How Positive Psychology can Add Value to Businesses and

Organisations
The Value of the People in an Organisation
The value of "intangible assets" which include everything from
skilled workers to patents to brands has increased from 20% to
70% of the value of companies in the S& !00 according to
a "ay #roup 200$ study% &n 200!' the intangible capital of the
world(s largest )!0 companies was *7%! trillion compared to
*+00 billion in ),+!%
-ercer and ./0 1esearch Services find that companies spend an
estimated 2$% of their revenues on human capital%
"uman capital practices are a leading indicator of corporate
financial performance% 3 200! 4atson 4yatt study found the !
year shareholder return for companies with strong human capital
practices was nearly double that of companies with weak human
capital practices 5)02% vs% !2%6%
There is a growing trend in both -edicine and 0rganisational
Science towards evidence7based practices 5feffer & Sutton'
200$6
The Incremental Value of Employee Engagement
4orldwide' the vast ma8ority of employees across all levels of
organisations are less than fully engaged in their work%
3ccording to a recent study completed by Towers errin' only
)9% of employees worldwide indicate that they are highly
engaged% 1oughly a :uarter are actively disengaged' and $2%
are only moderately engaged%
The #allup organisation has been measuring employee
engagement since 2000' and their recent studies found results
consistent with Towers errin% #allup estimates the annual
economic costs associated with disengagement as high as ;22
billion in the <=% )00 billion >uros in /rance' and *270 billion in
the <nited States%
&t is generally accepted that there is a scarcity of talent' meaning
organisations cannot rely on hiring in' but must also develop the
talent they have to it?s full potential' and unlock motivation in
new ways% 50?1eilly and feffer' 20006%
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The Field of Positive Psychology
ositive sychology is an evidence7based science studying what?s right
with people% &t includes a classification of strengths' the deployment of
strengths to enrich development' meaning' purpose and virtue'
constructive relationships' the impact of optimism' hope and resilience
on optimal performance' and the role of positive emotions% &t applies
the same discipline as traditional psychology' but with a very different
purpose%
The <niversity of ennsylvania' with rofessor -artin Seligman' leads
the field in ositive sychology 1esearch and other centres are
emerging with a particular focus on the application of positive
psychology to organisations% The fields of study include@
)6 ositive 0rganiAational Behaviour research at the <niversity of
Cebraska focused on psychological capacities that can be
measured' developed' and managed for performanceD
26 ositive 0rganiAational Scholarship at the <niversity of -ichigan
where researchers are focused on positive organisational
characteristics that can enhance organisational survival and
successD and
26 3ppreciative &n:uiry at .ase 4estern 1eserve <niversity% &t is a
well7established model of organisational change that involves
three stages moving from elevation of in:uiry' to fusion of
strengths' to activation of energy%
The last two of these present a convincing argument for application
through case studies of organisational change% They make compelling
reading and can be eEplored further at the following websites@
http@FFwww%bus%umich%eduFositiveF.enter7for70SF
http@FFappreciativein:uiry%case%eduF
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The eed for ew Approaches
3ll organisations are now broadening their remit to include an
emphasis on Sustainability' 1esponsibility and Gong Term "ealth% 3
review of the challenges facing organisations suggests some key
themes that will contribute to these goals@
)6 Cew levels of >mployee >ngagement%
26 Heveloping Geaders fit for the 2)
st
.entury%
26 &ncreased adaptability' speed of response and creativity%
96 and 5of course6 sustained high performance%
The !ole of Positive Psychology
"# ew $evels of Employee Engagement
0rganisations are enhancing >mployee >ngagement by focusing on
strengths' meaning and purpose%
3t Toyota(s Corth 3merican arts .entre' 900 employees went
through strengths7based interventions@
o 3fter one year' per7person7productivity at the warehouse
increased by $%' compared to the normal yearly variation
of around I)% to )%
o The two teams who underwent a more intensive strengths7
based program saw a ,% productivity increase after only $
months 5.onnelly' 20026%
4achovia Bank saw an increase in performance of )2% with a
group of employees who they actively engaged in the purpose of
the Bank Js a control group%
3 meta7analysis of more than 200'000 employees in !)
