Employee Engagement - A Silver Bullet
Employee Engagement is much discussed by HR Executives and Organisational Development professionals alike. The question we are most asked is "How do we improve engagement?", followed closely by "Do we use a performance development system, leadership training, incentives, work-life balance or something else ?"
This White Paper outlines a systematic way to increase engagement across the entire workforce and then maintain high engagement.
Before outlining the elements of an effective engagement program, it is important to define exactly what Employee Engagement means. Following is an extract from Wikipedia:
"Employee engagement is a concept that is generally viewed as managing discretionary effort, that is, when employees have choices, they will act in a way that furthers their organisation's interests. An engaged employee is a person who is fully involved in, and enthusiastic about, his or her work."
The term "discretionary effort" is the most relevant. In many engagement studies, the clear outcome is that an organisation that can harness discretionary effort will far outperform the organisations with employees who just do the minimum they can get away with.
Wikipedia goes on to list the major influences and linkages of Employee Engagement:
Employee perceptions of job importance.
According to a 2006 study by Gerard Seijts and Dan Crim, "...an employees attitude toward the job['s importance] and the company had the greatest impact on loyalty and customer service then all other employee factors combined."
Employee clarity of job expectations.
"If expectations are not clear and basic materials and equipment not provided, negative emotions such as boredom or resentment may result, and the employee may then become focused on surviving more than thinking about how he can help the organisation succeed."
Career advancement/improvement opportunities.
"Plant supervisors and managers indicated that many plant improvements were being made outside the suggestion system, where employees initiated changes in order to reap the bonuses generated by the subsequent cost savings."
Regular feedback and dialogue with superiors.
"Feedback is the key to giving employees a sense of where they're going, but many organisations are remarkably bad at giving it." "'What I really wanted to hear was 'Thanks. You did a good job.' But all my boss did was hand me a check.'"
Quality of working relationships with peers, superiors, and subordinates.
"...if employees' relationship with their managers is fractured, then no amount of perks will persuade the employees to perform at top levels. Employee engagement is a direct reflection of how employees feel about their relationship with the boss."
Perceptions of the ethos and values of the organisation.
"'Inspiration and values' is the most important of the six drivers in our Engaged Performance model. Inspirational leadership is the ultimate perk. In its absence, [it] is unlikely to engage employees."
Effective Internal Employee Communications - which convey a clear description of "what's going on".
"'If you accept that employees want to be involved in what they are doing then this trend is clear (from small businesses to large global organisations). The effect of poor internal communications is seen as its most destructive in global organisations which suffer from employee annexation - where the head office in one country is buoyant (since they are closest to the action, know what is going on, and are heavily engaged) but its annexes (who are furthest away from the action and know little about what is happening) are dis-engaged. In the worst case, employee annexation can be very destructive when the head office attributes the annex's low engagement to its poor performance... when its poor performance is really due to its poor communications. "
In our experience this definition of the Influences of Employee Engagement is representative of the major issues that most organisations experience. The major variable here is a manager's capability to do all of these things well. Unfortunately, we have found that most struggle with all of the above Influences, Job Importance, Clarity of what is expected, Career advancement or Improvement Opportunities, Regular Feedback, Quality of Employee Manager relationship, Values and Communication.
Why Bother ?
Given the above definition and the fact that improving Employee Engagement is a difficult thing to do, the next question becomes, why bother with Employee Engagement ?
What happens if we do nothing ?
The answer to the Why Bother question is that Employee Engagement holds the key to the desired outcomes of most organisations. Whether you are a Government organisation, Commercial or Not for Profit, the employees of your organisation deliver the outcomes. It is suggested by industry experts Becker and Huselid in " High performance Work Systems and Firm Performance" that only 15% of organisation outcomes are due to strategy and 85% are due to execution i.e. employee effort. Whether its service levels, profit for shareholders, balanced outcomes for multiple stakeholders, engaged employees make the largest contribution to organisation outcomes and deliver more than disengaged employees.
When I say more, I really mean a LOT MORE, particularly over a sustained period. How much more ? It depends on how engaged your employees are. Conventional wisdom is that at least 20% more, some times up to 50%. Wikipedia references several studies in various industries where organisations in different industries have experienced significant superior returns for sustained periods. (Search wikipedia with "employee engagement" to find these case studies).
Secondary impacts of high engagement are also evident, staff turnover decreases, morale increases, things seem to "happen" rather than get bogged down. So the question becomes, how do we improve Employee Engagement in a holistic fashion, across the entire organisation, taking into account the variation in manager's skills.
There have been many traditional approaches to improving Employee Engagement, as follows:
Leadership training is essential to any organisation. Organisations need their leaders to be able to lead, manage, deliver outcomes from their teams and contribute to the organisations goals. To do this, many managers are sent on Leadership Development training. We have no doubt they acquire valuable skills, reflect on the way they manage and sometimes change their behavior.
The problem with this approach is that it is not uniform at achieving Employee Engagement. Some managers improve engagement as a consequence of their newly acquired skills, others don't. In the case of those that don't, often it is not a question as to whether or not they are good managers or did they acquire new skills, rather a question of time. Managers get back from their leadership training and a thousand things happen. "I had 350 emails to answer, budgets were due, we had 3 tenders to get in, I had to relieve my manager" and so forth.
