness is wealth. The conclusion that the IEA, the free market think-tank, draws is that the government should forget their investment in, and promotion of, ‘general wellbeing’ and concentrate on boosting growing the UK economy.
At the heart of the argument is a disagreement with the so-called ‘Easterlin’ school of thought which holds that after a certain point our wealth no longer drives our happiness. Amongst other things, the new report contends that 20% more wealth has the same affect whether you earn $500 a year or $50,000 a year.
As a psychologist it’s not my place to enter into an argument about the economics that sit behind the assertions made by the two sides in this debate. I’m sure that it’s possible to use the data to construct arguments to support both positions. However, what concerns me about the new research is the implication that focusing on happiness, well-being and mental health is a waste of time…and that we should just get back to making money!
Research of this kind is based on pulling together macroscopic financial data from many countries and connecting it with very general ‘life satisfaction’ scores. It has its place, but it doesn’t necessarily tell the story about what is happening on the ground. Money is important to all of us – of course – but it is only one of the many things that influence how we feel and how happy we are with our lives. The data in any given year may nudge us in one direction or the other, but how can we forget recent examples of footballers grappling with depression and mental illness? Or the many stories of lottery winners who fail to find happiness? Or our own experiences of what really makes us happy on a day-to-day basis? How much evidence do we need before we accept that money alone is never enough to bring true happiness? For the vast majority of people it’s about finding the right blend of relationships, health, social support, achievement, community, family, love, work, money and a whole host of other things. In short, it’s about living a balanced life.
I don’t think this new finding should in any way put off David Cameron and the government in their attempts to measure and develop the happiness of the nation. The current effort is partly about encouraging those who have enough money, or are within touching distance of that ‘saturation point’, to consider more deeply what they want; to think about whether they need more money or whether it would benefit them and their community if they knew how to live a happy life, whatever their financial status.
Yes, in our economy wealthy people at the top need to continue to create wealth so there is a trickle-down effect – but if we leave it at that we are setting a dangerous precedent for the aspiring middle classes who will assume (as many do now) that the goal is to get rich, rather than to live a good life and contribute to the happiness of others. The current government’s efforts are as much a response to massive increases in mental ill-health, as they are to the sense that we are focusing on the wrong things. In this sense, I agree with the assertion that we can no longer afford to focus on growth at all costs and to the detriment of our health.
I do think, though, that the government is in for a tough fight in the face of challenges such as those issued by the IEA report. On the one hand the coalition is promoting happiness as an ultimate goal that will bring us a sustainable economy and better lives – ones that don’t rely unrealistically on credit and spending on things we don’t need. Yet, right now we are trapped inside an economy that is based on, and demands, growth. Every headline bemoans the lack of it and over Christmas we were again encouraged to get out there and spend to help the ailing high street. All that talk of ‘make do and mend’ that we heard a few years back has faded and we’ve been encouraged to revert to our former spending patterns. So the government has a dilemma: does it want us to genuinely change the goal of the whole enterprise to be about achieving happiness or does it want us to focus on growth? If the only way to get happy is growth then we are, as the new research would have it, back to square one!
In reality, this points to an awkward transition period where we need old levels of growth to support the nation’s economy (which will, in turn, support our old habits!) while we try to make a shift to a new way of living and working based on different values. Maybe we need some signposts for how this will be achieved – this could be about moderating our growth targets slightly in favour of changing the way we do business – taking the hit now for the long-term strategic benefits this will bring. It will be a massive challenge, but no one ever said this would be easy and we now need to decide whether we’re up for it or not!
1 Comment | 
economy, Happiness, prime minister, Uncategorized | Tagged: David Cameron, economy, government, happiness, IEA, Institute of economic affairs, mental health, wealth, Well-being | 
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Posted by Cary Cooper
November 11, 2011
Last month I was lucky enough to be able to attend a session of the ‘All-Party Parliamentary Group in Wellbeing Economics’. Led by Cabinet Secretary Sir Gus O’Donnell, and attended by senior MPs from all parties, it was promising to see the high level of attention being paid to the subject.
Sir Gus was wholly in support of the project to measure the nation’s well-being, and taking action on the results. We need to consider how to use this data to improve the quality of life for individuals, families and the elderly; people’s working lives and work life balance; health and welfare services and infrastructure.
Importantly, he highlighted that a holistic measure of the country’s success should include GDP, but not be restricted to it. I think this is something that’s often forgotten by those who claim the government should not be ‘wasting’ time an effort on ‘measuring happiness’. No-one in support of this activity is suggesting that economic stability or unemployment are any less important than they always were, just that there are other things that are important too. Good economics and well-being are not mutually exclusive – in fact, quite the opposite is true!
