People who are happy with their jobs are generally motivated to work harder and have high levels of performance. Conversely, those who don’t have job satisfaction can be demotivated. An unengaged worker costs an organization approximately $3,400 for every $10,000 in annual salary. With the trend of team structures, one of the key drivers of effective team performance is the motivation of team members.

Happiness, which affects motivation, comes from relationships, so effective Leader-member exchange (LMX) leaders have higher levels of performance. However, performance is not based simply on motivation. The level of performance attained is determined by three interdependent factors: ability (IQ, skills), motivation (willingness to work hard), and resources (things needed to do the task).

This relationship can be stated as a performance formula: Performance = Ability × Motivation × Resources. For performance levels to be high, all three factors must be high. If any one factor is low or missing, the performance level will be adversely affected. When performance is not at the standard level or above, you must determine which performance factor needs to be improved, and improve it.