Thursday, January 23, 2014

Organizational Happiness: a winning strategy for sustaining growth

The existence of organization, big or small, state owned or privately owned, profit making or non-profit making, is initiated with some purpose in mind and in that direction objectives are outlined. The organizational activities are designed and the task to perform those activities is assigned to the employees or workers as the case may be. The performance is evaluated from the perspective of organizational objectives. During the course of its operation, the organization at times faces competition from other organizations or with past performance or with situation. These forces of competition compel the organization to draft winning strategies so that each one of them can perform better than the other. And this is what keeps an organization on toes and organizations keep surviving like this for years. Just like human beings. The human life keep facing challenges, ups and downs throughout and this is what makes life interesting as well as worth living. 

Individuals perform the tasks as assigned to them which contributes to achievement of organizational goals and ideally speaking, should also contribute to the individual goal achievement. The match between individual and organizational goal motivates the employees to perform their best. In case of mismatch of goals though individuals perform but their do not put their heart into work. The organizations as well as individuals have to somehow reach to the match of commonality of goals. The organizations have to be very cautious in selecting the work force and making sure that the motivation of individual to work is not just earning but the satisfaction to his/her inner self. It is a challenging task for any organization. If the individual is not clear on what really his/her inner self seeks, adaptability and flexibility would be the key quality to be looked into the candidate. Anyway the match has to be from the beginning of the joining an organization or has to be made later as one spends more time in the organization. 

An individual while selecting an organization to work has to put efforts in finding an organization which allows him/her to achieve his/her goal, through achieving organizational goals. The motivation of remuneration and satisfying one’s inner self has to go side by side. The organizations become effective when the heart of employees is interwoven with the organizational culture and system. 

Primarily as individuals, ultimately we like to be happy. We aspire for happiness through different kind of activities that we perform. At the end of the day it is that sense of happiness which drives us further to start another day with full of positive energy. We tend to feel happy when our goals are achieved. Satisfaction is a measure of happiness and organizations show keen interest in knowing the satisfaction of their employees and customers apart from other stakeholders. 

Utilitarian view determines the human aspirations and needs. Happiness is the goal of human life. In the process of achieving so called happiness, there are lots of compromises which are made. Happiness is not just merely a momentary response to the object, event or individual but it is a sustainable response. Hence if such events, objects and individuals provide sustainable positive response, it is happiness. It is important to discover this facet of happiness since all through life we put forth our efforts to make our tomorrow better than today. However nishkam karma (performing without thinking about returns) provides sustainable positive response which results into real happiness. Happiness is an attitude or a state of mind which enthuse positive energy in one’s thoughts and actions. Behind all our efforts, day in and day out, somewhere a driving force clings to have this positive feeling as an end result. At work as well as at family front the efforts are put to match the expectations. The proximity with the expectation results into a sustainable positive feeling called Happiness. So for leading a happy life, many a times it is suggested to expect less, because this is one way through which efforts get closer to expectation. Another way to be near the expectation is to put more efforts. An individual can choose either way in order to have a positive feeling. 

The literature on happiness as such is contributed from the discipline of philosophy, psychology, sociology and economics primarily. Utilitarianism, subjective well-being, quality of life are some such terms which lead to study of happiness from different perspectives. Public policy has a basic target of prioritizing issues which results into social welfare. 

For organizations as well, primarily it is achievement of goal/s which enthuse it with setting new goals and to keep performing towards its goals effectively. The organizations have to put in place a system and develop an inclusive culture which leads to provide satisfaction to all its stakeholders. For profit making organizations, though primarily their focus would be on earning profit, however their concern for fair treatment of employees, providing value for money to customers, and contributing to sustainable growth of the organization shall be able to win the trust of society in general. And it could lead to attaining organizational happiness. 

This is the premise of this work and as developed nations are switching their focus from merely attaining economic growth towards social well being (happiness), it is the time for all organizations, big or small, state owned or privately owned, profit making or non-profit making, to think about attaining organizational happiness. Here some of the measures are suggested in order to make an organization, a happy organization, keeping in mind, an assumption that ultimately organizations aspire for Happiness as in case of Individuals. 

According to a Chinese wisdom - Happiness surrounds three basic activities of human existence: Love, Work & Hope. Love leads to Life Satisfaction, Work leads to Job Satisfaction and Hope leads to putting one’s best in order to satisfy oneself. Happiness is attained when the needs are satisfied. Happiness is related to needs and needs need to be satisfied. The needs for human beings and that of an organization are different. Human needs are fulfilled by organizations and institutions like family, government, state, market, work place, etc. Here we study needs from the perspective of business organizations. They are elaborated and are further studied in relation to Organizational Happiness Framework. Man, Money, Material and Market (4Ms) are the basic needs of an organization. The organization has to manage these 4Ms in order to maximize profit and minimize cost. According to Ernest Dale, who wrote a book entitled ‘Organization’ in 1975, organizational needs are also satisfied by producing the best possible results to all the publics i.e., employees, customers, local community and public in general. In this process the needs are satisfied and in one or the other way organization as an artificial person and the decision makers (at different levels of management) as natural persons derive happiness. At a macro level I call it Organizational Happiness (OH) which is a derivation from the happiness of individual stakeholders in the organizations and leads to transform an organization into a Happy Organization. (Figure 1).

