Explain What is Employee Engagement

What is Employee Engagement ?

Employee Engagement is a common phrase, which has captured the attention of workplace observers, HR managers and executives. Yet employers and employees can't easily explain Employee Engagement. The explanation from Wikipedia is : “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 organisations interests. An engaged employee is a person who is fully involved in, and enthusiastic about, his or her work.”

The concept of discretionary effort is relevant. In many employee engagement studies, the clear conclusions are that organisations that can harness discretionary effort will far outperform the organisations with employees who just do the minimum they can get away with. With respect to discretionary effort, a lot of the research describes three types of employees.

1.Engaged - employees work with passion and feel a profound connection to their company. They drive innovation and move the organisation forward.

2.Not Engaged - employees are essentially “checked out”. They are at work physically but mentally have lost energy or passion for their work.

3.Actively Disengaged - employees are not only unhappy but busy voicing and acting out their unhappiness. Everyday these workers are reversing the positive outcomes of their engaged workers.

History of Employee Engagement

Employee engagement is a relatively new term in HR literature and really started to come to prominence from the year 2000 onwards.
Melcrum Publishing (2005) found that from a global survey of over 1,000 communication and HR practitioners 74% began to formally focus on the issue between 2000 and 2004.
In the years prior, to most organisations, employee engagement was just a general philosophy incorporated into the organisation's people practices rather than being a formal, dedicated engagement programme. Over the past two years in Australia, more organisations have been measuring employee engagement levels through a series of survey questions. The results are represented graphically as a percentage of employees who are at various stages of engagement. High Engagement levels have been found to have a strong impact on the business growth, employee retention and financial return.

How Does Employee Engagement fit into Human Capital Management

Human Capital refers to the stock of productive skills and technical knowledge embodied in the labour force. Many early economic theories refer to it simply as "labor", one of three factors of production according to Wikipedia. These earlier theories consider Human Capital to be a resource which is readily available and easily interchangeable. As a driver of discretionary effort, employee engagement is a strategic output from human capital management in any organisation and therefore requires a long-term, strategic programme to help drive employee motivation within the company. It is also important from HR perspective to consider engagement and whether each new hire and each existing employee will fit into the culture of the organisation and share the same vision and values. As employee productivity is clearly connected with Employee Engagement, creating an environment that encourages employee engagement is considered to be essential in the effective management of human capital.

Typical Positive Outcomes from Employee Engagement

A number of engagement factors affect ever workforce.

Employee clarity of job expectations.

According to Gallup "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 we can help the organisation succeed." Clarifying job expectations helps to build a bridge of communication and understanding between the employee, the manager and the strategy of the organisation.

Career advancement/improvement opportunities.

According to Virginia A Hulme "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." Employees want to be heard and they want to believe that the personal contribution they make is important and valuable to the organisation. Any employee engagement approach must provide strongly inclusive elements of employee participation in innovation and improvement.

Regular feedback and dialogue with superiors.

A common theme in many workplaces is “Feedback is the key to giving employees a sense of where they are going, but many organisations are remarkably bad at giving it.” According to a Wattson Wyatt report “What I really wanted to hear was ‘Thanks you did a good job.’ But all my boss did was hand me a check.” Most employees value feedback very highly. Employees need to feel included and appreciated and a lack of feedback acts to exclude employees from these feelings. Regular feedback, positive or negative tends to give employees a sense of belonging and positive feedback also makes them feel appreciated.

Quality of working relationships with peers, superiors, and subordinates.

According to Ryan, Richard M. and Edward L. Deci “..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.” A powerful employee engagement technique is to praise employees more often than reprimanding them. Even when a reprimand is necessary, it can be preceded by paraise and also succeeded by praise after the reprimand is delivered. This does not lessen the effect of the reprimand but it does serve to help the employee understand that it is not the end of the world.

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.” according to Ken Scarlett. Ethical, values based leadership helps to align all employees behind the leader as they start to understand how they will be treated in a more transparent management process.

Effective Internal Employee Communications- which convey a clear description of “what’s going on”.

According to Wikipedia “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." What is not obvious is that these communications must connect back to the organisation strategy at every available orpportunity. This, at least, helps clarify goals and objectives for every employee, manager and executive in every territory where the organisation has a workforce.

In our experience these influences of Employee Engagement are representative of the major issues that most organisations experience. The major variable here is a manager’s capability to do all these things well. Unfortunately, we have found that most managers struggle with all of the above influences, Job Importance, Clarity of what is expected, Career advancement of Improvement Opportunities, Regular Feedback, Quality of Employee Manager relationship, Values and Communication.

Traditional Approaches

There have been many traditional approaches to improving Employee Engagement, as follows:

Leadership Development

Leadership development 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%.

Programs

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. 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

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.

- Employee surveys.
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.

Typical Outcomes from Employee Dis-engagement

Disengagement may result from numerous causes and conditions. Once the catalysts for disengagement are understood, managers can be better equipped with engagement toolsand training to deal with falling employee commitment and energy levels. Doing this will gain better understanding of employee direction.
An article written by Richard Pech, (Director of Research at La Trobe University School of Management) states: “Organizational structures, traditions, rules, policies, conditions, and procedures may also cultivate disengagement. With increasing levels of education and global awareness, employees are perhaps venting their frustrations by withholding commitment and energy. A ponderous bureaucracy, lack of resourcing, low standards and acceptance of poor performance may all contribute to employee disengagement” (Pech, 2001).

The above would suggest that the employee may be responsible for the initial problem that has switched him of her off, but the organisation is also responsible as it must then manage the situation. Whether this calls for counseling, training, demotion, or negotiation, managers must confront such problems before they become embedded within the company’s culture.

Employee Engagement Research

According to the Asia 2007 study and its ongoing research. The analysis found that organisations with high engagement are 78 percent more productive and 40 percent more profitable than those organisations with low levels of engagement. Those with disengaged employees had an average profit loss of $8,000 to $10,000 profit each year for each disengaged employee

"Disengaged workers are costing Australia's economy about $31.5 billion a year". A new Gallup Australia study found 20 per cent of employees were 'actively disengaged' at work, costing the country billions of dollars ... Employees who are actively disengaged are less productive, profitable, loyal, less likely to provide excellent customer service and are often disruptive."

Over 2000 Australian workers were included in the study conducted. The study found that 62% of Australian respondents were disengaged at work, with 42% of employees describing themselves as “disconnected”- neither engaged nor happy at work. Only 36% of Australian workers said they felt connected to their job and described their organisation as a great place to work. These results are enough to make organisations to strongly re-think their strategy. The relationship of Employee Engagement to productivity/performance and other measures are linked to effectiveness.

“An engaged workforce is likely to perform better and be more profitable than competitors,” said Right Management chief executive Bridget Beattie.“Disengaged workers can often spread ‘subtle poisons’ that could undermine an organisation, such as not turning up to meetings or making adverse comments.” Beattie said that rather than money, it was “intangible factors” such as the communication of organisational goals to employees, open lines of communication between management and staff, and recognition and feedback with regard to performance that provide critical engagement points, and help retain staff.

According to a case study printed in Hewitt Quarterly Magazine Ross Fowler (Cisco System Vice Presidents & award recipient of the Hewitt Best Employer Study made the comment;
"The return on investment for ensuring happy and committed staff is beyond question. In these days of skill shortages and booming economies, being an employer of choice is a critical competitive differentiator"

After much research there is a clear and an overwhelming amount of evidence to conclude that high levels of Employee Engagement positively effect individual, group and corporate performance in areas such as retention, turnover, productivity, customer service and loyalty.