Leading well-being should be the foundation of an optimal performance strategy—but it rarely is!

Still today, some leaders believe that better performance should focus on “maximum effort = maximum results”, but that’s an outdated way of thinking about performance that doesn’t work like that in reality[1].

In fact, well-being and optimal performance are interconnected.

Balancing personal well-being needs with the push for business needs and short-term performance is a challenging leadership paradox, which contains contradicting, yet interrelated objectives[2].

Leading such challenging paradoxes fails if leaders and organizations don’t begin to really recognize that optimal performance requires a strong foundation of well-being for individuals and teams.

And then make the necessary changes structurally, systemically and through leadership behaviors to make well-being a strategic priority.

If that connection between well-being and performance continues to be neglected it results in sad outcomes such as bad stress and burnout affecting not only the individuals, but also their teams and broader their families.

In a Harvard Business Review article, Greg McKeown highlights that the widespread burnout culture nowadays requires a shift in mindset and culture among leaders and organizations everywhere[1].

Leading such paradoxes is definitely challenging and in this first blog article of 2025, I will discuss how leading well-being will positively affect sustainable performance in organizations.

Well-being and Performance.

Employees who have a good optimal level of personal well-being are far more likely to perform well at work[3]. Research has found that meeting employees’ well-being needs results in around 1,25x greater engagement, 2x higher energy, and more than 2x more loyalty to the employer[4].

Furthermore, engagement has been positively correlated with company profitability[4]. In a Gallup meta-analysis of 263 research studies across 192 companies, the companies with the most engaged employees were 22% more profitable than those with the least engaged employees[4].

A recent working paper by Oxford University from 2023 have also found that the top 100 companies with the highest well-being outperformed the S&P 500 and Dow Jones markets by approximately 20% since 2021[3,5].

That is amazing, really!

But, not surprising.

I have included the latest Work Well-being 100 and Stock Performance overview compared to the markets from 2021-2024 below (Figure 1).

Work Wellbeing 100 and Stock Performance
Figure 1: The Indeed Work Wellbeing and Stock Performance[6].

Notes: Simulated simple wellbeing-based investment strategy by Oxford, starting with $1000 in the top Work Wellbeing 100 companies in January 2021, which would have grown to $1,533 by July 2024 compared with $1,479, $1,408, and $1,401 had they invested instead in the S&P 500, Nasdaq Composite, or Russell 3000, respectively[5,6].

As you can see from Figure 1, the top 100 companies with the highest well-being impressively continued to perform better into 2024 than the S&P 500, Russel 3000 Index and Nasdaq Composite markets[6].

Jan-Emmanuel De Neve, who is the Professor of Economics at Saïd Business School and Director of the Wellbeing Research Centre at the University of Oxford, also recognizes that “research consistently shows that how we feel at work matters. It deeply impacts our general well-being as well as company financial performance”[6].

Overall, it shows that leading well-being is a critical foundation for optimal performance, also financially.

Let’s have a look at how optimal effort and performance works in the next part.

Optimal Human Performance.

In 1908, the researchers Yerkes and Dodson introduced a model for human performance, known as the Yerkes-Dodson law, showing that too much stress leads to burnout, while too little leads to boreout[7]. 

The sweet spot for optimal performance lies somewhere in between, around the middle (see Figure 2).

Yerkes and Dodson Human Performance Curve
Figure 2: Adapted from Yerkes and Dodson (1908)[7], and McKeown (2021)[8].

To perform well and be well, we need to oscillate between the stretch zone and the comfort zone, with intentional moments of recovery and renewal[2].

And research shows that what actually works is the 85% rule, aiming for 85% effort (not 100%) to get better performance individually and as a team[1].

We know that from sports, when we need a rest after a strenuous training session to come back stronger, also known as supercompensation where you create balanced work-rest ratios[9].

Yet in many organizations, that cycle of recovery and renewal is often overlooked.

Instead, we push ourselves—and are pushed—to maximum effort, firefighting in survival mode year after year, sacrificing sleep, physical activity and personal well-being. 

This approach inevitably leads to burnout (see bell curve in Figure 2).

“Well-being is both the foundation of and result of achievement[2]“

Aristotle

But boreout—the state of feeling underchallenged and finding work meaningless—is just as critical.

And, we often in organizations fail to notice boreout, which can also happen.