To get this right the ONS measures need to be recording the right data, something I’ll talk more about in my next blog.
Leave a Comment » | economy, Well-being | Tagged: Cabinet Secretary, economics, GDP, happiness, MPs, national well-being, ONS, Parliamentay group, Sir Gus O'Donnell, stability, unemployment, Wellbeing economics | Permalink
Posted by Cary Cooper
October 28, 2011
The IDS (Incomes Data Services) have revealed that the average package for a FTSE 100 company director has risen by 25 – 50% in the last year, depending on which average you take. Although this does not mean salary has increased by 50% (the majority of the rise is a combination of bonuses and other benefits) this is nonetheless a shocking statistic considering the experiences of the past four years.
Figures like these send a damaging message that some sectors have learnt nothing from the recession. In a time when so many are still facing real hardship, it seems crass at best. At worst, it risks seriously demoralising the rest of the workforce, who carry out the day-to-day work but are battling for any pay rise at all.
This is a difficult thing to tackle, as each organisation claims they have to ‘keep up with the Joneses’ if they are to attract top talent. I’m not saying that these aren’t challenging roles, and success should be rewarded. But here’s the important bit, these rewards need to be justifiable. No-one should expect a multi-million pound salary simply for being at the top.
The risk here is that we create a completely unsustainable situation, where these extraordinary increases are expected year on year, and the divide between the top and the bottom will ever widen. These findings have quite unsurprisingly caused outrage among many. But until the companies are forced to answer to other stakeholders, they can continue to operate in this way.
2 Comments | economy, Leadership, reward and recognition, Talent | Tagged: bonus, company director, demoralising, FTSE 100, IDS, Incomes Data Services, recession, salary, unsustainable | Permalink
Posted by Cary Cooper
October 14, 2011
This week I attended the World Economic Forum in Abu Dhabi, where I was a member of the Global Agenda Council on Health and Well-Being. The ‘great and the good’ from all over the world were there to explore the burning issues of our time, including the dire global economic crisis, poverty, sustainability, water shortages, social networking, ethnic tolerance, leadership and climate change. Even though the academics, business leaders, politicians, non-governmental and global gurus were there to explore their particular area of expertise, they all understood the impact of these challenges on the individual human being. There was a real concern for the quality of life of individuals, families, communities, businesses and populations on every continent.
Although these discussions can’t solve all of humanity’s problems, they can at least explore the possible alternative solutions, their costs and benefits, how they might be achieved and the likely scenarios for the future if we don’t deal with them. It is wonderful to see people from all corners of the world coming together to try and understand not only the global challenges but also the different problems we are facing, from the under-developed to the developing to the developed worlds. WEF may be perceived as a talking shop but it does achieve some good, and helps to drive global change on what some may think are intractable problems. This is a slow process but profound change always is.
Leave a Comment » | citizenship, Community, economy, health, Leadership, Uncategorized, Well-being | Tagged: climate change, ethnic tolerance, Global Agenda Council, global challenges, global economic crisis, Leadership, poverty, social networking, sustainability, water shortages, WEF, World Economic Forum | Permalink
Posted by Cary Cooper
September 7, 2011
The IPOD generation – Insecure, Pressurised, Over-taxed and Debt-ridden – was an acronym first coined in 2005 and applied to those then aged 18 – 35.
Although this term is not as commonly used now, I’ve become increasingly concerned about the fate of this generation of young people, and the one that is following them. The ongoing debate around the connection between a disillusioned youth and the recent riots highlight how important it is to tackle these issues. Here are just a few worrying findings that have been revealed in the last few months:
- Rising university fees will continue to increase the debt burden of those who opt for higher education. Despite this, places are still hard to come by; this year 189,992 people were chasing 29,409 available places through clearing.
- 18.4% of 18 – 24 year olds are currently classed as Neets (not in employment, education or training), the highest level since this data became available in 2006.
- A recent Graduate Prospects survey estimates that half of internships are unpaid.
- The National Housing Federation warned that the decline in the number of homeowners is set to continue, with buying and letting prices increasing as a result of the housing shortage.
- 47% of micro employers would be ‘fairly’ or ‘very’ nervous about employing school leavers as they do not think they are equipped for the world of work, despite many wanting to recruit new staff.
