What is employee engagement? Why do organizations need it today?
Employee Engagement is the holy grail of HR departments. A quick search on google or social media indicates a rising interest in the term over the last decade, with innumerable blog posts devoted to plumbing its depths and uncovering its secrets.
While there is no clear definition of Employee Engagement, it can be explained as the “Emotional connection an employee feels toward his or her employment organization, which tends to influence his or her behaviors and level of effort in work related activities. The more engagement an employee has with his or her company, the more effort they put forth.” In other words, employee engagement is the very foundation on which an organization operates. The grease that ensures machinery runs smoothly. The glue that causes people to stick.
The term ‘employee engagement’ first appeared in 1990 in the Academy of Management Journal by William A. Kahn.
Prior to that, in the early 1970’s, the HR community spoke of employee satisfaction, a term that was wholly focused on the employee while ignoring the relationship that the employee had with the organization.
The HR community then took baby steps towards integrating the organization with an employee’s life, when they spoke of employee commitment. In exchange for a stable and satisfying job, the employee would ‘commit’ to the organization, often clocking-in a lifetime of service.
In the late 1990’s, with rapid globalization and the move from a manufacturing economy to being service-oriented, organizations learned to be more flexible, lean and competitive. Companies also realized that their primary and often only assets were their employees, causing a shift in how organizations viewed their key resources. It was around that time that Gallup started interviewing employees using their proprietary Q12 survey which spawned a whole new industry of companies dedicated to researching employee engagement.
Several research papers later, including one by the Institute of Employment Studies (IES), a definite link between employee’s attitudes and business performance was established. This put employee engagement firmly on the agenda of CEOs and senior leadership teams across every industry.
Today, as HR practitioners grapple with sustaining employee engagement, they recognize that employees don’t want a career, they want an experience. Similar to how customers today no longer buy a product but instead buy an experience, employees are not necessarily swayed by perks like free food and plush offices, they want to be involved in something valuable and worthy of their time and effort.
Today, employee engagement is empowered by awesome employee experiences.
Scoreboard: The ROI of Employee Engagement
Campbell’s Soup Former CEO, Doug Conant, once said, “To win in the marketplace you must first win in the workplace.”
Change and innovation are taking place at a faster pace than ever before. Traditional ways of doing business have been replaced by newer and faster methods. A few years ago, employers were clearly in the driving seat when it came to attracting and retaining high performing individuals. Today, employees hold that power. The options available to employees – from working for themselves to working with innovative startups – are innumerable. The future of work is influenced by the gig economy, the rise of millennials in the workplace and rapid digitization. Companies today have to provide an impetus rather than simply sit back and wait for employees to flock to them.
In this uncertain ever-changing economy, an engaged workforce provides competitive advantage. According to estimates from Gallup, even a 1% decrease in employee engagement can lead to an eventual 20% decrease in productivity overall, a 7% increase in attrition, a 1% decrease in customer satisfaction and a 2% decrease in revenue and profits.
Engaged employees are emotionally involved in the work they do and the company they do it for. They don’t just work for the next pay cheque or promotion. They actually care. According to Forbes, when employees care—when they are engaged—they use discretionary effort. This is the effort that causes employees to go beyond the call of duty – to work overtime without being asked; To be so completely aligned with the organization’s goals and objectives that everything they do contributes to, and creates business value.
Deloitte’s Global Human Capital Trends 2016 report states that CEOs consider employee engagement among their top 5 concerns, behind concerns related to developing future leaders and promoting the right culture.
Here are a few benefits to having an engaged workforce:
Engaged employees are more profitable for business.
Forbes explains the benefits of employee engagement through something called the Engagement-Profit Chain.
Engaged Employees lead to…
higher service, quality, and productivity, which leads to…
higher customer satisfaction, which leads to…
increased sales (repeat business and referrals), which leads to…
higher levels of profit, which leads to…
higher shareholder returns (i.e., stock price)
Companies with high employee engagement recover from recessions faster.
Gallup’s research shows that during a recession, disengaged employees are waiting around to see what will happen. Engaged employees have already bought into what the company is about and what it wants to do. It is these employees that make things happen, especially when times are tough. They are more productive in all that they do.
Engaged employees help to reduce turnover.
While happiness is not a perfect indicator of engagement, it is a well-known fact that engaged employees are happy and happy employees are engaged. According to a study by BI Worldwide more than half of unhappy employees plan to leave in the next 12 months, while just 23% of those who are happy at their current jobs plan to leave.
In another example Adobe reduced turnover among high performers by over 30% by revamping their employee engagement and performance management processes. As businesses become more knowledge-intensive, the cost of replacing capable knowledge workers is high.
Engaged employees are more likely to service customers better.
According to a study by BI Worldwide, 93% of happy employees agree with the statement, “I am willing to work especially hard for my organization’s customers,” compared to just 69% of unhappy employees. There are several case studies that show how customer engagement increases dramatically when employees are engaged.
Engaged employees are more likely to help steer the organization into the future.
Engaged employees ‘get’ the business. They understand. They’re involved. They’re motivated. It is these employees that are most likely to identify and suggest areas of growth for the business as they are invested in helping the organization succeed. Engaged employees are also likely to self-organize and fix problems within the organization thereby allowing managers and leadership to focus on moving the organization forward.