Boreout, often mistaken for a lack of motivation, is the opposite of burnout: a psychological state of boredom and apathy.

It leads to lower performance, decreased productivity, and job dissatisfaction.

Surprisingly, boreout is not a lack of motivation altogether. Boreout is actually a sign of untapped potential. 

People who are bored at work are motivated to do more, not less.

Preventing boreout and burnout is in my opinion about plain old good leadership: aligning tasks with strengths, providing challenges that stretch people, and creating meaningful work.

In the next section, let us explore some key elements of leading well-being.

Leading Well-Being is Leading Optimal Performance.

Earlier, we saw how higher levels of well-being and engagement positively affect individual, team and company performance.

Gallup research shows that leaders account for as much as 70% of the variance in employee engagement, and engagement is one of several performance variables[10]. And if personal well-being needs are met it also positively affect engagement, which again positively impacts performance[4].

Now, what does this all mean to leaders and organizations?

Well, given that leaders have such a significant impact on engagement and performance, it’s clear that their role in leading well-being is essential.

And individual team members also have a responsibility to react and change the situation, when something is out of tune. If the work you are doing is not meaningful to you, if you are not learning, if you feel overworked or not stretched.

Today’s leaders are facing unprecedented challenges and responsibilities.

As business environments continue to evolve, leaders must adopt a more versatile approach to leading teams. The pace of change continues to increase. So, lot’s of pressures, demands, different contexts and paradoxes need to be handled and led.

In their 2021 white paper The Future of Work & Wellbeing, Hintsa Performance (a world-leading performance coaching company) projected that the evolving role of leaders will be to lead optimal performance[2].

Let’s pause for a moment and say those words to ourselves as we read them.

Leaders have a continuously evolving role of leading optimal performance.

In my opinion this is an increasingly critical aspect of leadership, which connects well with the emerging trend since the COVID-19 pandemic of more humanistic leadership.

So, let’s now explore how leaders can actively influence the well-being of their teams.

Firstly, well-being is something very personal, subjective and holistic[2]. To some it may be about 100% relaxation, to another person it can be to engage in intellectually stimulating activities[2].

Yet it is important to discuss what well-being means to your organization, your team, for your individual team members.

Research shows people feel better and perform better, more sustainably if four well-being needs are met[4,11]:

  • Physical → renewal (rest, recovery, fewer inflammations, exercise, feeling energized)
  • Mental → focus (learning, creativity, complex problem solving)
  • Emotional & Social → value (feeling appreciated and valued, emotional balance, resilience)
  • Spiritual → purpose (meaningful work, aligned with personal and company values and objectives)

Jim Loehr and Tony Schwartz already wrote about these well-being needs as an ideal performance state in their excellent Harvard Business Review article The Making of a Corporate Athlete from 2001.

Below, I’ve created an adapted version of their High-Performance Pyramid (see Figure 3).

Physical well-being is the foundation of the pyramid and above that rests emotional and mental well-being, and at the top spiritual well-being, a sense of purpose[9].

The ideal performance state

Figure 3: Adapted from The High-Performance Pyramid by Loehr and Schwartz (2001)[9].

The ideal performance state can be achieved if all of the levels of the pyramid are working together according to Jim Loehr and Tony Schwartz[9]. So, to reach better long-term performance, you’ll need to tap into the positive energy at all levels of the pyramid[9].

What I like about their holistic perspective on ideal performance, is that to perform well, you need to build a rhythmic movement (oscillation) between energy expenditure (stress) as shown in Figure 2 and energy renewal (recovery)[9].

And to build that ideal cycle, you have to build rituals, routines and habits that promote this oscillation—the rhythmic expenditure and recovery of energy—linking the levels of the pyramid (see Figure 3)[9].

So, leaders have to lead in ways that meet these four needs to increase personal well-being and thereby elevating performance.

This is what leading well-being is about, and that is a critical role for leaders.

Hintsa Performance gives their view on what that important role entails[2,12]:

  • Setting direction by creating and communicating clarity: Clearly communicating expectations on WHAT to achieve (goal-setting) and WHY we are to achieve that and connecting it to the organizational objectives and purpose. Clearly outlining when and why we are in temporary survival mode and when we are resting, optimizing our energy levels etc.