I don’t want to dishearten those who will be facing these challenges, but it is important to talk openly and realistically about their aspirations and expectations. Home ownership is a prime example. Although the average age for a first time buyer is now 35 (and for many that involves help from parents), many will spend their 20s and 30s scrimping to save a deposit and feel like a ‘failure’ if they do not reach this goal. This, combined with other debts and job insecurity, will be a dangerously long term source of pressure.
Later this week I’ll discuss whose responsibility it is to help turn this situation around – in the meantime I’d welcome your thoughts.
http://www.independent.co.uk/news/education/education-news/another-record-year-for-alevels-prompts-frantic-university-scramble-2340311.html
http://www.bbc.co.uk/news/education-14644613
http://www.britishchambers.org.uk/zones/policy/press-releases_1/micro-businesses-want-to-grow-but-struggle-to-find-the-right-staff-reveals-bcc-report.html
Leave a Comment » | economy, Personal Resilience, pressure, Stress, Uncategorized | Tagged: debt, generation, Graduate Prospects, higher education, Home ownership, IPOD, micro employers, National Housing Federation, neets, pressure, riots, university | Permalink
Posted by Cary Cooper
June 28, 2011
As someone who has worked as university lecturer in the public sector for most of my career, I can understand the great concern public servants are now expressing about their pay and pensions. And I can also understand that many who will be affected agreed to take lower pay for job security and better pensions, when they were first considering their career options. But for some (though not all), public sector pay has improved over the years, whilst job security and generous pension entitlements have remained.
Importantly, and realistically, three things have changed since those times which have affected the pensions landscape. First, jobs in the public sector are no longer safe, with downsizing in government departments in the order of 20-30%. Second, pension provision in the private sector has got much worse, with many no longer receiving final salary pensions. And third, we have been through a recession which has resulted in continuing lower growth forecasts. That’s in addition to the long term increase in life expectancy which puts more pressure on the pension pot.
From an equity point of view, the increases in public sector pay, at least at the top, together with the worsening of pensions in the private sector, have made many people in the private sector and in SMEs upset at the widening gulf between them. There is certainly an issue here, particularly at a time of real economic hardship and low growth. Unfortunately this is not a problem that will end soon, as the BRIC countries compete more aggressively and our economy’s recovery is likely to be at a snail’s pace for at least a decade!
The solution is not industrial action though, because that doesn’t solve problems, it only creates even more. We need a dialogue between employers and unions to move towards a long term resolution. Given the economic context , and the hardships being faced, I think a fair solution might be one in which people in the public sector no longer traded off lower wages for pensions (given that they have already lost their job security), but they were better paid with more realistic pensions. That some people in the public sector should be able to retire at 60 on a full pension, whilst others in the private sector may have to work on until 70, does not seem fair. We need to acknowledge the contribution that our teachers, nurses, government officials, etc provide to us all by paying them a fair and proper wage. For their part, they need to look at the reality of the government’s ability to sustain pensions in the future, given the demographic time-bomb. It is all about discussion and, dare I say it, compromise on both sides.
Leave a Comment » | economy, Private Sector, Public Sector, reward and recognition | Tagged: BRIC, career, demographic, downsizing, government, job security, lecturer, life expectancy, pensions, Private Sector, Public Sector, public servants, recovery, SMEs, university, wage | Permalink
Posted by Cary Cooper
March 9, 2011
I’ve written about the value of community and ‘civic virtues’ before in my blog ‘Finding meaning in the community’ and since David Cameron recently ‘re-launched’ his Big Society campaign (amid much scepticism) it seems to be a good time to come back to this issue.
Many commentators have taken the opportunity to identify problems with the idea – focusing on the fact that it’s a cover-up for the severe cuts in public spending or that the idea is “unclear” or “incomprehensible.” The journalist Johann Hari, for example, has drawn attention to relevant research by sociologist Amitai Etzioni. Etzioni conducted an international study of ‘volunteerism’ which found that volunteering is highest where state funding is highest, and lowest where state funding is lowest. You may be wondering why this would be the case – the answer: volunteers need to be recruited and trained – you can’t just set them to work on complex tasks. When funding is available this becomes possible and when it’s not volunteering rates wane. Add to this that in difficult times workers are more likely to put time into working extra hours to earn more money or ensure they keep their job than give their time away as a volunteer.
‘Civic virtues,’ are thought to promote group and social harmony – so the idea of the Big Society is certainly aligned. The proposal may yet turn out to be a good one, but people are struggling to visualise the process we need to follow to get there and while the values at the heart of the society work in principle, they are proving hard to promote in practice. Several commentators have been debating whether we can ‘nudge’ these behaviours – the approach adopted by the Cabinet Office’s Behavioural Insight Team (e.g. http://blog.mindapples.org/2011/01/31/nudge-vs-bigsociety/) – however, it’s clear that such a fundamental shift in societal culture and values will take an awful lot of small ‘nudges’….or a few very, very big ones!
