What We Measure Matters

Can little Bhutan -- with its humanistic development philosophy -- create for a new global currency of well-being? For you skeptics who think innovation only occurs in the developed world, consider Bangladesh's Muhammad Yunus and his microlending approach to financing the aspirations of the poor. Yunus, who won the Nobel Peace Prize in 2006, has helped to revolutionize how the financial community and governments view the poor and the Grameen Bank's efforts have led to similar projects in more than 40 countries. Bangladesh, a country that's even poorer than Bhutan, has taught us that business can't sustainably thrive in societies that fail at the bottom of the pyramid.

Simon Bolivar, the South American independence leader, said long ago, "The most perfect system of government is that which produces the greatest possible amount of happiness." Bhutan, through its Gross National Happiness (GNH) index, has tapped into that fundamental aspiration that unites us. The Bhutanese have redefined their objective of development and countries around the world are taking notice. In tandem with the growth of the positive psychology movement, there is a new paradigm arising in both global economics and psychology. Recognizing that modern man has been liberated by prosperity but not fulfilled by it, psychologists and economists are seeking new ways to measure the intangibles of public welfare.

One wise man once wrote, "Happiness is designed to evaporate." So, how do you measure something that disappears? The U.N. Millennium Summit commissioned the largest international poll ever taken (by the Gallup organization) and found that people value good health and a happy family far more than they do material well-being. The Philippines have modified their approach to measuring subjective well-being such that each individual surveyed identifies which particular domains -- whether it's leisure time or compensation -- are most important to them and then the government is able to tabulate the overall subjective well-being for the country. Given that the U.S. is on the cusp of its 2010 census, wouldn't it be instructive for us to ask more meaningful questions than just the demographic and personal financial data of our citizens?

As the CEO of hospitality company that surveys the well-being of our 3,500 employees twice a year, I've learned that asking revealing questions -- beyond the tangible of "are you getting paid enough?" -- helps us better understand how we can address our employees' higher needs. We have been able to create the conditions for our people to feel more engaged and inspired by asking, "Have you been recognized for what you do in the past month?" or "Do you feel that your work positively impacts our customers and how do you know this?" And, we've cut our employee turnover to one-quarter the industry average by rethinking what we're measuring. Our people will never aspire to more than a job if all they focus on is the fact that they clean toilets in a hotel. But when one sees the broader purpose of what they do, they start to realize their work can fulfill in ways they hadn't imagined. And, the positive result of being in a workplace full of happy fellow employees is noticeable to everyone who comes into contact with an organization. Harvard's Nicholas Christakis has shown that happiness -- like the fear and the flu -- can spread from person to person and even affects people peripherally like neighbors and relatives.

What if we took Abraham Maslow's ideal of self-actualization and used it as an organizing principle beyond the individual? Most don't realize that in his latter years, Abe Maslow was focused on how to take this individual-focused theory and apply it more collectively to organizations. I've found that using his Hierarchy of Needs theory as a means of understanding the collective higher needs of my company brought me great insight. In essence, Bhutan is doing that as a country as they're focusing more on the intangible higher needs that a tangible metric like GDP misses. What the world needs now is an actualization index that measures something worthwhile, something that helps us move people up both the economic pyramid as well as Maslow's needs pyramid.

The world's economic crisis is a symptom of a deeper malaise that threatens our collective well-being and survival, yet using the old measuring tools may not allow us to address the disease beyond its symptoms. Many of our dominant economic theories -- from Smith to Ricardo -- were espoused in the 19th century and were based upon the tangible scarcity in agricultural and industrial societies. While the world's tangible, precious natural resources are certainly scarce, some of our deprivation today is in the intangibles of the cultural, spiritual, and emotional realm. Some of the scarcity is "capability deprivation," those who have talents but lack access to opportunity or "time deprivation," a scarcity that's very familiar in modern society. How do economists evaluate the theory of scarcity when it comes to the intangibles that define the quality of modern life?

We've been too pervasively susceptible to confusing ends and means and needs and wants. Is it possible that Gross Domestic Product should just be a subset of a Gross National Happiness index rather than the other way around? As we're exposing so many emperors with no clothes these days, can we now see that GDP is an artifact from a time when it was presumed that if there were more goods in circulation, general welfare would naturally follow? Paraphrasing Viktor Frankl, the world has been pushed by drives, but it is now pulled by meaning. The vast and intricate envy-producing machine called "consumerism" may have overpowered the other "isms" with a "c": communism and capitalism. But a good portion of the world has woken up to the insatiable and insane arms race that comes with "positional consumption," -- buying not to meet a need but to create a relative superiority. Gandhi said it best, "The world has enough to satisfy everyone's needs, but not enough to satisfy one's greed." It is time for the world to reconsider what we measure and how the very act of measurement impacts what matters.

Chip Conley is the Founder and CEO of Joie de Vivre Hospitality and the author of PEAK: How Great Companies Get Their Mojo From Maslow.