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Monday, August 29, 2011

Emotional Economics

By Ali Hart
Emotional Economics: Measuring What Matters 
Since the economy came crashing down on us in 2008, there’s been a growing consensus that our economic system as we know it is not sustainable. What we’ve since learned is that money is fiction and the security we think we’ve been building all these years is a myth. Other than its dysfunction, nothing in the conventional economy seems real. So what does the new economy that everyone’s talking about look like?
A clear theme at Sustainable Brands ’11 is the importance of our emotions, particularly happiness. In 1972, Bhutan’s former King Jigme Singye Wangchuck established the term “gross national happiness” which aims to measure quality of life or social progress as opposed to gross domestic product, which is only concerned with financial gains. Jules Peck of Abundancy Partners in the UK has applied this concept to the globe with the Happy Planet Index (HPI). Costa Rica took first place out of 143 countries measured in 2009. The US came in at an embarrassing 113. The measurement isn’t about happiness per se, but about a country’s ability to provide for the well-being of its people without exceeding the limits of equitable resource consumption. An economy that achieves this balance is considered a Wellness Economy and, according to Peck, requires a decoupling of intensity and scale. He goes on to say that if you design an economy right, you don’t need to rely on growth. So what do you need?
Martin Seligman’s Flourish has been referenced frequently at the conference. In his book, Seligman identifies what constitutes well-being: Positive Emotion (happiness), Engagement, Relationships, Meaning andAccomplishment (PERMA). Peck urges that we need to have flourishing enterprises in order to become a Wellness Economy. However, an important element is missing from this equation.
Consumer researchers at the conference revealed not only that they were trying to identify a “happiness quotient”, but also that empathy was extremely important for sustainability. More specifically, Ci Research, a UK-based market research agency, found that people who participate in meditation and/or prayer have more empathy and that these people respond to brand stories more than most. Interestingly, Buddhism is one of the pillars of Bhutan’s economy and meditation is a crucial part of the practice.
It appears that if our population focused more on our spirituality, our empathy for flourishing enterprises would, ahem, flourish and our Wellness Economy would boom. Considering the state of our economy, it wouldn’t be surprising if more people turned to spirituality for a sense of security.
As a former New Yorker, in the past I may have written this off as weird California hippie talk. But there’s certainly something bigger happening here and it’s on a global scale: the UN and EU, among others, have begun to measure national metrics beyond GDP.
On a more local level, what are you doing in your life or work to measure meaning? Conventional MBAs are taught to manage what they can measure. If we can measure meaning and happiness, we will manage and, more importantly, nurture it.
Ali Hart is a sustainable communications and engagement strategist with a passion for life’s essentials: food, water and storytelling. Her background in the Entertainment industry, penchant for humor and MBA in Sustainable Management from Presidio Graduate School are Ali’s secret weapons in her quest to master the art of behavior change and to make sustainability inconveniently fun.

Investing in Emotional Economics

Are you too busy to have important conversations with your people? Anthony Landale examines how Skandia is making motivational conversations a priority for managers and the business.