You won’t be surprised to hear that I subscribe to the values that sit behind the idea of the Big Society: individuals becoming more community focused, involved, free from constraints and responsible. It could have a very positive impact but we’re now getting to the point where we need a plan for how we’re going to implement this new way of being. This could be a huge challenge in a volatile political and economic environment – priorities are constantly shifting and there isn’t much money to make it happen. For me the big question is just how much do Mr Cameron and his government want it to work? What would they be willing to sacrifice to make it work? I’d love to hear what you think.
Leave a Comment » | Community, economy, prime minister | Tagged: Amitai Etzioni, Big Society, Cabinet Office, civic virtues, Community, culture, cuts, David Cameron, economic environment, government, Johann Hari, values, volunteerism, volunteers | Permalink
Posted by Cary Cooper
November 25, 2010
I was lucky enough to be present to watch the Prime Minister announce £2 million of funding for measuring well-being today – and it will probably come as no surprise that I am in favour of the idea! The PM argued strongly that GDP is no longer an adequate measure of progress (if it ever was!), and that we need a new way to track the success and well-being of the nation.
I also welcome the news because it signals a move towards different priorities. Obviously, in a time of job losses and spending cuts we all appreciate the importance of a reliable income, but that doesn’t mean our entire focus should be around increasing our material wealth. Indeed, research has shown that rising incomes over the last 50 years have not produced any corresponding increase in happiness. That means now is the time to develop a new mindset that breaks the erroneous link between money and happiness; we have to challenge ourselves to change this thinking habit. For example, what price would you pay to have 50% better working relationships in a 50% happier workplace? If someone offered you the prize of a significantly more enjoyable working life or a 5% pay increase which would you take? Economic stability of course remains a priority, but after a reasonable standard of living is secured, it’s important that we take a broader view of the other things that can enrich the quality of our lives.
This change in priorities is reflected in other initiatives that are building momentum in this area. One example is the launch of the Movement for Happiness, championed by my friend and colleague Lord Layard. It’s a movement with global aspirations to encourage a different approach to life and work, one that ultimately increases happiness and reduces misery in the world.
While there has been mention of ‘happiness indexes’ from government before, I’m hopeful that this time we’ll see the ideas come to fruition, giving the issue the attention it deserves and influencing future policy-making – but more importantly driving future action and investment.
I’m under no illusion that there will be those who find it difficult to see the benefits of this development – particularly those in households and businesses that are struggling financially. I empathise with them and there’s no doubt that things are difficult right now, but we’re in a ‘can’t see the wood for the trees’ situation – if we can lift our heads and get this right now it will create positive change for generations to come.
I’d love to hear your thoughts and comments – please post below or alternatively send me a message on Twitter
http://www.movementforhappiness.org/
Lord Layard addressed the Business Well-Being Network Conference this year – you can see coverage and footage at http://www.personneltoday.com/articles/2010/11/22/56975/business-well-being-network-annual-conference-addresses-employee-engagement.html
Leave a Comment » | economy, Well-being | Tagged: economic stability, economy, GDP, government, happiness, happiness indexes, Lord Layard, money, Movement for happiness, UK Well-being survey, Well-being | Permalink
Posted by Cary Cooper
September 10, 2010
Results released in a report by Experian yesterday reveal which areas of the UK are the most, and least, resilient. Elmbridge, St Albans and Waverley come out on top, with Middlesborough, Mansfield and Stoke-on-Trent at the bottom of the list. Business, community, people and place are the four key themes the findings are based on – and results depend on each area’s blend. The report has raised questions about reliance on public sector funding and of a north/south divide, among others. But I also think there is a more personal element to an area’s resilience levels than these factors.
The report defines economic resilience as ‘the capacity of the economy to withstand external shock. The less distressed an economy is by an external shock, or the faster it bounces back and returns to the point prior to the shock, the more resilient it is’. The definition also expands to include the link to long term competitiveness, which underlines its importance.