The business benefits to having an engaged workforce are no longer in question. There is irrefutable evidence to show how much of an impact engaged employees have on an organization. Employee engagement is the key to activating a high performing workforce and gaining the competitive edge in the marketplace.
Despite its numerous benefits, Gallup’s 2013 State of the Global Workplace study indicates that only 13% of employees are ‘engaged’ at work. A total of 63% are ‘disengaged’ and 24% are ‘actively disengaged’. The actively disengaged group are negative about the place they work at and even potentially hostile. Combined together the disengaged and actively disengaged groups far outnumber the engaged group. That’s the reality that HR managers and CEOs are dealing with today.
Achieving any amount of engagement in the workforce is not easy and requires constant nurturing and attention. Here are a few engagement tactics and strategies to remember in order to ensure your employee engagement program is successful.
Ownership – HR teams often have a specific role within their team, an engagement or happiness manager, whose primary focus is fostering a culture of engagement. In most organizations the responsibility for engagement has moved beyond the walls of the HR department to permeate through every level of leadership in the organization before finally coming to rest on the CEOs desk. Today, CEOs and Senior Leadership teams are ultimately responsible for employee engagement. It is important that they own, or at the very least, support employee engagement within the organization, for any engagement initiative to succeed.
Key influencers – Josh Bersin and several employee engagement experts highlight the fact that first and second line managers are the biggest influencers when it comes to creating a culture of engagement. According to Harvard Business Review, managers account for as much as 70% of variance in employee engagement scores. Studies show that almost half of the present workforce has quit a job at some time in their careers to get away from a manager. It is not enough that the employee engagement program is supported by the CEO and senior leadership team, every manager needs to get onboard as well.
Contributing factors – Engagement strategies will differ from organization to organization based on culture, industry and several other factors. Finding what drives engagement for a unique group of individuals is critical to the success of any engagement strategy. These expert opinions and survey responses highlight key trends.
According to Josh Bersin, there are five elements which drive a highly engaged workforce:
- The work itself,
- The management environment,
- The flexibility and inclusion of the workplace,
- People’s ability to learn and grow, and
- Trust and meaning from leadership.
The 2015 SHRM Employee Job Satisfaction and Engagement survey reported the following factors as those that made employees happy and engaged.
These are the top factors that made employees happy
The rules of engagement change over time. Based on the fact that by 2025 over 75% of the workforce will consist of millennials, here are some essential tactics to keep in mind:
Performance Management – in recent years, several large enterprises have done away with traditional performance appraisal systems. Employees, today, especially millennials, want immediate and regular feedback, preferably on a weekly basis. Traditional yearly performance appraisal systems aren’t enough for today’s ‘now’ generation. Instead, these organizations have opted to pare down their appraisal process so much so that some organizations have only four questions that need to be answered when appraising an employee. They’ve also gone the route of providing timely feedback with a process that supports and enables employees rather than compares and rates them. Gallup reports that employees are more engaged when performance appraisal is done well. Clarifying expectations, immediate recognition and feedback are just some of the prerequisites to doing performance management right today.
Meaningful Work – There are two aspects to consider here a) doing work that contributes to the organization’s business goals and b) the meaningfulness of work. According to Deloitte, while 76% of all employees want to work in roles that directly impact and contribute to the organization’s business goals, 75% of employees (this is even higher when considering millennials only) are supportive of – and engaged with – companies that care about more than a high profit margin. Many organizations today support a variety of causes and employees are free to choose one that is close to their heart and contribute in whatever way they’d like. Similarly, HR departments and managers have devised several methods to communicate the impact each role has on the organization’s goals and objectives.
Trust – The workforce today is driven by a sense of community even while there is an increasing demand for flexible work timings and locations. Employees need to know that the organization cares about and is invested in them, not just in their role or designation. Traditional methods of monitoring and watching employees has gone out of the window. What remains is an extremely collaborative environment that empowers and encourages employees. Employees need to feel that they can trust leadership and the organization as a whole. While there is an emphasis on doing what’s right, the demand is that there is more transparency and honesty in all dealings with staff.
Communication – The modern workforce craves effective, regular and open communication not just about work but about life in general. Employees want to feel valued. A once-a-year performance appraisal or employee feedback survey hardly seems to satisfy the needs of this overly communicative workforce.
Enter pulse surveys.
Pulses are a continuous feedback tool – a deep listening device – that enables organizations to feel the pulse of staff on a daily basis. Unlike annual employee surveys, these are quick, device-agnostic check-ins that provide management with deep insight. With the addition of analytics, organizations use this tool to detect and analyze trends, problems and results from interventions.
n!Gage, n!Factorial’s real-time employee engagement feedback platform, helps managers listen, understand and act upon employee feedback that leads to great employee experiences and ultimately, deeper engagement. This first-of-its-kind-in-India-platform uses analytics to provide real-time intervention analysis, trends, predictive analysis and much more. Winner of TechHR’s 2016 Spotlight award, the platform is in use in several large corporations across multiple industries.
In conclusion, employee engagement may just be the silver bullet that everyone hopes it is, however there are several things that must be put in place before any engagement tactic begins to bear fruit. We leave you with wise words from Peter Baeklund.
CFO asks CEO “What happens if we invest in developing our people and they leave?”
CEO responds, “What happens if we don’t, and they stay?”