The Importance of employee engagement
I recently spent a great day with an international group of HR leaders, where a big focus was on their role in developing greater employee engagement and motivation – especially during times of increasing change.
They all understood the vital impact of employee engagement – or lack of it – on their business. It’s simple really; businesses with more engaged employees perform better.
Need convincing or a business case for employee engagement? The research on this topic is significant:
- Companies with the most effective employee communication have 47% higher shareholder returns over the last five years (Towers Watson, 2010)
- Engaged employees outperform disengaged employees by 20-28% (The Conference Board, 2006)
- Highly engaged employees have 3.5 less absence days (Gallup Germany, 2011)
- A 5% increase in total employee engagement correlates to a 0.7% increase in operating margin (Towers Perrin 2004)
- Organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement (The Impact of Employee Engagement – Kenexa)
- In companies where 60 to 70 percent of employees were engaged, average total shareholder’s return (TSR) stood at 24.2 percent; in companies with only 49 to 60 percent of their employees engaged, TSR fell to 9.1 percent; companies with engagement below 25 percent suffered negative TSR (Employee engagement at double-digit growth companies, Hewitt Research Brief)
But where do you start? HR of course has many roles and responsibilities and your time is always at a premium – so here are 3 vital steps that might help you ….
Step 1 – Agree the big-picture outcome you are looking for
As the research shows, employee engagement, or lack of it, can have a large, complex knock-on impact across a whole range of areas. However, from our experience, it’s really useful to pin down the one main direct metric you particularly want to focus on (and can measure). For example, this could be financial performance, safety, product innovation or employee retention.
Step 2 – Prioritise the drivers for engagement
As we all know – ‘If everything is a priority – nothing is a priority’. HR resources will never be sufficient to tackle every factor which impacts employee engagement.
The research in this area suggests that there are four main drivers, all of which need to be considered:
- Individual differences – some people are simply more engaged than others. So how can we assess this natural engagement when recruiting?
- Alignment with company values – It might be an obvious statement, but engagement is significantly higher when employees understand and fully buy into the ‘Why’ behind the organisation they work in. For some organisations of course, this is easier than others – in our own projects with charities and public-sector organisations, we regularly find that employees are deeply engaged with their organisation’s purpose – and this can provide them with a deeper resilience when things get tough. Many private sector companies ignore or struggle with this and often their stated mission – eg “increasing shareholder value” doesn’t resonate from an engagement perspective
If you have not already watched the Simon Sinek’s YouTube presentation ‘Start with Why? https://www.youtube.com/watch?v=sioZd3AxmnE it’s a great place to start.
- Their specific role – some people are engaged with the pleasure or the intrinsic reward of doing a great job. This is not just about the obvious craft industries of the past, but occurs in many modern industries – eg technology companies where the detail of the project and getting it perfect can be a reward in itself. But how often is this involvement encouraged by managers?
- Engagement with their manager – perhaps one of the most forceful impact is the overriding importance of an employee’s manager as the key driver of their engagement. As the saying goes, people might join an organisation because of the company – but often leave because of their manager. We find that managers who drive engagement have a number of characteristics:
- They take a genuine interest in each individual in their team and engage them in a way that is relevant to them
- They are honest and authentic.
- They give direction but allow people to get on with the job.
- They do not micromanage.
- They adjust their style to the needs of each member of their team.
- Engagement for them isn’t a task or an HR initiative, it is a way of managing
The good news is that there are a lot of new tools and research to support this – recent advances in cognitive psychology and neuroscience help us understand the impact managers can have on engagement at an individual level.
Step 3 – develop an engagement mentality through the management team
This brings us back to our title: what does this mean for the role of HR? We’d suggest a few pointers:
- Focus less on creating massive firm-wide surveys and more on working with key managers to help them engage their employees.
- If managers are doing it well but not doing it ‘your way’ let them get on with it. If they are not, understand why. If it’s a lack of competence provide real-time coaching (perhaps from their peers who are doing it well) to help them do it better. If they lack the confidence, then sit with them and help them understand the barriers and how to overcome them.
- If it is a lack of commitment, understand why and challenge them to recognise that this is a core part of their job. From our experience, many managers don’t realise that they are expected to develop their people or drive engagement with their team!
So what’s the overall message?
Engagement happens at an individual manager level so HR leaders need to spend time in the business understanding where to focus their efforts and working with key managers, rather than designing another organisational initiative that might be seen as meaningless.
It will probably also be more fun, more satisfying and engaging for HR professionals too!