That Making your workers happy will increase productivity is a fallacy.

For years, human resource researchers have looked at highly productive work groups and found that workers in top-performing groups also had higher morale than workers from other groups. So, they concluded that happiness brings about productivity.

You may have heard of a small, regional air carrierwhose management believed that if they made their workers happy, productivity and profitability would follow. They paid their people high salaries, provided perks and gave them lots of paid time off. A lot went into  paid time off and paid family leave.

But productivity didn’t go up. The airline was no more productive than its competition. But it was a lot less profitable because it was paying a whole lot more than competitors for the same amount of work. Eventually, the airline went out of business. Then, the employees were very sad.

If top-performing groups are filled with workers who are both happy and productive, and if happiness doesn’t cause productivity, it must be the other way around. That’s not the case either.

Consider the early years of the Ford Motor Company. Henry Ford’s vaunted assembly line set the pace of work and it was a brisk pace indeed. Workers and their families were scrutinised by Ford security and those of “poor moral character” were let go.

The Ford assembly line wasn’t a happy place to work then. But it was very productive. It was so productive, that Ford was able to buy vast holdings all over the world without borrowing a penny. The profits from the Model T were enough.

Leadership matters

To be productive and happy, people need to feel like they are being treated fairly. They want to make enough money. They want their salary and benefits package to be comparable to other people doing similar work within the company and in other companies.

After these are satisfied, monetary rewards don’t make a lot of difference. If people are being treated fairly and paid enough by the company, then it is their boss that makes the big difference.

When chief executive office of General Electric (GE) Jeffrey Immelt was young, his father worked for the company.

He said: “When I would sit around the kitchen table with my dad, I never knew who the CEO of GE was. I knew my dad’s boss. (When he had a bad boss) he came home in a bad mood, uncertain about the future. And when he had a good boss, he was pumped.”

That’s the secret to a happy and productive workforce. Give them good bosses up and down the line. Don’t concentrate on making your workers happy or making them productive. Instead, concentrate on making your bosses good.

Select your leaders — the people responsible for group performance — from a pool of qualified and engaged workers. Give them the training they need to be a good superior. Give them regular and usable feedback on how they are doing their job.

Then, help new leaders become good, experienced bosses. Keep training in basic one-on-one leadership skills, but go beyond the training room.

Provide them with opportunities where they can develop both skills and vision. Help them connect with other bosses to discuss leadership situations and issues.

It’s no mystery, but it’s not easy. It takes time and resources. But building a cadre of great bosses is the way you build workgroups with high morale and high productivity. And those workgroups help you build a profitable company for the ages.