Organizational Happiness - Concept 

OH is conceptualized on the basis of tangible as well as intangible factors. In general the perception about organizational performance and success is measured in terms of profitability or financial performance. Though financials are important but just concentrating on that shall not be a wise approach to sustain positive organizational growth. Thus apart from financials, the organizations have to focus on the purpose of the organization. Does the organization want to leave behind a legacy of being most profitable organization, or most admired and/or respected corporation, or great place to work for organization, or happy organization. This is where the organizations have to deliberate on and accordingly draw their policies. This is where the framework of organizational happiness is suggested (Figure 1). It is assumed that as individuals, organizations would also ultimately strive for achieving organizational happiness and would like to leave behind a great legacy of having been a happy organization. In that direction this model is proposed which could be useful for all kinds of organizations depending on their line of operation or nature, motive, size and aspiration. 

OH framework is designed to focus on pillars (Figure 2) which are tangible (objective) as well as intangible (subjective). They lie within the organization (internal) and are driven by outside environment as well (external). In order to strengthen OH pillars, stakeholders (targets) are identified (Figure 3) for whom appropriate efforts have to be pursued to achieve OH and to transform an organization into a Happy Organization which shall be measured through developing composite index on the basis of OH pillars.

Organizational Happiness - Pillars 

OH pillars (Figure 2) are identified as financial performance (for management and promoters), employees’ satisfaction (for employees/workers and staff), customers’ satisfaction (for clients/buyers and users), and corporate social responsibility (for society). Employees’ (job as well as life satisfaction) and customers’ satisfaction is subjective measure whereas financial performance and CSR is objective measure. 

Theoretically accounting and reporting has its role in the objective pillars whereas general management of the organization needs to strengthen subjective pillars through effective policies and their implementation. The organizational success could be gathered from its financial position and performance. Profit is the primary focus of any firm and it is one of the most important factors in order to judge organizational success of any organization. The organizations have to follow existing accounting standards and principles according to the law of the land and should get the accounts audited so that the authenticity of such accounting statements is assured. Primarily, the financial statements can help an organization to know its financial position and profits, if any. 

Through proper reporting practices the initiatives under CSR and the details of allocation and expenditure on such initiatives could be assessed. The expenditure on CSR activities as a percentage of profit should be taken as a measure to compare different organizations for OH. The OH pillars have to be focused through making strategies after identifying the target groups which hold these pillars strong. In that direction, OH targets are identified which are outlined hereunder. 

Organizational Happiness - Targets 

In order to strengthen OH pillars, OH targets (Figure 3) have to be addressed through effective planning mechanism. The targets are identified as Employees, Management, Institutional partners (internal), Society, Suppliers and Clients (external). Employees, Management, Society and Customers are considered as primary targets whereas Institutional Partners and Suppliers are considered as secondary targets. 

The promoters start a business organization with a primary target of earning profit. They are the primary stakeholder in the organizational initiatives, planning, decision making, and controlling activities. It is they who are primary responsible to provide leadership in establishing organizational objectives and guiding organizational efforts towards the set objectives. Promoters through an effective management manage the resources of the organization. They are interested in building the organization through sound financial structure. Their focus is on profitability and in assuring good return to the shareholders, whose indomitable support is most valuable for them. 

Institutional partners play an important role in building the organization. Here primarily institutional partners refer to the financial institutions which provide the life-blood to the organization and at times put their stake as well. They could be venture capitalists also. Their interest in the organization lies in seeing the growth of the organization through the abilities to respond to market forces successfully and in developing products, services and experiences for the customers. 

While management is the brain of the organization, employees are the hands. They join the organization with their personal goal and ambition. The match of their goal with organizational goal gives them a high to concentrate their heart to the organization and work. Their contribution makes or breaks the organization; hence they need to be treated well. Vineet Nayar of HCL Technologies developed a new concept called Employees First, Customers Second which makes a strong case of prioritizing employees over customers for attaining organizational objectives. It is based on a simple logic that only satisfied employees can satisfy customers. 

Conventionally speaking most of the organizations concentrate on customers (external) or clients more than any other stakeholder. The products, services, information or experiences are all meant for customers, clients or users. As individuals they are the concern for all strategies. They have to be targeted and segmented according to the nature of product or service. Their expectations, behavior, and feedback guide the formulation, design, price, and portfolio of the product or service. Organizations depend on customers; if there are no customers there would be no organization. The firm has to focus on the products for the customers after studying them thoroughly. 

Most of the organizations depend on suppliers for constant supply of raw material or inputs. They provide the base. Organizations have to play a cautious role in selecting the suppliers. Their selection should be based on research on their capability to supply required goods or services, their past records, their client base, their core competencies and their fit to the organizational policies. 