But what can we do about this? Isn’t economic resilience bigger than any individual action? The ‘People’ category does make up an important part of the results, with their skills and employment prospects playing a vital role in an area’s resilience. But what really struck me were the direct comparisons between the sources of resilience for the economy and how we, as business psychologists, discuss the resilience of individuals. The report states that:
‘When understanding what makes an economy resilient, focusing on the flexibility and adaptive capacity of an economy – mainly of its business base and workforce – is a good starting point. In addition, given the close association between resilience and long term competitiveness, factors widely known to affect economic growth more generally, such as the skills of the local workforce or the cohesiveness of local communities, also deserve further consideration’
I’ve written before about the fact that resilience can be developed in all of us, but to summarise, the four key sources of resilience for individuals are confidence, adaptability, social support networks and sense of purpose. Adaptability is referred to directly in the definition above, and it’s not too much of a stretch to see that social support networks could be aligned with the cohesiveness of local communities. As for skills of the local workforce, while the development of personal resilience in each employee may not count as a skill in a more traditional sense, it should certainly be considered a valuable attribute – the report chapter actually opens with the phrase ‘during times of economic turbulence, the ability to withstand external shocks becomes a hot commodity’ – something which can relate to individuals just as much as to organisations.
So yes, economic resilience is a national and regional issue. But ultimately, the economy is made up of businesses, and businesses are made up of people; so the aggregate value of developing personal resilience needs to be duly considered. As organisations and individuals, we should all commit to developing this quality in ourselves and our employees, for our personal benefit, but also to contribute to national economic resilience from the ground up.
You can start developing your resilience today using Robertson Cooper’s free i-resilience tool: http://www.robertsoncooper.com/iresilience/
http://www.bbc.co.uk/news/uk-england-11141264
http://www.experian.co.uk/assets/insight-reports/brochures/experian_q4_insight_report.pdf
Leave a Comment » | economy, Personal Resilience | Tagged: adaptability, business, Community, competitiveness, economic resilience, Elmbridge, employment prospects, Experian, external shock, flexibility, individuals, local communities, Mansfield, Middlesborough, north/south divide, organisations, People, personal, place, Public Sector, resilent, resilience, Sense of purpose, social support, St Albans, Stoke-on-Trent, UK, Waverley, workforce | Permalink
Posted by Cary Cooper
September 2, 2010
With inflation holding stubbornly above 3% and a public sector pay freeze in place, many commentators are predicting industrial unrest in the coming months. I don’t want to speculate on the industrial relations issues (I’ve posted previously on that topic), but we do need to recognise that there is an important link between reward and well-being. The power of a pay rise as a motivator is often limited or short term, but feeling that you are not rewarded fairly has a significant negative impact on your well-being and self-esteem. In this sense pay is often thought of as a ‘hygiene factor’ – if it’s fine you ignore its effect, if there’s a problem with it you’ll soon notice!
Generally speaking, it is not the level of reward itself that seems to be the most critical factor but rather how fair it feels. So how do we assess whether we are fairly rewarded? Most of the time we evaluate fairness in relation to one or more reference points – internally this is likely to be based on a comparison with colleagues at a similar level to ourselves. Many employers get annoyed when an employee seems obsessed with what their colleagues earn in relation to them – preferring to see jobs themselves as having an intrinsic value to the organisation – but unfortunately we do seem to have a need to be able to evaluate our worth by looking at others.
The other option is to look outside and currently in the public sector it is more likely than ever that staff will be considering whether their rewards are fair in relation to what they might earn in the private sector. This might be driven not just by the pay freeze but also by the perception that pensions and other benefits are under threat. While this will not necessarily lead to a mass exodus from the public sector, particularly at a time when good private sector employment is still difficult to come by, it could fuel growing organisational resentment.
Of course, those who do not consider pay and reward to be a core part of their self-worth are at reduced risk of having their well-being damaged by these concerns. We all need to maintain an income that meets our standard of living requirements, but most public servants would agree that they are not in it for the money. So I am sure great nurses and doctors will continue to be primarily motivated by providing the best possible service to patients, and most police officers by fighting crime. Indeed, whatever we do there is a range of factors that are at least as important as pay in terms of determining our well-being and motivation levels. However, if our financial rewards are eroded we may well see it as a signal of our decreased worth to society; and, in turn, this can start to undermine our psychological well-being. In this sense, we ignore fair pay at our peril!
Leave a Comment » | economy, job satisfaction, Private Sector, Public Sector, reward and recognition, Well-being | Tagged: 3%, benefits, colleagues, crime, doctors, fairness, financial, hygiene factor, income, industrial relations, inflation, mass exodus, motivator, negative, nurses, patients, pay freeze, pay rise, pensions, police, Private Sector, psychological well-being, Public Sector, resentment, reward, self-esteem, society, standard of living, Well-being, worth | Permalink
Posted by Cary Cooper