Too many managers are much too busy. This may be an understandable response to the immense pressure they are under but it’s unacceptable. Why? Because the biggest single factor in delivering improved performance lies in a manager paying more attention to the relationships they have with their direct reports; and when managers are too busy they start to compromise the time, energy and attention they give to their people.
Some people have started to call this ‘emotional economics’. The whole tenor of such an argument may have hard rationalists spitting teeth but here’s the truth: there is money to be made in emotion, and leading businesses are waking up to the fact.
The rationale for emotional economics make sense. Performance levels rise when people are engaged with their work and when they care about what they are doing. That’s what has made Dan Goleman, author ofEmotional Intelligence, so relevant. His conclusions that human competencies such as self-awareness, self-discipline, persistence and empathy are of greater consequence in determining the effectiveness of leaders than cold analysis and intellect have massive implications for individuals and organisations alike.
Motivation soars
Investment and pension company Skandia has been testing how much of a difference it makes when managers pay more attention to this human dimension of their role, and especially to the motivational conversations they have. The results are impressive. After a year-long programme, Skandia has seen on average a 50% average increase in motivation when managers started to focus specifically on engaging its people.
"Performance levels rise when people are engaged with their work and when they care about what they are doing."
The pilot that Skandia has been running is based around the implementation of a programme entitled ‘100 Watt Coaching’ run by psychologist Sukhwant Bal, MD of Tools for Leading Change.
The premise of the programme is that when managers are trained to have direct conversations about issues that are important to their people, their performance will consequently improve. To measure this progress, the programme measured people’s motivation at the start of the initiative and then again after 100, 200 and 300 days.
Carla Ginn is an organisation development consultant with Skandia and has been responsible for monitoring and measuring progress on the pilot. "We broke down the overall figures into four sub-sections: commitment, energy, competence and confidence, and there has been a significant increase in each area with a particularly marked increase of 61% in competence and a 56% increase in energy."
The tracking element of this programme is certainly going to be of interest to all companies which want to ensure that investment in people leads to measurable business payback. This is a factor that Bal has built into his programmes as he believes that it is essential that managers buy into this people dimension wholeheartedly.
"Too often consultancies go into organisations, do some great work and then leave," he says. "But when they leave they typically take their knowledge and their insights with them. This is deeply frustrating to the companies they have been working with. To address this it’s become my mission to provide practical and accessible psychological tools for managers around which they can construct powerful conversations with their team members. These tools have to be of immediate benefit and once they’ve been trained managers need to be able to continue to use these tools without the need for more expert help."
Bal’s approach requires managers to have a meeting for 20min every week with their people focusing on their motivation – and while they might agree in principle that this is a good idea they might also wonder where on earth they are going to get the time to have such conversations. Ginn suggests that in a high performance culture such as Skandia there is little choice. Time may be short but a manager’s capability to coach his or her people for improved performance and motivation is where future growth lies.
"Managers who’ve been on this programme know that our business depends to a great extent on the motivation of staff to perform their roles," she says. "That’s where managers can make the difference, by tapping into people’s engagement. The way they do this is by having a series of truthful conversations that help people to connect with what they are trying to achieve. The manager also commits to support the individual in their work and will provide further coaching and development along the way. In this manner the individual gets excited about their own future, brings more energy to work and moves up the performance curve.
"What’s been important for us to recognise in this process is that the focus isn’t on the manager setting hugely ambitious goals, it’s on ensuring that there is some emotional connection from the person between their target or goal. That’s what helps the individual concerned own both their performance and their own motivation."
Shaping the future
Ian Vincent is one of the Skandia customer services managers who participated in the pilot programme. According to Vincent a big part of his learning has been in having conversations with his people that are based around their agenda rather than his.
"My managers have always known that they need their people to be motivated but in the past they probably weren’t focussing their conversations in a way that helped achieve this. The new focus gives them a structure that encourages them to ask people what makes them tick, what inspires them and what support they need going forward. They’ve invested a lot of time in becoming black belts in this approach and the results show it’s worth it. In a very busy environment our volumes of business have increased, staff are being more productive and when I look at the measures I can see that motivation in my team is much higher."
So why don’t managers have these sorts of conversations as a matter of course? Are they really that difficult?
In her book Fierce Conversation, author Susan Scott suggests that people feel there is a risk in having such ‘real’ conversations. This perceived risk is that "I will be known. I will be seen. I will be changed" and it leads to people avoiding one of the most fruitful areas of human interaction.
"Time may be short but a manager's capability to coach his or her people for improved performance and motivation is where future growth lies."
Bal’s approach addresses this by giving people both the training and the frameworks for having such conversations. "The emphasis is on helping managers and their staff get to the truth fast," he says.
According to Bal this may mean a manager opening up to his people, talking about the relationship they have together, questioning the level of competence to deliver the goals being asked or even enquiring into the confidence that the employee has in working outside his/her comfort zone. "Instead of really getting to know their people, too many managers will focus on telling people what to do because it seems easier. But what’s really important for managers is to get to know the agenda of the person in front of them. It’s in what we call ‘lightbulb’ conversations that managers can find out about their people."
Lorren Wyatt, HR director of Skandia UK, is a strong advocate of this approach. "People engage when they get the opportunity to talk about themselves and it’s absolutely relevant that our managers should help their staff to identify any barriers that may be getting in the way of their performance. What I particularly like about the 100 Watt Coaching approach is that it has installed a different sort of conversation that helps people to make speedy changes to their performance.
"Our aim at Skandia is to become a top 100 employer and I believe that this programme will help us to achieve that," he says. "In all the Skandia teams that have adopted this approach we can see the indicators going in the direction we want. Absence and attrition rates are going down and productivity and motivation are going up. People want more of it and when I have the FD knocking on my door wanting his team to go through this training I know that we have discovered something that meets both the people agenda and delivers benefit to the bottom line."
Answering the critics
Some people will never buy into the idea that conversations can make such a difference. There will always be those who prefer to tell and direct rather than engage and empower. But alongside the few refuseniks it appears there are many more that have already started building new relationships and are discovering that with a clear set of tools and a bit of training they can transform their teams.
As Bal concludes, the motivating factor for him in this work is in getting people to turn up to work feel inspired.
"Managers may need to be brave and have more truthful conversations with their people about how they work together – but they will soon find it makes an extraordinary difference. After all what manager wouldn’t want his or her people showing up at work with more confidence, a renewed sense of purpose and more motivation?

