Leaders rarely have just one goal for their firm. “Profit maximization,” of course, is the biggie. (defining “profit” depends on what you do, of course; if you work in the public sector, you may define it as “doing as much good in the world as we can while minimizing costs”). Focusing purely on the numbers, though, often leads people to make short-term decisions that may not work so well in the long run. You need to consider factors that contribute to long-term profitability and set objectives for those as well.

As we look at important factors like recruiting, retention, and productivity, we often tend to focus on compensation as the way to maximize those. If we pay people a lot, they will want to come work for us, they will want to stay with us, and they will do good work for us so they keep these high-paying jobs; so goes the industrial-age conventional wisdom.

That may have been the case when the majority of work was physically intensive, or mindlessly repetitive, requiring certain physical or technical skills but not so much a broader education; work that paid the bills but did not really offer a sense of fulfillment. Knowledge work, though, and especially creative work, offers much more than just a paycheck, and many knowledge workers seem to value that job satisfaction over money. So, among your workplace goals, you might consider “employee happiness” as something to maximize, in order to help your organization grow and do well.

In his book Drive, Daniel Pink reported on research that suggested as much. One particularly enlightening example involved schoolchildren who were given an art project to do; those who were compensated for it turned out to be less engaged than those doing it for the sheer joy of doing it. Sure, once you have mortgage payments your priorities change, but he further discussed research suggesting that, once a certain minimum level of income is achieved, compensation is no longer the key issue for job satisfaction, especially in knowledge and creative fields. Rather than focusing on offering the highest salaries, he says, employers should offer enough compensation to “take salary off the table” and turn to other factors, such as happiness, to help keep employees engaged in their work.

Richard Florida has found in his research that “High levels of well-being and of thriving seem to turn not just on income but on the ability to find work that is challenging, purposeful and enjoyable and the freedom one has to be one’s self.” Like Pink, he has found that once basic needs are covered by a certain minimal income, other factors take over when it comes to enabling happiness. Is there a clear link between happiness and productivity? In the creative economy, research suggests that there is such a link. It’s interesting to note in Florida’s research that, while some countries are low in happiness but still have growing economies, they tend to focus on natural resources (Russia) or manufacturing (China) rather than being creativity-based economies. It will be interesting to see what happens to workers preferences and expectations in China as it continues its shift from an industrial economy to a knowledge economy.

A lot of leaders are going to start grinding their teeth when they see the word “happiness” associated with the workplace. “Work is not supposed to be fun; that’s why it’s called ‘work’,” is a common refrain. Milton Friedman famously wrote

In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.

Nowhere in there did he say anything about happiness.

Then again, Friedman was looking at an industrial economy, where profit could be more easily measured using the cost of physical inputs. Employee motivation seems to have a higher impact in knowledge/creativity-based work. High wages and job security may be what an automobile assembly line worker needs, but high satisfaction and flexibility may be what your employees need to be happy and motivated.

You may think it’s not your responsibility to help your employees be happy, but it’s certainly in your interest.