Though employees, customers, clients, and suppliers, are part of society, there are social interest groups, and other social institutions as well as individuals who also play an important role in the life of an organization. Business organizations follow the premise of ‘society’ as a concept as there is interdependence of organization on society, and of society on organization. Both co-exist for mutual betterment. The organizations play a very strong role in building societies and through innovation and use of technologies responding to the changing social needs. They need to be targeted through organizational strategies. 

Organizational Happiness - Efforts 

Organizational policies have to such which aim at targeting internal as well as external beneficiaries or stakeholders. Management as an entity is interested in improvement in the profitability of the organization through higher return on investment, reducing cost, improved productivity, satisfied employees and customers, and proactive corporate citizenship behavior of all the stakeholders. The strategies should be designed in such a way that the organization is able to sustain its profitability with gradual growth. The response to market and capitalization of market opportunities depending on the product/service portfolio within the industry of operation should be targeted keeping in mind the strengths and weaknesses of the firm. Innovation and creativity should be the prime focus of organizational efforts. 

The strategies have to be such that develop a sense of mutuality and co-existence with them. The relationship with the institutional partners should be nurtured so that the credit requirements are met whenever needed. The ability to respond to the opportunities through innovation and responsiveness to change and better compliance mechanism has to be shown to the institutional partners who could foresee better return on their capital. 

The selection of employees should be done keeping in mind not just the nature of work that the person is going to perform but person’s ultimate motivation to join the organization. Proper talent management teams should be initiated to mentor the employees. Fair and attractive compensation depending on the industry norms, appropriate perks and incentives, committed welfare schemes, creation and maintenance of conducive work environment, proper performance appraisal systems, and convincing career growth opportunities within the organization, should be prioritized over other policies. 

We have grown with thinking that Customer is God and hence can never be wrong. It is absolutely true that customers are important for business, business is for customers anyway. But by prioritizing employees over customers, customers/clients can be served better value. This value would not be momentary rather it would be timeless and precious. However the intention here is not at all to sideline customer. Customers have to be targeted and all the products/services have to be designed keeping in mind their requirement, their capacity to pay, and their expectations. Proper research has to be carried out before and after sale to make sure that the customers’ needs are addressed properly. In the competitive environment the strategies of the rival firm should be studied and countered with better products and value for money. Their primary concern is to serve value to the customers. 

The back end strength is derived through constant supply of material through suppliers. Hence the relationship with strong trust has to be built with them. The interdependence between the firm and its suppliers should be kept in mind while selecting the suppliers. Proper supply chain management systems should be developed to ensure smooth inflow of material into the process and wherever possible resource sharing should also be initiated so that mutually beneficial alliances could be formed. The payment system should be efficient and prompt which does not put the supplier into odd situation. Strong Supplier Management system has to be developed. 

The organizations need to take up social causes and participate in community development projects in order to behave like responsible corporate citizens. Though, the motive of increasing profitability has been finding dominance in the organizational strategies. However in last few decades there has been a consensus amongst the organizational heads to respond to the social responsibility and to share the burden of respective governments by investing in social infrastructure and related areas. 

As individuals, organizations have to reach to the level of self actualization need. Organizations have to take up social causes in order to partner with the state to share its responsibility in developing strong social infrastructure. They need to allocate funds for the causes related to education, medical facilities, environment protection, sanitation, drinking water etc. These initiatives fall under the category of Corporate Social Responsibility or corporate philanthropy. Almost all the big business houses are spending hugely for social causes. Organizations can achieve their self actualization need through these initiatives. In the process of responding to market forces and capitalizing the available opportunities, the organizations exploit the natural resources, though with honest intentions of serving the society. However at times it leads to disturbing the environment. In such cases it is the responsibility of the organization to contribute to the improvement of the environment through effective measures. 

Organizational Happiness - Index 

A composite index of the measures on OH pillars (financial performance, employee satisfaction, customer satisfaction, and corporate social responsibility) could be developed. For financial position, measures like return on investment, earning per share, and turnover could be used. The expenditure as percentage of profit could be taken as a measure of CSR. 

Measurement of satisfaction is a process which is subjective in nature. However many industries and organizations get into measuring satisfaction of various interest groups. There are many instruments developed in order to measure satisfaction of employees as well as of customers. Many organizations try to know the satisfaction level of their employees on the variables such as salary, relationships (with subordinated, superiors and co-workers), growth opportunities, location, working conditions, etc. To measure employees’ satisfaction, apart from job satisfaction measures, life satisfaction measures could also be used to relate and study their relationship and interdependence. 

Similarly the satisfaction level of customers is measured on account of product quality, price, appeal, service, availability, response time, etc. This is the process of quantifying satisfaction level of employees and customers. Once the organization is satisfied with the satisfaction level of employees and customers, it can design its future policies and extent of operations. 

The organizations could compare the indices of the current year with the past year to know whether they have improved or gone down. Accordingly they could strategize for the next year. Comparisons across industries, organizations, products/departments, and geographies could be made on the basis of the composite index in order to get feedback on OH efforts and redesign, restructure the OH efforts focusing more on the pillar that had lower index value. This is suggested for all kinds of organizations. Isn’t it that all organizations inherently want to be happy organization?

(published in SME World (Dec) 2013)