Emotional Economics: Beyond the Paycheck, What Motivates Your Employees?
Ellen Frankenberg, Ph.D.
During tough economic times, employee bonuses become a faint shadow of their former selves. Even if your company has managed to stay in the black, significant portions of employee compensation may have evaporated. What incentives can you offer to your best and brightest, so your company remains competitive, positioned for the good times ahead?
A recent survey of more than 300,000 business units worldwide by The Gallup Organization provides some stimulating ideas about motivation in the workplace. In Follow This Path, Curt Coffman and Gabriel Gonzales-Molina report some findings that you might have suspected, but not known how to incorporate into your personnel policies:

  • People at work are not always rational.

  • Emotion plays a significant role in productivity.

  • An emotion-driven economy has infinite horizons.

Your answers to the following questions will indicate how plugged in your are to "emotional economics", or your EQ, your Emotional Quotient. Do you believe that:

  1. People work harder only if paid more?

  1. It's fair to treat every employee the same way?

  1. Everyone can excel, if they try hard enough?

  1. Fixing weaknesses is the best way to help employees improve?

  1. Superior performance results from improved technology?

  1. Rational thinking, not emotion, improves productivity?

The Gallup Report indicates that many businesses are running at 1/3 of their human potential, because they don't capitalize on the connections between the rational and emotional circuitry of the brain. Every human interaction either elevates or degrades the emotional state of each of your employees, triggering automatic responses that can shift instantly between anger or delight, surprise or resentment, guilt or confidence, boredom or excitement. These emotional responses happen without a deliberate choice or rational decision, and they determine:

  • how hard a person works.

  • how committed an individual will be to doing the job right.

  • whether he/she will go the extra mile, even when tangible rewards are slim.

Great organizations generate positive emotional responses (passion!) among employees and customers through consistent, positive human interactions. They catch people doing things right. Superior performance happens when individuals are assigned to the right jobs, where their thinking capacities are not distorted because their emotional environment is destructive. Brainpower that is enhanced by positive feelings produces engaged employees who can work together to accomplish measurable goals.
Great managers focus on their top performers, at the unit level, and learn from them:

  1. What makes them passionate about their jobs?

  1. How do they build relationships in the workplace?

  1. How do they motivate others in their teams?

  1. How do they decide what to do, and how to do it?

Great managers who understand emotional economics then:

  • Set up each employee for success by capitalizing on what they do best.

  • Identify strengths that may be invisible to the employee.

  • Give specific, affirming feedback tailored to each individual.

  • Develop consistent expectations, so employees can develop trust.

  • Help employees link their personal values with company values.

Engaged employees (about 30% of the U.S. workforce, according to Gallup)
consistently use their talents to do their jobs better, build supportive relationships at work, innovate and drive for efficiency, never run out of things to do, and recommend their company as a good place to work.
What percent of your employees are positively engaged, even in an uncertain economy? How many of your managers, especially your technical people, focus on the emotional energy that can drive their teams to success? Surveying your employees, using the 12 Q questionnaire developed in the Gallup survey, can provide a benchmark, and help you develop an engaged workforce, far beyond a mere 30%. Your profitability should increase significantly, even in lean times.
Once employees are paid at a fair rate, motivation depends on many other factors, especially the recognition they receive, the relationships they forge, and their feelings about their own value in the workplace. If you and your managers learn how to practice emotional economics now, your company will be enriched in ways that will extend far beyond the generous bonuses that await those who know how to work productively through tough times to the good times ahead.

EMOTIONAL ECONOMICS: 4 Ways to Manage Our Inner Resources


As many of us learned in Economics 101, economics analyzes the allocation of resources. It addresses the reality that resources are scarce, and seeks to organize society so that it most efficiently utilizes those resources.

In economics, choosing to allocate resources to a certain activity creates an opportunity cost – the loss of an alternative. This means that we choose one opportunity at the expense of another. This is why it is very important to allocate scarce resources toward the best opportunities, because once expended, we forgo the alternate opportunities.

