What The World Happiness Report Teaches Us About Work

Each year I pour through the World Happiness Report and this year it’s particularly insightful, so let me interpret some of the results.

First, the US happiness ranking (1-10 scale) dropped to #23, a full 13% below Finland, the happiest country in the world. And this is disappointing. Over the last 15 years the level of US happiness dropped by almost 8%, a steady decline year by year. For those of you living in the US, you probably feel as I do: our life seems to be flooded with negative news, politics, and a general sense that people can’t get aligned on values.

This has happened, by the way, while US GDP has continued to outperform most major economies. So the US, as a country, is getting wealthier yet markedly less happy (more on what this means below).

From a business perspective, this message is easy to understand. Paying people more money does not make them happier. While everyone wants to be paid fairly, total level of pay does not translate into engagement. Our 2023 Definitive Guide to Pay Equity found that pay equity is 7-times more correlated to employee engagement than level of pay.

Second, the report shows that US young people are significantly less happy than older people in the US. (This is not true in all countries, but it is in most developed countries.) In the US people under 30 rated 6.4 in happiness vs a rating of 7.3 for people over 60 (12% less happy). And these low happiness ratings for young people put the US at #62 in youth happiness, far below our overall ranking.

What this tells me is I discussed on last week’s podcast. Today young workers are worried about global warming, they suffered the pandemic in the middle of career growth, and they feel frustrated by wars, inflation, social issues, and politics. The Edelman Trust Barometer shows that young people feel that establishment leaders are not to be trusted, yet businesses are still the best solutions to today’s problems. This raises expectations on our business leaders.

From a business standpoint, this reinforces my thesis that today’s workforce is “activated.” The median age of our workforce (US) is now 33 years old. This means that many of our most important employees feel a sense of angst and this encourages them to demand more. Almost 60% of workers now believe “the company should accommodate their needs,” not vice-versa.

It also explains the increasing focus we put on corporate well-being, flexibility, and other employee benefits. Options like the 4-day week, flexible work hours, and hundreds of other benefits have increased (fertility, childcare, mental health, fitness, financial wellness).

(The newest BLS data shows that we spend 31.1% of payroll on benefits, up from 29% three years ago. In the information industries this number is 35.5%, the highest I’ve ever seen.)

And to push that point further: it’s vital for companies to re-energize “early career” development programs. Many companies built these programs in the 1960s and 1970s but they fell away. If you’re recruiting top candidates from colleges and investing in campus hiring (which is on the increase), make sure you have a strong 1-2 year development, job rotation, and cohort-based engagement program for younger people. I just spoke with Comcast about their early-career “potential high-potential” program and almost every person is directly contributing to their leadership pipeline.

Third, and most interesting, the report points out to the enormous role of social relationships at work. The ateam who does this research have discovered that the “Cantril Ladder” of happiness (a simple question of “how happy are you on a scale of 1-10”) can be decomposed into six contributing factors.

These are:

• Wealth (GDP per capita)
• Social Support (number and strength of close relationships)
• Life Expectancy (health)
• Freedom to Make Life Choices (your ability to live as you choose)
• Generosity (tendency to give money and time to others)
• Freedom of corruption (belief that the “system” is fair).

Their relative contribution to happiness is eye-opening.

Surprise surprise.

Social relationships are the #1 contributor to happiness, and health scores only around 1.4%. Note that the second most important factor is “perception of corruption” which gets to the issue of equity and trust.

What Does This Tell Us About Work?

Well there are a few simple lessons here:

1. Relationships matter. If managers and supervisors are not building a sense of teamwork, employees are feeling the pain. Despite the financial and operational pressures we face, we must take time to get to know people, listen to them, and have some fun. Bringing people together and creating cross-functional teams creates social relationships even when people are remote.
2. Trust in leadership is sacrosanct. I’ve worked in situations where senior leaders were greedy, disloyal, or dishonest. Everyone in the company felt it. Trust is an asset that is earned over years, and we must always invest. Trust is developed through ethics, honesty, and listening. Are these ideas in your leadership model?
3. Pay and equity must be balanced with performance. While everyone would like more money, people want to feel that rewards are fair. So don’t go out and over-reward the hyper-achievers (read my article on Talent Density for more) without a transparent process and fair balance.
4. Freedom of choice ranks high. Many studies show that employees value flexibility over pay, so consider things like the four-day week and flexible work options a core part of your employment proposition.

Many years ago I gave a speech on Corporate Citizenship to a large group of HR leaders, and I made the point that companies, like countries, are really little societies. If your corporate “society” is not fair, transparent, and free, employees feel the pain. As I finished the speech and wasn’t sure what people would say, a group from IKEA came up to me and gave me a big hug. That company, which very much embodies the socialist culture of Sweden, is one of the most enduring companies on the planet. They reinforced my message about building a culture of collective thinking, fairness, and respect for every individual.

I think this message is clear. Take care of your corporate “society,” and your people will take care of your business. I welcome your comments, the detailed World Happiness Report is here.

Additional Resources

Irresistible: The Seven Secrets of the World’s Most Enduring, Employee-Focused Organizations

Employee Activation: An Essential Big Idea For 2024

Citizenship On The Rise: What This Means To Business and HR