This Is Your Organization on OXYTOCIN, Part II

Here’s this month’s piece from neuroeconomist Paul Zak. For those who might dismiss some of our thinking as the “soft side” of management, Paul puts “hard science” behind it.

Last month, I described why employee happiness is what scientists call a “sufficient statistic” for a well-run company: If joy is high on most days, then your chances of organizational success soar.

But, how does a manager create happiness?

My theory of organizational design, called Ofactor, states that Trust x Purpose = Joy. Purpose is something you have to identify for your organization, while trust can be raised by implementing policies explicitly designed to empower and engage employees.

My tests of the Ofactor theory bear this out. So far, some 4,000 employees at a diverse set of organizations have taken the Ofactor survey of organizational trust and its constituent factors. My team and I have also assessed joy at work, stress and several work-relevant outcome measures.

The bottom line: By asking employees “How much do you enjoy your job?” we have found that Trust x Purpose is highly correlated with joy, and this result is strongly statistically significant.

So, what does this mean in practice?

In field experiments we ran at several for-profit companies, employees who enjoy their work were more productive in their individual tasks and more proficient at creative problem solving with others. Clearly, joy produces a positive return on investment.

We have also tested the eight factors that, according to the experiments I’ve done, create trust:

• Ovation (Praise often, unexpectedly and visibly)
• eXpectation (Set clear objectives)
• Yield (Allow your colleagues to choose how work is done)
• Transfer (Let those doing the work manage themselves)
• Openness (Practice transparency)
• Caring (Demonstrate concern for the whole person)
• Invest (Develop colleagues)
• Natural (Be authentic)

These factors spell the acronym OXYTOCIN and, taken together, predict organizational trust with perfect accuracy. Each individual factor alone predicts between 45% to 72% of the variation in trust between work colleagues.

People who work in high trust organizations report being more competent at work, want to spend their entire career at their present company, are apt to recommend that family and friends get jobs there, and even say they would invest in the company’s stock. Extending trust is a key way to engage employees in the company’s mission.

Now, here’s how you can use these findings: First, survey your employees to measure how happy they are on an average workday. Do this anonymously to get better data.

Second, make sure every employee understands your organization’s “core purpose”—that is, how their work improves people’s lives. You need to constantly reinforce this message through discussions, published material and, above all, the behavior of the organization’s top leaders. Without common objectives and common values, “there is only a mob,” Peter Drucker wrote, “Management’s job is to think through, set and exemplify those objectives, values and goals.”

Third, assess interpersonal trust at work. If it is low, push on one or more of the OXYTOCIN factors.

Finally, view managing as an endless set of experiments. Before you make a change, determine what outcomes you expect to improve, measure these rapidly and only make the change permanent if improvements occur.

Some interventions will fail. So fail fast, and then try again.

Paul Zak is the director of the Center for Neuroeconomics Studies at Claremont Graduate University and the author of The Moral Molecule.