Whether we realize it or not, our daily interactions consist of an expenditure of internal resources. Those resources exist in the form of energy – physical, mental and emotional. We are constantly managing the expenditure and replenishment of those resources, and if we aren’t careful we can end up in a state of deficit.

Interestingly, the word “economics” is derived from the ancient Greek word “oikonomia,” which translates as “household management.” When we consider the allocation of inner resources, household becomes analogous to the self.

Mental resources are those that contribute to planning, problem solving and other cognitive functions. Emotional resources refer to our emotional reactions to external events, as well as emotional well-being. Physical resources encompass our physiological systems and overall bodily health.

It is important to note that these resources do not exist in isolation; they are holistically interconnected. Therefore, over-expenditure in one area can negatively affect the other two areas. For example, over-expenditure of emotional resources can negatively affect mental resources. Once we experience a negative emotional event, an overall mood emerges which can disrupt other mental activities. Biologically, research has shown that emotional upset can disrupt our cognitive processing. Consequently, when driven by emotion, our perceptions, judgment and concentration are negatively affected, and if the heightened emotional state persists, the body will become stressed. The physical stress response can cause detrimental changes and, over time, can manifest as exhaustion and illness.

We experience many competing interests which place demands on our internal resources. To stay healthy, we must acknowledge that our resources are limited, and take great care not to deplete them.

How do we accomplish this?

One way is to shift our perspective to one of emotional economy, focusing on the allocation of finite inner resources, and consciously considering opportunity costs. In other words, it’s the management of supply and demand.

Since we can’t really create more supply, one of the best ways to manage our inner resources is through conservation – preventing waste. Carefully considering opportunity costs will allow us to consciously choose the most effective expenditures, thus allowing us to conserve our efforts for the highest pursuits.

There are four ways to conserve our inner resources:

  1. Employ Selective Engagement
    Selective engagement means consciously selecting our activities and personal interactions. In other words, we can selectively engage in the interactions and activities that will provide the most benefit. Additionally, when it comes to managing conflict, it means choosing which battles to fight, rather than fighting them all.

    Example: The night before a final exam, a college student learns that her roommate has been spreading rumors about her. Understandingly, she is upset by this violation of trust. At this point, there are two external demands which she must consider. She can confront her roommate, which carries the risk of a heightened emotional event, which could affect her ability to concentrate. Or she can study for her exam which will facilitate her accomplishment of a higher goal. Both choices involve an opportunity cost. However, considering economy, she should select the option that provides the greater benefit – which is studying for the exam.

    Demands that involve negative interactions will drain our inner resources without offering a benefit. We should therefore look for ways to minimize or eliminate the time we spend interacting with negative people.

  2. Practice Verbal Restraint
    During conflict, take time to collect your thoughts. Don’t be provoked into emotional responses. Think before you speak, and say only what is necessary. The goal of any discussion or argument should be resolution, so if you see that things are not moving toward resolution, or communication is devolving into an emotional shouting match, conserve your resources by disengaging.

    Additionally, when it comes to communication, consider the fact that sometimes less is more. At times, it better to listen and consider, versus providing a rebuttal or having the last word.

    “Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.” ~Dalai Lama~

  3. Stop
    At times it is important to focus on allowing instead of controlling. You will expend much less energy when you allow things to unfold naturally (i.e. patience and acceptance) than attempting to micromanage each and every detail.

    If something isn’t working – i.e., a relationship or goal-oriented activity – simply stop. Allow the situation to exist as it is without trying to force it to happen. You can’t control anything (or anyone) outside of yourself, so it is a waste of inner resources to continue your efforts.

  4. Replenish
    When you feel yourself becoming overwhelmed, take the time to slow things down. Think of the cache (temporary memory) of a computer. As you browse the internet, the cache saves each new page so that it can be quickly accessed once you visit again. However, as the cache reaches capacity, the browser speed slows down. The only way to remedy this situation is to clear the cache. As we go about our daily activities, we add more and more items to our inner cache. In the same way that the computer’s browser speed is affected, we also can become overloaded. Taking a time-out for meditation, deep breathing, or even a power nap, will help us to clear our mental cache.

See the following video for an effective quick meditation technique:

Conscious awareness of “emotional economics” can help us to manage our interactions more effectively. Through selective engagement, verbal restraint, ceased control, and replenishment, we can conserve our resources for the most beneficial pursuits, and potentially enjoy increased focused (due to more energy) while doing them.

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