Although Leadership Training is essential, it will not provide your organisation with a uniform improvement in Employee Engagement. Rather the outcome will be patchy, managers with time to apply newly acquired skills will improve engagement, managers with little time will attend to the burning issues of the day. Employee Engagement will move positively by a few percentage points, not a marked shift of more than 10%.
Organisations often embark on a "program" to drive engagement. They are often called "Act as One", "Be number One", "Grow Fast" or something similar. These programs are rolled out with fanfare, posters, pens and other material to broadcast a new direction and to try and engender a feeling of belonging in the organisation, of loyalty and to try and harness the discretionary effort of employees.
The programs are often effective, some employees can identify with these programs and engagement increases for these employees. Disengaged employees will often look at these programs in a skeptical light, "I have seen five of these programs in the last seven years. I like the new pen but what does Act as One really mean to my role, I don't know what they expect me to do. Last time I didn't do anything and nobody noticed."
The net outcome of these programs is that engagement typically moves positively but only by a few percentage points and the effects dwindle after about six months.
Learning and Development
Increased Learning and Development will have a positive effect on Employee Engagement however this type of initiative suffers from a number of problems, as follows:
Of all of the Learning and development that is planned, a lot is not completed. For example, in the Australian Public Sector Commission Annual Employee Survey, the completion rate of all planned Learning and Development was only 41%. If the Learning and Development is seen as the only vehicle to drive engagement, then it can not be effective for the employees who did not complete their Learning and Development. Note that Learning and Development is important for other reasons but we are making commentary here only about its effectiveness on Employee Engagement.
Once Learning and Development becomes expected as part of an employees entitlements, it no longer improves engagement. Employees take it for granted as it becomes an expected part of the organisations value proposition to the employee, especially in low-unemployment and knowledge based economies.
Other initiatives deployed that are used not for the sole purpose of driving engagement but that have an affect are:
A weekend away with the CEO.
This has an impact and everyone feels good afterwards but the impact is short lived.
Incentives such as gym membership.
Again, this has a short term impact but employees soon regard the incentive as a given and its effect on Employee Engagement declines. Note that if the incentive is withdrawn when its effect diminishes then you will typically experience a significant decline in engagement.
Engagement will rise as a consequence on employees believing they are being listened to but again this is short lived as reality sets in a few weeks after the survey when nothing has really changed.
New Approaches to Increasing Employee Engagement
Given the experiences of the traditional approaches outlined above, most organisations struggle to shift Employee Engagement more than a couple of percentage points. In discussing this with CEO's, Human Resources and Organisational Development Executives, it became clear that new approaches were required to create a significant shift in Employee Engagement.
With old or new approaches, the factors that need to be addressed remain the same as per the Wikipedia list of major factors that affect Employee Engagement:
1. Job Importance - an employee needs to know how their job is important to the organisation
2. Clarity of what is expected of them - an employee needs to be very clear on what their manager expects of them.
3. Career Advancement - employees want to know that there is a fair and equitable system for Career Advancement and that if they perform, then they will be considered for advancement.
4. Improvement and Reward - employees want to make improvements to the organisation and if they do, would like to be rewarded where possible (remuneration and a thank you).
5. Regular Feedback - employees want to know when they, the department and the organisation are doing well or not so well.
6. Good Relationship - employees want to communicate with their manager. Even if the news is not good.
7. Clear values - employees want to know the values and behaviors that will be looked upon favorably, they don't want to be left in a vacuum to guess.
8. Good Communications - "Tell me what is happening, I don't want to be the last to find out, I want to be included."
In order to address the above needs, the solution needs to address all of the above and then some. Following is an outline of a comprehensive solution that addresses each of the major influencers outlined above.
The Silver Bullet for Employee Engagement
The organisation leaders need to be clear on what they are trying to achieve before they communicate this to the organisation.
If the Level 1 Strategy (Organisation Level) is not well defined then you need to conduct a Strategy Workshop where the Executive Management define and refine a clear strategy.
Convert the Strategy into a Strategy Map
The Strategy needs to be converted into a Strategy Map. This Map is a pictorial representation of the Strategy showing dependencies and relationships of the major parts of the Strategy. The majority of people understand a picture far better and have much more information than from a word heavy strategic plan written in finance-speak. If you need more information on Strategy Mapping, please refer to a separate White Paper at the PeopleStreme website that provides an overview of Strategy Mapping.
Define the Values and Behaviors
The Executive and Management team need to determine the values and behaviors they believe are important to the organisation. These need to be clearly defined and agreed upon.
Convert the values and Behaviors into Statements and Define the Measurement Criteria
The values and behaviors need to be clearly articulated so that they can be readily understood. The Executive Management need to define what part values and behaviors will play in employee evaluations or reviews. If employees are not going to be evaluated on these values and behaviors, then you are wasting your time defining them. The Executive Management Team needs to decide on the percentage weighting these values and behaviors will attract in an employee's review.
