Purposeful Economics : Motivation and Engagement

Purposeful Economics: Motivation and Engagement

Across the United Kingdom, businesses form the backbone of our economy. From manufacturers and exporters to technology innovators, local retailers, professional services, and family enterprises, businesses create jobs, drive innovation, and sustain communities in every part of the country.

They understand something fundamental about economic progress. Growth does not happen by accident. It happens when businesses have the confidence to invest, when people have the skills and motivation to contribute, and when institutions provide stability and direction.

These principles have always mattered. But today they matter more than ever.

Because the global economy is entering a period of profound transformation. Technological change, demographic shifts, environmental pressures and geopolitical uncertainty are reshaping how economies operate. At the same time, expectations of business are evolving. Employees increasingly want meaningful work. Consumers expect responsible companies. Investors are looking beyond short-term returns toward organisations capable of creating sustainable value over the long term.

All of this leads to a simple but important question. Not only how we grow our economy, but what kind of economy we want to build. Any type of growth is not the answer, yet this is what we currently see.

For much of the last century, economic success has often been measured narrowly - output, profit and productivity. Those measures remain important. But they are no longer sufficient, if ever they were.

The most successful economies in the decades ahead will not be those that focus solely on short-term growth. They will be the ones that meaningfully combine economic dynamism with a deeper sense of purpose. An economy in which businesses succeed not only by generating profit, but by focusing upon wellbeing (people, place, planet) and creating genuine and sustainable value for customers, employees, communities, and the planet.

This is what we call a "Purposeful Economy".

The idea is straightforward - nurturing an economy that creates meaningful, sustainable, purposeful growth. Not an economy profiting from extraction or failure.

Businesses, governments, educational institutions and citizens all play a role in creating prosperity. When each operates with clarity of purpose - when they understand the value they exist to create for the community as a whole - the entire economic system becomes more resilient, more innovative, more productive and more sustainable.

Purpose, in other words, is not an abstract concept. It is rapidly becoming the front-line of competitiveness and its application is set to expand to over 170 countries. It's also a primary driver of wellbeing, psychological wellbeing (eudaimomia).

Organisations that embed purpose into governance and leadership consistently report higher employee engagement, stronger innovation and greater long-term performance. Yet in many workplaces today engagement levels have fallen to below ten per cent. In contrast, workplaces where purposeful governance is adopted - where people understand the purpose and vision of the organisation and see how their work contributes to something meaningful - see engagement levels rise to over seventy per cent.

That represents a transformation in organisational energy.

A six-fold increase in engagement that drives step-change improvements in productivity, innovation and growth.

This tells us something important:

"Productivity, and investment, in an economy is not simply about financial capital, technology investment, or human capital (people/skills).

It is about 'purpose, motivation, and engagement'.

These provide the real engine of economic value. Yet in economic models they are not factored in. People numbers and skills are included. Explicit levels of motivation and engagement are not. This needs to change and there are a number of ways this can be done".

It's worth noting that forward-looking investors already try to do this. For instance, consider the number of highly valued companies existing today that are either pre-revenue or yet to make a profit. Investors see the value beyond the numbers - the value embedded in knowledge, human capability, engagement and purpose - and the inherent creativity of people. They recognise intention, human ingenuity, motivation and potential.

Human capability, when properly engaged, is one of the most powerful economic assets any organisation can possess. Until now, this dimension of economic policy has been largely overlooked. In recent years workforce wellbeing, motivation and development have been seen more as costs to manage than a strategic asset to investment in.

It's time for economics to catch up. This starts with the integration of intrinsic motivation and engagement measures into decision making and economic models. This deliberately focuses on introducing psychological wellbeing (through engagement measures) into decision-making and economic models, not extrinsic measures associated with increasing hedonistic wellbeing (including over-consumption/hoarding) or cost of failure (including costs of housing, energy, food, water, transport, climate breakdown).

To influence policy and economic models, motivation/engagement must be translated into measurable variables and causal mechanisms, with data collected over time. These models will require variables such as engagement scores, wellbeing measures, job satisfaction, burnout rates, absenteeism, innovation output, and productivity per worker.

Frameworks already exist and these could be extended. For instance the simple Human Capital model could easily be updated to Engagement-Adusted Human Capital (Heffective), with engagement treated to calculate effective human capacity.

Example:

Effective Labour = Labour x Skills x Engagement

and

Heffective = Hcapital x Engagement

H = Human Capital (Skills, Education)

E = Engagement factor

The gap represents wasted capability, and it's negative impact on productivity and GDP can be calculated.

Production Function:

Y = A x K^α x (L x H x E)^β

Y = Output (GDP)

A = Technology

K = Capital

L = Labour

H = Human Capital

E = Engagement Factor

α = Elasticity of capital (typically around 0.3)

β = Elasticity of labour (typically around 0.7)

The high elasticity of labour (compared to capital) means any changes to engagement are particularly significant, with changes to GDP(%) calculated using the following equation:

Percentage Change in GDP:

ΔGDP(%) = β x ΔE(%).

The use of Engagement-Adjusted Human Capital is a very simple form of integration, yet its introduction would go some way to fixing the 'Productivity Puzzle'. Current economic models introduce unexplained adjustments to try to compensate for its omission (e.g. Productivity residuals/Total Factor Productivity). By doing this models miss out on a key point of leverage. More sophisticated models are needed, and are starting to be created.

Wellbeing Economics measures general engagement and motivation through subjective and eudaimonic indicators, including life satisfaction (reflective assessments such as satisfaction with life), affect (feelings or emotional states), and eudaimonia (a sense of worth, meaning and purpose). Engagement is a eudaimonic measure, focused around motivation in work, and needs to be specifically built into economic models (including GDP models).

Doughnut Economics has 22 social indicators to monitor humanity's progress towards avoiding critical human deprivation, and whether the necessary conditions for psychological wellbeing (eudaimonia) exist. For this reason it does not currently use motivation/engagement and psychological wellbeing measures yet, as these are arguably only needed when "within the doughnut".

The above highlight the challenges ahead - to help avoid deprivation, and to then focus on flourishing. The first requires a redefinition of the purpose of the economy, around wellbeing for all, to tackle inequalities and to successfully move communities/nations out of deprivation. The second focuses on increasing wellbeing and flourishing, once basic needs are met (life "within the doughnut").

The recent report "Counting What Counts", from the UN's Independent High level expert Group on Beyond GDP, also focuses on the wellbeing of people and planet. Not surprisingly it's a framework not dissimilar to the Doughnut model, but pulls out three foundational elements; Peace, Human Rights, and Respect for the Planet (including Planetary Boundaries). It also identifies 31 priority areas for measurement - measures that already exist in many countries. A number will be familiar to those using Doughnut Economics, though this framework goes further by including a few life-satisfaction (eudaimonic) measures more similar to those used in Wellbeing Economics. In many ways this tries to connect the two (i.e. removing deprivation and increasing flourishing), though it fails to prioritise engagement measures related to work, critical to updating GDP models, which we would like to see.

A group now starting to apply engagement scores in economic models is Gallup. They are measuring engagement scores and using them to predict lost GDP. Early findings are stark and expose trillions in lost GDP globally. To accelerate towards a Purposeful World we need to build on work like this, and for this kind of work to become mainstream within economics (once the purpose of economics has been properly redefined).

David Clift

Purposeful Ambassador®

Founder, Good Turns Foundation

Co-founder of Purposeful Britain and Purposeful World

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