companies showed that work teams who scored above the
median on the number of employees who get to use their top
strengths daily had@
o 2+% higher productivity scores
o 99% higher customer loyalty and employee retention
scores 5"arter & Schmidt' 20026%
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%# &eveloping $eaders Fit for the %"
st
'entury
The latest ideas in this area reflect an emerging model of leadership
that is :uite different 51esonant Geadership 5BoyatAi6' 3uthentic
Geadership 5#eorge6' Gevel ! Geadership 5.ollins6% Terms such as
compassion' hope' optimism' resilience' authenticity and humility are
entering the Geadership Jocabulary and sit firmly in the remit of
ositive sychology%
.>0s who rated high on positive affect 5i%e% the eEperience of
positive emotions6 were more likely to have employees who
rated themselves as happy and healthy' and who reported a
climate conducive to performance% 0rganisational climate was
then correlated with productivity 5r %2)6 and profitability 5r %2$6%
5/oster' "ebl' 4est' & Hawson' 20096%
Teams lead by managers who eEhibit positive leadership
behaviours 5e%g% focusing on strengths' giving fre:uent
recognition and encouragement' and maintaining a positive
perspective6 are more engaged and have higher pro8ect
performance% 5#reenberg and 3rkawa' 20076%
Service departments with happy leaders were more likely to
receive high ratings from customers 5#eorge' ),,!6%
There is a positive relationship between 0rganisational Geaders?
level of hope and the profitability of their units and the
satisfaction and retention of their employees 5eterson and
Guthans' 20026%
0ptimistic .>0s receive higher performance ratings from the
chairpersons of their boards and head companies with greater
returns on investment 5ritAker' 20026%
2# Increased adapta(ility) speed of response and creativity*
.ertain psychological characteristics such as hope and optimism
increase our ability to effectively deal with challenges' whilst the
eEperience of positive emotions 5sometimes enabled by a focus on
strengths6 allows us to broaden our thinking and build new ideas%
0ptimism and 1esilience can be taught 5Seligman' ),,+6 and
has been linked to@
o .oping better with crisis' coming up with more effective
coping strategies and improving the :uality of decision7
making 5/redrickson' 20026%
o The development of more innovative problem solving
techni:ues 5&sen' 20006%
4
o The ability to thrive and flourish 5rather than 8ust survive6
inevitable difficulties and uncertainties 51yff & Singer'
20026%
The >Eperience of ositive >motions leads to increases in lateral
thinking and creativity 5/redrickson' 20026%
eople who focus on negative events tend to show less creativity
in problem solving 5Gyubomirsky' ),,!6%
3 positive relationship eEists between the amount of positive and
constructive interaction within a team and the performance of
that team 5/redrickson & Gosada' 200$6%
>mployees are more willing and able to adapt to change and new
challenges that are aligned to their strengths 5Ginley' "arrington
& "ill' 200!6%
Strengths use and strengths knowledge is associated with
psychological well7being and vitality 5#ovind8i & Ginley' 20076%
9# +ustained High Performance
The above all link to erformance' but some studies show a direct
relationship between 8ob performance and positive psychological states
5such as hope' optimism and self7efficacy6 and constructs 5such as
strengths based approaches and high :uality relationships6%
3 study of ),'000 employees found that an emphasis on
performance strengths led to a 2$% increase in performance'
whereas an emphasis on weakness saw a decrease in
performance of 27% 5.orporate Geadership .ouncil' 200)6%
0ne study shows that the level of hope of over )000 employees
and managers is positively related to their performance' 8ob
satisfaction and organisational commitment 5Koussef' 20096%
Specific approaches have been developed that increase hope in
an organisational setting 5Guthans' Koussef and 3volio' 20076%
0ptimistic Gife &nsurance Salesmen sell more insurance
5Seligman and Schulman' ),+$6% This may be due to the
optimistic eEplanation for setbacks that led to a focus on self7
development and creative problem solving 5Guthans' Koussef and
3volio' 20076%
The -arriott "otel .hain saw an increase in sales of $% Js a
control #roup when they were given Strengths Based /eedback
5#allup 20096%
3 meta7analysis of ))9 studies showed a strong positive
correlation between Self7>fficacy 5the probability that we believe
we will succeed in a particular endeavour6 and 8ob performance
5Sta8kovic and Guthans' ),,+a6% There are well7established
5
techni:ues for increasing work7related Self7>fficacy 5Guthans'
200$6%
>ngagement' leadership' innovation and performance are inherently
linked and' when taken as a whole' there is growing evidence to
support a role for ositive sychology in helping organisations flourish
in the 2)
st
.entury%
>mma Ludge
ositive 0rganisations
3pril 200+
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