    This relates to creating meaningfulness.
  • Acting as a role-model: Role modeling your own working style and well-being, so others feel safe to create their own. You have a great influence as a leader, so your approach to when you are sending e-mails, if you are ever off work etc. affect what your team does.

    This relates to meaningfulness and to some extent creating a space where people feel valued.
  • Leading the fundamentals of intrinsic motivation: Leading the long-term drivers of well-being, which are the fundamentals of intrinsic motivation:

    – Meaningfulness (connecting everyday work to personal meaning and the subscribed mission)
    – Autonomy (giving team members freedom to do their work in the best possible way)
    – Competence (the feeling of skill, accomplishment and mastery related to a feeling of doing well)
    – Relatedness (the relationships, atmosphere and support of working with trustworthy colleagues)

    These all connects well to the before-mentioned four well-being needs.

I couldn’t agree more with these aspects of leading well-being.

If you as a leader communicate clarity of the direction, connecting it to what that means to your team members’ day-to-day work tasks and how they each contribute to the objectives, then you create more meaningfulness.

Delegating work to the best of your team members’ strengths, ensuring they move between comfort and stretch, so they can flourish, learn, grow and master skills, while having the freedom to do their best work, will positively affect their motivation and well-being.

Creating an atmosphere, relationships and a space where the team members feel valued, appreciated, safe, supported and trusted will also make them trust you.

Leading well-being is the foundation to leading optimal performance!

P.S. How are you using well-being as a catalyst for high performance in your team? Share your thoughts below.

References.
[1]McKeown, G. (2023) To Build a Top Perming Team, Ask for 85% Effort, Harvard Business Review. Available at: Organizational Decision Making (hbr.org). (Accessed 15 June 2023).
[2]Pohjakallio, P. (2021) The Future of Wellbeing, Hintsa Performance White paper: The Future of Work & Wellbeing: Trends to get right for sustainable and healthy high-performance work, pp. 20-28. Available at: The Future of Work & Wellbeing (hintsa.com). (Accessed 27 December 2024).
[3]Le Pertel, N. (2023) Sustainable competitive advantage, Hintsa Performance White paper: Wellbeing Strategy, pp. 4-12. Available at: Wellbeing Strategy (hintsa.com). (Accessed 27 December 2024).
[4]Schwartz, T. and Porath, C. (2014) The Power of Meeting Your Employees’ Needs. Available at Harvard Business Review (hbr.org). (Accessed 29 December 2024).
[5]De Neve, J-E., Kaats, M. and Ward, G. (2023) Workplace Wellbeing and Firm Performance, Wellbeing Research Centre, University of Oxford, Working Paper Series (2304): pp. 1-42. Available at: Wellbeing Research Centre, Oxford (ora.ox.ac.uk). (Accessed 27 December 2024).
[6]Wellbeing Research Center (2024) Top employers revealed by new Work Wellbeing 100. Available at: Wellbeing Research Centre, Oxford (wellbeing.hmc.ox.ac.uk). (Accessed 29 December 2024).
[7]Yerkes, R. M. and Dodson, J. D. (1908) The Relation of Strenght of Stimulus to Rapidity of Habit Formation, Journal of Comparative Neurology & Psychology 18(5): pp. 459-482. Available at: Wiley Online Library (onlinelibrary.wiley.com). (Accessed 30 December 2024).
[8]McKeown, G. (2021) Effortless: Make It Easier to Do What Matters Most, Penguin Random House, Dublin, pp. 95-98.
[9]Loehr, J. and Schwartz, T. (2001) The Making of a Corporate Athlete, Harvard Business Review. Available at: Psychology (hbr.org). (Accessed 1 January 2025).
[10]Harter, J. and Adkins, A. (2015) What Great Managers Do to Engage Employees, Harvard Business Review. Available at: Emotional Intelligence (hbr.org). (Accessed 30 December 2024).
[11]Rosendahl, N. (2022) Quantifying Wellbeing, Hintsa Performance White paper: Quantifying Wellbeing: 5 Perspectives for Leaders, pp. 3-10. Available at: Quantifying Wellbeing (hintsa.com). (Accessed 27 December 2024).
[12]Ryan, R. M. and Deci, E. L. (2000). Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being. American Psychologist, 55(1), 68–78. Available at: American Psychological Association (psycnet.apa.org). (Accessed 30 December 2024).