The Leaders Guide to Workplace Culture and Happiness.

4th Sep 2023

This is a guest post by Nic Marks, Founder and CEO of Friday Pulse.

The management guru Peter Drucker once said that “culture eats strategy for breakfast”. 

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He didn’t mean that strategy was unimportant but instead that you wouldn’t be able to implement your strategy without a positive workplace culture. Although he died nearly 20 years ago, I’m sure he’d be pleased to know there is growing evidence that having a good culture really does translate into better performance. 

One such study showed that businesses with good cultures had higher share price growth. Researchers from Oxford University used crowd sourced data on employee happiness as their indicator of organisational culture. They then tracked their share prices and showed that happier businesses outperformed the Dow Jones index by over 10% between January 2021 and July 2023. 

Using employee happiness as a measure of organisational culture is something I’ve long advocated. Happiness is a bit like a good-bad signal; when we feel happy it’s a sign that things are going well. Workplace happiness is in both the interest of the employee and the employer as it’s very related to our performance. When we feel good, we’re more collaborative, creative and productive. A positive workplace culture really drives performance. 

Teams are at the heart of great cultures because they shape people’s experience. In fact, focusing on teams helps to demystify the rather nebulous idea of organisational culture. It’s much more tangible to focus on creating happy, productive teams instead of vaguely improving the organisational culture. In addition, teams matter as there isn’t really one culture across an organisation but instead there are lots of microcultures. In the data I collect on team happiness I always see a lot of variability between teams. Some are doing well and others less so. 

The quality of team leadership isn’t the only factor in explaining the differences but it’s a major one. Remember the old adage “people join organisations but they leave managers”? While this is somewhat true, I think it’s unfair on team leaders as they’re often under-supported, especially when it comes to people skills. The UK’s Chartered Management Institute estimates 80% of managers have received absolutely no training on how to be a good people manager. Ultimately this systematic lack of support is an organisational failure and if you want to create a great culture then investing in your managers is a great place to start.

What Google learnt about managers

Google recognised this when they were rapidly scaling in the 2000s. They were actually very sceptical about the need for “managers”, instead feeling that engineers just wanted to get on with their jobs. But being Google they decided to look at the data and launched a large internal study, called the Oxygen project. They looked at every team leader hire they’d made and analysed how effective they were in terms of both team happiness and performance. To their surprise they found that managers really mattered and they identified ten key attributes of a great manager:

  1. Is a good coach
  2. Empowers team and does not micromanage
  3. Creates an inclusive team environment, showing concern for success and well-being
  4. Is productive and results-oriented
  5. Is a good communicator — listens and shares information
  6. Supports career development and discusses performance
  7. Has a clear vision/strategy for the team
  8. Has key technical skills to help advise the team
  9. Collaborates across Google
  10. Is a strong decision maker.

In many ways this list is non-controversial, but its strength is its empirical basis. What’s striking is that most of them are people skills rather than technical ones. They also strongly overlap with my own research on what the key drivers of happy, successful teams are. The difference is that we present these drivers as positive actions that create a positive productive culture rather than individual attributes. I call them the Five Ways to Team Happiness, and below I have cross-referenced them to the Google list of attributes: 

The Five Ways to Team Happiness

  • Connect (1, 5 & 9)
  • Be Fair (3, 5 & 10) 
  • Empower (1, 2 & 8)
  • Challenge (3, 4 & 6)
  • Inspire (5, 7 & 10) 

The Five Ways can be used as guides, or reminders, for leaders about what needs to happen in their teams to create a great culture where people are happy and successful. They are all important but the data shows that when people feel treated unfairly or with a lack of respect, that undermines their happiness fastest. 

Building happy teams doesn’t need to cost much in terms of money or physical resources but what it does require is the regular investment of time. In the increasingly pressured world of work this can feel hard, but of course that’s precisely why it’s the antidote to stress and unhappiness. People need to step out of the busyness, take the time to reflect on how their work is going and then decide what actions they need to take.  This can be hard, especially for team leaders, who have multiple pressures on them from above and below. It’s not surprising that one of the biggest push backs about addressing team happiness is from managers saying “I haven’t got the time”. The problem is there is a cost to ignoring it: if team members aren’t happy, they not only won’t be performing well, they’re also much more likely to leave. This creates much more work for the team leader as they have to recruit a new hire, then integrate them into the team and get them up to speed. Instead it would be much more efficient, and much less stressful, to invest their time now to prevent these future headaches. 

3 steps you can take today

If you are serious about building a positive, more productive culture, there are three steps you can take:

  • Understand your present culture. Measurement can really help with this as it provides concrete data that gives everyone a common understanding.
  • Encourage every team to take the time to step out of their busyness, reflect on their own team culture and decide what changes they want to make. 
  • Give ongoing support to team leaders with guidance, training and - critically - time-budgets, so that they have the time and skills to build happy, successful teams.
These three steps are really a continuous learning process; building a positive, productive culture isn’t a one-off activity, it’s about how people work together every week. If you get these three processes up and running, you’ll be well on your way to creating a great culture and all of your ambitious business strategies will be much more achievable. 

Nic Marks

Founder and CEO of Friday Pulse.

Friday Pulse measures and improves team happiness.