Conduct Strategy Mapping in every major Business Unit
Your employees need to be clear on how they are connected to the organisation strategy. They specifically need to know their part of the plan and they need to see that their part of the plan is important to the organisation. Each Department must complete a Strategy Map with each employee being allocated a part of the Strategy. This might sound difficult but in practice it's not.
If you complete Strategy Mapping in each department or work unit, employees know their part of the plan. You have now achieved the first influencing factor of Employee Engagement - Job Importance. Each employee now knows what is important and what their part of the plan is.
Performance Management and Talent Management System
Set up an automated Performance Management and Development system. Ensure the system has the capability for regular feedback, at least monthly. This is the platform that will deliver the clarity of role and communications aspect of Employee Engagement.
The Talent Management component should enable an objective way of short listing potential candidates for promotion. This is the platform that will deliver the Career and Succession Planning component of Employee Engagement.
Link Remuneration to the outcomes of Performance Management
In order to achieve the Reward component of Influencing Factor 4, link remuneration to Performance. Whether it's a salary increment, bonus or some other remuneration consequence, there needs to be some linkage to remuneration to achieve and satisfy Influencing Factor 4 - Improvement and Reward.
Get every manager to Set Objectives from the Department Strategy Map
Each Manager should now sit down with their team and discuss the employee's part of achieving the Strategy Map. Objectives are set with each employee and each employee now understands their part of the Strategy, how their work is important and how other employees and managers rely and depend upon their work.
Make every Manager Accountable for reviewing progress once a month
If your Performance Management system is capable of delivering a quick touch-base progress review each month, this becomes easy. Managers sit down with employees for 10-15 minutes each month and do a quick update. The Performance Management system should restate a summary of the employee's objectives and values and behaviors. After the meeting, managers should record progress in the system.
In delivering these quick touch-base or One on One Meetings and ensuring they are happening, we deliver Influencing Factor number 5 - Regular Feedback and Factor 8 - Good Communications. Note that Factor 8 will require more than just One on One meetings with the manager or CEO. Internal communications will need to be planned at regular scheduled intervals as well.
Career and Succession Planning
Design a communications program that will advise all employees that Succession Planning will now be based on merit, not just who you know or who plays golf with who. Your Talent Management System should be able to produce a short list of employees based on objective criteria, for example:
• Career Aspirations match
• Historical Performance Rating
• Potential Rating
• Competencies Match/Rating
• Age based Retirement
Ensure that managers and employees understand that having no Talent Management plan means there will be no consideration for Succession. The Career and Succession Planning component delivers Influencing Factor 3 - Career Advancement.
The last influencing factor not addressed is the "good relationship with my manager". This is a factor that is not as easily achieved by any single initiative except that improvements will have been made through:
• Clarifying purpose - managers will have to interact with staff in the Strategy Mapping phase
• Setting Objectives - Managers will have to spend time with their staff while setting objectives. They can no longer avoid staff contact.
• One on One Meetings - Managers will be required to conduct 10-15 minute touch base meetings. Progress and Status of Objectives will need to be updated. Again, we are improving relationships between employees and managers by ensuring there is adequate ongoing communication.
Questions and Answers
Following are some questions and Answers we are frequently asked in relation to Employee Engagement:
We have acquired a company 9 months ago. Employee engagement has declined markedly since then. It is worse in the acquired entity but our last Employee Engagement survey shows a decline across both organisations (original and acquired). What is causing this?
Employee Engagement is a function of clarity, role purpose and the other Influencing Factors as outlined above. Post acquisition (typically 9 months after) many of the factors that would be addressed in the normal course of business break.
• Clarity and communications decline as Leaders and Managers spend time on digesting the acquisition.
• Managers and Employees in the acquired entity typically lose some or all of their leadership as the entities are consolidated.
• Clarity declines, role purpose becomes fuzzy
• Career Advancement becomes hazy (who will be promoted, manager A from the parent or manager B from the acquisition)
The real answer to this issue is that no matter how carefully the acquisition is handled, Employee Engagement will decline in both entities. In our experience, you will be best served initiating a program as outlined above as soon as you can after acquisition. You will still see a decline in Employee Engagement as restructuring occurs but The Silver Bullet will help it be turned around quickly and refocus all employees in a relatively short amount of time.
Why does your approach work ? We have tried numerous initiatives but have failed to move the Employee Engagement score.
The secret to success is Sequencing and Content. It is not about a piece of software or an isolated initiative. Strategy Mapping is a key driver for Employee Engagement and this is a new concept to a lot of organisations. Performance and Talent Management provides the platform to ensure that Engagement is delivered at an employee level. The combination of both is the most powerful agent to drive Employee Engagement that we are aware of.
As a consequence of delivering this program, what are the financial benefits we will see?
There are many benefits as follows:
• Increased Performance - case studies reveal anything between 2% to 25%.
• Decrease employee turnover, especially in high potential staff
There are numerous other benefits but the above will account for 80% of your financial return.
Improving Employee Engagement is not the product of one initiative. You need a framework as outlined in this document if you want to achieve significant improvement in engagement. Sequencing and content of the initiative are critical as is communications of the initiative.