Business leaders often focus on profitability as the cornerstone of success to the exclusion of other factors. However, emerging research in economic well-being shows that real, sustainable growth comes from aligning financial goals with personal and employee well-being. This alignment fosters a healthier work environment and can drive significant business growth.
There are two key factors of well-being that leaders must understand for long-term corporate success:
1. The tendency of people to compare themselves to others when evaluating personal happiness; and,
2. The universal reliance on monetary rewards as a measure of well-being.
The Role of Pay in Well-being
Pay is undeniably important, but its effect on overall happiness is limited. While fair compensation is essential, it is not the ultimate driver of long-term satisfaction. As people progress in their careers, other factors like purpose, autonomy, and job satisfaction become more significant.
In my MBA dissertation, I noted: "Using financial bonuses is an easy answer for rewarding employees as it provides flexibility for the recipient, but it is also observable and measurable (Boyce et al., 2010). How much you are paid is important, but only to a certain point. According to the SRHM (2018:52) report, Compensation / Pay ranks second for job satisfaction among hourly and middle management workers but falls to last place for executive management."
This supports the theory that while workers care about absolute pay, they are more affected by comparative pay—how much they earn relative to others (Brown et al., 2008). This "ranking system" is almost unavoidable (Blanchflower, 2021), leading people to evaluate their happiness by comparing their compensation with others.
Interestingly, pay becomes more relevant when employees consider quitting. The Institute of Leadership (IoL) found that base pay was the second most important factor after enjoyment of the work itself. Meanwhile, financial bonuses motivated only 13% of staff surveyed (IoL, 2013). This suggests that while money plays a role in retention, it is not the primary reason employees stay.
Many business leaders overestimate the value of profitability, assuming that increasing revenue will lead to personal fulfilment. However, research in the economics of well-being reveals that financial success is often a misleading indicator of happiness. Business owners frequently find themselves wealthier, but not happier.
The path to sustainable business growth and personal satisfaction lies in aligning financial success with personal well-being—a strategy that leads to a more rewarding entrepreneurial journey.
Understanding the Limits of Wealth:
The Hedonic Treadmill and Eudaimonic Well-being
The Hedonic Treadmill describes how individuals, after material gains or successes, eventually return to their baseline level of happiness (Luhmann & Intelisano, 2018). For business owners, this often means that expanding their company or increasing revenue brings only short-term happiness. Studies by Clark and Oswald (1996) suggest that wealth alone cannot provide lasting fulfilment, and that enduring fulfilment comes from factors beyond material wealth. Authenticity, autonomy, self-development, value-driven purpose, and meaningful relationships are key components of eudaimonic well-being, which fosters long-term personal growth and satisfaction (Davis, 2021; Sapiens, 2023).
Leaders should regularly reflect on their motivations and long-term goals. For example, if a business owner values community involvement, aligning the business with these passions can lead to greater fulfilment. Additionally, maintaining a work-life balance and focusing on personal development supports business success and long-term well-being. Simon Sinek’s works are an excellent starting point for understanding this shift from short-term success to long-term fulfilment, helping business leaders ground their ambitions in purpose and authenticity.
Purpose and Autonomy: The Heart of Entrepreneurial Fulfilment
Running a business offers significant opportunities for personal growth and autonomy. Clark (1996) notes that job satisfaction is closely tied to having a sense of purpose and control over one’s work. This is why many entrepreneurs start their businesses—they seek financial independence and the ability to shape their professional path.
However, as businesses grow, owners can become distanced from their original purpose. The daily demands of running a company can obscure the deeper reasons the business was started. When this happens, the joy and fulfilment once associated with the business can fade, leading to burnout or dissatisfaction.
To counter this, business owners should regularly reassess whether their operations still align with their values. Expanding a business should involve more than just financial gain; it should contribute to the owner’s sense of accomplishment and satisfaction. Staying connected to the "why" behind the business—the deeper purpose for which it was created—helps harmonise financial rewards with personal fulfilment.
Productivity and Happiness: A Two-Way Street
The link between workplace happiness and productivity has been well-documented. Research by Bryson and MacKerron (2017) highlights that happiness in the workplace is closely linked to increased productivity and job satisfaction. This principle applies to both employees and business owners.
Well-being plays a critical role in one’s ability to lead effectively and sustain long-term business success. Studies indicate that an increase in happiness can, on average, lead to a 12% rise in productivity (Oswald et al., 2015). Although precise impacts are hard to quantify, the connection between well-being and productivity is clear.
It’s also important to recognise that the relationship can work both ways. Increased productivity can lead to greater happiness, while other external factors can influence both productivity and well-being (Böckerman & Ilmakunnas, 2012).
ASK Bermuda’s Action Points for Business Owners
At ASK Bermuda, we help business leaders balance profitability with personal well-being. Here are some steps to help align financial success with personal fulfilment:
• Reflect on Purpose: Regularly assess whether your business still aligns with your values and long-term goals. Staying connected to your original purpose fosters greater fulfilment.
• Set Holistic Goals: Profitability is crucial, but what else matters? More time with family, greater community involvement, or more autonomy? We assist business owners in setting goals that balance financial success with personal fulfilment.
• Focus on Long-term Well-being: Long-term stability and personal satisfaction are essential for sustainable success. As Clark and Oswald (1996) suggest, higher income does not always lead to greater happiness.
• Create Work-Life Balance: As your business grows, it’s easy to lose sight of what matters most. Implement strategies like setting clear operating parameters or scheduling regular breaks to maintain a healthy balance.
• Prioritise Well-being in Decision-making: Every business decision should consider both profitability and its impact on quality of life. We integrate the economics of well-being into our consulting services, ensuring your business supports both financial and personal goals.
The Leadership Challenge
Excellence in leadership requires effort and resilience, especially in today’s complex business environment. Balancing the expectations of superiors and boards while supporting your team can be overwhelming. The rise of remote workforces, AI integration, and shifting work cultures means that no single solution fits all leadership challenges.
However, respected leaders share a common trait: they lead by example. If you’re committed to improving your team’s well-being, start by examining your own. Reflect on your values, purpose, and relationships. Invite honest feedback from trusted colleagues and make the necessary changes. These guiding principles will strengthen your leadership moving forward.
Conclusion
Sustainable business growth is not determined by financial success alone. Business leaders who prioritise purpose, autonomy, and well-being are more likely to achieve long-term satisfaction and fulfilment. As a leader, you face many challenges, but if you want a positive, purpose-driven team, you must first challenge yourself.
If you need a final piece of evidence, think about the two or three happiest periods in your life. I’ll bet your last bonus none of them had to do with money…
At ASK Bermuda, we can guide you through a reflective process that ensures your operations remain in harmony with your values, fostering financial prosperity and personal well-being.
ASK us Today!
Ben is Principal Adviser at ASK Bermuda, delivering Leadership & Direction Services to our clients. Ben achieved his MBA (Dist.) from Warwick Business School. His dissertation “Why does our perceived happiness change over our adult life”, focused on economic well-being, a subject about which he is passionate, drawing heavily on his progressive military career.
Contact Ben for a free 90-minute consultation.
Ben Beasley BA MBA CMgr FCMI FioL BEM
Principal Adviser
ASK Bermuda
Mobile: 441-705-3502
Office: 441-601-2275
Suite 500 | International Centre
26 Bermudiana Road
Hamilton | HM11 | BERMUDA
Web: www.ask.bm
Email: benbeasley@ask.bm
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